Supervisory Board’s comments on the Management Board’s report and the 2006 fi nancial statements 183
Copies of this document and the French-language document de référence may be obtained free of charge from Natixis, Immeuble Arc-de-Seine, 30 avenue Pierre Mendès France 75013 Paris.
Natixis has a strong position in all of its core business lines. As the banking partner of nearly all of the largest companies in France, it also plays a very active role in serving fi nancial institutions (banks, insurance companies, pension funds etc.). It has gradually built up an ever expanding international customer base.
March 12, 2006: The Banque Populaire Group and the Caisse d’Epargne Group enter into exclusive negotiations concerning the creation of Natixis.
The boards of directors of Banque Fédérale des Banques Populaires and Natexis Banques Populaires and the supervisory board of Caisse Nationale des Caisses d’Epargne approved the agreement at their meetings held on June 2 and 6 respectively.
Concomitantly with these contributions, each of the Banque Populaire banks issued CCIs for Natexis Banques Populaires representing 20% of its share capital (together referred to as the “Banque Populaire CCIs”).
After the meeting, the Group’s share capital stood at €1,973,176,336, divided into 1,233,235,210 shares with a par value of €1.60 per share.
On January 16, 2002, Natexis Banques Populaires, a French corporation (“société anonyme”) with a Board of Directors, opted to separate the functions of Chairman and Chief Executive Offi cer. François Ladam, who was not a member of the Board of Directors, was made Chief Executive Offi cer. This situation remained unchanged until November 17, 2006.
Chairman and Chief Executive Offi cer of VEOLIA ENVIRONNEMENT 38 avenue Kléber 75016 PARIS
These two members also satisfy the criteria for independent members as set out in the AFEP/MEDEF reports. They are not members of the bank’s management. Banking relationships between Natixis and the groups headed by these two individuals do not affect the impartiality of their judgment. However, it should be noted that Mr Naouri and Mr Proglio each serve as non-voting director on the Supervisory Board of Caisse Nationale des Caisses d’Epargne, one of Natixis’ two shareholders.
CORPORATE GOVERNANCE 2 Structure of executive bodies by a representative of one of the two shareholders for a period of six years. The fi rst Vice-Chairman of the Supervisory Board shall be a representative of the shareholder not represented by the Chairman of the Supervisory Board, and the second ViceChairman shall be a representative of the other shareholder.
Representative of Banque Fédérale des Banques Populaires, Chairman of sas Guidéo
Permanent representative of Caisse Nationale des Caisses d’Epargne, Director of Banque de Tahiti
Permanent representative of Banque Populaire Occitane, Director of Maison du Commerçant S.A.
Legal representative of Elior SCA, the company that is Chairman of Elior Gestion (SAS)
The Supervisory Board decides on the draft resolution proposing to the general shareholders’ meeting the designation
Supervisory Board members shall not act against the interests of Natixis or the companies it controls, in particular in the case of a proposed transaction in which a member of the Supervisory Board or a non-voting director has a direct or indirect interest; certain authori zations given by the Board to the Management Board in the context of the Internal rules: In accordance with Article 113-1 of the decree of March 23, 1967, concerning commercial companies, the Supervisory Board has decided that: disposals of buildings up to a value of €10 million per transaction, disposals of participating interests in any form of company or grouping, up to a value of €10 million per transaction, disposals of participating interests in any form of company or grouping created solely for the purpose of carrying out corporate or investment banking transactions, irrespective of the value, may be decided by the Management Board without prior authorization from the Supervisory Board.
Given Natexis Banques Populaires’ shareholding structure and/or the existence of directors with directorships of both companies concerned, several of these agreements were treated as regulated agreements in accordance with Article L. 225-38 of the French Commercial Code: authorization to sign the protocol agreement of June 6, 2006; agreement to implement the general protocol agreement of June 6, 2006; protocol agreement relating to the issuance of cooperative investment certifi cates by the Banque Populaire regional banks; agreement concerning the disposal of Novacrédit.
Compensation paid to the Chairman of the Supervisory Board has been set at €285,000 a year.
Other services relating directly to auditors’ duties A3 3,546(1) 265 46% 8% 81 60 3% 4% 10 0 1% 0% 106 72 9% 5%
ASSET MANAGEMENT 71 A global player in asset management 71 A global distribution platform 72 A new key player in Europe 72 Strong position in the United States and expansion in the Asia-Pacifi c region 73
The corporate and investment banking division generates over half of its net banking income outside France, mainly in Europe and the United States. The main drivers for the Group’s international activities are securitization, fi xed income, structured fi nance and commodities, derivatives and equity brokerage.
