Yet there are enough similarities between the two financial solitudes to create a foundation for Leroux's pan-Canadian vision. Both Desjardins and Western have deep roots in farming communities. Desjardins operates Quebec's largest farm lending group and Western Financial offers lending, leasing and insurance products to western farmers, a market neglected by the major banks as they've retreated from rural Canada. More importantly, the two companies provide the kind of one-stop financial shopping that Canada's banks are proscribed from offering. Although federal law restricts banks from selling insurance in their branches, Quebec financial reform in the late 1990s allowed Desjardins to sell insurance from its branches. For its part, Western can be in both businesses because it backed into banking from insurance. It has been offering bank services since 2003, when it launched Bank West as a kind of virtual bank that sold loan and savings products through its insurance brokers.
Desjardins has no plans to rebrand Western Financial's operations or push it to adhere to its co-operative model. It does plan to start expanding Western's limited line of financial products. If all goes according to plan, Western Financial customers will be able to walk into a local office and choose from an array of financial products. Even if the co-op model is not exported, the hope is that the appeal of doing business locally will stick.
If there is indeed a sea change at Desjardins, it will be a slow one. Although she's an ambitious CEO, Leroux is at heart a conservatively trained accountant who is vigilant about risk and given to talking about "prudent growth." As much as she thinks that Desjardins must push into new territory-which could mean more acquisitions, more partnerships and new lines of business-she is mindful that her fiscal restraint was a key selling point with Desjardins' member-owners, who do not want to endanger their dividends or Desjardins' historic attention to the economic health of local communities. The complex mandate means that when Leroux talks of "diversifying our revenues" or "increasing our critical mass," her eye is trained on "landing future deals or entering into partnerships with other organizations with which we share common values." With this kind of focus, there is little chance that Desjardins, Canada's "people's bank," will lose its distinctiveness any time soon.
Desjardins' roots: Parish or perish
Desjardins Group was as much a religious venture as a commercial one when Alphonse Desjardins and his wife, Dorimène, welcomed neighbours into their home in 1900 to launch North America's first credit union.
It was a grim time for Quebeckers. Years of poor harvests and soaring supply costs forced impoverished farmers and workers in the then mostly rural province to move to cities and towns and borrow for necessities. Banks rarely lent money to the province's consumers, forcing them to turn to unscrupulous moneylenders. Interest rates were so extortionate that on April 6, 1897, Montreal MP Michael Quinn stood up in the House of Commons to demand federal protection for constituents who were being exploited by loan sharks. One of his constituents, he told the House, was ordered by a court to pay $5,000 in interest on a $150 loan.
Taking careful notes that day in the House was Alphonse Desjardins-and not just because he was a parliamentary stenographer. One of 15 children of a displaced farmer, Desjardins had a strong sense of social injustice. When he heard about the moneylenders that day in Parliament, Desjardins, a former journalist and devout Catholic, had a new cause. After researching European credit unions, Desjardins promoted his first caisse populaire in Lévis, near Quebec City, as a "social pact" that called for local residents to pool savings in a collective that would make "productive loans" at low rates for basic necessities. Any profits from these loans would be shared by members in the form of annual dividends. It was a revolutionary concept that was backed from the beginning by one of Quebec's most powerful institutions, the Catholic church.
Desjardins won strong support from Lévis' parish priest and the province's archbishop, who embraced the collective as a financial miracle for struggling parishioners. Sunday sermons extolled the virtues of a people's caisse, priests presided over early caisse assemblies, and many branches were operated out of church basements. Desjardins travelled across the province to spread his financial gospel, and within decades most Quebec towns and cities boasted a caisse. Eventually renamed the Desjardins Movement, it became so ingrained in the social fabric that the province changed the Education Act to allow children to make caisse deposits through school programs.