Even as it prepares for a change in leadership next spring, the
Desjardins group is looking to implement an expansion strategy.
With assets over $250 billion, the co-operative is Canada’s largest. But, business outside its home province of Quebec only contributes around 35 percent of its top-line revenue. Over the next three to five years, Desjardins’s chief executive officer and board chair, Monique Leroux is planning to increase it to about 40%.
Instead of opting for flashy acquisitions – which has never been Desjardins’ style – the group is planning to drive growth by concentrating on building customer relations by offering more products, while remaining open to interesting asset purchases.
“Our footprint now is good but it cannot be the endgame, that’s for sure,” Leroux told the Globe and Mail. “We have a lot to do in Quebec. We’ve got a lot to do in Canada. If we were to do things on an international basis, we would do it in partnership.”
Leroux is in the final year of a second, and final, four-year term as the head of Desjardins and her replacement will be elected by members next month.
Talking about her priorities for the organization, she said that it is important to ensure innovation while building critical mass in its business lines. Last year, Desjardins acquired the Canadian arm of State Farm Life Insurance Co. which made Desjardins Canada the second largest property and casualty insurer in the country.
The organization also inked a deal with Crédit Mutuel, a French mutual-savings bank, which propelled it into the top ten in the payment processing sector.
“It’s very much important to be among the top five in your industry if not the top three,” Leroux said when talking about the financial-services sector. “You need to have a certain position to be pertinent and have the capacity to have good returns on your capital.”
In Quebec, Desjardins has a commanding share of retail deposits with 5 million member-clients forming 40% of the market. Outside the province, it has 2 million members, which includes clients in the caisse branches in Ontario.
Peter Routledge, an analyst at National Bank Financial, noted that Desjardins is trying to leverage its strength in Quebec to expand into the rest of Canada.
“That’s going to be hard for them because they’re going up against incumbents who don’t want to cede share,” he said.
