The Montreal Gazette, November 27, 2002
National Bank of Canada CEO Réal Raymond emphasizes the human touch
By Warren Perley
Réal Raymond was appointed president and chief executive officer of the National Bank on March 13, 2002.
He's the chief executive officer of the biggest bank in Quebec, but Réal Raymond hasn't forgotten his roots.
We're in the boardroom of the National Bank and Raymond is reminiscing with a visitor about his early days in the seventies, when he was the bank's youngest manager, assigned to the branch on rue de la Fabrique in the provincial capital.
Those were the years when 100 per cent of customer transactions were done through the local branch. "I loved that kind of involvement in the community," Raymond recalled. "You were in the centre of everything ranging from retail to commercial. I dealt with so many different kinds of clients, including the religious orders."
It was during those years that Raymond, a native of the Laurentian community of St. Donat, decided that he would pursue a long-term career in banking, attracted by the opportunity to make a difference in people's lives while learning new skills.
The first thing you notice when meeting Raymond is his attire. Unlike most bankers, he projects a GQ fashion élan - black loafers and dark suit accentuated by a striped shirt with a colorful red-and-black patterned tie.
"We're close to our clients; we have a keen sense of what's going on," Raymond says when asked the secret of his bank's success with SMEs. "We have branches in all regions of Quebec with specialized account managers who understand the needs of small and medium entrepreneurs. We know the players and we know the environment. We can make the right decisions."
The first thing you notice when speaking with Raymond is that he loves a challenge. Business, sports or community involvement - ring the bell and he'll answer the call. He speaks with gusto, employing the lexicon of an entrepreneur while he expounds on one of his favourite subjects - the special relationship the National Bank has developed with the small and medium entrepreneurs of Quebec, better known as SMEs.
The National Bank has recognized that entrepreneurs have requirements that are vastly different from those of large commercial clients, which is why they have account managers knowledgeable about small businesses in specialized sectors including agriculture, wood products, the film industry, high technology, pharmaceuticals and aeronautics.
These specialized account managers in branches across Quebec have a lot of latitude to make decisions, unlike other large banks. Entrepreneurs are lavished with service at the National Bank. Among the perks that are available:
- weekly, monthly and quarterly updates on the economy
- analyses of cash management requirements
- networking opportunities with other SMEs
- a free, online market information newsletter
- publications to help SMEs deal with business planning,strategies, negotiating and training
There are low fees for SMEs and a new credit card known as the Business Latitude Line of Credit, which provides up to $50,000. More than 11,000 of the cards have been issued to Quebec entrepreneurs since their introduction earlier this year.
"This is a great tool for the entrepreneur to manage his or her cash flow," says Raymond. "With this card, you don't have to meet with your account manager every time you need money. It's there for you. It's a part of our commitment to entrepreneurs."
One of the highlights for Raymond is when he is called upon to make the annual award presentations to entrepreneurs who have distinguished themselves under the business recognition program known as SMEs of the National Bank.
Earlier this month, a Montreal-area company, Orthosoft, was one of the winners for 2002. Among the Orthosoft officials on stage with Raymond and Tony Meti, the National Bank's senior vice-president for commercial and international banking, were CEO Daniel Leclerc, François Girard, communcation and marketing director, and Louis-Philippe Amiot, president.
This close working relationship with clients has translated into one of the lowest ratios of non-performing loans among major Canadian banks, a fact that has not escaped the attention of financial analysts who track stocks in the financial services sector. As of July 31, 2002, net impaired loans were down $32 million.
As of July 31, 2002, with 544 branches, most of them in Quebec, it is by far the largest and the dominant bank in the province. Raymond refers to the National Bank as a "super regional bank" in recognition of the fact that it is the No. 1 bank in Quebec. Outside Quebec, its biggest concentration is in Ontario with 75 branches.Quebecers love to compete
Competing with the big boys in the rest of North America is part of the entrepreneurial streak that runs deep in Quebecers, including those who work at the National Bank, says Raymond. "It's almost as though it is a part of our DNA. In Quebec, we have adopted the open and efficient ways of American business, but because we are small, we've had to be remarkably creative as entrepreneurs."
Earlier this month, Investors Group, Great-West Life and London Life - members of the Power Financial Corporation group of companies - announced that they have signed an agreement to have banking products and services developed by National Bank offered to their 3.2 million clients across Canada. The range of products will include investment loans, lines of credit, deposit accounts and credit cards.
"We are proud of this new distribution partnership and the way it ties in so well with our development strategy," says Raymond. "In fact, it gives us access to the largest network of financial advisers in Canada and supports our plans to broaden our reach geographically.
"We have a vibrant economy based on entrepreneurship," he says, citing figures which show that unemployment is lower in Montreal than in Toronto. His buzz words are "diversification" and "value-added." He makes frequent allusions to high-tech darlings such as aerospace, biotechnology and pharmaceuticals.
From left to right at the recent entrepreneur awards gala known as SMEs of the National Bank: Tony Meti, senior vice-president, commercial and international banking, of the National Bank; Daniel Leclerc, chief executive officer of Orthosoft; François Girard, Orthosoft's communication and marketing director; Réal Raymond, president and chief executive officer of the National Bank; and Louis-Philippe Amiot, president of Orthosoft.
Raymond calls it the "New Quebec," an entrepreneurial drive nurtured in a knowledge-based economy and fueled by generous amounts of venture capital. Although the venture-capital market has shown signs of weakness since the high-tech meltdown began two years ago, Quebec has had less of a fall than the rest of Canada and the U.S.
