It didn't look like the way a major financial institution picks a new CEO. Maybe that's why the process had such an unusual result.
The first contender walked out of the conference room at Hotel Le Concorde in Quebec City shortly after 10 a.m. Waiting family members greeted the vanquished candidate-some with hugs, others with tears. The ritual was repeated over the next two hours until a total of five men and two women had been ejected.
Finally, around noon, the doors swung open to reveal a throng of voters surrounding a petite woman with shoulder-length blonde hair grinning-a big, infectious grin-as she clasped hands and kibitzed excitedly with her supporters.
After a gruelling two-month campaign that pitted her against seven other candidates, the dark horse had won the sixth and final round of votes by an electoral college of 256 delegates. The unique and secretive corporate ritual was over, and Quebec's largest financial temple, the Desjardins Group, had a new pope. And on that bitterly cold Saturday morning in March, 2008, Desjardins Group became Canada's largest company headed by a woman.
Monique Leroux's election was a pivotal moment in Desjardins' 110-year history. That's not because Leroux, 56, is the first female chief executive of a conservative and historically male-dominated financial institution. And it's not because she has since restored Desjardins' lustre after it was smudged by some bad bets on risky securities. Rather, what her victory has set in motion is an ambitious strategy to expand the country's sixth-largest financial institution. Although it boasts more than $175 billion in assets, the country's biggest credit union has struggled to build a national presence from its core francophone base of 481 caisse populaire networks in Quebec and Ontario.
Leroux is determined to expand Desjardins' reach by promoting its democratic structure and broad range of financial products. It's a distinct offering in a country that's dominated by a hand-
ful of banking and insurance giants-and at a time when the public may well be prepared to look at alternatives in the face of a financial system that has come perilously close to global collapse.
The distinctions in the Desjardins model are not insignificant: Members pocket about a third of its annual surplus profits, and, thanks to liberal Quebec laws, they can buy a variety of products in caisse branches, including insurance- something that banks, under federal law, may not sell in their own branches.
"We are working very hard to be better positioned in Canada," says Leroux in an accent that evokes Catherine Deneuve. "Our vision is to be recognized as the leading financial co-operative in Canada. We need to be more proactive, open and innovative in bringing new members to Desjardins."
Late last year, she revealed her hand, as Desjardins signed an agreement to acquire Alberta-based bank and insurance brokerage Western Financial Group Inc. for $443 million.
"This could be a sea change" for Desjardins, says National Bank Financial analyst Peter Routledge. Western Financial's small bank, Bank West, and network of 93 insurance brokerages serve individuals, farmers and small businesses in the four western provinces. Those outlets, says Routledge, offer Desjardins a badly needed distribution pipeline for the stable of mutual funds, annuities, investments, banking services, credit cards and insurance policies that have allowed it to flourish in Quebec.
Shepherding a company into a new phase is a heavy responsibility at the best of times-but all the more so when it's a company with a long, revered history and literally millions of owners. The enormity of the leadership challenge first hit Leroux the evening of her election victory. In her room at the Château Frontenac, she tossed and turned. "It was impossible for me to get to sleep that night," she says. Just before dawn, she saw the light. "Something had made me very different," she realized. "I was no longer a manager. I was an elected officer of Desjardins. It is a major shift: You realize that you have to represent people who put their faith and trust in you."
North America's first credit union was launched in 1900 under the caisse banner in Lévis, Quebec, the hometown of Alphonse Desjardins. A driven former journalist and federal civil servant, Desjardins imported the European savings and credit union movement to Quebec to end financial exploitation by unscrupulous moneylenders. Crucially, he aligned the caisses popu-laires-people's banks-with the Catholic church, then the dominant force in Quebec life. Owned by its members and backed by the church, caisse branches became as prolific as parishes. The credit-union alternative took hold more thoroughly in Quebec than anywhere else in North America.
Today Desjardins dominates Quebec's financial sector. It operates more than 1,300 caisse populaire branches, houses 40% of the province's deposits and ranks as Quebec's largest private-sector employer, with a head count of nearly 40,000. Its 5.8 million members account for two of every three Quebeckers. Customer loyalty is nurtured with annual dividend payments that neared $600 million by 2007. The caisse tradition inspires such faith among its membership that the eminent Montreal journalist Lise Bissonnette observed in 1997 that, in Quebec, the name Alphonse Desjardins has the "same validity as papal infallibility."