Former head of CIBC helped move the bank into the modern era

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There was a time in this country when bankers and civil servants signed on young and stayed put for life. If the stars and their intellectual, political and economic skills aligned propitiously, they reached the top. That's the way it was with Donald Fullerton who joined what is now Canadian Imperial Bank of Commerce at age 22, and retired four decades later as president and chair of the board.

Banking is all about assessing risks and calculating rewards in an effort to ensure that the interest you reap more than repays the risks you incurred in lending the bank's money. The trick is balancing between stinginess and profligacy, caution and foolhardiness. Being an astute judge of character and a visionary economist, however, can't insulate bankers from the financial land mines planted by previous administrations, or external calamities like real estate collapses, oil embargoes and global recessions.

That's when a banker's mettle has to morph from risk averse to risk management, a fancy term for writing down bad debts to get them off the balance sheet. Then there's human frailty: trustworthy clients who suddenly become megalomaniacs, or a banker's own rampant delusion that the market will continue to soar and the economy expand. That's why bankers, like demographers, are right until they are wrong. And usually when that happens, as in 2008, they are very wrong indeed.

By all those measures, R. Donald Fullerton, who died in Toronto on May 29 at age 79, was widely considered a good banker. The CIBC was ranked second when Fullerton stepped down as Chair and CEO in 1992; now it is fifth.

He took over the top job for the cleanup of Dome Petroleum and Massey Ferguson at home and Third World debt around the world; he stepped down about the time that Olympia & York and Enron went south. In between he had restructured the bank into three main banking divisions, flattened the hierarchy, steered the takeover of the venerable stock brokerage, Wood Gundy, an acquisition that took a long time to turn profitable, instituted a succession strategy, embraced customer service, technology, including credit cards and ATMs, and pro-active policies and practices to promote women to senior positions.

Few people will talk on the record about Fullerton, but most suggest that he was a transition figure helping to move the bank into the modern era, a process that some suggest was more cumbersome than reversing the venerable Queen Mary out of a tight berth. "He was a very good banker, no question about that," said Darcy McKeough, a former Ontario Cabinet Minister who was a member of the CIBC board for nearly 25 years, pointing out that Fullerton had "spotted" the problem with Olympia & York early on and had warned Paul Reichmann that he was "expanding too fast and too hard" in the late 1980s.

"He was probably the first modern bank CEO in that he recognized that being the chairman and chief executive officer of the bank was not a singular position, but that it was a responsible position, which depended on not just the chairman, but many others. Up until Don Fullerton, and I think this is true of the other banks as well, bank chairmen were the boss and the full boss. They ran the show, they had a board of directors who they tolerated, as opposed to recognizing that that is how they got there and that's how they stayed as chairman." Nowadays, of course, the CEO and the chair of the board are separate functions.

Hugh Brown, recently retired analyst with BMO Capital Markets was an analyst with Burns Fry during Fullerton's tenure as head of CIBC. "He was a real gentleman and a pleasure to deal with," said Brown describing him as a professional who "inherited a hand of cards that wasn't great" and who "got the bank through a difficult period," citing the real estate collapse of the late 1980s and the recession of the early 1990s, among other issues. "The CIBC has had a number of issues over the last 30 or 40 years and "he was one of the better stewards, but certainly he didn't have a lot of fun."

In an e-mail message, former CIBC board member Conrad Black said he had had "the opportunity to appreciate his high intelligence, astute judgment of people, banker's overview of almost all types of business, his thoroughness as a director, and his very lively wit," during the more than two decades the two men sat around the same board table.

When Fullerton stepped down as CIBC CEO in 1992, he joined the board of Hollinger International, the media conglomerate that was then controlled by Black. Even after Fullerton became alarmed at Hollinger's financial dealings and alerted CIBC, one of its principal bankers, Black still had good things to say about Fullerton and his wife, calling them a convivial couple. "In the encircling difficulties, it was unexceptionable, and I wasn't aware that it was thought to be controversial," Black said about Fullerton's resignation from the Hollinger board in 2004.

Donald Fullerton was born in Vancouver on June 7, 1931, as the Depression was grinding the Canadian economy into ashes. His father Carman Gardener (Jim) Fullerton was an investment executive who worked at one time for the investment broker A.E. Ames (now part of Royal Bank). He and his wife Muriel, moved the family, which included Don and his brother Jim, east to Toronto. Don went to Forest Hill High School and then Trinity College School in Port Hope, according to a brief entry in Who's Who. The Fullerton family declined an interview for this obituary even after The Globe complied with its request for a list of biographical questions in advance.

Fullerton, who was an avid hockey player, graduated with a BA from the University of Toronto in 1953 and returned to Vancouver where he joined what was then the Bank of Commerce. Many years later he waxed nostalgic about working his way up to senior teller, before being sent to New York city as the bank's agent and rising steadily through the hierarchical ranks.

He married his first wife Charlotte probably in the mid-1950s and soon had four sons. After she died - a family member would only concede health issues as a cause - he married Judith (Judy) Frankel, a family friend, in October, 1975. Fullerton and her first husband, Alan Frankel were members of the same fraternity, Kappa Alpha. She was a widow with two young children and he was, by then, vice-president and chief general manager of CIBC. They were married in Grace Church on the Hill and went to Antigua for their honeymoon, according to an item by Zena Cherry in The Globe.

