Recent turmoil shows Laurentian Bank's history is catching up with it

financialpost.com:

One bank analyst, the people who make investor recommendations to buy, sell or hold particular bank stocks, said “it’s completely out of nowhere.”

But did the sudden departure from Laurentian Bank of Rania Llewellyn, now former chief executive of the small, Quebec-based Canadian chartered bank, really come out of nowhere?

Laurentian is rather unique in the context of Canadian bank history. Its roots date back to 1846, making it older than Canada’s largest bank, Royal Bank of Canada, which was founded in 1864. Yet RBC, with roughly $2 trillion in assets and more than 1,200 branches in Canada, towers over the 58-branch Laurentian and its $50 billion in assets. Every Schedule I Canadian chartered bank with beginnings in nineteenth century Canada is significantly larger today than Laurentian — BMO, Scotia, CIBC, TD and National.

The sudden departure of Laurentian’s CEO signals turmoil, yet that turmoil isn’t simply the culmination of recent events, let alone the mainframe failure that has disrupted operations in recent days. It may be better understood as its past catching up with it, a past defined by the notion that smaller can be better in Canadian banking.

Laurentian Bank opened its doors in 1846 as the Montreal City and District Savings Bank to serve working-class Catholics in Montreal by promoting thrift. It is a case study in contrasts to The Home Bank of Canada, which opened its doors in 1854 as a thrift institution intended to serve working-class Catholics in Toronto.

In 1903, the Home Bank opted to become a chartered bank, expand across Canada and assume the associated risks — risks that proved beyond the capacity of its management when the bank failed in 1923. In contrast, Laurentian did not become a chartered