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Daniel Roussel
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Daniel Roussel
2013-11-19 12:46
Good afternoon, Mr. Chair and hon. members of the Standing Committee on Finance. My name is Daniel Roussel and I am the Consulting Director for the Senior Vice-President, Cooperation and Corporate Affairs of the Desjardins Group. We are honoured to give testimony before you today.
The Desjardins Group is much more than a financial institution for rural communities. It is a tool that has enabled those communities to develop over the past century. I would even say that it is a multi-purpose tool because it has supported personal projects, business projects and collective structural projects.
But how does our institution stand out from other financial institutions? As my colleague Mr. Phillips said earlier, like credit unions, the cooperative nature is the strength that enables our institution to meet increasingly diverse needs.
At the beginning of the 20th century, Mr. Desjardins established credit unions and cooperatives, but today, as we enter the 21st century, we realize that the members of our caisses are faced with increasingly complex issues, including the dematerialization of money, the globalization of financial and trade markets, the increase of debt and the development of mobility.
Information technologies have changed both the way we consume goods and the way we communicate. However, the Desjardins Group continues to provide in-person services to members at its more than 1,000 points of service and 43 business financial centres. I would like to point out that, in Quebec, 32% of the Desjardins points of service are in communities with fewer than 2,000 residents, whereas the percentage for banks is only 2%.
Not only does Desjardins provide services locally, but it also focuses on its relationships. The group's caisses, which serve workers' communities of interest and cultural communities regardless of location, show how important this type of community-oriented approach is. According to the current trend, our democratic structure encourages close relationships with members and the participation of members in the group's initiatives.
I think it is important to point out that, without the participation of elected leaders, respect for the distinctiveness of each caisse and a flexible approach adapted to their local reality, Desjardins would not be today the largest cooperative financial group in Canada and the sixth largest in the world. Our leaders, elected from local communities, ensure the caisses become firmly rooted in those communities and promote local services through innovation. For instance, our points of service are increasingly sharing resources and buildings with municipalities, which makes it possible to increase the hours of operation and to keep most transactions traditionally carried out by tellers.
The prosperity of rural communities relies especially on support for innovation. Since a cooperative is a voluntary group of people who want their needs to be met and, as a result, take charge, we feel that this business model is an attractive and viable solution to the prosperity of rural communities, including access to essential services.
We are seeing multi-purpose cooperatives emerge everywhere. They are like a breath of fresh air in a number of devitalized or lower-density communities where they respond to essential and diversified needs. We are also seeing solidarity cooperatives that provide grocery, fuel and even postal services in addition to financial services.
Capital régional et coopératif Desjardins is closely involved in the development of resource regions. First, it injects venture capital into SMEs and cooperatives and offers its local expertise. Second, it promotes the transfer of businesses, which makes it possible to maintain its presence in local communities in order to avoid the outsourcing of jobs.
In 2012, Capital régional et coopératif Desjardins invested a record $237 million in Quebec businesses. We have also used some of that investment for a farm succession fund for young people who wish to buy farms. In addition, the caisses themselves provide an impressive range of services. The caisses also contribute to the community development fund, which enables people to invest in structuring projects in their own communities.
Last year, an amount of $41 million was invested in local projects, community projects.
I could also talk about Desjardins' educational role. It is fair to say that, over time, Desjardins and its leaders have become a popular university for financial literacy.
I would like to wrap up by talking about services. Our company employs 45,000 people across Canada and provides services to Aboriginal communities as well. We could also talk about our solidarity-based financing for people who are not eligible for financial services.
Bernard Brun
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Bernard Brun
2012-10-16 15:44
Thank you, Mr. Chair.
Desjardins Group thanks the Standing Committee on Finance for the opportunity to meet with members of the committee during the 2012 pre-budget consultations.
With current assets of 194 billion dollars, the Desjardins Group is the largest cooperative financial group in Canada. Its main network of caisses is in Quebec and Ontario, with branches found around Canada. Desjardins Group offers expertise in wealth management, life and health insurance, property and casualty insurance, personal services and business services. It has 5.6 million members.
Recognized in 2012 as the top corporate citizen in Canada and ranked among the 100 best employers in Canada in 2012, we focus on the skills of nearly 45,000 employees and over 5,400 elected officers.
It is also worth noting that Desjardins Group offers an education and cooperation program for its members, but also for the general public. In addition to responses provided earlier this year during written consultations, we would like to draw the committee's attention to avenues that fit with issues related to the economic recovery, i.e. growth, job creation and economic stability.