In the United States, Natixis sold and securitized over $3.3 billion of CMBSs through seven transactions and $4.1 billion of ABSs through eight transactions. It one of the world’s leading underwriters of CDOs and CLOs, with a broad range of underlying assets. In 2006, it structured and placed CLOs of $14.5 billion, more than doubling the previous year’s production. It is the world’s No. 3 bookrunner in arbitrage CLOs in terms of issue volumes (source: Asset-Backed Alert). It also acted as collateral manager for ABS CDOs worth $1 billion.
In the United States, several managers have received particularly prestigious awards: David Herro of Harris Associates was nominated for Morningstar’s International Stock Fund Manager of the Year and Dan Fuss and Kathleen Gaffney of Loomis Sayles came second in the Fixed Income Manager of the Year category. Barron’s ranked Ixis AM Group top for the performance of its funds over fi ve years and second for the performance of its funds over 10 years and one year. In addition, the Delafi eld Fund and Oakmark International Fund were ranked one of the fi ve best funds in 2006 by SmartMoney.
NPE offers international teams the opportunity to work with a key player in the private equity sector and benefi t from its experience, its network, its methods and its fi nancial support. Furthermore, in order to ensure the real sharing of experience and expertise between all of its teams in France and abroad, NPE has decided to focus on developing specifi c knowledge management and business development solutions for the sharing of expertise and opportunities.
In products intended for personal customers, the number of comprehensive personal accident insurance policies increased signifi cantly. The success of Autonomis, a new product providing long-term care insurance, in the fi rst few months after its launch confi rmed the growth potential of this product line. In non-life insurance (motor and home insurance), 153,000 new policies were taken out in 2006, bringing the total to 642,400.
Optimizing its product offering targeting private customers and stepping up the development of this business by capitalizing on the experience of Foncier Assurance with independent wealth management advisors are also key ways of boosting growth.
The Group has developed a broad range of employee benefi ts planning products in order to suit the wage and social policies of companies and small businesses, including employee savings products (profi t-sharing, company savings plans, Perco savings plans, employee shareholding), pensions and supplementary and group provident funds (“Article 83” and “Article 89” pension schemes, retirement bonuses) and regulated service vouchers (restaurant vouchers, vouchers to pay domestic employees, gift vouchers).
CIFG provides fi nancial guarantee insurance to fi nancial investors irrevocably guaranteeing interest and principal payments due from a borrower. By enhancing the credit rating of an issue to AAA, it offers issuers additional liquidity at a lower cost.
Natixis’s two main shareholders - the Banque Populaire Group and the Caisse d’Epargne Group - are mutual banking organizations that occupy leading positions in the French banking sector.
This enhancement of the product range is not intended solely for new customers. It primarily addresses the needs of the Group’s existing customers, ensuring the loyalty of whom is still a priority.
ACTIVITIES 3 Retail banking accounts have boosted banking services, customer deposits and lending business.
The new intranet, which in time will cover the entire Natixis Group, aims to encourage the development of a common culture while enabling the subsidiaries to promote their own identity. HR Contacts provides access to the “job mart”, which is open to all employees, and to a series of practical information, such as “Who does what in HR”, “Practical Questions” and “Time Planning” for online leave planning and management. Various subsidiaries offer specifi c content and the site is designed to welcome all entities that wish to use it. HR Contacts has been developed in line with international web content accessibility guidelines so that it can be used by all employees and particularly those with motor, vision or hearing disabilities.
In 2006, the Human Resources department strengthened its core-business-based organization structure, with one person specifi cally responsible for coordinating human resources management for each core business. The social management control and compensation analysis team was strengthened in 2006. A new team devoted to the employment of young people was also created to handle the growing number of students and young graduates being taken on by the bank (see inset).
The fi rst goal was to implement the measures required to create Natixis on November 17, 2006 and to ensure continuity of service of the existing systems. The second goal is to assist the business lines and support functions in defi ning a target architecture. Other goals are to defi ne new IT governance rules and identify potential areas for improvement.
Growing awareness of environmental risk in project fi nance and credit insurance
SRI assets amounted to €3.4 billion at December 31, 2006, putting the bank’s Asset Management business among the leading players in the French SRI market according to the quarterly Novethic indicator(8).
