The English language version of this report is a free translation from the original, which was prepared in French. All possible care has been taken to ensure that the translation is an accurate presentation of the original. However, the original language version of the document in French prevails over the translation.
PRESENTATION OF NATIXIS1 History and links with BPCE 1.2 History and links with BPCE
as an institution affi liated with BPCE, is covered by the Groupe BPCE fi nancial solidarity mechanism. Thus, in the event Natixis encounters fi nancial diffi culty, (i) BPCE would fi rstly provide support using its own regulatory capital in accordance with its duty as a shareholder; (ii) should this prove insuffi cient, it would use the mutual guarantee fund created by BPCE, totaling €344 million in December 31, 2013 in assets provided jointly by both the Banques Populaires and Caisses d’Epargne networks, and which is increased through an annual contribution (subject to the amounts which would be used in the event of a call for funds); (iii) if BPCE’s regulatory capital and this mutual guarantee fund should prove insuffi cient, BPCE would call on (in equal proportions) both the Banques Populaires and Caisses d’Epargne networks’ own guarantee funds of €900 million in total and, fi nally (iv) if calls on BPCE’s regulatory capital and these three guarantee funds should prove insuffi cient, additional sums would be requested from all Banques Populaires and Caisses d’Epargne.
At December 31, 2013, BPCE held 71.84% of the share capital of Natixis (71.96% of voting rights) (see section 1.2.2 Financial solidarity mechanism). The structure of Groupe BPCE at December 31, 2013 was as follows: Central institution
PRESENTATION OF NATIXIS1 2013 Key fi gures 1.3 2013 Key figures 1.3.1 INCOME STATEMENT
(2) Source: Project Finance International, December 2013 (R1 “Europe - Bond Deal of the Year”, Odebrecht “Americas - LatAm O&G Deal of the Year”, N’Goma “Middle East & Africa - African O&G Deal of the Year”, Nghi Son “Asia-Pacifi c Petrochem Deal of the Year”).
The credit research teams analyze credit market trends and recommend ideal market/sector weightings for customers’ credit portfolios.
R Mirova Environnement et Infrastructure (€0.2 billion): fi nancing for infrastructure projects.
For the fourth year in a row, the collective pension plan (PERCO) offered posted robust growth, particularly in the corporate and institutional client segments. The number of PERCO accounts increased 32% year-on-year, taking the market share of accounts under management to 29.9% (source: AFG at June 30, 2013).
The loss ratio stabilized year on year at 53.8% in 2013 versus 53.4% for 2012.
The Guarantee covers portfolio assets held both by Natixis and by its subsidiaries, and agreements between Natixis and its subsidiaries have been put in place with respect to this mechanism.
Stock market indexes CAC Next 20, SBF 80, SBF 120, SBF 250 and Euronext 100 1.6.2 BREAKDOWN OF SHARE CAPITAL AT DECEMBER 31, 2013
INFORMATION 58 2.4.1 Pollution and waste management 58 2.4.2 Sustainable resource use 59 2.4.3 Climate change 60 2.4.4 Protection of biodiversity 62 2.5 SOCIAL INFORMATION 63 2.5.1 Territorial, economic and social impacts 63 2.5.2 Relationships with stakeholders 63 2.5.3 Subcontracting and suppliers 64 2.5.4 Fair practices 64 2.5.5 Measures taken to safeguard human rights 64 2.6 REPORT OF THE STATUTORY AUDITORS APPOINTED AS INDEPENDENT THIRD-PARTY BODIES ON THE CONSOLIDATED SOCIAL, ENVIRONMENTAL AND CORPORATE INFORMATION PROVIDED IN THE MANAGEMENT REPORT 65
R TECHNOLOGICAL BREAKDOWN OF THE RENEWABLE ENERGY PORTFOLIO AS AT 12.31.2013
With this innovation, Natixis Interépargne and Mirova are expanding access by SMEs and professionals to accredited SRI strategies through the Banque Populaire and Caisse d’Epargne networks. Impact ES refl ects the shared ambition of Natixis and the CIES to ensure easier access to socially responsible employee savings plans for all employees, whatever the size of their company.
Resuming the process begun in 2010 with the green works charter, the Real Estate and Logistics Department’s teams participated in the production of Groupe BPCE’s regulatory and environmental charter. This charter indicates the regulatory and environmental obligations to be obeyed for each type of outfi tting or improvement operation and the best practices observed within the group.
Buyers and business introducers have a responsible purchasing framework, based on Natixis’ environmental and social criteria. This presents the clauses applicable to the different categories of services, classifi ed by level (regulatory, required by Natixis and recommended).
In 2013, the purchasing department launched a sustainable development survey covering 30 service suppliers (recruitment, security, reprographic copying, printing and IT services fi rms). None of the companies that responded were given a global score that posed a high risk for Natixis.
