The Caisse de dépôt et placement du Québec is putting risk management front and centre as it undergoes a major organizational overhaul, the large institutional fund manager announced on Thursday.
In a slew of structural changes, the Caisse is abolishing 55 of its 813 positions and creating 24 new ones, most of which will be in the risk management unit. Some of the employees affected by the structural changes will be assigned new duties, the Caisse said.
The changes are intended to simplify the institution’s structure, improve its overall effectiveness and manage risk more effectively, according to the institution.
“The Caisse must adapt to the current reality of the financial markets, which is very different from that of recent years and whose impacts include a decrease in activity in some areas, more volatile markets and more stringent risk management,” said Michael Sabia, president and CEO of the Caisse.
On the investment side, the Caisse has decided to combine all investment operations involving liquid markets into two divisions: equity markets; and fixed income and currencies.
The institution is cutting back hedge fund staff, and is abolishing the position of executive vice president of hedge funds. The funds of hedge funds management team, led by Mario Therrien, has been folded into the private equity group.
The position of executive vice-president and chief strategist, recently staffed by Christian Pestre, has also been abolished, the Caisse said.
Meanwhile, Jean-Luc Gravel, previously senior vice-president of Canadian equities, has been named executive vice-president of equity markets. He will replace François Grenier, who had held the position since 2003. This will help ensure “new momentum and a new perspective” in the equity markets team, according to the Caisse.
“Mr. Gravel has achieved a very good performance in managing the Canadian Equity portfolio in recent years, and senior management has decided to extend his leadership to all the equity portfolios,” Sabia said.
Philippe Ithurbide will remain executive vice-president of fixed income and currencies.
In addition, Normand Provost, executive vice-president of private equity, has been given the additional responsibility of chief operating officer. To assist him on a daily basis, Jacques Lavallée, previously internal auditor, has been appointed senior vice-president of operations and technologies. He will oversee information technology, middle-office and back-office services, and business services.
“We will be relying on Mr. Provost’s extensive knowledge of the Caisse and Mr. Lavallée’s full understanding of its processes and products to create operational synergies in investment support and risk management services and technologies, as these tools will have to be developed further,” Sabia said.
With risk management now the top priority for the Caisse, it has accelerated implementation of the three-year development plan that was adopted by its board of directors last year. The deployment of the plan is expected to take place within 18 months, and most of the priority projects will be completed by the end of this year, the institution said.
“The plan builds on the progress made in risk management in recent years, incorporates lessons learned from the ABCP crisis and the financial crisis and is forward-looking. In addition to an increase in staff, it is based on four key components: development of new risk management practices to deal with unforeseeable circumstances, optimization of the approval process for new operations, refinement of risk measures and methodologies, and strengthening of the risk management culture,” Sabia said.
To facilitate the accelerated implementation of the plan, the Depositors and Risks Executive Vice-Presidency has been divided. Susan Kudzman will become chief risk officer, and a number of specialist risk management positions have been created, which will be incorporated into the teams in each of the main investment areas. The number of employees in this unit will double, with the addition of about 20 permanent positions.
In addition, responsibility for depositor relations will now be assumed by a separate executive vice-presidency.
“Even though our communication with depositors is frequent and well structured, the current context requires that it be more thorough,” Sabia said. “In uncertain markets, it is important that the Caisse and the depositors exchange more information on the directions taken by the institution.”
Bernard Morency, previously management adviser in the executive vice-presidency, depositors and risks, has been appointed executive vice-president, depositors’ accounts management and strategic initiatives.
On the finance side, Ghislain Parent, formerly executive vice-president of finance and operations, has been named chief financial officer. He will continue to provide leadership on accounting, control and financial-governance operations, as well as its relations with the credit rating agencies, and will also take on new responsibilities. He will establish methods for closer and more active monitoring of the organization’s overall financial performance, the Caisse said.
@page_break@“The new financial market context has created a greater need for proactive, dynamic management of all performance levers. This change will enable us to move in that direction,” Sabia said.
“I would like to offer the senior managers and employees who are
unfortunately affected by these changes my sincere thanks for their
contribution to the Caisse during the years they worked here,” Sabia concluded.
The Caisse manages funds primarily for public and private pension and insurance plans. As at Dec. 31, 2008, it held $120.1 billion of net assets.
IE