Charles Milhaud
1943–

President of the directory of the Caisse Nationale des Caisses d'Épargne

Nationality: French.

Born: February 20, 1943, in Sète, France.

Education: Attended University of Montpellier.

Family: Son of Georges (savings-bank manager) and Fernande (maiden name unknown; homemaker). Married, 1964 (divorced, 1967); married Gisèle (maiden name unknown), 1969; children: two.

Career: Caisse Nationale des Caisses d'Épargne, 1964–, various positions including president.

Awards: Légion d'honneur, 1996; decorated with L'ordre national du Mérite, Laurent Fabius, 2002.

Address: Caisse Nationale des Caisses d'Épargne, 5, rue Masseran, 75007 Paris, France.

■ "I prefer consensus to the use of force," Charles Milhaud claimed in 2003 ( Le Figaro , January 13, 2003). Through a combination of political astuteness and sheer doggedness, Milhaud rose to the top position of the Caisse d'Épargne Group and eventually ruled over it as his personal fiefdom. He transformed the loosely organized network of franchises into France's top savings bank, and through an aggressive policy of mergers and acquisitions he created the third largest French banking group. Under his direction, a narrowly focused collective became a major banking enterprise.

Under Milhaud the Caisse d'Épargne Group was a cooperative bank composed of a network hub, La Caisse Nationale des Caisses d'Épargne (CNCE), the Federation Nationale des Caisses d'Épargne, 34 regional Caisses d'Épargne, the Crédit Foncier de France and its subsidiary companies, and specialized national and regional subsidiary companies, 4,700 agencies, 26 million clients, and over 50,000 employees. It disposed of over 18 billion euros in assets under his term at the helm. In 2003 Milhaud moved to consolidate his control over the organization by purchasing the stake in its partner bank,

the Caisse des Depots et Consignations (CDC), held in their joint holding company Eulia and its investment bank CDC IXIS. After his reelection to the head of the group in 2003 he detailed his vision of a global French banking dynasty.

FROM THE BOTTOM UP: A FAMILY HISTORY

Charles Milhaud was one of the more colorful and formidable figures in French banking and business, which is all the more extraordinary for his relatively ordinary origins in a country traditionally skeptical of self-initiating achievers. Milhaud was born into a family that had been former French colonial settlers in Algeria. His grandfather was a self-made man and worked hard to secure for his family a modest existence. He eventually became a skilled laborer and journeyman. Milhaud's father was obliged to leave school in order to work, and he oversaw a vineyard in Algeria. His mother sold bread locally from a car.

The family returned to France shortly before resistance to French colonial rule began. They landed in the fabled Italian fishing town of Sète on France's Côte d'Azure, beloved for its summer festival that includes drunken longboat jousting matches and frequent bleacher brawls. There, the father found work in a local savings bank and eventually rose to become manager.

In Sète they lived in a crowded, working-class neighborhood but enjoyed a middle-class life. Milhaud's parents attentively oversaw the education of their six children and emphasized the traditional values of hard work, persistence, and family loyalty. Both parents were scrupulously involved in the children's schoolwork and mindful of academic achievement.

Though a diligent student at the École Victor-Hugo and the Lycée Paul-Valéry, a heart condition prevented Milhaud from participating in the school's recreational activities. Following the lycée Milhaud studied physics with minors in math and chemistry at the University of Montpellier. He married young, and without financial recourse abandoned his studies to begin work in his father's business. He soon came to the attention of Léopold Suquet, a noted Sétois figure and president of the local Caisse d'Épargne.

GRABBING THE REINS: NETWORKING AND NEGOTIATING

Suquet was a locally influential member of the French Socialist party and at one time worked with the French Socialist interior minister, Jules Moche. Under Suquet's mentorship Milhaud made an early mark on the local Caisse by updating accounting methods and overseeing the installation of a computer banking system.

He also joined the Syndicat Unifié (SU), whose directors comanaged the different Caisses. An opportunity for advancement occurred when the SU decided against appointing one of its directors to represent the Caisses within the national trade union, the CGC. By the end of the 1970s Milhaud, having won the appointment, was SU's president at the CGC. Ambitious, enterprising, and militant, Milhaud assiduously cultivated his connections as a Freemason during this period.

In 1980 Milhaud was appointed assistant general manager of the Caisse d'Épargne des Bouches-du-Rhône et de la Corse, the second largest concern in the Caisse d'Épargne network. The head of the SU in Marseille, Ange Piazza, set Milhaud on his unwavering path to the top when he convinced the SU president, Claude Pelat, of Milhaud's skills as a union negotiator. Pelat was a close colleague of Valery Giscard d'Estaing, who was then running a tight campaign against François Mitterrand for president of France.

His association with Pelat during the election was the turning point in Milhaud's career. His image as a leftist and tough union negotiator at war with, or at least defiant of, France's centralized authority, made him a symbol of the tensions between provincial France and Paris. Through judicious maneuvering he allied himself with the rising stars of the SU and the Caisse d'Épargne, and in 1983, after heading a reform committee, he became director general of the Caisse d'Épargne and member of the Centre National des Caisses d'Épargne et de Prévoyance (CENCEP). Two years later he took over as president of the Caisse d'Épargne des Bouches-du-Rhône et de la Corse and was appointed to a seat on the board of trustees of CENCEP.

