Mouvement des Caisses Desjardins
Mouvement des Caisses Desjardins
Incorporated: 1900 as Caisse Populaire de Levis
Total Assets: C$80.49 billion ($128 billion)(2001)
NAIC: 522298 All Other Non-Depository Credit Intermediation
Quebec cooperative Mouvement des Caisses Desjardins is that region’s leading bank and the sixth-largest financial institution in Canada. A restructuring in July 2001 created a single, united Federation des Caisses Desjardins (previously there had been 14 federations) with total assets of $80 billion. The cooperative is also present in French-speaking regions of Acadia, Manitoba, and Ontario, which are organized under separate federations. In all, Mouvement des Caisses Desjardins offers a full-range financial services to 5.1 million members through more than 1,000 branches or “caisses.” Desjardins controls some 46 percent of Quebec’s traditional deposits activity and claims a market share of 7 percent and 15 percent in the mutual funds and securities markets, respectively. Credit makes up some 60 percent of the group’s activities—the group provides some 70 percent of Quebec’s personal and home mortgage loans, and 22 percent and 41 percent of the province’s commercial and industrial and agricultural loans, respectively. Founded at the beginning of the 20th century by Alphonse Desjardins, the Mouvement has successively diversified its product range beyond the consumer market and is now one of Quebec’s leading financial services providers to the corporate and institutional market. The group’s more than 20 subsidiaries include publicly listed Desjardins-Laurentian Financial Corporation, which groups Desjardins’ insurance and investment and asset management operations; Desjardins Specialized Financial Management, the leading trust company for group savings plans in Quebec; Desjardins Securities, which offers both full-service and discount brokerage services; Elantis Investment Management, which, with $11.5 billion in assets, is one of Quebec’s top five investment management firms; and Desjardins Business, which, with 100,000 member companies and 68 corporate financial centers, handles some $20 billion in business volume each year. Mouvement des Caisses Desjardins has been led by chairman, president, and CEO Alban D’Amours since 2000.
Banking with Compassion at the Turn of the 20th Century
The French Canadian rural farmers and their urban working class counterparts of the late 19th century were more or less abandoned by Canada’s generally English-speaking banking community, which focused on corporations and wealthy customers. The French-speaking poor and low-income population, already subjected to a series of economic reversals in the latter decades of the century, were preyed upon by unscrupulous banks and moneylenders that were reported to charge interest rates as high as 3000 percent. Quebec’s largely rural population had little access to savings facilities; the high interest rates of the loans available to them most often resulted in foreclosures on their homes. As a result, a growing number of French Canadians were fleeing to the cities or leaving Canada altogether.
Alphonse Desjardins had been working as a French-language stenographer for the Canadian House of Commons when, during a debate on the banking industry, he learned of the unjust conditions facing much of Quebec’s population. By then, the cooperative movement, which began in England at the mid-19th century, had spread around the world, extending from the dairy and grocery industries to the banking industry. Desjardins became determined to adapt the European model of cooperative banking to the Quebec population.
Desjardins and a group of fellow investors launched Quebec’s first “caisse populaire” based on a cooperative savings and loan model. Located in Desjardins’ own home, the Caisse Populaire de Levis grouped together 12 people who together purchased shares for a total of C$26.40. The first savings deposit was for ten cents, with Desjardins himself accepting the financial risk.
The caisse caught on quickly, and by the end of its first year already boasted more than 700 members. Part of the new society’s appeal was its commitment, beyond providing savings and loans facilities, to encouraging the growth of the Quebec economy and improving the conditions of its working class and rural population. Desjardins himself proved to be the group’s strongest promoter, who turned to the region’s clergy—Desjardins has been described as deeply religious—to promote the new banking concept among parishioners. A number of priests started up their own cooperatives for their parishes, while Desjardins himself founded new caisses in the towns of Lauzon, Hull, and Saint-Malo between 1902 and 1906. By that time, the group boasted total assets of just under C$10,000. From the outset, the Mouvement des Caisses Desjardins, as the rapidly growing collection of banking cooperatives came to be called, became associated with Quebec’s Roman Catholic Church.