This study led to the perfecting of the first in vitro test suited to the realities of the field to study the parasite’s resistance to artemisinin-based treatments, which should be widely distributed for easier monitoring of parasitic resistance to anti-malaria drugs.
R creation of a dedicated website: www.plaquonslepalu. com; R production of three animated fi lms showing Racing Metro 92 players confronted with a mosquito, broadcast on the websites of Natixis and its partners; R launching of an SMS game allowing participants to support the malaria prevention programs of Plan France and the Institut Pasteur’s research; R organization of a communication campaign during the match at the Stade de France between Racing Metro 92 and Stade Toulousain, on March 30, 2013, including the presence of a hundred or so volunteers to distribute leafl ets about the initiatives carried out and raise spectators’ awareness of this cause.
Natixis France Natixis and all of its subsidiaries in France 13,475
Agreement on the early release of mandatory and voluntary profi t-shares 06.28.2013
On the medical front, Natixis S.A. has a full-service medical department (three company physicians, four clinics, eight nurses) and three company social workers.
Frequency rate of workplace accidents (a) (by number per million hours worked) 7.24 5.99 6.48
Finally, 2013 saw the development of internal training programs, in the form of campuses, to promote the sharing of know-how and knowledge. These sessions were led by 80 internal experts and made up 11% of the training hours.
Percentage of women who received training (as %) 50.7 50.9 52.0
2013 Key event During European Waste Reduction Week (November 18 to 22, 2013), Natixis’ Real Estate and Logistics Department launched the “Recyclez vos stylos” operation, allowing employees to give a new lease on life to their plastic pens. Used pen collectors were installed for this purpose on all of the Natixis sites in Paris and Charenton.
They were replaced with new multifunction models, which consume less power and are confi gured for two-sided printing by default.
Bernard Oppetit * Date of birth: 08.05.1956 Nationality: French Natixis shares held: 1,000
Chairman of the Steering and Supervisory Board of Caisse d’Epargne Languedoc-Roussillon 254, rue Michel Teule BP7330 34184 Montpellier Cedex 4
Chairman of the Board of Directors of Banque Populaire d’Alsace Member of the Supervisory Board and Audit and Risks Committee of: BPCE Member of the Board of: Natixis (1) (since 01.28.2013)
Member of the Board of: Natixis (1) (since 04.01.2010) Member of the Management Board - Chief Financial & Administrative Officer of: JC Decaux Member of the Management Board – Chief Executive Officer of: Merial Ltd (until 05.19.2010)
Member of the BPCE Management Board – Finance, Risk and Operations Deputy CEO of: CE Holding Promotion (since 05.06.2013) Member of the Supervisory Board of: Nexity (1) (since 12.18.2013) Permanent Representative of BPCE, member of the Board of Directors of: Natixis (1), Crédit Foncier , CE Holding Promotion (since 05.06.2013)
Chairman of: Coface SA (since 11.22.2012) Permanent Representative of Natixis, non-voting member of the Board of Directors of: BPCE Chairman of the Board of Directors of: Compagnie française d’assurance pour le commerce extérieur (from 05.15.2012 to 12.19.2012) Chairman of: SAS Coface Holding (until 11.21.2012) Permanent representative of Natixis, member of the Board of: Compagnie française d’assurance pour le commerce extérieur (until 05.15.2012)
Chief Executive Officer of: Natixis (1) (since 05.14.2009) Member of the Board of: Natixis Global Asset Management (since 09.11.2009), Sequana (1) (2), Arkema (1) (2), Coface (since 10.27.2009), Lazard Ltd (1) (2) (since 07.28.2009), Cogefi S.A. (until 05.13.2009), Génération Vie (until 05.13.2009) Non-voting member of: BPCE (Permanent Representative of Natixis) (since 08.25.2009) Associate Manager of: Oddo et Cie (until 05.13.2009) Chairman and Chief Executive Officer of: Oddo Asset Management (until 05.13.2009) Member of the Supervisory Board of: La Banque Postale gestion privée (until 05.13.2009) Permanent representative of Oddo et Cie: Managing Partner of Oddo Corporate Finance (until 05.13.2009)
FRANCE Member of the Board of: Natixis (1) (starting November 12, 2009) INTERNATIONAL Chairman of: Centaurus Capital Limited Member of the Board of: Centaurus Capital Holdings Limited, Centaurus Global Holding Limited, Centaurus Management Company Limited Trustee of: École Polytechnique Charitable Trust Member of the Advisory Board of Ondra Partners Offices below ended on 09.18.2009 Member of the Board of: Centaurus Alpha Master Fund Limited, Centaurus Alpha Fund Limited, Centaurus Capital International Limited, Centaurus International Risk Arbitrage Master Fund Limited (formerly Centaurus Kappa Master Fund Limited), Centaurus International Risk Arbitrage Fund Limited (formerly Centaurus Kappa Fund Limited), Centaurus Asia Pacifi c Opportunities Master Fund Limited (formerly Centaurus Omega Fund Limited), Centaurus Asia Pacifi c Opportunities Fund Limited (formerly Centaurus Omega Fund Limited)
