(Montreal) The Canadian banking system is solid, insists the President and Chief Executive Officer of Desjardins Group, Guy Cormier, but he recognizes that the economy is not immune to the consequences of the crisis of confidence that is shaking some institutions in the United States and Europe.
Before the recent headlines on the difficulties of Silicon Valley Bank, Credit Suisse, First Republic or Deutsche Bank, the Desjardins Group economist team was already anticipating a recession in 2023 due to rising interest rates.
There is a risk that a banking crisis will lead to a recession “stronger than we had anticipated,” explains Mr. Cormier, in an interview on Saturday, on the sidelines of the Desjardins Group annual meeting. “It is clear that at that time, economic activity around the world will slow down and there it could impact Canadian companies, it could impact Canadian financial institutions which could see loan losses adjusted upwards . »
So far, the big boss of Desjardins Group says he is reassured by the latest developments. “Me, what I welcome is really the speed of response from governments and banking authorities. We really see that there has been significant learning since the 2008 crisis. In a few hours, a few days, people wanted to secure citizens, members and clients of institutions and the financial system. »
Desjardins Group has well-stocked reserves to deal with possible headwinds, assures Mr. Cormier. The cooperative’s equity ratio reached 21%, more than double the regulatory minimum. He points out that the Canadian banking sector as a whole is well regulated and is in a resilient financial position.
The Canadian context is different from the American banking industry, which has more medium-sized players. “If you are in the United States and you want to meet all the bank CEOs, you almost need the Palais des Congrès de Montreal. If you want to meet with the leaders of Canadian financial institutions, you are able to do that in a room where there are about fifteen chairs. »
The present crisis could bring a new lesson, believes Mr. Cormier. International regulators have given much attention to systemically important institutions. “What we have learned in recent weeks is that smaller financial institutions can be systemic, if they have difficulties. »
A different chairman for the board
At a meeting in Quebec, some 1,100 representatives voted in favor of separating the functions of chairman of the board from that of president and chief executive officer. The two positions will be occupied by different people at the end of the next assembly in 2024.
At the same time, Mr. Cormier, who fulfills both functions, will bow out at the 2024 meeting, after two terms at the head of the cooperative. The manager says he has no plans for the future. “You won’t get a scoop,” he replies. My priority is to take advantage of the next year, which may be a little more difficult, to take care of our members and our clients and to help Desjardins Group prosper. »
Mr. Cormier devoted a large part of his speech to encouraging citizens to be attentive to the aspirations of young people. He has already carried this ball on several platforms at a time when the environment, access to housing and inflation are raising concerns among young people.
The big boss of Desjardins pointed out that 35% of its 58,000 employees were under 35 years old. He says he is very happy with the co-op’s appeal to the next generation in a context of labor scarcity.
The leader also concluded a tour of six cities in Quebec in February to meet young people. He recounts having discussed with young people “who are overflowing with ideas”. “I have seen young people for whom the circular economy is the normal way of imagining a business project, he gives as an example. For whom technology improves people’s quality of life. For whom sharing wealth is more important than accumulating it. »