Apart from promoting the growth of the caisse populaire movement, Desjardins also began lobbying for government legislation recognizing the new banking structure and codifying its organization. Unsuccessful at the national level, where a bill was narrowly rejected in 1908, Desjardins’ appeal nonetheless found support in the Quebec government, which adopted legislation governing the cooperative movement in 1906. The new law provided the first boom for the movement: between 1907 and 1914, Desjardins had launched nearly 150 new caisses. At the end of that period, the new caisses began incorporating Desjardins’ name. The first of these was the Caisse Desjardins de Saint-Saveur-des-Monts, established in 1913.
Most of the caisses were located in Quebec. However, the movement had already begun to spread to other areas with significant populations of French Canadians, including Ontario and, beginning in 1909, the United States, in particular the New England region, which had a large population of French Canadians. By the end of the following decade, the movement had grown to 220 branches, with 187 located in Quebec, 24 in Ontario, and nine in the United States. Quebec remained the group’s base, with more than C$6 million in total assets and a membership topping 30,000. The many branches remained independent operations with no central control, however, a feature Desjardins had begun to put into place shortly before his death in 1920.
The first move toward centralizing control of the caisse movement came at the end of that same year when a regional union of caisses was formed in Trois-Rivieres. In 1921, the caisses operating in the Levis-Quebec City region formed their own union. Other regional unions were formed in Montreal and in Gaspesie by the middle of the decade. These unions remained largely local through the end of the decade; in 1932, however, the four original unions joined together to create the Federation de Quebec des Unions Regionales des Caisse Populaires Desjardins, which now grouped regional unions on a province-wide basis. The federation added technical support for the individual branches and also inspection and oversight services.
The onset of the Great Depression slowed down the movement’s growth as membership shrank amid the economic turmoil. The return to growth in the build up to World War II soon restored the Desjardins movement to growth, and the number of caisses once again began to build, nearing 900 at the end of the war with total assets of C$88 million. By then, the Mouvement des Caisses Desjardins had extended operations throughout Quebec. The strong growth of the movement led to the adoption of more professional management, as well as the first permanent employees. (The caisses had originally been staffed by volunteers from among their members.)
Desjardins had begun to extend beyond its core savings and loan mandate by the end of World War II. In 1944, the group began offering insurance products—at first for theft, fire, and fraud—through a newly created group, Société d’Assurance des Caisses Populaires. Then, in 1948, the group added a new operation, Desjardins Life Assurance, which provided life and family insurance as well as savings life insurance and loan insurance to members. This insurance component, later known as Groupe Desjardins, took on greater weight in 1962 when the movement acquired La Sauvegarde, a life insurance company based in Quebec that was threatened with a possible takeover from a non-French Canadian company.
In 1963, Desjardins acquired another Quebec concern, Société de Fiducie du Quebec, a trust company that was later renamed Fiducie Desjardins. This acquisition enabled Desjardins to extend its range of services to its members to include asset management, investment, estate planning, and similar services. In 1965, Société de Fiducie du Quebec launched its first group investment vehicle; three years later, the group added a range of other services, including real estate brokerage and pension plan supplements.
Mouvement Desjardins, the subsidiaries and the caisses, have as their mission to contribute to the improved economic and social well-being of people and groups within the compatible limits of its field of activity by developing an integrated cooperative network of sound and profitable financial services, on an ongoing basis, that are owned and administered by the members, as well as a network of complementary financial enterprises, all performing well in their respective fields of activity, controlled by the members, and by teaching democracy, economics, solidarity, and individual and collective responsibility, especially to members, officers, and employees.