The year 2012 is the International Year of Cooperatives, as declared by the United Nations and supported by Canada. The year has seen many cooperative events including, more recently, the first International Summit of Cooperatives held last week in Quebec City. This event brought together over 2,800 participants, representing over 91 countries. Regulations on cooperative banks were also published this year, and a special committee on cooperatives was struck and published its report a little earlier.
All of these measures, and the International Year of Cooperatives, have highlighted a plural economy. Diversification, which most of our economists advocate, is not only about different sectors but also about different types of businesses. The cooperative structure deserves to have its place in the Canadian economy. It is an excellent complement to the traditional structure of equity companies.
To illustrate the economic role of cooperatives, there are 9,000 cooperatives in Canada, representing 18 million members. There are over 150,000 jobs through them. The survival rate of cooperatives is twice as high as that of traditional equity companies; they are more resilient and perform better, particularly during times of economic stress. They also serve regions and categories of clients that are not served by traditional business and they are highly adaptable.
Nevertheless, financial cooperatives and all cooperatives are facing particular issues including capitalization issues, which also lead to demutualization pressures. Even more importantly, cooperatives need a high-quality representative within government. The significant reduction to the Rural and Co-operatives Secretariat a little earlier this year, as announced in the previous budget, sent a mixed message to all cooperatives from the government. It can be interpreted either as a lack of interest or, on the contrary, as an opportunity for renewal and transformation. We fervently hope that it is the latter that is planned.
In conclusion, the federal government can greatly contribute to spreading the cooperative model for the benefit of all. Transfer and responsibility for cooperatives from the Department of Agriculture, where it is now, to the Department of Industry is essential in our eyes for cooperatives to be able to benefit from all policy and program support.
Finally, we invite the government to ensure there are safeguards to prevent all unjustified enrichment, particularly for demutualization applications.
Thank you.
Bernard Brun
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Bernard Brun
2012-07-25 9:20
Mr. Chair, the entire Desjardins Group hails the creation of the Special Committee on Cooperatives. We would like to thank the committee members for this opportunity to express our views and opinions on this topic. We wholeheartedly believe that this initiative is all the more timely given that the UN has declared 2012 the International Year of Cooperatives.
That is also true, primarily because cooperatives are first and foremost an expression of a tremendous business model, albeit less well-known as compared with the more traditional corporate business model, with which people are more familiar.
I would like to introduce you to the Desjardins Group and explain where it fits in Canada's cooperative landscape. Desjardins Group is celebrating 112 years in business, so it is safe to say it's a success story. The mission undertaken by Desjardins Group is quite unique when compared with that of traditional businesses. Our mission is first to contribute to the economic and social development of people and communities. To that end, it is important to recognize that Desjardins Group is a movement, as its French name suggests. It is not a group of specific or centralized members, such as those that make up traditional business structures. It is a network of individual, secure, profitable cooperatives that have come together, coupled with a network of subsidiaries offering competitive returns. Desjardins Group is also very involved in education as regards finance, the economy, democracy, solidarity, and individual and collective responsibility.
Now I will give you an overview of the components that make up Desjardins Group. Currently, it comprises nearly 400 caisses across Canada, 1,300 service outlets and almost 2,600 banking ATMs in Quebec. With 5.6 million members in Quebec and Ontario, Desjardins Group serves an estimated 70% of Quebeckers. Desjardins Group holds $200 billion in Canadians' assets, which are managed through this cooperative union. We consider this to be an excellent example of what cooperatives can do, how they can grow and what they can contribute.
We especially wish to emphasize the fact that cooperatives and mutuals fuel job creation, innovation, financial stability and access to community-based services. Cooperatives and financial cooperatives often operate in sectors and communities that are underserved by traditional businesses. We do, however, face certain challenges and issues, the main ones having already been addressed by those who appeared before me. Generally speaking, access to capital and reserve protection for cooperatives are areas of concern that must be addressed through government assistance and an appropriate legislative and regulatory regime.
Like traditional businesses, cooperatives and mutuals are confronted with these issues, but solutions do exist. Desjardins Group has submitted a relatively detailed brief on the issue and has attached an in-depth economic study conducted in late 2011, which we urge you to read. To get an idea of the size of the economic sector and the position that cooperatives can hold, you need only think of Quebec. The first and fifth largest private sector employers are cooperatives: respectively, Desjardins Group and La Coop fédérée, whom you will also be hearing from a little later.
Cooperatives are present in communities and exist to fuel job creation and the economy. In terms of spinoff, Desjardins Group offers businesses venture capital and helps maintain more than 35,000 jobs.
