Simplifi ed organization chart of Natixis businesses (as at 31.12.2008) 4
Statutory Auditors’ report on the parent company fi nancial statements 389
Authority. It may be used in support of a financial transaction if it is supplemented by a transaction note approved by the Financial
It prepared Natixis’ 2007 reference document (annual report) and its updates, and ensured their fi ling with the AMF
Natixis issued a number of specifi c press releases, notably on the consequences of the fi nancial crisis, events that had a signifi cant infl uence on the fi nancial statements, reorganization measures and the main appointments that occurred.
NATIXIS SHARES1 Shareholder relations during the September 2008 capital increase, resources ■
POLICIES AND RULES FOR DETERMINING COMPENSATION AND ALL BENEFITS IN KIND PAID TO MEMBERS OF THE EXECUTIVE BODIES 27
Member, Compensation Committee First appointed: 17.11.2006 Term expires: 2012 AGM (3)
Member, Executive Board First appointed: 17.11.2006 Term expires: 17.11.2012 (Dominique Ferrero was CEO from 17.11.2006 to 06.03.2009)
Executive Board members whose term of offi ce had expired as of March 6, 2009
All four of these members satisfy the criteria for independent members as set out in the AFEP/MEDEF reports. Banking relationships between Natixis and the groups headed by these two individuals are not of a nature to affect the impartiality of their judgement. In addition Henri Proglio serves as a non-voting director on the Supervisory Board of Caisse Nationale des
General Shareholders’ Meeting, to replace Alfonso Iozzo who resigned; in November 2008, following the resignation of Charles ■
The Supervisory Board may decide to establish committees to review issues submitted to it for examination by the Board itself or its Chairman. It determines the composition and duties of these committees, which operate under its responsibility.
of the Company or the Group, or for which the Company accounts for a signifi cant portion of its business; have a close family connection with an executive of the ■
up to a limit not exceeding €10 million per transaction; disposals of investments in any form of Company or grouping ■
The Board, in accordance with the shareholders’ agreement and by-laws, had notably to give an opinion on the restructuring operations between subsidiaries prior to their implementation.
The following projects were concerned: the formation of Natixis Epargne Financière; ■
of the fi nancial statements and the Chairman’s report on the Company’s business activities. Under this framework, it monitors the quality of information provided to shareholders and, more generally, carries out the duties set out in CRBF
conclusions of Inspection and Banking Commission assignments; for this purpose, it may receive reports from the
relation to commercial relationships between the Company and one or more of its subsidiaries and all, or some, of the entities making up Groupe Caisse d’Epargne or Groupe
On the subject of internal control and compliance, the Committee received a presentation on the Commission Bancaire report on risk monitoring and internal control. It also received a presentation on the assignments and organization of the Natixis Compliance function, as well as the work program of the bank’s Inspection
Committee received detailed information on the consequences of the crisis for Natixis, covering the main exposures and their constituent components (sub-prime, conduit entities, specialpurpose entities). A regular bulletin update was presented to it on liquidity.
Fédérale des Banques Populaires on the Supervisory Board, was appointed to replace him as Member of the Compensation
members, including fringe benefi ts, pension plans and health insurance, as well as the allocation of stock options or share purchases; rules for the allocation of directors’ fees to Supervisory Board ■
CORPORATE GOVERNANCE 2 Board composition and preparation and organization of its work to which the college of Statutory Auditors is invited, approved the 2007 fi nancial statements, the 2008 interim and quarterly fi nancial statements of the Company, as well as the Group consolidated fi nancial statements. The approvals of the 2008 and 2009 budgets were also dealt with as specifi c agenda items of the Executive Board. In total, the Executive Board met 54 times in 2008.
B - Compensation and all benefits in kind paid to Supervisory Board members
The fi xed compensation paid to Philippe Dupont in relation to his duties as Executive Chairman of Natixis was €350,000 in 2008.
In 2008 the fi xed compensation paid to Jean-Pascal Beaufret was as follows: in relation to his employment contract, a fi xed salary of ■
François Ladam enjoyed the use of a company car and housing allowance valued for 2008 at €8,499.
Ferrero and Jean-Marc Moriani as at December 31, 2008) are not entitled to severance payments in relation to their executive corporate offi cer positions within Natixis or its subsidiaries.
