New financial market reality: The Caisse de dépôt et placement du Québec announces organizational changes

Michael Sabia, President and Chief Executive Officer of the Caisse de dépôt et placement du Québec, announced today organizational changes to simplify the institution’s structure, improve its overall effectiveness and manage risk more effectively.

“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,” Mr. Sabia stated.

Risk management
In this context, the Caisse has made risk management its top priority and has accelerated implementation of the three-year development plan adopted by the Board of Directors in 2008. The horizon for deployment of the plan has been reduced to 18 months, and most of the priority projects will be completed by the end of 2009.

To facilitate accelerated implementation of the plan, the Depositors and Risks Executive Vice-Presidency has been divided. Susan Kudzman becomes Chief Risk Officer. Specialist positions have been created; these high-calibre risk management professionals 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. 

“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,” Mr. Sabia explained.

Depositors’ accounts management
As with risk management, responsibility for depositor relations will now be assumed by a separate Executive Vice-Presidency. 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. (Before joining the Caisse in 2007, Mr. Morency was President of Mercer’s Health & Benefits division at head office in New York.)

“Even though our communication with depositors is frequent and well structured, the current context requires that it be more thorough. In uncertain markets, it is important that the Caisse and the depositors exchange more information on the directions taken by the institution,” Mr. Sabia pointed out.

Investment operations
In the wake of the global financial crisis, many investment operations have been affected by a drop in activity, notably hedge funds. The Caisse has therefore decided to combine all investment operations involving liquid markets into two Executive Vice-Presidencies: Equity Markets; and Fixed Income and Currencies. 

As a result of this reorganization, the position of Executive Vice-President, Hedge Funds, has been abolished, and the staff has been reduced; 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 has also been abolished.  

In the Equity Markets group, the Caisse would like to ensure new momentum and a new perspective. Jean-Luc Gravel, previously Senior Vice-President, Canadian Equities, has been named Executive Vice-President, Equity Markets, to replace François Grenier, who had held the position since 2003.

“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,” Mr. Sabia said.

Philippe Ithurbide will continue to be Executive Vice-President, Fixed Income and Currencies.

Finance
Ghislain Parent, formerly Executive Vice-President, Finance and Operations, has been named Chief Financial Officer. In that capacity, he will continue to provide leadership for the Caisse’s accounting, control and financial-governance operations, as well as its relations with the credit rating agencies, but will also take on new responsibilities.  He will establish methods for closer and more active monitoring of the organization’s overall financial performance. He will also oversee consolidated management of treasury operations, including centralized liquidity management, financial leverage and financing operations. 

“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,” Mr. Sabia explained.

Operations
Also with a view to developing a better-performing organization, Normand Provost, Executive Vice-President, 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, 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,” Mr. Sabia explained.

Staff levels
Over all, the changes involve the abolition of 55 positions but also give rise to the creation of 24 positions, mainly in risk management. The Caisse had 813 employees as at December 31, 2008.

Some of the employees affected by the changes will be assigned to new duties.

“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,” Mr. Sabia said.

Mr. Sabia also said that, at his request, Fernand Perreault had agreed to stay on as Strategic Adviser to the President. He will continue to assist Mr. Sabia and the members of the Executive Committee with the implementation of the Caisse’s main priorities. 

For the Caisse's new senior management organization chart, click on this link

About the Caisse de dépôt et placement du Québec
The Caisse de dépôt et placement du Québec is a financial institution that manages funds primarily for public and private pension and insurance plans. As at December 31, 2008, it held $120.1 billion of net assets. As one of the leading institutional fund managers in Canada, the Caisse invests in the main financial markets as well as in private equity and real estate. For more information: www.cdpq.com