Chairman of the Management Board of: BPCE Chairman of the Board of Directors of: Natixis (1), Crédit Foncier Chairman of: CE Holding Promotion, Groupement Européen des Caisses d’Epargne Vice-Chairman of: Fédération Bancaire Française (2) (since September 2013) Member of the Board of: Natixis (1), Crédit Foncier, CNP Assurances (1), Sopassure, CE Holding Promotion, Musée d’Orsay (2)
Permanent Representative of BPCE, Managing Partner of: SCI Ponant + Permanent representative of BPCE MAROC, member of the Board of Directors of: Banque Centrale Populaire Member of the Executive Committee of: Fédération Bancaire Française (2)
Henri Proglio (born June 29, 1949). Henri Proglio has been Chairman & CEO of EDF since 2009 and independent director of Natixis. A graduate of HEC, Henri Proglio began his career in 1972 at the Générale des Eaux Group (now Veolia Environnement), where he held various Senior Management positions. In 1990, he was appointed Chairman and CEO of CGEA, a subsidiary specialized in waste management and transport. In 2000, he became Chairman of Vivendi Environnement (Véolia Environnement), and, in 2003, Chairman & CEO. In 2005, he was also named Chairman of the School Council of his alma mater, HEC. Key advisory skills: A nationally and internationally renowned industrialist, with expertise in large corporations and strategic issues.
Chairman and Chief Executive Officer of: EDF (starting 11.25.2009), Veolia Environnement (until 11.27.2009) Chairman of the Board of Directors of: Veolia Environnement (starting 11.27.2009), Veolia Propreté, Veolia Transport, Veolia Water (until 11.27.2009) Member of the Board of: Dassault Aviation, Dalkia International (until 11.27.2009), Société des Eaux de Marseille (until 11.27.2009), Sarp Industries (until 10.19.2009), CNP Assurances Managing Partner of: Veolia Eau – Compagnie Générale des Eaux (until 11.27.2009) Member of the Supervisory Board of: Lagardère (until 11.16.2009), Veolia Eau (starting 12.30.2009), Boards A and B of Dalkia (SAS) Member and Chairman of the Supervisory Board of: Dalkia France (until 11.27.2009), Eolfi (from 04.06.2009 to 11.27.2009) Member of: the High Commission for Transparency and Information on Safety in Nuclear Facilities (since 11.25.2009), the National Commission for Sectors of Vital Importance (since 12.08.2009), the Comité d’Énergie Atomique (since 11.25.2009) Non-voting member of: Caisse Nationale des Caisses d’Epargne (until 07.31.2009) INTERNATIONAL Member of the Board of: Veolia ES Australia (until 10.19.2009), Veolia Transport Australasia (until 10.19.2009), Veolia Environmental Services UK (until 10.19.2009), Siram (until 11.27.2009), Veolia Transport Northern Europe (until 09.02.2009), Veolia Environmental Services North America Corp. (until 10.29.2009), Veolia Environnement North America Operations
Vice-Chairman of the Steering and Supervisory Board of: Caisse d’Epargne Île-de-France Member of the Board of: Groupe Ecureuil Assurance, Société d’Économie Mixte d’Aménagement du Val d’Oise (SEMAVO) (2)
CORPORATE GOVERNANCE3 Structure of the corporate and executive bodies Nicolas de Tavernost (born August 22, 1950) is Chairman of the Management Board of Groupe M6 and independent director of Natixis. A graduate of the IEP in Bordeaux and holder of a DES in public law, Nicolas de Tavernost began his career in 1975 serving on the cabinet of Norbert Ségard, State Secretary for Foreign Trade, then Post and Telecommunications. In 1986, he headed up the audiovisual operations of Lyonnaise des Eaux. In this capacity, he oversaw the plans to create M6. In 1987, he was appointed Deputy CEO of Métropole Télévision M6 where he has served as Chairman of the Management Board since 2000. Key advisory skills: expertise in strategic, management and business development issues.
Given that the Natixis Board of Directors partially includes joint representation of the Caisses d’Epargne and the Banque Populaire banks (indirect shareholders), the term of offi ce of Natixis directors was based on that of the term in force at these institutions.
V Changes made to the Board of Directors since January, 1, 2014: R on February 19, 2014, the Board of Directors of Natixis co-opted Michel Grass to replace Stève Gentili for the remainder of his predecessor’s term of offi ce, namely until the General Shareholders’ Meeting called to approve the fi nancial statements for the fi scal year ending on December 31, 2014.