For example, in the third quarter of 2002, the Quebec venture capital industry invested $167 million, down 33 per cent from the $250 million invested during the same period in 2001. However, in the rest of Canada and in the U.S. venture capital investment declined 46 per cent and 49 per cent, respectively, during the third quarter of 2002, compared with the same period in 2001.
Working capital has not always been easily available to French-Canadian businessmen, which is why the National Bank was founded 143 years ago by a group of businessmen dedicated to assisting French-Canadian businesses. It opened its first branch in May, 1859 on rue Saint-Jean in Quebec City.
The bilingual Raymond, who has an MBA and has completed the renowned Executive Management Program at the University of Michigan, is a history buff who likes to analyze events from a historical perspective. All good students of history learn from others' mistakes and are able to adjust accordingly. In that vein, the National Bank is given strong marks by analysts for its recent adjustments in strategy starting with the acquisition of First Marathon in 1999 and culminating with the announced acquisition last June of Altamira, a leading Canadian mutual fund manager and distributor.
In between, the bank divested itself of most of its U.S. lending operations, selling approximately $1.6 billion (U.S.) in loans to PNC Financial, one of the largest American financial service organizations. Earlier this year, it acquired Putnam Lovell Group, an investment boutique based in the U.S.
Divesting itself of its U.S. loan operations freed up the capital needed to acquire Altamira, which, in turn, has doubled its mutual fund business in Canada, Raymond said. It's part of the bank's drive to concentrate on wealth management within Canada.
"The U.S. market is very tough," he said. "It's already very competitive. How can a Canadian bank beat a U.S. bank? It's a question of size and synergy."Growth in wealth management
On the other hand, wealth management within Canada represents a huge area of potential growth for the bank, especially in Quebec with its extensive branch network.
Among National Bank clients with investment portfolios of $100,000 or more, the bank's financial planners manage 27 per cent of their investment wealth. The bank's objective is to increase it to 33 per cent.
"We have a base of 2.6 million clients," Raymond said. "We don't have to look elsewhere to increase our share. Our market is right here."
The bank has 800 investment advisers across Canada, including close to 200 who are certified financial planners and it plans to have 60 more within six months, he said.
"We want to be a major player in wealth management," he said. "The Altamira acquisition represented an excellent opportunity to participate in industry consolidation and to achieve the necessary critical mass for further expansion."
In order to make investing simpler for clients, as of last year the bank started offering six types of managed products, known as Personalized Investment Plans, each with a different risk profile.
Since last spring, in an effort to be more accessible to clients, the bank has extended opening hours between 25 per cent and 40 per cent at 63 of its largest branches.
The bank has also increased the time spent training its financial advisers in order to increase their expertise as consultants to bank clients seeking advice on wealth management.
Two times a year, the bank engages the services of an outside company to survey customers as to their satisfaction levels. The last survey showed a "substantially" higher level of satisfaction because of the extended banking hours and the greater number of financial advisers added to the team, Raymond said.The customer is king
To make sure the message that "the customer is king" is taken seriously by key members of management, a bonus system has been put in place which is based on the results of the "satisfaction surveys," Raymond added.
The bonus system suits Raymond's management style - low-key leadership which employs positive reinforcement to convince colleagues to work as a team to attain the best results for clients, shareholders and, ultimately, for staff.
Part of that teamwork involves investing time and making donations in the areas of health care, education and culture. In the field of education, the National Bank is a major donor to many. The annual fund-raising campaign of the Université de Montréal's HEC Polytechnique known as A World of Projects is one of the major beneficiaries.
The bank also supports McGill University and the Université du Québec à Trois-Rivières. Raymond is personally involved to a large degree, having been appointed president of the next fund-raising campaign at Université du Québec à Montréal (UQAM) for the 2003-2007 period. He believes that education is of major importance not only for the personal and professional development of an individual, but for society at large.
In the field of health care, the bank gives to many hospitals, including the Montreal University Hospital Centre and the Maisonneuve Rosemont Hospital Foundation. It supports the Mira Foundation, Centraide, St. Mary's Hospital and the Foundation for Research into Children's Diseases. In 1998, Tony Meti, one of the bank's senior vice-presidents, started an annual fund-raiser for The Montreal Heart Institute.
The bank is also heavily involved in the field of culture. For example, this year it sponsored the television series on Jean Duceppe. It sponsors Les Grands Ballets Canadiens de Montréal. The Montreal International Jazz Festival is a recipient of financial support, as is the Montreal Museum of Fine Arts and the Théâtre du Nouveau Monde.
Raymond's long hours at the office - starting at 7 a.m. and often going late into the night - don't leave much time for leisure. His favourite hobbies are reading, biking, skiing, fishing and golf.
He didn't have much opportunity to hit the greens this past summer, which has ballooned his handicap to 22 from its normal range of 14. "I'm losing all my bets," he says with a good-natured laugh.
But when all is said and done, Raymond feels that his long workdays are worth it because as a Quebec role model in the Toronto-dominated banking industry, he can help make a difference. He still sees the National Bank's relationship with its clients and with the communities it serves as he did those many years ago when he was a young manager in Quebec City - up close and personal.
Give that extra effort and time without looking for an instant reward. Sometimes hard work is a reward in itself because it forges strong bonds, which make for a vibrant and cohesive community.
And don't forget patience. As a keen student of history and an astute administrator, Raymond knows that momentous events don't occur by themselves. The groundwork is laid one brick at a time, which is the way the National Bank has grown for the last 143 years.Warren Perley, a former career journalist, is president of Ponctuation Grafix, a marketing and graphic design studio (www.ponctuation.com).