The newlyweds adopted each other's children and raised them seamlessly, according to anecdotal accounts, in a blended family in a big house on Russell Hill Road in Forest Hill. At home as at work, Fullerton was said to be tough but fair, "the rock that anchored the family" according to a eulogy given by one of his grandsons at the funeral, a charcoal-suited service, complete with the singing of Jerusalem and Abide with Me, at the same Anglican church where Fullerton had been married more than 35 years earlier.

John Hunkin, himself a retired CEO of CIBC, told mourners about his former boss's inept but enthusiastic love of skiing, calling him a "tree hugger on skis" and his delight in order and routine. Even after a convivial Saturday night at the cottage, Fullerton still expected family members in attendance at 8 a.m. breakfast, followed by lunch at the stroke of noon and dinner at 6 p.m. As an example of Fullerton's celebrated dry wit, Hunkin related an anecdote about his barber. Apparently, the nearly bald Fullerton wanted a discount because he had so little hair to cut, while his barber wanted to charge a premium because of the eye strain in finding any hair to cut.

At work, "Don was tough and was going to do what he wanted to do and if things went wrong, he would grin and bear it," said Hunkin because Fullerton was a business leader who "understood" that "victories are team victories" but "losses are yours." Inevitably things did go wrong on occasion, resulting in blood on the corporate broadloom.

By the mid-1970s, Fullerton was a member of the CIBC board and chief operating officer of the bank under CEO Russell E. Harrison, an autocratic manager, according to CIBC's own online history. Harrison, who once famously chewed out an activist nun at a CIBC annual meeting, presided over an expansive time, but came to grief when huge loans that had been provided to expanding firms resulted in massive amounts of bad debt. Between 1979 and 1984, CIBC had the lowest average return on assets of the five largest banks.

That was the environment that Fullerton inherited when he became CEO in May, 1984. He had risen through the ranks - indeed he had never worked anywhere else - and was known to be a bluff, gruff man with a ramrod straight military bearing, who was a stickler for rules and order. He once told a reporter that he didn't like staff members helping themselves to tea from the afternoon trolley and taking it back to their desks because he felt it might distract them to sip a beverage while working on bank documents.

The bank needed a firm hand and he supplied it, closing branches to reduce overlap and costs, clearing out ineffective performers from the upper echelons and writing off the worst of the bad debts. Ostensibly, the three presidents - Warren Moysey, A.L. Flood and Paul Cantor - he had installed to run the three new banking divisions in his massive restructuring of the bank's core businesses, were all vying to replace Fullerton as CEO eventually. Only one could succeed, of course, and it turned out to be Flood.

Unlike the messy succession process when Fullerton replaced Harrison as CEO, he announced his own departure well ahead of his retirement in 1992 at the age of 61. Fullerton stayed on the CIBC board, initially as non-executive chair of the executive committee. Three times the board voted to extend his term beyond mandatory retirement age, according to Hunkin, and the third time he said no. He was in good health until he suffered a serious stroke at home on Tuesday, May 24, and was taken to St. Michael's Hospital, where he died of complications five days later.

Donald Fullerton leaves his wife, Judy, six children and several grandchildren.

FROM LOWLY TELLER TO THE TOP JOB

1953 joins CIBC in Vancouver

1964 Agent in New York City

1966 Regional general manager Regina

1967 Regional general manager international

1968 Deputy chief general manager

1973 Exec. vice-president and chief gen. mgr

1974 Elect to CIBC board

1976 President and COO

1984 President and CEO

1985 Chair of board and CEO

1992 Retires as CEO but stays on the board

DONALD FULLERTON WAS A BLUNT TALKER WITH FORCEFUL OPINIONS. HERE IS A SELECTION OF QUOTES:

1. "We bankers must also accept our fair share of the responsibility for accepting unjustifiably high risks in pursing new profit opportunities." Speech to the Canadian Club in Montreal, April, 1987.

2. "Middle management mush" a line from a letter to bank executives and managers telling them that he intended to purge the bank of people who were mired in mediocrity and behaving in a "country-club" manner at work. February, 1990.

"Most of the positive feedback has come from the lower management levels. From the 230 vice-presidents and above, I have not received the feedback I would expect from you, the most critical driving forces of change in our organization." Letter to senior managers April, 1990.

3. "While constitutional turmoil might make investors cautions abut Canada, it will make some of the countries we compete against very happy indeed. While we debate how to govern ourselves, they'll be out there busily marketing their products and services to the rest of the world." Speech to the Montreal Society of Financial Analysts, March, 1991.

4. "Look up from the ledger and demand from the CEO more detailed information and accessibility to the institution's inner workings, if that's what you need to assure yourselves of its stability, soundness and the quality of its assets. … Because by the time such problems show up in the books, the institution may be already so far gone that only a massive bailout or the Canada Deposit Insurance Corporation can restore order." Speech to the Canadian Comprehensive Auditing Foundation November, 1991.

5. "I guarantee that every Canadian will feel the effect in terms of lost international confidence, lower levels of investment, lost economic opportunity and more lost jobs," he told shareholders in a bid for national unity at his last annual meeting as Chair of CIBC in January, 1992

Editor's note: an earlier version of this story that appeared online and in Saturday's newspaper incorrectly stated the name of Donald Fullerton's brother. His brother's name is Jim.