These new products helped the Desjardins movement attract a growing number of members. Total assets climbed past the C$1 billion mark in 1964. By the beginning of the 1970s, Desjardins had grown to hold a central place in the Quebec economy, with total assets of more than C$2.5 billion. This position was recognized by the Quebec government, which passed legislation in 1971 enabling Desjardins to form its own investment vehicle, Société d’Investissement Desjardins. That group began operations in 1974; in 1975, Desjardins decided to separate its business investment program activities from its industrial and commercial loans operations, placing the latter into a new corporation, Credit Industrial Desjardins, formed in 1976.
Throughout the 1980s, Desjardins continued to add new products and features such as automated teller machines and credit card facilities—VISA Desjardins was to grow to become Quebec’s largest credit-card issuer. The group also added securities brokerage products and other support operations such as a “caisse centrale.” Desjardins was also moving toward a consolidation of the Canadian cooperative financial sector. In 1979, the group absorbed Credit Union Federation, then added the Quebec Credit Union League at the beginning of the 1980s. Later that decade, the Desjardins federations operating in the French-speaking regions of Ontario, Manitoba, and Arcadia also joined the main Quebec-based movement. The additions helped boost the group’s total assets to more than C$40 billion by the beginning of the 1990s.
A Modern Banking Group for the 21st Century
In 1988, the Quebec government passed new legislation governing the province’s banking cooperative. The Savings and Credit Union Act of that year enabled Desjardins to restructure its operations, grouping together its growing number of subsidiaries under holding companies that could provide central direction to each specific area of operation. The reorganization gave Desjardins the possibility of extending its range of services and providing these services through an integrated format.
In 1994, Desjardins acquired Laurentian Group, vastly expanding its insurance operations and giving it a particularly strong presence in Quebec’s personal insurance sector. Desjardins-Laurentian, as the new entity came to be called, became a publicly listed company on the Toronto exchange, with subsidiaries and products ranging from insurance to asset management.
The Laurentian acquisition also brought Desjardins a new investment advisor firm, Elantis, which then took over as manager of the Desjardins Funds subsidiary. Under Elantis, Desjardins stepped up its development of new investment funds products, such as the launch, in 1990, of its “ethical fund” Desjardins Environment Fund. After establishing two international funds in 1996, the Worldwide Balanced Fund and the American Market Fund, they launched the Quebec Fund, which featured only Quebec-based shares. Then, in 1999, the group added a “funds of funds” product family, called Desjardins Select Funds, which invested in third-party funds. A year later, Desjardins added three new ethical funds as part of its funds of funds family.
By then, Desjardins had already begun preparing an overhaul of its organization into a single, streamlined federation, a move that had been voted for in 1999. Faced with increasing competition in its home market, as the financial community was becoming more and more international in scope, with an emphasis on new generations of products, such as brokering and related services, Desjardins had decided to unify its decision-making process into a single, central office. Such a move was also to provide cost-savings as the group eliminated many of the redundancies of its previous structure.
The reorganization was completed in July 2001, when the 11 existing Desjardins federations were regrouped under the single Federation des Caisses Desjardins de Quebec. This new federation then provided oversight for 15 new regional offices, based on existing regional borders in Quebec. Meanwhile, Desjardins began responding to the increasingly competitive financial markets with a series of external growth moves, such as the acquisitions of two property and casualty insurance firms, bought from Canadian Imperial Bank for C$352 million, which not only added some 60 percent to Desjardins’ insurance activity, but also enabled it to extend its customer base beyond Quebec and into such provinces as Alberta and Ontario. In a similar move, the company’s Desjardins-Laurentian subsidiary agreed to merge with Imperial Life, creating the seventh-largest life insurer in Canada.
- Alphonse Desjardins founds the first cooperative credit union in North America, Caisse Populaire de Levis.
- Establishment of the first caisse (“branch”) to incorporate Desjardins name into its own.
- The first regional union of caisses is formed in Trois-Rivieres.