V Board operating procedures specified in the Internal Rules: In particular, the Internal Rules stipulate that, except for decisions related to the preparation of parent company and consolidated financial statements and management reports (Company and Group), directors participating in a Board Meeting by videoconference or through the use of telecommunication facilities transmitting at least the member’s voice and whose technical characteristics allow for continuous and simultaneous streaming of the proceedings, shall be deemed present for the purposes of quorum and majority.
If the Board of Directors has received inside information on Natixis, the directors and any individual attending Board or Committee meetings must refrain: V from performing any transactions on the financial instruments it has issued, directly or indirectly, on its own behalf or on behalf of another, on or off the market, before that information has been made public; V from disclosing that information to any third party, including within Natixis, unless it is within the normal context of performing his duties; V from recommending or ordering that a transaction be performed on the basis of that information.
For the fi fth year in a row, Natixis assessed the work of its Board of Directors and specialized Committees, in accordance with recommendations set out in the AFEP/Medef Code regarding the correct governance of listed companies.
Three of the six members are independent (Ms. Bories and Messrs. Proglio and de Tavernost). The number of independent directors on the Appointments and Compensation Committee is not greater than half the total number of members as recommended by the AFEP/Medef Corporate Governance Code. It has an egalitarian composition (50% independent, 50% non-independent) and the Committee is chaired by an independent director.
The Committee is responsible for submitting proposals to the Board of Directors concerning: V the level and terms of (fixed and variable) compensation paid to the Chairman of the Board of Directors, the CEO and, where applicable, one or more Natixis Deputy CEOs (including benefits in kind, pension plans and health insurance, as well as the allocation of stock options or share purchases); V rules for allocating directors’ fees to the Board and the total amount submitted for approval by Natixis’ General Shareholders’ Meeting; V the general policy on allocations of stock options.
The recommendations of the AFEP/Medef Code on the compensation of executive corporate offi cers of listed companies are taken into account in the bank’s corporate governance approach. As shown above, the AFEP/Medef Code is the one that the Company refers to when preparing the report provided for by Article L.225-37 of the French Commercial Code.
CORPORATE GOVERNANCE3 Policies and rules for determining compensation R TABLE 9
The main efforts in 2013 focused on: V enhancing the embargo management system. In order to maintain the top level of security, Natixis launched an action program in 2013 covering a series of topics ranging from the implementation of specialized training initiatives to the increased consistency of filtering systems on Consolidated Natixis’ three Swift platforms. This program will be completed in 2014; V monitoring Consolidated Natixis’ Financial Security function. This year notably saw the further coordination of procedures and tools at Wholesale Banking’s foreign entities. Greater fluidity in the circulation of information helped improve management of the system during the year; V participating in the project to create a Customer Loans Revision Unit at Natixis’ subsidiary in Algeria. The Financial Security Department was involved via supervisory, training and control initiatives; V establishing specialized training in anti-money laundering efforts. 7,200 employees (including all Material Risk Takers) completed 8 new special e-learning modules. Specialized training courses were also given to employees with high exposure to money laundering risks (correspondent banking, Private Banking, commodities, etc.); V anti-fraud efforts; this year prevention and training initiatives were enhanced in the area of social engineering fraud. In addition, the software tool Safir (supervision of fraud in market activities) was further developed over the course of the year.
The main responsibilities of the Risk Department are to: V propose a risk policy for Natixis in line with the Company’s strategy, and monitor its regular application and updates; V define methods and standards that make it possible to measure risks and approve risk taking (models, reports, limits, limit authorizations) in compliance with Groupe BPCE’s standards; V provide a second opinion on business-line cases based on workflow and Committees, for which the Risk Department undertakes preparation and supervision and acts as secretary; V set out supervision and risk monitoring procedures at the individual and consolidated level; V produce risk reports for the Senior Management Committee, the business lines, BPCE and regulatory authorities.
The calculation methodology is based on an econometric model whose standard deviations are calculated as being the maximum (risk factor by risk factor) standard deviations calculated over 12-month and 3-month rolling periods. This method makes VaR more responsive if the markets become more volatile.
The vast majority of Natixis’ exposure is in euros and US dollars and uses a short-term fl oating rate. As a result, Natixis’ overall interest-rate risk is essentially linear and concerns contractual operations.
CORPORATE GOVERNANCE3 Chairman’s report on internal control procedures relating to its fi eld of application. This Committee meets quarterly and is chaired by the Chief Executive Offi cer or his substitute the Chief Finance and Risk Offi cer, with the Head of the Operational Risk Department acting as secretary.
If Natixis decided to dispose of certain operations, the selling price could turn out to be lower than expected and Natixis might continue to bear signifi cant risks stemming from these operations as a result of liability guarantees or indemnities that it might have to grant to the buyers.
Eligibility for the different categories is defi ned according to decreasing degrees of solidity and stability, duration and degree of subordination.