Furthermore, cooperatives are known around the world as well as here at home. And that is a key message that must be understood.
Financial stability or safety is frequently mentioned. It is important, then, to remember that Desjardins Group is not only the 6th largest financial institution in Canada, but also the 4th safest financial institution in North America and the 18th safest in the world, according to international ranking.
That standing is proof that the cooperative management style can go a long way towards financial stability and safety.
Generally speaking, the cooperative model is an excellent counterbalance to the traditional capital-share business model. It drives the economy, while adding value to it, and that is something that should be encouraged.
I will now hand the floor over to Mr. Adams.
I would be delighted to answer your questions.
Yvon Bernier
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Yvon Bernier
2011-12-06 8:57
My name is Yvon Bernier, and I am vice-president,consulting expertise, Développement international Desjardins.
To provide you with some background, the Mouvement Desjardins, as you no doubt know, is now one of the largest financial institutions in Canada and operates virtually across the country. The Mouvement Desjardins currently has assets of approximately $190 billion, which makes it the fifth largest financial institution in Canada and the largest in Quebec, and its aim as a financial cooperative, after all these years, is still financial inclusion.
Développement international Desjardins, DID, is a non-profit organization that has been in existence for about 40 years and currently operates in some 30 countries, essentially developing countries, and whose objective is to promote access to diversified financial services, which means financial inclusion. DID, a non-profit organization, cooperates and acts extensively in partnership with the Canadian International Development Agency, mainly in major bilateral, and most of the time highly structural, projects, but always in the context of the Canadian partnership regarding which we have just renewed a co-financing agreement with the Mouvement Desjardins. In short, my comments will concern access to financial services as a development driver for the private sector.
For DID, improving access to financial services for all is an essential condition for development of a community's private sector. The fact that in many countries, more than 80% of the population does not have access to quality financial services constitutes an actual brake on economic growth of the private sector. In this context, we think that it is strategic to work with small entrepreneurs and farmers who create jobs and also to offer the entire population, including its poorest members, diversified financial services that include savings, credit, insurance and transaction services. Consequently, microfinance should be considered as overall leverage for sustainable economic development, rather than simply as microcredit.
While the cooperative financial model seems, in our opinion, to be particularly favourable to very close involvement by such institutions in the communities they serve, we naturally support financial cooperatives. We support the emergence and development of diverse types of financial institutions in order to ensure maximum access to financial services. Regardless of type, community finance institutions should all operate within the framework of the formal financial industry and in function of its norms, while still adjusting to a primarily informal economy, and focus on a horizon for local ownership.
We also believe that it is necessary to rely on local resources. This would include the mobilizing of savings deposits, which increases the dependence of the communities being served, plus the strengthening of local leadership and democracy that occurs when stakeholders in the community become increasingly involved in the various aspects of the democratic life of their financial institution, and also include local capacity-building, which is the foundation for the performance and viability of the institutions we assist.
DID believes that, in order to have a significant impact on community empowerment and economic expansion, the assistance delivered should aim at increasing the level of institutional professionalism to boost outreach and impact. We also believe that such assistance should focus especially on large cooperative groups, namely institutions whose territorial outreach is national in scope and covers both urban and rural regions.
In West Africa, for example, DID provides support to seven institutions which rank among the leaders in their respective countries. Taken as a whole, these institutions reach nearly 5,000,000 members and clients, 40% of whom are women. They have approximately 1,000 service outlets, employ over 5,000, with the support of just as many elected administrators, and have total assets of nearly CAN$1 billion, although the average loan amount totals only CAN$900.
We believe that community finance institutions must deliver diversified financial services that help create value. DID believes that it is of utmost importance to focus on the efforts needed to provide micro SMEs with access to sources of financing tailored to their needs, since lack of access often places a brake on development and consequently on the economic development of these countries.
To fill the gap separating small entrepreneurs from the financial services they need, DID sets up financial centres for entrepreneurs, which we call CFEs. The 10 CFEs created with support from DID in Africa and Latin America have, to date, issued US$220 million in loans to some 82,000 small entrepreneurs. Using the Calvert Foundation's Social Return on Investment, we estimate that over 53,000 jobs have been created thanks to these institutions.
In the context of a crying need for food security in many regions of the world, developing countries are facing enormous challenges. They must diversify crops, modernize their agricultural techniques and achieve increased agricultural productivity. In order for the men and women working in agriculture to contribute to its development, they absolutely must have access to diversified financial services, such as specialized agricultural loans such as credit for investment or marketing, and crop insurance. It should also be noted that, in most developing countries, nearly 80% of food production depends on the work of women. Indeed, if structural gender inequity is reduced, agricultural yields could reportedly be increased by over 20% on the continent of Africa.
