The credit union system outside Quebec and Desjardins Group, the Montreal-based co-operative giant, continue to reach across the two solitudes to establish partnerships as both groups look for ways to grow and keep clients from going to the Big Six banks.

“If we don’t work together and share our know-how,” said Des-jardins president and CEO Alban D’Amours at a conference of world CUs in Calgary this past summer, “we will be confronted with big challenges because the competition is knocking on our door.”

Acting more like long-lost relatives than close cousins for most of their respective histories, Desjardins and other Canadian CUs have found ways to work with each other in recent years. For Desjardins, partnering with CUs is a practical way to grow outside Quebec. And for the CUs outside Quebec, Desjardins has the size and financial heft to allow them to expand their suite of products and services.

“It’s clearly in both sides’ interest to look at opportunities,” says Don Rolfe, president and CEO of both Credential Financial Inc. , the CU system’s wealth-management firm, and Ethical Funds Co. , which are both based in Vancouver. “We have the same values and principles.”

Desjardins and individual CUs in the rest of Canada have partnered on credit card deals, liquidity arrangements and technology partnerships, among others.

This past March, Desjardins created an advisory board consisting of representatives from Desjardins and the CU system to look for ways to grow the co-operative movement nationally. And in September, Desjardins and Ethical Funds agreed to create a new fund company that would bring together the socially responsible investing acumen of Ethical Funds with the product lineup strength of Desjardins’ Toronto-based subsidiary, Northwest Mutual Funds Inc.

Although the increasing co-operation between Desjardins and the CU system outside Quebec seems like a natural evolution, the two groups have key historical and structural differences — not to mention linguistic and cultural ones. Consequently, the two groups look quite different.

Desjardins, which has 536 caisses populaires and $147 billion in assets as of Sept. 30, dominates the market in Quebec. It also has 20 subsidiaries, including wealth-management, asset-management and insurance firms, many of which do a significant amount of business outside Quebec. Desjardins also operates 22 branches in Ontario as Desjardins Credit Union.

The CU system outside Quebec consists of 472 credit unions spread across nine provinces; it had $102 billion in assets as of Oct. 31. The largest, Vancouver City Savings Credit Union, is roughly one-twelfth the size of Desjardins, with $12.3 billion in assets.

The creation of Central 1 Credit Union, announced earlier in 2007, is also expected to facilitate the continuing dialogue between Desjardins and the CUs. Central 1 will be the name of the new entity resulting from the merger of the CU centrals of Ontario and British Columbia, which is set to take place by July.

In February, Rolfe will leave Credential and Ethical Funds to take over as president and CEO of the B.C. central; he will serve in that same role for Central 1.

The main reason for creating Central 1 is to help B.C. and Ontario CUs drive greater efficiencies. Ultimately, the goal is to persuade the other provincial centrals to join.

The Ethical Funds/Northwest Mutual Funds deal is considered to be a landmark deal between the co-operative movement in Quebec and the rest of Canada, leveraging both groups’ strengths.

“This is probably the most significant transaction that has occurred between Desjardins and the credit unions,” Rolfe says. “I’m very optimistic further transactions will occur.”

Several CUs already partner with Desjardins to offer a VISA credit card. “[Desjardins] offers a very competitive product,” says Lawrie Ferguson, senior vice president of marketing at Vancouver-based Coast Capital Credit Union. “It is smaller than the big banks, which results in more of a peer-to-peer relationship for us.”

Recently, Desjardins has been extolling the virtues of its electronic banking technology, which is currently being used by caisses populaires in Ontario and New Brunswick. Some 30 CUs have already expressed interest in adopting the IT platform, Desjardins says.

Although some in the CU system are wary of working too closely with the green goliath, Desjardins says it’s looking for ways to build, not bully.

“We’re there as a partner,” says Andre Chapleau, the director of information and media relations for Desjardins. “We can all benefit if we do more together.” IE

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