Deductions include: V financial investments representing more than 10% of the share capital of a credit institution or investment firm, as well as subordinated loans and any other item constituting capital; V securitization positions with a rating of less than BB- or unrated; V total projected losses for equity exposure; V positive difference between projected losses calculated using internal ratings-based approaches and the sum of value adjustments and portfolio-assessed impairment relating to the exposures in question.
RISK MANAGEMENT4 Pillar III Breakdown of IRBA credit risk exposure by category of exposure and internal rating
Breakdown by internal rating (S&P equivalent) for asset classes subject to the IRB approach, after excluding: V exposure to equities (calculated using a simple weighting approach); V pool-based exposure (acquired portfolios); V securitization positions; V generic counterparties.
SMEs recorded in the corporate entities category 490 7 388 1,055
SMEs recorded in the retail customer category 5 - 5 2
Market risk affects Natixis’ trading and investment portfolios. In investment portfolios, market risk encompasses: V the overall interest rate risk associated with asset and liability management, which is the risk to earnings arising from asset and liability mismatches in the bank book or in the insurance business; V the risk associated with investment operations, which depends directly on fluctuations in the value of invested assets in securities portfolios; and
The Risk Department’s main responsibilities are: V the definition of all applicable risk measurement methods and risk indicators; V the analysis and daily control of market risks and the corresponding reporting for each business; V the validation of valuation models (pricers); V the definition of provisioning and fair value adjustment policies (for liquidity risks, risks related to non-hedgeable parameters, model risks, etc.); V the drawing up of all consolidated reports presented to management and control and supervisory bodies; V the introduction of standards and procedures common to all entities (subsidiaries and branches) carrying market risks; V the production of VaR, stressed VaR (SVaR), IRC (1) (Incremental Risk Charge), stress tests and backtesting.
RISK MANAGEMENT4 Pillar III R All decisions regarding risks factors are revised annually in Committee meetings attended by all parties concerned (Risk Department, front offi ce and P&L division). Quantitative, objective tools are used to measure the relevance of risk factors. The aim is to ensure consistency between VaR calculations, results and sensitivities (use of the same risk factors).
These exceptions, the fi rst of which was related to the calculation method, exceeded the VaR level by more than 20% and were reported to the Audit Committee and to the ACPR in connection with the alert thresholds defi ned under Regulation No. 97–02 (Articles 17 ter and 38).
R STRESSED NATIXIS VAR Change in regulatory Stressed VaR and End-of-period VaR including the BPCE guarantee.
In addition to risk mapping, the Operational Risk Department analyses Key Risk Indicators (KRI) across the whole of the Natixis scope as a preventive measure used to detect any changes in the operational risk profi le. KRIs cover seven types of lossgenerating events according to the Basel accords in force, and are divided into two categories: one category measuring scale across all Natixis business lines and another measuring scale specifi c to the business lines analyzed. These risk indicators are subject to validation by the Operational Risk Committee and are regularly reviewed.
Prudential restatement of unrealized gains or losses on available-for-sale equity instruments as a percentage of upper Tier 2 capital 44
Natixis’ structural balance sheet risks are managed and monitored under the authority of the Asset/Liability Management Committee (ALM Committee) chaired by the Chief Executive Offi cer, and comprised of the members of the Senior Management Committee (in charge of Finance and Risks, Wholesale Banking and market solutions), the Head of Risk, the Head of the Single Treasury and Central Bank Collateral Management Pool, the Head of Financial Management and BPCE’s Head of Asset/Liability Management. The Committee meets every two months and is mainly responsible for: V defining and monitoring Natixis’ asset/liability management; V approving the major principles in terms of structural balance sheet risks (structure, delegation of authority, internal liquidity pricing, etc.) in compliance with the standard ALM framework set up by BPCE; V validating ALM assumptions and conventions underlying calculations for indicators used to manage and monitor structural risks; V validating limits related to liquidity indicators, overall interest rates (1) and structural foreign-exchange rates; V validating the overall refinancing policy in conjunction with BPCE ALM; V monitoring the main balance sheet aggregates and their developments, as well as supervising structural balance sheet risks and compliance with limits.
In August 2004, three shareholders acting in the name of and on behalf of three investment funds (Oakmark Fund, Oakmark Equity and Income Fund and Oakmark Global Fund) fi led a complaint against Harris Associates L.P., a wholly-owned subsidiary of Natixis Global Asset Management, before the United States District Court for the Northern District of Illinois. The plaintiffs alleged that Harris Associates LP billed services to these three funds at an excessively high rate in light of applicable regulations. These proceedings are among numerous legal claims initiated in recent years against investment advisors. Harris Associates L.P. and the plaintiffs fi led motions for summary judgment.
Constitutional Council declared to be unconstitutional the fi rst paragraph of Article L.442-9 of the French Labor Code in its version prior to Law No. 2004-1484 of December 30, 2005 and considered that employees of companies whose share capital is predominantly held by public entities cannot call for a profi tsharing scheme to be applicable to them in respect of the period during which the provisions declared unconstitutional were in force. The case is still in progress before the Paris District Court.
