National Bank president and CEO Louis Vachon has been in the position for more than 14 years, helping cement its status as one of Canada’s Big Six banks and securing its stronghold in Quebec.Paul Chiasson/The Canadian Press
National Bank of Canada has chosen Laurent Ferreira as its next chief executive officer to succeed Louis Vachon, who will retire at the end of October, ending his run as Canada’s longest-serving bank CEO.
Mr. Vachon, 59, has been CEO of the Montreal-based bank for more than 14 years, helping cement its status as one of Canada’s Big Six banks and securing its stronghold in Quebec, while pursuing a disciplined plan to expand the bank’s reach outside the province and internationally.
It is no surprise to Bay Street that Mr. Vachon is passing the torch to Mr. Ferreira, 50, a financial markets expert who has spent 23 years at National Bank and helped build its derivatives business. The bank signalled its succession plan in January, when Mr. Ferreira was promoted to chief operating officer and added to the board of directors, after a stint as co-head of financial markets.
In terms of business mindset, the two bankers have been closely aligned, promising a smooth transition. Both men have backgrounds in structured products and derivatives, and each worked for Bankers Trust before moving to National Bank in the late 1990s. Under Mr. Ferreira, National Bank is expected to keep a keen focus on financial markets, but also continue a push to revamp its retail banking arm with a more digital mindset.
Ratings agency DBRS Morningstar Ltd. expects the management change “to be seamless,” with no big change in strategic direction, according to a note to clients published Wednesday.
In another note, Canaccord Genuity Group Inc. analyst Scott Chan called Mr. Ferreira “a suitable replacement, as he has demonstrated a deep understanding of the banking industry.”
But the bank is preparing for a notable change in style when Mr. Ferreira takes over. Mr. Vachon is charismatic, outspoken and even statesman-like, but colleagues know Mr. Ferreira for his fierce intelligence, analytical mind, keen grasp of numbers and enthusiastic embrace of technology.
For months, Mr. Ferreira has undergone an apprenticeship to prepare him for a more public-facing role as CEO. He has co-managed the bank’s transformation office and overseen operations and information technology. Also, since January, several of the bank’s top executives have reported directly to him.
Neither Mr. Vachon nor Mr. Ferreira were available for an interview on Wednesday, but Mr. Vachon said in a statement that Mr. Ferreira has “a decisive and unifying leadership approach, always quick to identify and seize growth opportunities.” National Bank board chair Jean Houde described Mr. Ferreira as “an inspiring leader with a human touch,” and thanked Mr. Vachon for the “financial, technological and cultural progress” the bank has made under his direction.
When Mr. Vachon was named CEO in 2007, National Bank had a reputation as “a very traditional Quebec bank,” Louis Hébert, a professor in the department of management at HEC Montréal, said in an interview. But under Mr. Vachon, “it always stayed current.”
“Mr. Vachon came in at the right moment to push the bank the new levels, to modernize it and to make it a more significant player in the Canadian banking system,” Prof. Hébert said. “Mr. Vachon has credibility on Wall Street, not only on Bay Street,” he added.
After inheriting a crisis over asset-backed commercial paper at the start of his tenure, Mr. Vachon helped navigate through the global financial crisis in 2008 and 2009, then set about diversifying National Bank’s business.
The bank now generates 54 per cent of its revenue in Quebec, down from 62 per cent when he took over, as returns from the rest of Canada and abroad have increased. Retail banking made up half of all revenue in 2007, but now accounts for 42 per cent as financial markets, wealth management and banking abroad have grown in stature.
With Mr. Vachon as CEO, “virtually every part of the bank has improved its competitive position – not just capital markets,” said Rob Wessel, managing partner and co-founder of Hamilton Capital Partners.
Yet Mr. Vachon has been judicious about expanding the bank’s reach. Rather than make a major acquisition to transform its footprint, he has chosen to build up smaller subsidiaries in profitable niches, such as the specialty finance company Credigy Ltd. in the United States and ABA Bank in Cambodia. He even put a temporary moratorium on investments in emerging markets, sending a clear signal he preferred to deploy the bank’s capital to reap the benefits of a strong economy in Quebec.
The COVID-19 pandemic could have been a jarring bookend to Mr. Vachon’s time as CEO, but so far the bank has performed well. Its stock has generated a return of 141 per cent since the share price hit a pandemic low in late March, 2020, compared with an average of 101 per cent for Canada’s other major banks, according to Canaccord’s Mr. Chan.
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