In 2006, the bank introduced various measures to optimize waste management. Selective sorting of offi ce waste was introduced along with a paper recycling system. Employees are encouraged to sort their waste upfront using separate bins for different types of waste.
The audit, which was managed by the Sustainable Development team, involved the Logistics, Purchasing, Corporate Secretary, IT and Human Resources departments in the data collection phase, which covered energy consumption, employee travel, clients and suppliers, logistics, purchases, etc.
Examine the possibility of a corporate relocation plan as part of the integration process.
Draw up a manual of responsible purchasing practices and share them with all the new entities comprising Natixis.
The total number of employees was 21,138 full time equivalents (FTEs) at December 31, 2006. The parent company accounts for almost one quarter of the total.
The number of junior employees continues to grow, accounting for 26.6% of new hires compared to 24.6% in 2005). Young employees are often recruited after a long-term internship or international work experience with the bank (see section on “Relationships with associations and schools”).
The Health, Safety and Working Conditions Committee (CHSCT) of the Paris metropolitan area has sixteen members compared to a legal minimum requirement of nine.
Recommendations made by the occupational physicians about precautions to take during heat waves were circulated at the beginning of summer 2006.
Due to the Group’s growing internationalization, foreign language training accounted for a high proportion of the total in some entities, as did business line training.
Eighty-seven young graduates took part in the International Work Experience program (Volontariat International en Entreprise) offered by the parent company and its subsidiaries, including Coface, Ixis Asset Management, Ixis Corporate & Investment Bank and Natixis Pramex International (especially in North America and Asia). These assignments last between one and two years. They give participants the opportunity to acquire their fi rst international work experience and are often a springboard for permanent hiring either locally or in France.
Pursuant to the shareholders’ agreement, BFBP and CNCE have agreed to own an identical number of Natixis shares and to maintain their percentage ownership at or above 34% of Natixis’ total share capital for at least ten years following the completion of the combination transactions carried out on November 17, 2006. Accordingly, Natixis is limited in its ability to conduct equity issuances or use its shares for acquisitions, since this requires the approval of both BFBP and CNCE, as well as a mechanism to enable both parties to maintain their percentage shareholdings following the transaction. BFBP’s and CNCE’s ownership of a large percentage of Natixis’ share capital and any coordination between them may also have the effect of delaying, deferring or preventing a change in Natixis’ control, and may discourage bids for its shares more generally (see paragraph “Factors that may have an impact in the event of a public offer”).
Market risk arises in trading portfolios and in non-trading portfolios. In non-trading portfolios, it encompasses: the risk associated with asset and liability management, which is the risk to earnings arising from asset and liability mismatches in the banking book or in the insurance business. This risk is driven primarily by interest rate risk; the risk associated with investment activities, which is directly connected to changes in the value of invested assets within securities portfolios; ■
Natixis may generate lower revenues from brokerage and other commission- and fee-based businesses during market downturns
In the United States, where the risk of infl ation predominated at the start of the year, the possibility of price acceleration created concerns about an overreaction by the Federal Reserve, resulting in a sharp downturn in the stock markets and emerging debt. From the end of the summer, the risk of infl ation was superseded by concerns about the sudden slowdown in the US real estate market impacting the rest of the economy: GDP increased by a modest 2.1% on an annualized basis in the third quarter, with residential real estate investment falling by 18%. The division of value-add remained highly favorable for business and profi ts were at their highest level in 40 years, highlighting the lack of risk of infl ation by wage costs.
Credit Portfolio Management The Credit Portfolio Management desk, developed in 2006, paved the way for a dynamic credit risk management policy, ranging from the origination of fi nancing to divestment of exposure on the market or its transformation in the form of investment products.
The Services division refl ects the challenges of the two distribution networks to which it is attached: strong growth in fi nancial savings and life insurance in particular, benefi ting life insurance companies and securities activities in France; general pressure on margins in the highly competitive retail banking market and gains in market share to the detriment of prices: lower take-up charges in life insurance, lower tariffs for guarantees in real estate loans (-30%), reduction in charges paid on payment methods, pressure on interest rates in consumer fi nance.
This business line focuses on sureties (medium and longterm loans to individuals and small businesses) via subsidiary Saccef and fi nancial guarantees (individual home builders, real estate agents, developers, property management companies etc.) via subsidiaries Cegi and Socamab.
a record market effect of €37.4 billion, up 14% at constant exchange rates; the fall in the dollar (year-end exchange rate), creating a negative currency impact of €18.1 billion.