Consequently, in light of these findings, it appears crucial that microfinance institutions make financial resources accessible so that farmers, especially women, may participate fully in agricultural sector expansion and economic growth.
Housing finance meets a rising need within communities in developing nations. One need only think of the current urbanization rate in the major capitals. The impact of sound, well-built homes is enormous, not just on health, education and security, but also on the creation of family wealth, which can be passed on to future generations, and entrepreneurship. These are also prerequisites for community private sector development.
Delivering community financial products and services to clienteles living in marginalized regions comes up against major constraints in terms of accessibility, security and cost. In this context, DID believes that introducing innovative and effective technological solutions is an essential condition for secure and expanded access to financial services. Transaction software, mobile applications, mobile banking services, for example, smart cards, biometrics and inter-coop transaction systems are some of the tools advocated by DID to reduce costs and improve service outreach.
For Développement international Desjardins, the emergence of genuine community finance that is truly inclusive requires suitable legislation and supervision with the purpose of improving professionalism in the sector and safeguarding depositors. DID also promotes sound microfinance practices aimed, among others, at preventing overindebtedness of members and clients.
In conclusion, we reiterate that all support for development, including investment, should be placed at the service of local capacity-building and local leadership development. Based on this prerequisite, the impact of aid intervention for development will be multiplied and significant results achieved on a larger scale.
Thank you very much for inviting us, Mr. Chairman. I was a little nervous at the start. If there are any important questions for us, we will be very pleased to take part.
Bernard Brun
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Bernard Brun
2011-11-03 12:23
Thank you, Mr. Chair. Dear committee members, first of all, I'd like to thank you for the opportunity given to us to appear before you as part of the pre-budget consultations of the Standing Committee on Finance.
The Desjardins Group is the largest cooperative financial force in Canada. We are a financial institution with over $188 billion in assets and we have over 6 million members across Canada. We are also the only financial institution present in 58 per cent of Quebec's municipalities, and this makes us a very significant component in Canada's economic life.
As part of these consultations, I'd also like to draw your attention to a something particular. The UN recently declared 2012 the International Year of Cooperatives. In fact, early this week, the United Nations officially announced the launch of this year. As a cooperative, Desjardins believes it is extremely important to expand this sort of business model, which is an opportunity for greater participation by individuals and also for a better distribution of wealth.
As for budget forecasts, our comments are going to be very high-level and economic in nature. In light of the time available to us, they will be brief.
First of all, the world economic situation is particularly difficult and is also very fragile. We talk about almost extreme volatility. Nevertheless, Canada is all and all in a very enviable situation. The Desjardins Group therefore believes the budget should stay the course.
That said, we would like to draw particular attention to three recommendations. The first one is on infrastructure. It's no secret to anyone that Canadian infrastructure is in poor shape and is wearing out more or less throughout the country. A little earlier, reference was also made to the rather problematic case of Champlain Bridge. While the economic recovery plan of the Government of Canada allowed some catching-up to take place, it remains that this is an ongoing problem and that the government should focus on this problem by providing adequate funding for the modernization and maintenance of infrastructure, so that at the very least we don't waste the catching-up going on now.
The Desjardins Group is also of the opinion that the government should maintain transfers to the provinces, for both other levels of government and individuals. We're thinking particularly of individuals where transfers for employment insurance and old age security benefits are concerned. These are people who are especially vulnerable. Some of them live below the poverty line and these payments, especially in the state of the current economy, should in our opinion be maintained
Finally, the last matter I'd like to raise is household debt. This has been discussed repeatedly in the past year. We're talking about mortgage debt and also consumer debt. Since 2008, the government acted three times to change measures pertaining to mortgage credit, which in our opinion, was an excellent thing. Now the situation, even though it's relatively stable, still remains fragile. In our opinion, the government must be very vigilant, particularly with regard to mortgage debt, since a rise in interest rates, which is not expected in the very near future but nevertheless seems to us inevitable, could put many Canadian households in difficult economic situations.
As far as consumer credit is concerned, we think that this should also be paid particular attention by the government. We've observed fairly fast growth in debt, even though assets are also increasing.
In closing, I mention the example of Desjardins, which has raised its minimum payments on credit cards from 3 per cent to 5 per cent, which seems to us to be an appropriate measure. We need to send a clear signal to taxpayers and especially consumers. The message is as follows: consumer financing is not long-term financing.
On that, I yield the floor.
Thank you.
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