Leroux's election as Desjardins chair and CEO handed her the reins to Canada's sixth-largest financial institution and made Desjardins the country's largest company with a female CEO. Those distinctions throw a conspicuous light on Canada's Big 5 banks and insurers, which are all led by men and will remain so for the foreseeable future. Leroux believes her ascent to the top spot would not have been possible had it not been for the "open-to-everybody" election process at Desjardins. "I think that if there would have been a typical nomination with a board, with a committee, I'm not sure that I would have been nominated."
In the early months of Leroux's administration, her prophecy of a deepening crisis came true, as Wall Street giants Bear Stearns and Lehman Brothers toppled and banks around the world had to be resuscitated with government money.
Desjardins was strong enough to weather the storms, but Leroux believed drastic steps were necessary to insulate the company against future squalls. She wanted the co-operative to absorb a $1.1-billion hit from ABCP and other investment writedowns in the 2008 fiscal year. She also wanted to set aside almost all of the company's surplus profits to bolster its capital and build an acquisition war chest. The plan would erode most of Desjardins' 2008 profits and slash more than 50% of members' annual dividends.
Before Leroux publicized the bitter medicine, she took the unusual step of convening meetings with caisse officers around Quebec to share what was then confidential information about the writedowns and her plans. Thousands of people participated.
Hélène Lee-Gosselin, a caisse member and chair of Desjardins' Board of Ethics and Professional Conduct, attended a session and was surprised by how much confidential data Leroux divulged. "It was a sign of a very high level of trust. She trusts us-well, we will trust her in return." When Desjardins announced the bad news, none of its members complained publicly.
Less than two years after Leroux was elected, Desjardins' balance sheet had been restored, credit agency warnings had been withdrawn and a new executive team was in place-and the CEO was ready for new challenges. In late 2009, one of the new hires, Christiane Bergevin, recruited from the senior ranks of SNC Lavalin to be Desjardins' executive vice-president of strategic partnerships, came to Leroux with a proposal.
Bergevin outlined a plan to sell Desjardins insurance and investment products in urban Western Canada by partnering with Western Financial, an insurance brokerage and bank based in High River, Alberta. Bergevin did not get the response from Leroux that she expected. "She said, 'Don't limit the vision,'" Bergevin recalls. Caught off guard, Bergevin left the meeting with a new understanding of her boss and a determination to think outside the box. "It was a very telling point. This woman has the power to empower people. In a subtle way, she was challenging me."
Bergevin's response was to come up with a more ambitious strategy regarding Western Financial. She declines to discuss details about confidential negotiations, but sources familiar with the talks say Desjardins entered discussions with national home and auto insurer Intact Insurance Co. to break up Western Financial. Intact would buy the thriving property and casualty insurance business and Desjardins would acquire its small regional bank, Bank West, which had seen deposits shrink during the financial meltdown. As the talks moved closer to the finish line in early December, Bergevin and Leroux expanded the vision again. They would break away from Intact and launch their own bid for all of Western Financial.
Desjardins won the day by slapping down a premium of more than 60% for Western's shares. It is a rich offer for a tiny financial player. But Western Financial offers Desjardins something it has always lacked outside of Quebec: an alliance with a financial player that has a strong brand with local communities.
"They decided very late in the game to go for the whole thing. It was a very aggressive move," says one person familiar with the discussions. Less than a month later, Desjardins announced an agreement to acquire Western Financial. There is still a chance a rival could top the bid before a shareholder vote in late February, but the rich premium paid by the Quebec co-operative would be challenging to top.
If Desjardins prevails with its bid, it will mark one of the country's most unlikely financial marriages. Desjardins is a quintessential Québécois institution, a 110-year-old co-operative built up from the grassroots. Western Financial is a 14-year-old company that has grown quickly by acquiring or striking partnerships with insurance brokers and travel franchises to serve the overwhelmingly anglophone communities in the northern parts of the western provinces. Desjardins has had most of its success on the insurance front with life policies; Western Financial specializes in property and casualty.