Rowland Kelly : Central role

Rowland Kelly’s experience dealing with financial turmoil over four decades has helped him influence the growth of Canada’s credit-union system
Rowland Kelly: “there’s nothing like a financial crisis to focus your attention on what needs to be done”

Nineteen-eighty-five was a pivotal year in Rowland Kelly’s career.

Over the Labour Day long-weekend, Edmonton’s Canadian Commercial Bank went bust, and 27 days later, Calgary’s Northland Bank was forced to cease operations as the fallout from Western Canada’s recession and the burst commercial real estate market bubble overwhelmed the two regional financial institutions.

Their collapse created a crisis at the Bank of British Columbia, where Kelly was manager and chief trader of treasury operations.

“Overnight, we lost 30% of our funding,” said Kelly. “You can last with negative capital and be losing money, but as a financial institution, you can’t last a day without liquidity.”

Over the next several months, Kelly struggled to keep the bank afloat with Canada’s lender of last resort closely watching.

“I might be sitting here at my desk, but right beside me was a representative from the Bank of Canada. They were very much involved in making sure we made it day-to-day until we could find a merger partner, which eventually became HSBC.”

His six-year stint in the mid-’80s at the now-defunct Bank of BC was Kelly’s longest foray outside the credit union system. But the lessons from his experience in what at the time was Canada’s largest financial crisis have remained with him throughout his career at Central 1 Credit Union, where he retired as CFO and COO on September 30.

“There’s nothing like a financial crisis to focus your attention on what needs to be done.”

Vancouver-born Kelly graduated from Simon Fraser University in 1969 with a degree in economics and commerce. His first big career break came when he was hired to work in the treasury department of Alcan’s Montreal head office.

“For a young kid out of university, it was a blast.”

While his career progressed, the violent bombings and high-profile kidnappings during the height of Quebec’s FLQ Crisis overshadowed the professional opportunities of living in Central Canada.

When Kelly and his family returned to the West Coast in 1977, he was introduced to the credit union system when BC Central Credit Union hired him to run its $100 million money market fund.

A couple of years later, Vancity lured him away to set up and run its investment treasury operations.

He left Vancity to work at the Bank of BC in 1982. But the chance to run the treasury operations for a larger, regional financial institution proved to be a less appealing career opportunity than he had envisioned.

After accepting a severance package when HSBC took over the bank, he left banking to become a retail investment broker.

But his anticipated independence was short-lived as market turmoil derailed his professional goals.

“My retail broker’s licence is dated October 15, 1987. That was a Thursday. The next couple of [trading] days were Black Friday and Black Monday [when the Dow Jones fell 22% in one day].”

Fortunately for him, a financial problem at Credit Union Central of Canada created an opening at BC Central, and Kelly returned to the credit union system as director of treasury in 1988. He held that title until 1993 when lending services were added to his responsibilities.

In 1998 Kelly took over as CFO for Credit Union Central of BC (CUCBC) and served as its interim-CEO from 2006 to 2008.

By 2006, he had become the busiest he had ever been in his career. In addition to running CUCBC as interim CEO, he was working on the merger between CUCBC and Credit Union Central of Ontario (CUCO). But the closure of the deal that would eventually create Central 1 was delayed as the asset-backed commercial paper (ABCP) crisis began to unfold in 2007.

Chris Dobrzanski, CEO of Citizens Bank and senior vice-president of risk management at Vancity, said Kelly’s long experience in dealing with unexpected market turmoil has influenced his work with the creation of Central 1 and the way he managed his responsibilities as CFO.

“If there is one lesson he kept reminding us is that crises can occur. As he moved around in his career, he worked in places that were bigger and provided more treasury challenges, and he brought that capacity for growth and the rigour of risk management required to Central so that growth was sustainable.”

Kelly’s career highlight would be the merger that created Central 1. While the merger was a decade in the making, Kelly believes that consolidation of credit union centrals is good for the system in Canada. He’s convinced that larger centrals will be better able to provide additional liquidity to member credit unions through their higher credit ratings and greater access to the capital markets.

While Dobrzanski considers Kelly’s retirement a loss for the credit union system, Kelly won’t be leaving the financial world entirely just yet. He will remain on the board of the Co-operators on behalf of Central 1 and is open to doing a few Central 1 assignments.

But Kelly remains confident in the people who will succeed him and the people he’s hired over the years.

“If there was a skill I’d mention, it’s being more right than wrong on the hiring front. What’s made the difference is bringing into the organization the talent that’s needed and never being afraid to look at someone and say, ‘They’re a heck of a lot smarter than I am, and I want them here,’ and then letting them do the job.”

As to the latest financial crisis, Kelly’s parting advice remained simple: “What’s required is to have a long-term view and to approach it with a certain amount of calm. It’s been going on for three to four years now, so this is unprecedented in a lot of ways. But I think people will just have to be patient and keep a cool head. We’re into a new era.” •

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