- The four existing regional unions join together to create the Federation de Quebec des Unions Regionales des Caisse Populaires Desjardins.
- Mouvement Desjardins enters the personal insurance market with the creation of Société d’Assurance des Caisses Populaires
- The group acquires the life insurance firm La Sauvegarde, and the following year acquires Société de Fiducie de Quebec.
- The launch of the Société d’Investissement Desjardins after passage of special legislation by the Quebec government in 1971.
- The group absorbs the Credit Union Federation, then the Quebec Credit Union League.
- The Savings and Credit Union Act enables group to reorganize its operations into subsidiaries and holding companies.
- The Laurentian Group is acquired, creating the Desjardins-Laurentian group, which is listed on the Toronto stock exchange.
- Group members vote to unify 11 existing federations into a single, centrally operating federation.
- The group announces merger agreement between Imperial Life and Desjardins-Laurentian.
With assets topping C$80 billion at the end of 2001, Desjardins appeared to be just at the start of a new growth drive to celebrate the beginning of its next century of operations. Among the group’s targets was a strengthening of its position in the brokerage market, as well as building a full-service investment and corporate underwriting wing. The group took a step toward that direction in mid-2001 when it acquired Groome Capital, Inc., based in Montreal, followed by the acquisition of nearly 7,500 client accounts from Rampart Securities Inc., which had been operating in Toronto until it was closed down by securities regulators. At the end of the year, Desjardins admitted that it had entered talks to acquire a position in another troubled firm, Yorkton Securities Inc., said to be the target of a possible securities investigation. The addition of Yorkton, however, was set to give Desjardins a boost in the high-technology sector. If Alphonse Desjardins would be surprised by the modern appearance of the movement he had founded more than 100 years before, he would no doubt approve of the Mouvement des Caisse Desjardins’ ability to retain its commitment to its founder’s principles.
Federation des Caisses Desjardins du Quebec; Caisse Centrale Desjardins; Capital Desjardins; Fonds de Securite Desjardins; Société Historique Alphonse-Desjardins; Desjardins Federal Savings Bank; Fondation Desjardins; Developpement International Desjardins; Société Financiere Desjardins-Laurentienne ; Desjardins Securite Financiere, Compagnie d’Assurance Vie; Le Groupe Desjardins, Assurances Generates; Assurances Generates des Caisses Desjardins; La Personnelle; Certas Direct, Compagnie d’Assurances; Gestion de Services Financiers Specialises; Fiducie Desjardins; Placements Elantis; Opvest; Investissement Desjardins; Valeurs Mobilieres Desjardins; Capital Regional et Cooperatif Desjardins.
Woolwich Pic; Mouvement Des Caisses Desjardins; Aid Association for Lutherans/Lutheran Brotherhood; North Carolina State Employees’ Credit Union; Golden 1 Credit Union; Vancouver City Savings Credit Union; State Employee’s Credit Union; Credit Union Central Of British Columbia; Patelco Credit Union; Space Coast Credit Union; Credit Union ONE; Credit Union Central Of Saskatchewan Regina; Surrey Metro Savings Credit Union.
Auger, Michel C., “The Power of the Caisse,” Ottawa Sun, January 28, 2000, p. 15.
Belanger, Guy, and Claude Genest, La Caisse populaire de Levis: La oil tout a commence, Ste-Foy and Levis: Editions Multimondes and Editions Dorimene, 2000.
Kalawsky, Keith, “Desjardins Taps Markets for US$400 Million to Expand,” Financial Post, June 13, 2001.
“The Populist: Alphonse Desjardins,” Macleans, September 4, 2000, p. 46.
Poulin, Pierre, Desjardins, 100 ans d’histoire, Ste-Foy and Levis: Editions Multimondes and Editions Dorimene, 2000.
Tedesco, Theresa, “Desjardins Eyes Yorkton Securities,” Financial Post, October 29, 2001.