Net banking income increased by 11% to €118.3 million, driven by strong revenue growth and despite a fall in average commissions.
Created at the end of 2005, GCE Affacturage, which targets primarily the Caisse d’Epargne network and Banque Palatine, achieved breakeven in 2006. All transactions carried out concern the provision of general factoring services combining
management and recovery, invoice fi nancing and guarantees against unpaid invoices.
The subsidiary had an encouraging fi rst full year, with nearly 100 contracts signed generating potential full-year revenues of €440 million. Total factored receivables came to €263 million in 2006, of which 34% relates to CEP, 19% to Banque Palatine and 47% to others.
Net premiums written for the year totaled $232.3 million, up 43%.
CIFG generated net income of €22.2 million, up 39% or €4.3 million.
Operating expenses rose by 6% to €3,531 million, with payroll costs representing 57%, an increase of 6%, and other operating expenses representing 43%, also up 6%.
Meanwhile, payroll costs increased by 4.6% excluding exceptional items, due to the combined effect of new hires relating to the expansion of the network and the bank’s employee incentive and loyalty policy, allowing employees to participate in the performance of the Banque Populaire regional banks through employee profi t-sharing schemes.
Income, used as a reference for determining the contribution of the Caisses d’Epargne to Natixis’ pro forma income through the recognition under the equity method of cooperative investment certifi cates must be restated for the capital gain on the sale of CEFI shares. The restated amount is €1,424 million, up 24% compared with 2005.
Since the creation of Natixis, VaR has been calculated taking account of the effects of offsetting positions where possible and by adding VaR when this is not the case. As at December 29, 2006, VaR calculations concerned the trading activities of the former Natexis Banques Populaires (excluding subsidiaries) and the Paris investment portfolio. At this date, one-day parametric VaR with 99% confi dence was €4.25 million. For Natixis Négociation, which comprises the trading activities of Ixis Corporate & Investment Bank Europe Asia and the former Natexis Banques Populaires as mentioned above, one-day parametric VaR with 99% confi dence was €11.55 million. In 2007, Natixis’ consolidated Monte Carlo VaR will benefi t from the effects of offsetting positions with the integration of the capital market operations of the former Natexis Banques Populaires into Scénarisk with the inputting of positions by the server.
Data was inputted into Riskmanager primarily using automatic interfaces developed between the front offi ce/middle offi ce systems and the software. These interfaces supply the characteristics of an operation, enabling the software to understand the various operations. Market data are provided by Riskmetrics on the basis of information from Reuters and are subject to a data management process by Riskmetrics.
At December 31, 2006, the breakdown of one-day VaR with 99% confi dence by class of risk was as follows (in € millions): CONTENTS < >
Liquidity risk As a corporate and investment bank, Natixis has few liquidity positions relating to accounts without a set maturity; nearly
Structural interest rate risk Structural interest rate risk benefi ts from a VaR limit (10 days at 99%) of €18 million. The amount used of this limit is calculated daily by the Risk Management department, with the Finance department responsible for monitoring and managing risk.
Risk-weighted assets totaled €125.1 billion at December 31, 2006, compared with €116 billion pro forma at December 31, 2005, an increase of 8% relating to credit risks (up €12 billion), while market risks decreased by €3 billion as a result of the combined effect of extension of Ixis CIB’s internal model and methodological advances in Natixis’ portfolios.
The ratio of liquid assets to liabilities falling due within one month must be higher than 100%. It stood at 145% at December 31, 2006, for the former Natexis Banques Populaires and at 181% for Ixis CIB.
Peter Voss, after 15 years as the head of Ixis Asset Management Group (IAMG), has announced his decision to retire. Pierre Servant will succeed him as global CEO in the fi rst quarter of 2007. At the request of the Group, Mr Voss will continue to assist Natixis as a consultant in corporate development with a focus on mergers and acquisitions and will remain on the board of the Oakmark funds in the US.
This dual affi liation is in accordance with Article L.511.31 of the French Monetary and Financial Code. It enables Natixis to benefi t from the respective guarantee and solidarity systems of the Banque Populaire Group and the Caisse d’Epargne Group.”
