What Is Caisse Populaire?
Caisse populaire is a cooperative, member-owned financial institution, which fulfills traditional banking roles, as well as diverse activities such as lending, insurance, and investment dealing. Caisses Populaires are primarily found in the province of Quebec in Canada, as caisses populaires are essentially the francophone equivalent of a credit union.
- Caisse populaires are cooperative, member-owned financial institutions popular in Canada.
- Alphonse Desjardins, a journalist and civil servant, founded the first caisse populaire in Quebec.
- Caisse populaires provide more personalized service as compared to banks but they cannot provide the same level of funding available to banks.
Understanding Caisse Populaire
The first caisse populaire was started in Quebec in 1900 by Alphonse Desjardins, a journalist and civil servant. His institution was modeled after the savings and credit unions popular in Europe at the time and backed by the Catholic church, which dominated civic life in the new colony. The Church's backing ensured that traction and popularity for the new financial service.
There are approximately one thousand caisses populaires in existence in Canada, the vast majority of which are located in Quebec. Some are as small as a single branch, and most caisses populaires seek deposits from individuals with commonalities, such as those from the same ethnic group or geographic community.
Besides the difference in structures, caisse populaires and banks are similar in that both provide commercial borrowing and lending services. But the former tends to have a local focus. This means that their services are personalized. But caisse populaires cannot offer the same volume of funding as banks, which restricts their customer base.
Caisse Populaire and Credit Union
As noted above, a caisse populaire is very similar to a credit union. In credit unions, members pool their money (or buy shares)—in order for the union to be able to provide loans, demand deposit accounts, and other financial products and services. Credit unions will, at times, generate income; however, instead of returning profits to a small minority of executives, the credit union will fund projects and services, which generally benefit the community in which its members lives. An example of a credit union is the Navy Federal Credit Union (NFCU), with 300 branches, with many locations near military bases.
Caisse Populaire and Big Six Banks
The Big Six Banks stand in contrast with caisse populaire in Canada. The big six banks are a group of the largest banks in Canada, including: the National Bank of Canada, Royal Bank, The Bank of Montreal, Canadian Imperial Bank of Commerce, The Bank of Nova Scotia (Scotiabank), and Toronto Dominion Bank (TD).
Headquartered in Montreal, the National Bank of Canada is Canada's sixth largest commercial bank. Publicly traded (stock ticker RY on TSX and NYSE), The Royal Bank of Canada (commonly known as RBC) operates as a diversified financial services company, along with its subsidiaries. Established in 1817, the Bank of Montreal (BMO) also operates as a diversified financial services provider. BMO's total assets under management (AUM) $710 billion (Aug. 31, 2017).
Formed in 1961 through the largest financials services merger in Canadian history (i.e., Canadian Bank of Commerce and the Imperial Bank of Canada), today the Canadian Imperial Bank of Commerce (or CIBC) is headquartered in Toronto, Ontario. The Bank of Nova Scotia (Scotiabank) is the third largest Canadian bank by deposits and market capitalization and is highly international, given its acquisitions throughout in Latin America and the Caribbean, along with Europe and parts of Asia. Finally, TD Bank Group (consisting of the Toronto-Dominion Bank and its subsidiaries) serves more than 25 million customers worldwide with and is one of the top online financial services firms.