Tranches - Total Buyer Outstandings Outstandings in millions of euros Number of limits Number of buyers Outstanding
Compagnie Européenne de Garanties et Cautions is Natixis’ guarantee and surety platform for multiple business lines. Its primary risks include underwriting risk, market risk, reinsurer default risk and operational risk.
Financial Data 5.4 PARENT COMPANY FINANCIAL STATEMENTS AND NOTES 353 5.5 STATUTORY AUDITORS’ REPORT ON THE PARENT COMPANY FINANCIAL STATEMENTS 401 5.6 STATUTORY AUDITORS’ SPECIAL REPORT ON RELATED-PARTY AGREEMENTS AND COMMITMENTS 403
The pro forma impact was taxed based on the reported effective tax rate applicable in 2012. On January 1, 2012 deferred taxes in respect of the proceeds from the transaction were charged against the tax group’s tax loss carryforwards.
Capital will be allocated to Natixis business lines on the basis of 9% of their Basel 3 average risk weighted assets. The capital allocation specifi c to the insurance businesses is replaced by the Basel 3 treatment for investments in insurance companies, as stated in CRD4/CRR (“Danish compromise”: the consolidated value of the investment being risk weighted at 370%).
Excluding the impact of the revaluation of own senior debt, net revenues climbed 4% over the year to €7,226 million, refl ecting the solid momentum in the core businesses (+5%).
Investment Solutions posted a 9% increase in net revenues (+11% at constant exchange rates), predominantly attributable to the momentum in Asset Management driven by development in the United States and the turnaround in insurance income thanks to improved conditions in life insurance.
During 2013, cash surpluses in the euro zone decreased, including during the second half, despite a drop in the European Central Bank’s key interest rate from 0.50% to 0.25%.
With the exception of the items referred to in the abovementioned note, there have been no material changes in the group’s fi nancial and commercial position since the end of the fi scal year for which the fi nancial statements have been audited.
Pursuant to Article L.441-6-1 and D.441-4 of the French Commercial Code, the following table breaks down unpaid supplier invoices by due date: Due dates after December 31 Weighting as a %
TOTAL LIABILITIES 510,131 528,411 * The comparative 2012 fi nancial statements have been restated to refl ect the impact of the application of IAS 19 (revised). The effects of the change in accounting policy associated with the implementation of IAS 19 (revised) are described in Note 12.2.3.
Share in gains or losses of associates recorded directly in equity** 830 434
Equity as of December 31, 2011 after appropriation of income 4,932 5,230 3,800 (14)
As required by European regulation 1606/2002 of July 19, 2002, Natixis has prepared its consolidated fi nancial statements for the year ended December 31, 2013, in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union at that date (1). These standards include IAS 1 to 41, IFRS 1 to 8 and IFRS 13 as well as the related IFRIC interpretations adopted by the European Union as at December 31, 2013.
Natixis did not early apply the standards adopted by the European Union at December 31, 2013 but which had not yet entered into force. This mainly includes: V the amendment to IAS 32, which is retroactively applicable to the fiscal periods beginning on January 1, 2014. It specifies the terms of presentation offset in the balance sheet of financial instruments and the scope of the clarifications made by the amendment to IAS 32 is being established; V the new standards on consolidation – IFRS 10, “Consolidated Financial Statements,” IFRS 11, “Joint Arrangements,” and IFRS 12 “Disclosure of Interest in Other Entities,” published by the IASB on May 12, 2011 and adopted by the European Commission on December 11, 2012. These standards are subject to mandatory application for the annual periods beginning on January 1, 2014.
In addition, in drawing up the consolidated fi nancial statements as at December 31, 2013, Natixis also took into account: V with regard to the valuation of financial instruments, the recommendation published on October 15, 2008, by the AMF, the Conseil National de la Comptabilité (CNC – French National Accounting Board), the Commission Bancaire (French Banking Commission) and the Autorité de Contrôle des Assurances et des Mutuelles (ACAM – French insurance regulator), now the Autorité de Contrôle Prudentiel et de Résolution (ACPR - French Prudential Supervision and Resolution Authority), and
V power to assemble the majority of voting rights at meetings of the Board of Directors or an equivalent governing body.
At December 31, 2012, the dilutive/accretive impact derives from differences in the rights associated with ownership shares (entitlement to dividends) and CCIs (entitlement to dividends at least equal to dividends payable on ownership shares and entitlement to reserves made up of retained earnings).
At December 31, 2013, no such impact was recorded in Natixis’ fi nancial statements, because the cooperative investment certifi cates were sold.
Income generated from non-controlling interests subject to put options are presented in “Net income for the period – portion attributable to non-controlling interests” on the consolidated income statement.
