IREC study |  Desjardins too far from his cooperative ideals

IREC study | Desjardins too far from his cooperative ideals

Centralization of the administrative bodies, erosion of the power of the savings and credit cooperatives and the sense of belonging of the members, failures in the government of the board. This is just a sample of the highlights of an exhaustive and highly critical study on the evolution of the Desjardins Group carried out by the Institute for Research in Contemporary Economy (IREC).

Posted yesterday at 12:00 pm

Martin Vallieres

Martin Vallieres
Press

Released a few weeks before an “orientation conference” scheduled for this fall at Desjardins, the IREC analysis raises “serious questions about the directions taken by the financial services cooperative in recent years.”

“Desjardins has experienced a centralization that has led to the erosion of the power of the caisses and a weakening of the sense of belonging among the owner-partners. These transformations affect the way in which Desjardins carries out its cooperative mission”, indicates Robert Laplante, general director of IREC and one of the authors of the study.

Several of Desjardins’ management choices have alienated him from his record as well as impoverished his democratic life. The institution seems less and less attuned to the challenges of the communities, to the point that the designation of Desjardins as a Movement now has more to do with its heritage than with its true institutional reality.

Robert Laplante, general director of IREC and one of the authors of the study

In the opinion of the co-author of the study, Hubert Rioux, IREC researcher and professor of public policy, “the Mouvement Desjardins is proud, often rightly so, of being among the best managed financial institutions in the world, according to the best administrative and financial practices international”.

However, observes Mr Rioux, “not only has the Movement avoided for too long democratic reflection on its practices in terms of cooperative culture, community support and financial solidarity, but we realize that Desjardins stands apart from the other largest financial cooperatives in the world. in situations such as the abolition of regional structures or the merger of senior management functions”.

In their analysis, Robert Laplante and Hubert Rioux identify four main findings toward which Desjardins must “be bold.”

structural changes

“The abolition of regional federations [de caisses populaires au début des années 2000] it constituted a great transformation that could have been beneficial if it had been accompanied by the invention of new ways to engage the regions”, according to the report.

On the contrary, “there was a dilution of its cooperative originality and an impoverishment of economic democracy” that now turn out to be a “reputational risk for the institution, in its image and in its cooperative identity”.

High direction

According to the report, Desjardins’ management finds itself in a “special situation” with “the same person who occupies both the functions of president [du conseil d’administration] and CEO”.


PHOTO DAVID BOILY, LA PRESSE ARCHIVES

Guy Cormier, President and CEO of the Desjardins Group

“This situation is almost exceptional in the cooperative field for comparable organizations. This deprives Desjardins of an essential democratic dynamism,” according to the researchers.

They are also concerned about the decision to expand Desjardins’ board of directors to directors recruited from outside the cooperative movement, particularly from “conventional business companies”.

overcapitalization

According to the researchers, the management of assets and core capital at Desjardins in accordance with international bank security agreements entered into after the 2008 financial crisis has led to a “capitalization ratio at Desjardins that far exceeds the requirements set for banking institutions”. importance’.

“The executives are very proud of this result obtained at the cost of reforms whose consequences are important for Desjardins’ position in the financial markets and in the Quebec economy,” according to Hubert Rioux.

Among these consequences, the researchers highlight “the relative decline of credit and deposit activities”, as well as “the erosion of market shares” of Desjardins and a “loss of influence of the cooperative movement in the economic development of Quebec”.

orientation tracks

According to IREC researchers, Desjardins can still make decisions at his next orientation convention to find “ways to strengthen his cooperative vocation.” Among his proposals to Desjardins, we highlight:

  • increase the involvement of the caisses in the economic development of their region by focusing on decentralization and the strengthening of regional bodies;
  • improve support and services for members, particularly the poorest, with more generous and better tailored solidarity programmes;
  • encourage democratic participation of members and streamline the relationship between the cooperative association and Desjardins business management by separating the roles of chairman of the board and chief executive officer;
  • give more space and better conditions to cooperatives and social economy companies.


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