Admitting that he does not yet understand the cause of the computer failure that plunged the organization into a crisis situation, the new CEO of the Laurentian Bank arrives in office with the firm intention of stabilizing things.
“The primary objective is to resolve this crisis,” said Éric Provost in an interview.
The 49-year-old executive received a call over the weekend informing him that the bank’s succession plan had been activated and that he was taking over from Rania Llewellyn as head of the bank.
The call to Éric Provost came from the new chairman of the board of directors, Michael Boychuk, newly appointed to succeed Michael Mueller.
No reason was provided for the departures of Rania Llewellyn and Michael Mueller.
“The trigger for these changes appears to be more related to the bank’s systems issues, but it is hard to believe that the outcome of the recent strategic review did not also play a role,” comments analyst Meny Grauman , from Scotia.
His colleague Marcel McLean, of TD, believes the changes could well be linked to potential disagreements at high levels over the strategic review process which ended in mid-September with the decision to accelerate the evolution of the current strategic plan.
The bank had indicated on September 14 that the board of directors, supported by the management team, unanimously concluded that accelerating the evolution of the strategic plan was the best path forward to maximize shareholder value .
By Éric Provost’s own admission, the outage created a lot of anxiety and frustration among customers. The man who was responsible for personal and business banking before his appointment as CEO says he is “very aware that the bond of trust has been severely tested”.
A routine update gone wrong impacted bill payments, deposits and fund transfers for many customers.
“I hope we lose as few customers as possible,” says Éric Provost. Laurentian Bank has approximately 400,000 retail customers, the vast majority in Quebec.
He promises to be a visible leader in Quebec as soon as the crisis is in the past. “I will get involved at the branch network level to ensure that we rebuild this bond of trust which may have been damaged during the week we have just had. The team is still working tirelessly so that we can conclude this painful episode. »
While he assures that the bank’s systems are now functional, Éric Provost specifies that there are still hiccups affecting “a few small functionalities in terms of fund transfers and business services, but nothing major.”
“There are still special cases where we will find customers who carried out transactions last week [deposits, withdrawals, transfers], but which unfortunately are not yet reflected in the customer profiles,” adds -he.
“I’m hopeful that things will settle down in the short term. But I won’t make any promises on a specific time frame for 100% recovery. The teams are working day and night to get to that moment and we will make sure that it happens as soon as possible. »
If the monthly bank fees collected for September will be reversed and the costs incurred by customers due to the outage will be reimbursed, Éric Provost says he has mandated a team to “work on additional measures that could be considered” in order to mitigate the impacts on customers.
The update that caused the computer problems was supposed to increase the capacity of the system. “There will be a post-mortem to understand what happened and make the necessary decisions to prevent this from happening again. We will look at the sequence of events and what happened,” says Éric Provost.
Once the decision to backtrack was made during the update, Éric Provost explains that there was a lot of work to be done manually to ensure that the sequences were respected in terms of banking transactions. “That’s what created the delays,” he says.
Investors sent Laurentian shares down 6% to $28.48 in Toronto during the first session of the week. If the stock is down around 30% for two months following the conclusion of the strategic review process, it is today at the same level as a year ago.
“The IT outage clearly appears to be a significant problem for clients to necessitate such a sudden change in management, if obviously it is indeed the only reason leading to the changes,” comments analyst Darko Mihelic, at RBC .
At Keefe, Bruyette
The bank has not yet quantified the financial impact of the outage, but Scotia’s Meny Grauman believes it will be significant at least for the current quarter.
A request for authorization of collective action was also filed against the Laurentian Bank by the law firm Lambert Avocats. This request aims to obtain compensation for customers who were deprived of services due to the outage.
October 30, 2020: Rania Llewellyn joins as CEO
April 21, 2021: Official dissolution of the bank employees’ union
July 11, 2023: the bank reveals that it is reviewing its strategic options
September 14, 2023: Bank concludes review of strategic options by staying the course with its current plan
September 24, 2023: Routine update paralyzes IT system and causes crisis
October 2, 2023: Éric Provost takes office as CEO
