Laurent Ferreira arrives at the helm of the National Bank with a number of challenges to overcome. He will possibly be in office for the next eight to ten years, and his mark will begin to be felt soon.
The one who officially took over from Louis Vachon last November intends to lead in a spirit of continuity at a time when the banking sector is transforming and the pandemic is accelerating certain changes.
The role of a business leader being in particular to determine the potential for long-term income growth, Laurent Ferreira will specify the strategic orientations of the National Bank on January 10, when he will speak at the conference. Annual CEOs of Canadian Banks hosted by RBC Capital Markets.
The 51-year-old CEO will discuss the organization’s business plan for the next three years. It should in particular be a question of the investments that the organization must make internally to strengthen the “employee experience” and the corporate culture, and investments in technologies with a view to accelerating the digital transformation of activities ( process, customer services, etc.).
The new boss should also discuss certain growth vectors, in the commercial sector, for example, as well as in wealth management.
On the environmental side, the National Bank certainly has the challenge of making its loan portfolio greener. The organization is still not immune to yet another shock that could shake the energy sector.
The bank’s loans to companies in the oil, gas and pipeline sector now account for around 2.4% of the total loan portfolio. The financial institution’s direct exposure to this industry is $ 4.3 billion.
The bank does not fund the big oil sands companies, but rather the ecosystem companies that provide them with the hardware.
Historically, new bank CEOs put their teams in place when they arrive. Laurent Ferreira will certainly want to surround himself according to the strategic plan he intends to execute.
At the start of a term, a CEO usually wants to make his mark and establish his leadership.
The actions that Laurent Ferreira will take in 2022 will help to understand in which direction he wants to steer the bank.
Will he want to make acquisitions and investments or close deals? His predecessor Louis Vachon announced several during his presidency. Even relatively small, certain transactions can mark the imagination (the bank notably became a shareholder of Groupe CH during the presidency of Louis Vachon).
The evolution of the relationship with FinTech companies will be interesting to follow. A major investment of over 100 million was made last summer in the fintech Montrealer Flinks.
It is the largest investment in the venture capital portfolio of the Quebec financial institution. Under the previous regime, the National Bank also extended a partnership with Lending Club and increased its stake to 100% in Credigy, two other fintechs.
Internationally, the National Bank has made several investments in emerging markets in recent years. A bank in Cambodia became 100% owned by the National Bank. Under Laurent Ferreira’s leadership, it is to be expected that the bank will eventually depart from its investments in Africa, and perhaps also from those in Mongolia, which are not considered “central” in international strategy.
The organization has adopted a very different strategy from that of other large banks by turning to emerging countries. The idea was to seize an opportunity for growth.
The purchase of a bank in Cambodia was not carried out so that the National Bank becomes an international bank present in many countries, but to be inspired by the model of the super regional bank very concentrated on Quebec and certain sectors. and regions of Canada. The stated objective with Louis Vachon was to replicate this super regional model in foreign territories experiencing strong growth.
We can expect Laurent Ferreira to bring a different approach. Instead of talking about a super-regional bank very focused on Quebec and certain sectors and regions of Canada, the bank’s commercial customers have already started to hear him talk about a pan-Canadian bank with strong foundations in Quebec.
While we must not decode an intention to open branches across the country, we will have to see how the bank can do better in the country in the niches where it has acquired expertise, particularly in agriculture.
We will also have to see how the service to individuals will be redefined. While branches remain very important in the bank’s business model, the transactional aspect is much less important today.
A business opportunity presents itself with “open banking”, and the National Bank will want to take advantage of it. Well organized, the National could seek customers from competitors by going on the offensive.
“Open banking” refers to an open banking system empowering the consumer, who will thus have access to several banking offers for the same service. To renew a mortgage, for example, a bank could make an offer when it sees that a mortgage deadline arrives. The federal government is considering the regulatory context surrounding “open banking”.