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1 Développement international Desjardins (DID) Territory Management Issues: Perception, Pros and Cons By Serge GOSSELIN, DID Market Development Director Asian Credit Union Forum 2014 Way forward: Unification of Asian Credit Union Networks September 2014 Content of the presentation Amalgamation of Desjardins Caisses and Support Organizations Amalgamating Desjardins Caisses support organizations 2 1

2 Amalgamation of Desjardins Caisses and Support Organizations Caisses Amalgamations 2

3 Contents of the presentation Caisses amalgamations re-engineering g g member needs competition Caisses size Impact of amalgamations Questions 5 5 Caisses amalgamation 1995: 1,318 caisses 2005: 568 caisses 2013: 376 caisses 6 6 3

4 Caisses and support organization amalgamation Two essential transformations: ti For caisses Amalgamations and optimization Creation of centres of expertise (business, professional asset management, point of sale financing) For their support organizations 7 7 Caisses amalgamation versus re-engineering (1994) Not a goal of the revision process but a consequence Revision of processes (administrative versus advising) Computerizing transactions Assuming cost of information technologies Orientation towards sales Segmentation of clientele 8 8 4

5 Caisses amalgamation versus member needs Changes in the industry Services as commodities Added value services to individuals Business financing Critical mass to guarantee services Need to pool expertise Services under the same roof 9 9 Caisses amalgamation versus the competition Prospecting new business New arrivals in the industry Quasi-banks Deregulating financial services Bank amalgamations

6 Caisses amalgamation versus other sectors of activity Cities and municipalities School boards Hospitals and health services Businesses Subcontracting and partnerships Concentrating on core business Minimum size of caisses Critical mass Capacity to serve all members $xx million in assets Profitability and possibility of generating patronage allocations Desires of members

7 Maximum size of caisses Community of interests at the base Homogeneity H of market Feeling of belonging to community Social and economic environment Risks to finances, credit and reputation Supervision of management Accessibility Network equilibrium Cooperative dimension Impact of amalgamations Improved services to members Excellent and improved profitability Better image and recognition Resistance in certain milieus Major optimization of distribution network Better coherence

8 Question Period Amalgamating Desjardins caisses support organizations 8

9 Contents of Presentation Overview of Desjardins Pooling support organizations Various aspects Management and satisfaction Noteworthy items Action and continuous improvement Question Period Overview of Desjardins A major cooperative enterprise More than 6 million members More than 5,106 elected directors representing them and more than 45,219 employees to serve them Largest private employer in Québec as of December 31,

10 Overview of Desjardins Caisses 376 Desjardins Business Centres 44 ATMs 2,270 Service Outlets 864 Internet telephone AccèsD AccèsD Affaires CAISSES as of December 31, Pooling support organizations Two essential transformations: For the caisses Amalgamations and optimization Creation of centres of expertise (business, professional asset management, point of sale financing) For support organizations

11 Pooling support organizations Ten regional federations of Desjardins caisses One federation of caisses de groupes The Conféderation des caisses populaires et d'économie Desjardins du Québec The Fédération des caisses Desjardins du Québec Organizational Chart 22 11

12 Confédération des caisses populaires Desjardins Head Office Lévis Organizational Chart 5,371,912 MEMBERS IN QUÉBEC AND ONTARIO 44,391 DCU MEMBERS IN ONTARIO 219,885 MEMBERS IN NEW BRUNSWICK AND MANITOBA 568 CAISSES POPULAIRES AND GROUP CAISSES IN QUÉBEC (544) AND ONTARIO (24) DESJARDINS CREDIT UNION 40 CAISSES IN NEW BRUNSWICK (33) AND MANITOBA (7) Desjardins Trust ONTARIO FEDERATION NEW BRUNSWICK AND MANITOBA FEDERATIONS Fonds de sécurité Desjardins Fédération des caisses Desjardins du Québec Capital Desjardins Caisse centrale Desjardins Développement international Desjardins Fondation Desjardins Société historique Alphonse-Desjardins Desjardins Bank Desjardins Commercial Lending USA, corp. Subsidiary Netw work Desjardins Securities Desjardins Desjardins General Desjardins Venture Capital Insurance Group Financial Security Disnat Gestion Six Desjardins Desjardins Capital régional The Personal, Certas Direct Desjardins The Personal, Valeurs regional Insurance Company General General SFL Sigma Securities et coopératif mobilières investment Company * of Canada * Insurance * Insurance funds * Management * Assistel International Desjardins Desjardins 1 OptiFunds Optiinsurance Investments 1 Venture capital, public fund managed by Desjardins Venture Capital Inc. Chart does 24not reflect the legal ownership structure. As at December 31, 2005 Desjardins Asset Management Desjardins Global Asset Management Fiera Capital * Ownership link Auxiliary members Shared ownership * Société immobilière Place Desjardins Place Desjardins 12

13 Fédération des caisses populaires Desjardins Head Office Lévis 25 (1995 to date) 2014 Organizational Chart 26 13

14 Various Caisses Desjardins 27 Desjardins ATMs 28 14

15 (above) Desjardins Campus, Lévis, Quebec, Canada 29 (right) Complexe Desjardins, Montreal, Quebec, Canada Pooling support organizations Objectives: Improve decision-making processes Maintain the cooperative difference Reduce operating costs of support organizations in the caisses network

