A person walks past the Laurentian Bank head office in Montreal, on Aug. 30.Christinne Muschi/The Canadian Press
Laurentian Bank of Canada LB-T paid out $25.6-million in severance over the past year, including a settlement with former chief executive officer Rania Llewellyn, as the country’s eighth-largest lender shifted its strategy to focus on commercial borrowers.
On Friday, Montreal-based Laurentian announced stronger-than-expected financial results, while paying out severance packages equal to 15 per cent of last year’s profit. Executives also provided an update on a growth strategy that included finding a financial partner to provide funding for the bank’s U.S. lending business, Northpoint Commercial Finance.
The severance charges include a payout to Ms. Llewellyn – the first woman to run a Canadian-based bank – according to two sources familiar with the agreement. The Globe and Mail agreed not to name the sources because they are not authorized to speak for the bank.
On Friday, Laurentian spokesperson Frédérique Lavoie-Gamache said in an e-mail: “The bank will not be commenting on Ms. Llewellyn’s severance.”
Laurentian’s board dismissed Ms. Llewellyn in October, 2023, after she had been recruited from the senior ranks of Bank of Nova Scotia in 2020. Her dismissal followed a five-day service outage that left clients unable to access their accounts, and a failed attempt to find a buyer for the bank. The board appointed Éric Provost, head of its commercial and personal banking operations, as the new CEO. Laurentian’s former chair, retired banker Michael Mueller, resigned in protest over Ms. Llewellyn’s departure.
In May, Laurentian announced a shift away from a strategy that Mr. Provost called an ”everything to everyone” approach. The bank trimmed its executive team as it put a priority on lending to corporate clients, such as real estate developers and Northpoint customers, which include dealerships that need loans for clients buying boats, recreational vehicles and ATVs.
Over the past eight months, Laurentian chief operating officer Sébastien Bélair, chief legal officer Bindu Cudjoe and head of capital markets Kelsey Gunderson have also departed.
Laurentian filings show the bank caps severance for executives at two times their compensation the previous year, which means Ms. Llewellyn was entitled to a package worth up to $6.7-million. The sources said Ms. Llewellyn received less than the maximum payout, however. The bank is expected to detail executive compensation in filings ahead of its annual meeting this spring.
In 2022, Ms. Llewellyn earned $3.4-million after exceeding all the bank’s financial targets, including a $1.3-million cash bonus. Her pay was well above the $2.8-million compensation target set by the board at the beginning of the year.
Since taking the helm in 2023, Mr. Provost has used industry conferences and investor calls to highlight the potential for expanding Northpoint’s customer base by partnering with backers such as a private equity or private debt fund to provide capital to support Northpoint’s loans. Northpoint currently accounts for $3.9-billion of the bank’s $16.6-billion loan portfolio. The book value of the business is $3.1-billion.
In November, Laurentian merged Northpoint and its equipment finance business, LBC Capital, under the Northpoint brand as part of what Mr. Provost described as a “simplification” strategy.
On Friday’s conference call, Mr. Provost said the bank continues to search for a partner to help provide financing for Northpoint and in the medium term “we believe that platform could actually double in size.”
Laurentian’s stock price closed up 5.3. per cent on the Toronto Stock Exchange on Friday. In a report, analyst Gabriel Dechaine at National Bank Financial said Laurentian’s credit outlook is improving and “the company is in the midst of exploring partnerships for its inventory finance business (Northpoint), which could result in an acceleration of growth.”
Laurentian earned an adjusted profit of $168.7-million in the year ended Oct. 31, down from $208.3-million the previous year. In the final three months of the year, core cash earnings per share were 89 cents, beating the consensus forecast from analysts of 85 cents.
The bank booked $228.4-million of restructuring and impairment charges last year, resulting in a net loss of $5.5-million. The charges include $7.8-million of severance Laurentian paid in the final three months of the year.