Caisse Populaire

What Is Caisse Populaire?

Caisse populaire describes a cooperative, member-owned financial institution that fulfills traditional banking roles, in addition to providing lending, insurance, and investment services. Chiefly found in the province of Quebec in Canada, caisses populaires are essentially the francophone equivalent to credit unions in the United States.

Key Takeaways

  • Caisses populaires are cooperative, member-owned financial institutions popular in Canada.
  • Alphonse Desjardins, a journalist and civil servant, founded the first caisse populaire in Quebec, in 1900.
  • Caisses populaires provide more personalized services that traditional banks, but cannot provide the same level of funding.

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 proliferating in Europe at that time, which were backed by the Catholic church, whose support bolstered their popularity.

The vast majority of the approximately one thousand caisses populaires in Canada are located in Quebec. Most caisses populaires seek deposits from individuals with commonalities such as similar ethnic groups or geographic communities.

Although structured differently, caisses populaires and banks both provide commercial borrowing and lending services. But due to the fact that caisses populaires boast a sharper local focus, their services tend to be more personalized.

Caisses Populaires and Credit Unions

As stated, caisses populaires are fundamentally similar to credit unions, in that members pool their money or buy shares, thus enabling these institutions to provide loans, demand deposit accounts, and other financial offerings.

Although credit unions may generate income, rather than returning any profits to a minority of executives, these institutions fund projects and services that generally benefit the communities in which their members live.

Caisse Populaire and Big 6 Banks

Caisses populaires stand in stark contrast to Canada's Big Six Banks:

  1. The National Bank of Canada
  2. Royal Bank
  3. The Bank of Montreal
  4. Canadian Imperial Bank of Commerce
  5. The Bank of Nova Scotia (Scotiabank)
  6. Toronto Dominion Bank (TD)

These banks are broadly defined by the following facts:

  • Headquartered in Montreal, the National Bank of Canada is the nation's sixth-largest commercial bank.
  • 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, with some $710 billion in assets under management.
  • Headquartered in Toronto, Ontario, Canadian Imperial Bank of Commerce (CIBC) was formed in 1961, resulting from the largest financial services merger in Canadian history, when Canadian Bank of Commerce and the Imperial Bank of Canada joined forces.
  • The Bank of Nova Scotia (Scotiabank) is the third-largest Canadian bank by deposits and market capitalization. It boasts a substantial international footprint, given its acquisitions throughout Latin America, the Caribbean, Europe, and parts of Asia.
  • TD Bank Group serves more than 25 million customers worldwide and is widely reputed for its online financial services.

Despite their advantages, caisses populaires cannot offer the same volume of funding as banks, which ultimately restricts the sizes of their customer bases.