Claims reserves include an estimate of claims reported but not settled at the reporting date. In addition to the amount of claims payable, a provision is set aside for unknown claims, calculated on a statistical basis by reference to the fi nal amount of claims to be paid following settlement of risks and after any debt recovery measures.
V Consolidation of 12 funds: Colombes funds, dedicated investment vehicles for Coface’s cash; V Newly consolidated Coface Deutschland Vertrieb GMBH and Coface Rus insurance company after consolidation thresholds were exceeded.
FINANCIAL DATA5 Consolidated fi nancial statements and notes At December 31, 2013, the Natixis Assurances sub-group held a majority interest in fi ve funds which are material to the consolidated fi nancial statements and were thus consolidated in the Natixis consolidated fi nancial statements: R ABP ACTIONS; R ABP ALTERNATIF OFFENSIF FCP; R Fructifoncier; R NAMI INVESTMENT; R NATIXIS ULT.SHORT TERME BDS PLUS.
Accordingly, none of these entities had been consolidated as of December 31, 2013.
(a) As all transactions including this kind of data are back-to-back derivatives, this item, which justifi es the level-3 classifi cation, is fully hedged.
The Second Amended Finance Act for 2012 also provides for an additional exceptional contribution in respect of the systemic bank tax, equivalent to the tax paid in 2011, thereby doubling the contribution owed by banks. This exceptional contribution generated a €21.9 million expense in the second half of 2012. In addition, the Second Amended Finance Act also increased the systemic tax rate from 0.25% of the amount of minimum capital requirements to 0.50%. This new rate applies permanently since January 1, 2013.
The fair value of hybrid market instruments not traded on an active market is calculated using valuation techniques. Valuations produced using valuation models are adjusted, depending on the instruments in question and the associated risks, to take account of the modeling, counterparty, internal credit and input risks. The fair values obtained from these methods may differ from the actual prices at which such transactions might be executed in the event of a sale on the market.
(a) The fair value, determined using the method described in Note 5.6, recorded in respect of internal credit risk on Natixis issues totaled €125.7 million at the reporting date versus €323 million at December 31, 2012 (see Note 7.3). Besides changes in the outstanding amount, this difference refl ects changes in the Natixis spread since the close of the previous year’s accounts.
S.A., Eurex AG and Fixed Income Clearing Corporation (FICC). Natixis records on its balance sheet the net value of repurchase and reverse repurchase agreements that: R are made with the same clearing house,
The table below provides, by type of fi nancial instrument, a breakdown of the age of fi nancial assets which were past due but not impaired at the reporting date. It does not take into account any portfolio impairment losses which may be assessed.
Other available-for-sale securities 265 (1) 23 26 o/w fi xed-income securities 231 23 18 o/w variable-income securities 34 (1) 8
(c) A transaction undergoing restructuring was transferred to Level 3 of the fair value hierarchy in the amount of €602 million as at December 31, 2013.
This heading corresponds to technical accounts, details of which are given below: 6.9.1 OTHER ASSETS AND LIABILITIES
Insurance accrual accounts 6.9.3.1 8,521 8,190 * The comparative 2012 fi nancial statements have been restated to refl ect the impact of adopting IAS 19 (revised).
Impairment and amortization of property, plant and equipment and intangible assets (7) 3 (4)
Impairment losses taken on availablefor -sale fi nancial assets 1,797 204 (180) (600) (1) 1,221
Derivative instruments not eligible for hedge accounting (negative fair value) 63,337 2,127 59,932 1,278 66,458 1,961 63,711 786
V At December 31, 2013, recognized own credit risk adjustments to derivatives (debit valuation adjustments or DVAs) stand at €81.2 million. Furthermore, credit risk adjustments related to the valuation of counterparty risk on fi nancial assets is -€10.8 million at December 31, 2013.
* The comparative 2012 fi nancial statements have been restated to refl ect the impact of adopting IAS 19 (revised). The effects of the change in accounting policy associated with the implementation of IAS 19 (revised) are described in Note 12.2.3.
(b) o/w: -€32 million in taxes on the special dividend distributed at the conclusion of the disposal transaction.
Net gains or losses on fi nancial instruments at fair value through profi t and loss 2,079 2,079
Financial liabilities at fair value through profi t and loss 140,852 139 4 59,850 68 200,913 10.10 Other disclosures
As a lending institution, Natixis is subject to banking regulations and to supervision by the Autorité de Contrôle Prudentiel et de Résolution (ACPR). Supervision is on a consolidated and individual basis and is designed to set a number of rules guaranteeing the bank’s capital adequacy, liquidity and fi nancial equilibrium. The resources applied to achieve these objectives are essentially a quantitative mechanism: solvency ratios, major risk control ratios and liquidity ratios, along with a qualitative mechanism based on internal audit requirements.