Effect of exchange rate changes on cash and cash equivalents (D) (109) 98 (29)
All the goodwill is tested for impairment based on the value in use of the cash-generating units (CGUs) to which it is allocated. The formation of Natixis gave rise to three new CGUs: Asset Management (previously part of the Services CGU), Guarantees and Credit Enhancement, with both the latter linked to the autonomous new activities related to assets contributed by the Caisse d’Epargne group.
Insurance companies investments are classifi ed in the balance sheet under the various categories of fi nancial asset defi ned in IAS 39.
Natixis assesses at the balance sheet whether there is any objective evidence of impairment in loans and advances either on an individual or collective basis by category of risk. To detect any signs of impairment, Natixis analyzes trends in a number of objective criteria, but also relies on the judgement of its experts. Likewise, Natixis may use its expert judgement to establish the likely timing of future cash fl ow recovery (where the aim is to calculate the amount of individual impairment losses) or to adjust the expected losses under the McDonough framework, which underpins the amount of the collective impairment loss.
AEW Partners III , Inc .(27) Asset Management 85 85 - - - -
AEW Securities Limited Partnership(27) Distribution 85 85 - - - -
Coface Holding Israel(29) Holding company 100 100 - - - -
Coface North America Holding Company Holding company 100 100 100 100 100 100
Curzon Global CC Ltd.(27) Asset Management 85 85 - - - -
Harris Associates, LLC(27) Asset Management 85 85 - - - -
Ixis Asset Management Participations 1(27) Holding company 85 85 - - - -
Loomis Sayles Consumer Discretionary LP (27) Asset Management 85 85 - - - -
Vaughan Nelson Trust Company(27) Asset Management 85 85 - - - -
The 2005 pro forma income statement is intended to refl ect and facilitate comparisons between balance sheets and the earnings generated assuming the following transactions had taken place on January 1, 2005: contribution by CNCE of shares in Ixis CIB, Ixis AM group, CACEIS, Gestitres, La Cie 1818, CIFG, GCE Bail, GCE Affacturage, GCE Garanties, GCE FS, Foncier Assurance
5.6 - Restatements made to entities’ financial statements used to prepare the pro forma financial statements
Cash and balances with central banks and post offi ces 217 106 323
These are securities held for trading purposes or designated as at fair value through profi t and loss upon their initial recognition
Upon their initial recognition, loans and advances are measured at fair value plus transaction costs and less any discount and transaction revenues. In the case of loans, transaction costs include fees and any internal and external expenses directly attributable to the grant of the loan.
These impairment charges are determined on a case-by-case basis and adjusted at quarterly intervals, based on an analysis of the related risk and available collateral.
Consolidated fi nancial statements and notes 7.4 - Derivative financial instruments and hedge accounting
Interest rate, currency and equity options and forward contracts (including commodities)
Commitments given to banks that grant export credits fi nanced in foreign currencies in order to fi x the exchange rate of their foreign currency borrowings are published in off-balance sheet commitments.
Structural interest-rate risk hedging The Ixis Capital Markets North America subsidiary (subsidiary of the Ixis CIB sub-group) has documented the structural interest-rate risk hedging according to the method used to hedge fair value.
Monetary assets and liabilities (notably bonds and other fi xedincome instruments) denominated in foreign currencies are translated into euros at the spot rates prevailing on the reporting date. Exchange gains or losses are recognized in income, and directly in equity in the case of derivatives designated as cash fl ow hedges.
Internally-generated computer software is measured at the total cost of development, including related hardware costs, service costs and personnel costs directly attributable to
Natixis has used the option available under IFRS 1 to recognize all as yet unrecognized actuarial gains or losses in
Two plans set up in 2001 and 2004 relate to investment certifi cates issued by Ixis Asset Management SA and Ixis Asset Management participations1’s preferred shares. The vesting period under these plans is three years for the US benefi ciaries and four years for the European benefi ciaries.
All treasury shares held by Natixis are deducted from equity regardless of their purpose and/or their classifi cation in the individual fi nancial statements. Any gains or losses recognized in the individual fi nancial statements in respect of the sale, valuation or impairment of treasury shares held as trading securities or available-for-sale securities are eliminated in the consolidated fi nancial statements through equity.
The fair value of investment property (excluding investment property held by insurance companies) is determined on the basis of capitalization of rents, a method that is widely used by real estate professionals.
These debt securities are initially recognized at fair value, which is their issue price less transaction costs, and then stated at amortized cost using the effective interest rate method to defer issuance costs over the life of the securities.