Personal fi xed compensation in relation to CNCE 359,585 359,585 502,345
Compensation in relation to CNCE subsidiaries other than Natixis 50,000 50,000 50,000
Non-voting Director, Natixis Supervisory Board 12,000 12,000 due: 14,000 paid: 24,000 (1)
Two corporate offi cers of Groupe Natixis benefi ted from this free share grant in relation to their employment contract.
Performance bonus shares that became available for sale during the period for each executive corporate officer No performance bonus shares were granted.
Options held in the issuer and the companies previously referred to, exercised during the fi scal year, by the top ten Natixis employees by number of options exercised.
(1) Dominique Ferrero’s employment contract, dated March 23, 2006, was suspended at the time of his appointment as Chief Executive Offi cer of Natixis on November 17, 2006.
The plan is therefore considered as a plan with uncertain rights operating in accordance with the provisions of Article L.137-11 of the Social Security Code. The current compensation ceiling is €370,000.
Natixis’ Executive and Supervisory Board members include employees of the two shareholder groups (Groupe Banque
T ■ wo regional platforms in North America and Asia, with dedicated resources to support each of the business lines in their international development, in a controlled manner.
real estate finance in France and No. 4 MLA in the Europe, Middle East and Africa (EMEA) zone (source: Dealogic- January 2009); No. 2 book runner on French corporate bond ■
issues in euros and No. 2 book runner on bond issues from French AAA issuers in euros (source: Dealogic Loanware); No. 2 MLA on LBO financing in France by ■
Commodities, Real Estate, Debt Solutions and Securitization on behalf of clients.
Natixis was No. 15 by amount in MLA for the EMEA zone, No. 10 in North America and No. 19 in the world (source: Infrastructure
Preziosi (senior debt of €375 million), Guala Closures (senior and mezzanine debt of €428 million) and most importantly,
Financial engineering ■ arranges customized structured fi nancing for corporate and institutional clients: optimized fi nancing, equity fi nancing (fi nancing share acquisitions, equity-backed fi nancing, monetization of shares, secured loans replicating the profi le of a fi nancial instrument, etc.), and asset fi nancing
Natixis also won the “best transaction of the year” award from the magazine Trade Finance: Kazakhmys (Kazakhstan), Total
clients and their shareholder groups, as well as fi nancing solutions for companies that are being restructured. In 2008, the “Horizon PME” debt fund, dedicated to the long-term fi nancing of small-to-medium-sized business clients of the
In 2008, the creation of a marketing team dedicated to the range of Alternative Assets products opened up new geographical zones such as the Middle East and extended the customer base to fund managers.
Sydney teams continued their strategy of moving upmarket, based on a very selective approach to risk, with their fi rst mandate as arranger awarded in Australia (Lindores).
The role of the Active Risk Management and Supervision structure (ARMS), in coordination with the risks department, is to advise the CIB division in the strategic management of the business. ARMS is responsible for Credit Portfolio Management
The presence of several major institutional investors in NPE’s funds also helps to enhance visibility and its networks for the benefi t of entrepreneurs both in France and abroad. This innovative business model, targeting solely small and mediumsized businesses , gives Natixis Private Equity a competitive advantage and robust growth outlook.
which it has created specifi c services; independent wealth-management consultants, to whom it ■
Four of these six business lines – Insurance and Guarantees, Specialist Financing, Employee Benefi ts Planning, International Services – are specialized in the design of products and services marketed mainly by the “Banques Populaires” and “Caisses d’Epargne” networks.
In a turbulent environment of economic and fi nancial crisis and with high short-term rates, life-insurance infl ows are down for the entire market. The bancassurers have thus seen a drop in activity of 13% on average (source: G11). Natixis Assurances, in spite of a drop of 20% in its revenues in individual life insurance, had outstandings of €31 billion at the end of 2008, slightly up compared to 2007.
Lastly, Natixis Assurances continued the introduction of its insurance products for borrowers from the regional Banques
The names Cegi, Saccef and Socamab will remain in existence as product lines. They have been harmonized and distinguish the products in the documents designed for clients and partners: marketing brochures, surety bonds, etc.