Total revaluation adjustments at end of period 163 9 172 193 7 200
FINANCIAL DATA5 Consolidated fi nancial statements and notes (in millions of euros) 12.31.2013 12.31.2012
Other recurring operating income and expenses (212) (27) (185) (211) (212)
IA, LP (1) Private Equity FC 80 80 80 80 United States
Although we are not calling the aforementioned opinion into question, we would draw your attention to Note 1.1, which sets out the changes in accounting policies resulting from the application of new standards and interpretations as from January 1, 2013.
Commitments given to customers 19,417 21,028 24 o/w institutional operations: 37 Commitments on securities 6,358 4,883 37 Other commitments given 25,956 25,399
Provisions for geographic risk are primarily based on each country’s internal rating, incorporating different parameters and indicators (political situation, performance of the economy and economic outlook, banking system situation, etc.). Calculation of the impairment loss is based on an internal rating/provisioning rate correlation table.
R under net gains/(losses) on fi xed assets: R for adjustments in the value of securities held for investment (excluding impairment for risk exposure to a counterparty) when there is a high probability of disposal of such securities held for investment due to unforeseen circumstances and for all proceeds from the disposal of securities held for investment,
For accounting purposes, the P3CI issue was treated as a debt security issued at par whose redemption value was adjusted in the event of a drop in the prudential value of the CCIs. On each reporting date over the lifetime of the transaction, the carrying value of P3CI was adjusted to take account of changes in the prudential value of the CCIs (accounted for by the equity method). In accordance with the principle of prudence, the corresponding adjustment was not recognized in income but was instead recorded under assets on the accruals line.
Securities held for sale 1,582 1,586 o/w accrued interest 14 12 o/w non-performing o/w write-downs
Securities held for investment 87 154 o/w accrued interest o/w non-performing
Cash and consumer credit 20,080 20,005 o/w accrued interest 47 41
The remaining average working lives of employees, for all benefi ts, is 15.8 years.
Payments to the fund during the period (4) (4) (8) (8)
EXCHANGE RATE INSTRUMENTS 444,404 199,321 On organized markets 113,822 149,500 Swaps
We have no matters to report as to the fair presentation and the consistency with the fi nancial statements of the information given in the management report of the Board of Directors, and in the documents addressed to shareholders with respect to the fi nancial position and the fi nancial statements.
I - AGREEMENTS AND COMMITMENTS SUBMITTED FOR APPROVAL BY THE GENERAL SHAREHOLDERS’ MEETING
2.1.1 RECIPROCAL FINANCIAL GUARANTEE PERTAINING TO THE “NEPTUNE” DEAL BETWEEN NATIXIS S.A. AND NATIXIS REAL ESTATE CAPITAL INC.
On November 9, 2011, the Board of Directors approved the signing of a preliminary agreement between BPCE and Natixis. This preliminary agreement sets out the main terms and conditions, and the indicative execution timetable for the Coccinelle project, which consists in making arrangements to protect Natixis against a portion of the risks relating to the Company’s investment in Banques Populaires and Caisses d’Epargne, via the issuance by
2.1.10 CREDIT AND FINANCIAL GUARANTEE MASTER AGREEMENTS BETWEEN (I) NATIXIS AND BFBP AND BETWEEN (II) NATIXIS AND CNCE
In order to increase the share capital by issuing shares or securities giving access to the Company’s capital, reserved for members of employee savings plans with waiving of preferential subscription rights in favor of said members, pursuant to Article L.225-129-6 of the French Commercial Code €48 m (b) 26 months 02.17.2013 €13,503,408
No stock options were granted in fi scal years 2009, 2010, 2011, 2012 or 2013.
Board members, including natural and legal persons, owned 72.17% of Natixis’ capital at December 31, 2013 (almost all of this being owned by BPCE).
Under the share buyback program authorized by the General Shareholders’ Meeting of May 21, 2013, Natixis owned 5,270,351 treasury shares at December 31, 2013.
Finally, as indicated in paragraph 6.2.3 herein, during its session on February 17, 2013, the Board of Directors decided to use the authorization relating to the capital increase with waiving of preferential subscription rights reserved for members of employee savings plans granted by the Combined General Shareholders’ Meeting of May 26, 2011 (20th resolution), for the launch of the Mauve 2013 employee share ownership plan with an overall par value ceiling of €48,000,000, representing a maximum of 30,000,000 shares.
The amount of variable compensation for fi scal year 2013 was therefore set at €958,000, i.e. 119.75% of fi xed compensation. €343,347 will be paid in 2014, 50% of which will be index-linked to the Natixis share price. €614,653 will be deferred over three years, 50% of which will be index-linked to the Natixis share price, and will be paid in thirds in 2015, 2016 and 2017, provided that the presence and performance conditions are met.
Severance payment N/A Laurent Mignon did not receive a severance payment
Documents available to the public 7.2 Documents available to the public
Art. R.225-105-1 – II 1° d) V Work accidents, including frequency and severity, and work-related illnesses 54