In 1999 Milhaud seized power over CENCEP in what has been described as a "putsch." The opportunity arrived when the Jospin government decided to reform the group, soon to become the CNCE, and its obsolescent statutes. Due to his avid support of reforms, Milhaud had been the ministry of finance's favorite to succeed René Barberye when Barberye's mandate as president of the directory expired later that year. The decision was made, however, to appoint the banker Christian Giacomotto as president. Milhaud was appointed to head the board of trustees of the CNCE.

Relying undoubtedly on his skills as a negotiator, his political image, and his network of friends, Milhaud nevertheless managed to secure the presidency of the directory from the government in exchange for acquiring the problematic Crédit Foncier de France, which the government was more than glad to be rid of and which he, at the helm of CNCE, was to successfully turn around.

LE BOSS: BIGGER IS BETTER

Milhaud was described both by his admirers and his detractors as an "atypical" French banker if only for having stood in stark contrast to the elitist and highly exclusive banking establishment made up of the tax inspectors. "He is a complete opportunist, unscrupulous and unprincipled. Duplicity and betrayal are his only rules of conduct…. He has no talent except for scheming …," railed an establishment insider ( L'Express , November 27, 2003). His admirers, however, hailed him as an antiestablishment visionary and a committed regionalist from the south of France who delighted in his local accent, a radical socialist who is able to compromise, a patriot of France, and an inveterate football fan.

His business strategy was simple: "Some of the lower level managers say to me at times, 'We need a breather. We are working like dogs.' But I can't stop." Milhaud added, "I don't like to manage. I like to build." An establishment insider put it differently: "He wants it all. He would buy out everything down to the corner computer store if it flattered his ego" ( Le Point , October 17, 2003). Milhaud was seriously doubted when he first ascended the ranks of French finance, and many dismissed him as simply not up to the task. The idea of a provincial savings bank pretending to play with bigger banking entities struck them as preposterous. Though atypical in a culture that scorns the atypical, Milhaud was to prove them sorely wrong.

His main successes between 1999 and 2003 involved substantial changes in the Caisse d'Épargne system. As a manager, he doubled its capacity, achieving a solid 11.9 percent return on assets. He modernized computer and commercial systems, and he quelled labor unrest, though relations with the unions remained tense. As a strategist, he strengthened the position of Crédit Foncier de France by acquiring 60 percent of Banque SanPaolo and the insurance company AGF's stake in Entenial, thus turning Crédit Foncier into an asset and engine of growth. Most significantly, he merged with a close rival, Daniel Lebegue's CDC, and gained control of CDC IXIS, creating the financial holding company Eulia. These gains permitted him to expand a once purely domestic operation into a European and global enterprise. Summarizing his accomplishments, Milhaud said, "The Caisses had no back bone. We needed to give them one. That's what we did" ( Le Point , October 17, 2003).

The key to understanding this baffling success in such a hostile environment may be provided by the following anecdote: During the social unrest of 1968 Milhaud would go to the Bank of France packing a pistol in his belt in order to guarantee that his clients got their money ( Le Figaro , January 13, 2003). It is difficult to imagine any of his adversaries, products of the privileged institutions of the grandes écoles (which have long educated France's governing and management elite), taking such initiative on behalf of lower-income clients.

THE MACHINE MARCHES ON: ALL THE WAY TO WALL STREET

Milhaud's candidacy for a second term as leader of the Caisses was, not surprisingly, met with a vociferous campaign to block his reappointment. He was, nonetheless, the sole candidate for the post, making it difficult for his opponents to unseat him. The efforts against him appeared at best to be thinly veiled attempts to discredit him as either incompetent or corrupt. The Inspection des finances, for example, released reports dated July 1985, May 1988, and February 1997 detailing irregularities and inconsistencies in his management practices, notably his misapplication of fiscal rules and regulations and the elevated costs of unnecessary studies and external consultations. He was, however, neither convicted nor sanctioned for any of these charges.

Milhaud saw his own legacy as being his lasting imprint on the Caisse d'Épargne, a large, universal bank that would remain long after he was gone. Others saw his legacy differently. The little round man with the air of a friar, who once contemplated joining the church not to be a priest but to be a bishop, had set an example of a new and largely belligerent business culture that traditionalists in France vigorously resisted. That, however, is a legacy Milhaud himself would no doubt relish. If his critics complained that he succeeded by not playing according to the establishment's rules, he in fact succeeded precisely because he played by their rules while not playing their game.

Considered by his critics to be unscrupulous, cunning and duplicitous, Milhaud has been characterized as a man who would stand in no one's shadow, who honored promises and agreements only if they honored his ambitions, who kept tight control over his employees by playing musical chairs with their careers and who enforced a company consensus by keeping loyal cadres in comfortable and rewarding managerial positions. When asked if he had any designs on the American market, he replied enthusiastically: "Yes, that interests the Groupe Caisse d'Epargne … we have to be there … we are a real bank … and everybody better get used to it" ( Les Echos , October 3, 2003).

sources for further information

Bruno, Abescat, "Finances; Milhaud le placement maison," L'Express , November 27, 2003.

"Charles Milhaud; L'Ecureuil, c'est lui," Le Point , October 17, 2003.

Guerin, Jean-Yves, "Charles Milhaud: 'je préfère le consensus aux coups de force," Le Figaro , January 13, 2003.

Mayer, Francis, and Charles Milhaud, "Une bonne gouvernance génère l'efficacité, sans conflit paralysant," Les Echos , October 3, 2003.

Morris, Jennifer, "Daniel Lebegue and Charles Milhaud," Euromoney , March 8, 2002.

—John Herrick