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Laurentian Bank’s share price fell by 5.9 per cent on the Toronto Stock Exchange on Oct. 2.Paul Chiasson/The Canadian Press

The new chief executive officer at Laurentian Bank of Canada LB-T pledged to rebuild customer trust and improve performance after a five-day service outage last week and failed sales process this summer triggered a boardroom shakeup at the country’s ninth-largest lender.

Montreal-based Laurentian named Éric Provost as CEO on Monday, replacing Rania Llewellyn, the first woman to run a major Canadian-based bank. The lender also announced chair Michael Mueller had resigned.

Laurentian said Ms. Llewellyn would “leave immediately” after three years at the helm. She and Mr. Mueller are departing after the bank ran a sales process this summer as part of a strategic review, and failed to find a buyer. Laurentian is halfway through a three-year turnaround plan, launched by Ms. Llewellyn, aimed at boosting profit and matching the efficiency of rival lenders.

On Sept. 24, Laurentian’s systems crashed during a planned technology upgrade. The bank was unable to fix the problems and process transactions until Sept. 28 last Thursday, with both individual and corporate clients unable to access their accounts. In August, Laurentian chief technology officer Beel Yaqub left the bank.

“The outage caused a great deal of anxiety and dissatisfaction for our clients,” Mr. Provost said in an interview. He said Laurentian’s board offered him the CEO role on Sunday evening, and he declined to comment on Ms. Llewellyn’s departure.

Laurentian did a poor job last week of communicating with customers, Mr. Provost said, and “our priority now is to win back trust.” He said Laurentian has a strong balance sheet and an excellent relationship with regulators.

“I apologize to our customers,” said Mr. Provost, who joined Laurentian 11 years ago and began running commercial and personal banking operations last month. “It’s unacceptable for a financial institution to be down for that long a period.”

On Monday, Laurentian’s share price fell by 5.9 per cent on the Toronto Stock Exchange. The bank’s shares are now trading at approximately half their book value, a significant discount to the lender’s historical valuation.

Once IT issues are resolved, Mr. Provost said the bank’s priorities are continuing to expand its most profitable business, commercial lending, by winning customers in new fields.

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Over the past seven years, Laurentian made two acquisitions to build North American platforms that provide equipment financing and loans for retailers such as boat dealers. Mr. Provost said the bank sees opportunities to expand these businesses into sectors such as construction, agriculture and technology.

Laurentian suffered its IT problems on the heels of a sales process in which several Canadian banks kicked tires, but failed to make an offer that met the board’s expectations. Analysts predicted that if it did sell, Laurentian would fetch approximately $2-billion.

British bank HSBC Holdings PLC drew multiple bids last year for its Canadian unit, which was Canada’s seventh-largest bank, and eventually agreed to sell the business to Royal Bank of Canada for $13.5-billion.

Canadian banks rarely replace their CEOs abruptly, without telegraphing that succession is in the works. Until Monday, Laurentian aggressively promoted Ms. Llewellyn as a change agent.

“The trigger for this morning’s leadership changes appears to be more tied to the bank’s ongoing systems issues, but it is hard to believe that the outcome of the recent strategic review was not a factor as well,” analyst Meny Grauman at Bank of Nova Scotia said in a report.

On Monday, Laurentian announced its new chair is Michael Boychuk, who was previously head of the board’s audit committee.

“Éric is the right executive to lead the bank at this critical point in its evolution,” Mr. Boychuk said in a press release. “We have experienced challenges recently and the board is confident that Éric will successfully focus the organization on our customer experience and operational effectiveness.”

Mr. Boychuk, former CEO of BCE Inc. pension manager Bimcor, added: “I want to thank Mike Mueller for his many years of dedicated service as both a board member and chair. I would also like to thank Rania Llewellyn for her hard work and contributions.”

Laurentian announced that as a result of the IT outage, it will reverse all monthly services fees for September.

“Laurentian has been undergoing a significant modernization of digital tools and the IT outage clearly appears to be a significant issue for customers to lead to such an abrupt management change (if indeed this was the only reason for these changes),” analyst Darko Mihelic at RBC Capital Markets said in a report.

When Laurentian concluded its strategic review in September, the bank said it planned to speed up its turnaround plan, with an increased emphasis on improving efficiency and simplification. At the time, two senior executives departed and the bank promoted Mr. Provost.

In September, Mr. Mihelic said Laurentian faced significant challenges as it tried to increase profit and reduce operating costs that trail larger rivals. In a report, he said: “Perhaps more aggressive measures (i.e., a restructuring charge) may be needed to right-size the expense base.”

Laurentian’s former CEO is in line for a $6.7-million severance package, according to the bank’s regulatory filings. Ms. Llewellyn earned $3.38-million last year, including a $1.3-million cash bonus awarded for exceeding the bank’s financial targets. In its proxy circular, Laurentian said it caps severance pay for executives at a maximum of two years of their compensation.

Ms. Llewellyn began her career as a part-time teller at Bank of Nova Scotia and rose through the ranks before being recruited to the top job at Laurentian in 2020.

Ms. Llewellyn and Mr. Mueller did not return calls for comment on Monday.

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