Variable-rate securities have a fair value equal to their net carrying amount on the balance sheet.
Life insurance loss reserves cover the capital payable upon the occurrence of a loss. In credit insurance, they include an estimate of the total cost of losses reported but not yet settled at the close of the period. Accrued losses are topped up by a reserve for unknown losses calculated statistically.
FINANCIAL DATA 6 Financial data Consolidated fi nancial statements and notes 9.4 - Gains and losses on available-forsale financial assets
(1) The increase in the share in income of associates recorded during 2006 is attributable to fi rst-time consolidation of the Banque Populaire and Caisse d’Epargne banks, following the acquisition of 20% of their capital via the CCIs. The decline in the value of associates between 2004 and 2005 was due to the change in the method of consolidation used for BP Développement and Sopromec, which were fully consolidated as at December 31, 2005. The equity value of these two subsidiaries amounted to €80 million as at December 31, 2004.
+ Net income attributable to equity holders of the parent 943 695 488
The risk management department’s duties span all the banking activities, and it is organized by type of risk: counterparty/country risk; market risk; operational risk.
It is also supported by a risk analytics department responsible for designing and implementing risk methods and systems. It has a cross-divisional organization ensuring proper coordination. It is being rolled out in line with the global unit principle, and the priority during 2007 will be to establish strong functional and hierarchical ties between Natixis and its subsidiaries and foreign branches. This functional tie helps to ensure the consistency of risk management policy implemented across all of Natixis’ operations.
The market risk policy determined by the market risk committee notably incorporates the following aspects: determination and review of the VaR and operational limits. This review is conducted using budget data, which have to be provided by the front-offi ce managers; defi nition of delegations of authority for validation purposes; review of exposures at risk, possibly with a focus on a specifi c risk category; review of any limit overruns observed and/or unauthorized and actions implemented or to be implemented; review of previous decisions made after delegation of authority; information about the market risk methodologies and models validated, with validation being performed on a case-bycase basis by ad hoc committees.
A general review of Natixis’ system was conducted using stress tests. Stress tests were carried out using the Scénarisk VaR calculation system as of the date of Natixis’ creation.
The ALM committee validated the principle of expressing maturity schedule sensitivity limits of economic value for refi nancing books as a percentage of regulatory capital. For a sensitivity to a 200bp shift in interest rates(16), a global limit representing 2.5% of regulatory capital was adopted by the committee. The risk limits allotted are currently as follows: (16) “Shock” proposed by the banking regulator in the second pillar of the Basel II accord published in June 2004.(16) “Shock” proposed by the banking regulator in the second pillar of the Basel II accord published in June 2004.
The nature of insured risks combined with reinsurance does not result in any particular exposure in terms of the concentration of insurance risks.
Through its business activities, CIFG is exposed to two principal financial risks: credit risk and the risk of fluctuations in credit spreads
This is the basic risk facing any fi nancial guarantor. With each transaction it enters into, CIFG agrees to cover the risk of nonpayment by the issuer of the principal and interest payments due under the debt security guaranteed. This risk is moderated by the fact that the fi nancial guarantor continues (in the event of default) to make payments in line with the borrower’s original schedule, without any acceleration.
To reduce and manage this risk as effectively as possible, CIFG has put in place a risk control performed by an autonomous and centralized function overseen by a risk management department reporting directly to the Group’s CEO.
Assets and liabilities without a maturity date, such as accrued interest receivable and payable, ordinary accounts or immediately due receivables are shown in the “Demand deposits” column.
Net carrying amount 66 66 15.4 - Relations between consolidated companies
The Group records provisions to cover employee benefi ts (see note 7.13 of the notes to the financial statements). We examined the methodology used to value these commitments, as well as the assumptions and parameters used.
Net (charge to)/reversal of fund for general banking risks and regulated provisions 231 (0) (1)
Securities purchased under resale agreements 2,158 544 0 a ccrued interest receivable 4 4 3 a ccrued interest receivable 88 41 28 n on-performing loans 592 561 755
NATEXIS COFICINE 26, rue de Montévidéo, 75016 Paris 5,897 EUR 8,520 EUR 94.37%
NATEXIS INTERÉPARGNE 68, quai de la Rapée, 75012 Paris 8,891 EUR 18,610 EUR 100.00%
CAISSE D’É PARGNE ET DE PRÉVOYANCE (Somme) 3,780,588 EUR 11,142,108 EUR 20.00%
These fi nancial statements have been approved by the Management Board. Our responsibility is to express an opinion on these fi nancial statements based on our audit.