16 Pooling support organizations Unprecedented changes: Vast effort of 90 projects Over 300 collaborators Approximately 20, person / days From November 1999 to July Project Risks Insecurity of employees Absence of leadership during change Benefits not recovered Loss of responsibility by federations during amalgamation process Loss of key resources Accent on financial dimension to the detriment of individuals and operations

17 Organization of Project Coordination and transition support team Coordination and integration Project Director Project Manager Legal Change Management: Staff and Communications Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Managagement Accounting Budgets and Financing Legal component New legislation Harmonization of norms, regulations and policies Decision making processes at various levels Special general meetings Validation of legal and contractual impacts

18 Organization of Project Coordination and transition support team Coordination and integration Project Director Project Manager Legal Change Management: Staff and Communications Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Management Accounting Budgets and Financing Staff and processes change management component Process for selecting 200 managers Process for assigning and integrating 4,000 employees Handling employees not selected Harmonization of work conditions Union agreements

19 Organization of Project Coordination and transition support team Coordination and integration Project Director Project Manager Legal Change Management: Staff and Communications Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Management Accounting Budgets and Financing Communications component Support for presenting the project Communication plan for all target publics (internal and external) Relations and follow-up with the press Strong coaching for change management (HR) Bidirectional communication tools

20 Organization of Project Coordination and transition support team Coordination and integration Project Director Project Manager Legal Change Management: Staff and Communications Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Management Accounting Budgets and Financing Democratic decision processes component Accepting the pooling plan Redefining regions Internal bylaws New legislation Appointing councils of representatives Training directors for new roles and responsibilities

21 Organization of Project Coordination and transition support team Coordination and integration Project Director Project Manager Legal Change Management: Staff and Communications Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Management Accounting Budgets and Financing Business processes component Identifying business processes for each entity Assessing the performance of processes implemented by each entity Choosing most efficient processes Analyzing the impacts of choices made Implementing processes decided upon

22 Organization of Project Coordination and transition support team Coordination and integration Project DIrector Project Manager Legal Change Management: Staff and Communications Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Management Accounting Budgets and Financing Fiscal component Management age e of impact on transfer of assets s (capital holdings) Impacts on cash collection and expenses when various funds are pooled Negotiations and agreements with the two levels of government

23 Organization of Project Coordination and transition support team Coordination and integration Project Director Project Manager Legal Change Management: Staff and Communications Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Management Accounting Budgets and Financing Information technologies component Pooling IT resources Integration of systems and tools Rationalization of resources Outsourcing IT and telecom

24 Organization of Project Coordination and transition support team Coordination and integration Project Director Project Manager Legal Change Management: Staff and Communications Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Management Accounting Budgets and Financing Capital assets component Inventory of installations ti Inventory of contracts and leases Needs assessment Implementation of installation scenario adopted Maximizing i i available space

25 Organization of Project Coordination and transition support team Coordination and integration Project DIrector Project Manager Legal Change Management: Staff and Communi cations Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Management Accounting Budgets and Financing Finance component Centralized management of funds (liquidity, idit deposit, investment...) Meeting with regulatory agencies Negotiations with tax authorities Reorganization of capital Uniformity of rate bulletins

26 Organization of Project Coordination and transition support team Coordination and integration Project Director Project Manager Legal Change Management: Staff and Communi cations Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Management Accounting Budgets and Financing Risk management component Risk to image Risk to credit, rates and liquidity Risk to operations Risk of concentration Integration of risks and business development separation Creation of new team

27 Organization of Project Coordination and transition support team Coordination and integration Project Director Project Manager Legal Change Management: Staff and Communi cations Democratic Decision Business Fiscal Information Technologies Capital Assets Finance Risk Management Accounting Budgets and Financing Accounting, budgets and financing component Consolidation of budgets of entities before pooling Budget and financing of new organization Choice of accounting and control processes Choice of accounting systems

28 Rules set by management Responsibility of project team Result: Amalgamation Day July 1, 2001 Gradual launch scenario chosen over Big Bang Rules set by management Setting priorities iti rule What is essential Transparency and responsibility for change management and communication in each organization

29 Benefits Single management team Lighter, simpler decision process Cost savings of $117 M (annual and recurring) Able to face up to development needs Balanced Management Satisfaction of members and clients Financial caisses and specialized centres Productivity, the return for member owners Other Desjardins components Satisfaction and mobilization of staff and managers Balanced management of all elements in the triangle and sustained business development are essential for performance 58 A reference framework founded on cooperative values and management values shared by all components in the Desjardins Group 29

30 Satisfaction of caisses with the Federation Average index of satisfaction (in %) 80,0 84,0 89,0 87,0 89, Satisfaction of Federation employees Average index of satisfaction (in %) 74,0 77,0 80, NOTE: No overall survey was done in For Operations and Administration (630 employees) where the survey was done the average index was 80%

31 Noteworthy items (+++) Commitment by management and entities after amalgamation Directors oriented towards the future Employee comprehension Importance of ongoing and transparent communication Set assignment rules for human resources early Amalgamation day: July 1, Noteworthy items (+) Balanced participation by federations and the Confederation Concentrate on the essential Uniformity and equity (ex: messages, rules for assignments and work conditions) No impact on members of caisses

32 Noteworthy items (-) Information technologies component (better linkage, not simultaneous with Symphonie, the other major project) Integration of employees with their work tools and their environment (Who does what?) Action and continuous improvement Evolution of the Federation, including revising service offer Other major projects: Desjardins basis for quality and excellence Transforming caisses and managing deliverables Mechanisms for consulting

33 Question Period Thank you for your attention! 33