CHAIRMAN’S REPORT ON CORPORATE GOVERNANCE AND INTERNAL CONTROL (ARTICLE L.225-68 OF THE FRENCH COMMERCIAL CODE)7 Corporate Governance
Natixis’ internal control system is organized in accordance with the report of September 15, 2006, concerning the characteristics of the bank’s internal control system and approved by the CECEI in its decision of October 11, 2006. It complies with the legal and regulatory requirements arising in particular from CRBF rule n° 97-02, as amended, under which applicable companies must implement a consolidated internal control system able to ensure: permanent checks of compliance, security and validation of transactions, as well as other requirements relating to the monitoring of all types of risk resulting from transactions; periodic checks in the form of enquiries and audits of the compliance of transactions, conformity with procedures and the effectiveness of permanent control systems.
More specifi cally, the program aims to develop permanent controls of information audit trails, monitor the regularity of use of information resources, allow for the detection of internal and external attacks and collect and archive data required for investigations: security monitoring, checks of the opening of information systems to external parties, clearance checks and verifi cation of compliance of workstations with security standards, supervision of security equipment etc.
On the creation of Natixis, the principles governing the organization of market risk management at IXIS CIB and Natixis were maintained and a reconciliation process was initiated. In addition, existing market risk limits at the various entities comprising Natixis were confi rmed. The overall consistency of procedures and the development thereof are ensured by the centralization of key decisions.
In addition, the ALM committee uses monthly indicators concerning the structural interest rate position on banking book activities, in particular the static gap by maturity category, as well as sensitivity analysis of the net asset value on the basis of several yield curve scenarios.
In addition, the Operational Risk division in Paris and New York plays an active role in the bank’s new product and new activities committees.
Finally, a new tool was added for management and monitoring of suspense items, offering new reconciliation functions. Notably, it includes a suspense item control module, allowing for: freezing of suspense items at the accounting date and monitoring of their clearing; qualifi cation of Natixis’ risks on the basis of age and assessment of coverage.
Accounting and fi nancial control procedures at subsidiary Ixis CIB are organized in a similar way, based on two levels: tier-one controls decentralized at back offi ce level, for the production of balance supporting evidence and a results service, covering all analysis relating to results.
Resolutions to be put to the vote at the Annual General Meeting of May 24, 2007 379
The shareholders hereby approve the special report of the Acting Auditors on related party agreements governed by article L.225-86 of the French Commercial Code.
The general meeting delegated all necessary powers to the Management Board, including the power to subdelegate to its Chairman and/or and to one of its members with the Chairman’s agreement, under the conditions provided by law, to implement this authority, particularly in order to determine the dates and terms of the allocations, and generally to take any necessary steps to complete the envisaged allocations successfully.
Pursuant to article 2 of the bylaws, the company’s corporate object in France and abroad is: the conduct of all and any banking business and related businesses within the meaning of the French Banking Act; the provision of all and any investment services as defi ned in the French Monetary and Financial Code; the performance of specifi c assignments on behalf of the French State in economic and fi nancial areas under the provisions of special agreements; the conduct of all and any brokerage business; the acquisition of interests in companies, groups or associations with a direct or indirect connection with the activities referred to above; the completion of all and any private and commercial transactions.
The shareholders’ resolution may offer the option of receiving all or part of the dividend in either cash or shares. In the latter case, payment will be made by means of allotting shares in the company in accordance with any applicable legal and regulatory provisions.
Article 10 – Chairmanship of the Management Board – General management
The Management Board shall meet as often as the interests of the Company require, upon a notice of meeting being issued by its Chairman or by at least half its members. It shall meet at the head offi ce or in any other place indicated in the notice of meeting. Additions may be made to the agenda when the meeting takes place. Notices of meetings may be issued by any means including by word of mouth.
These options were granted: to employees and executive directors of Natexis Banques Populaires and other companies in which Natexis Banques Populaires directly or indirectly held the majority of the capital stock; to employees and executive directors of Banque Fédérale des Banques Populaires, the Banque Populaire banks and entities that are more than 50%-owned either directly or indirectly, exclusively or jointly, by Banque Fédérale des Banques Populaires or affi liated institutions.
Year Month Average price (€) High (€) Low (€) Number of shares traded Capital traded