In the real estate market in France, 1 in 3 new houses are covered by a completion guarantee from Natixis under the law introduced in 1990, representing 21,000 homes in 2008. Also,
increased its revenue by 4.6% compared to 2007. Standardized credit insurance contracts are now available in 93 countries; in 40 countries, these contracts are offered by Coface entities
In July 2008, Coface announced its intention to become a financial rating agency, alongside the three large American agencies, limiting itself to “Company” risk. This introduction is based on the internal rating process that Coface Holding, in consultation with the companies in question, already uses for its own requirements, to score 17,000 companies throughout the world corresponding to the most important risks. Coface emphasizes three exclusive strong points: signifi cantly lower cost, the statistical reliability of its tools, and expertise in risk handling acquired over 60 years in the credit-insurance business. The product, in the test phase in Europe and Asia, will be marketed during 2009.
The strong strategic fi t between the two networks represents a major advantage for Natixis, which, as a holder of CICs, benefi ts from the individual strengths of each network and, as a provider of products and services, from their combined strength.
Mutuelle Des Étudiants), which facilitates students’ access to loans and rental deposits without having to request parents or third parties to act as guarantors.
Banque Populaire among employees of the French national education, research and culture systems, and on the partnership established with the associations for credit and savings for government employees (ACEF).
The fi nancing of agriculture remained active during 2008. Both subsidized and traditional loans increased by 16.24% over a sliding 12 month period. The Group’s reputation continues to grow in this client segment.
To this end, it is committed to ensuring growth in its outstanding loans at an annual rate of 3 to 4%. This commitment also highlights the continuity of the close co-operation with Oséo, a long-term partner of the Group.
The process of merging the Caisses d’Epargne was completed in 2008: their number went from 29 in 2006 to 17 on 31.12.2008.
(legal, employee relationships, compensation & benefi ts, training, etc.,) and provides clearer information on key HR processes
The workforce is now consolidated monthly at the Group level, and this report is provided to Group HR, to divisional HR and to the fi nancial department, based on processing rules drawn up in 2008. Monthly monitoring includes the workforce per entity and the monitoring of arrivals and departures in France and internationally.
In 2009, HRIS will be introduced in line with HR policies, with the objective of continuing to improve the reliability of our reporting and analysis tools, continuing the international introduction of tools for managing performance (annual interviews and promotion interviews), and developing new tools for HR representatives to help with mobility and career planning.
The compensation policy of a Group is not simply the sum of the compensation policies of its various structures. It is therefore important to defi ne the key components of our compensation policy, to control the costs and risks related to systems of variable compensation and to obtain ongoing visibility concerning the practices and systems of compensation within all of our business lines. The aim is to have compensation systems that are appropriate to the specifi cs and diversity of our businesslines and in line with market practices, while taking care to keep overall coherence. This has been made possible with the creation of a team dedicated to compensation, employment benefi ts and salary policy, allowing individual and overall policies to be determined.
This last milestone completes the SDSS and provides Natixis with: databases common to all summary functions; ■
Lead arranger for the fi nancing of eight wind farms in France
The investment was made jointly with the support of Natixis’ banking unit. At the end of 2008, two of the four projects included in this investment were registered with the United Nations’ CDM executive board. CDM registration is pending for the two fi nal projects. The fi rst certifi ed emissions reductions are expected to be awarded in 2009.
(7) Sub-funds of the Luxembourg SICAV, Natixis International Funds (Lux) I.
French investment market and is specifi cally designed to optimize the management of the solidarity-based mutual investment subfunds of employee savings schemes. It is specifi cally designed to cater for the increased prominence of solidarity mutual funds within employee savings plans, which is being driven by recent legal developments (2). By launching this private equity mutual fund in 2006, Natixis Asset Management anticipated the future growth of solidarity-based employee savings schemes and gained the expertise to assist companies in this new area of investment.
Group’s operations in France rose to 40.9%, up from 40.5% a year earlier, and the percentage of women in overall promotions increased to 63.8%, versus 59.7% in the prior year.
Natixis S.A. had 69 employees with disabilities in 2008, twelve more employees than in 2007. A consulting fi rm has been retained to carry out ergonomics surveys and make enhancements in order to accommodate disabled members of staff. In addition, awareness-raising initiatives are being implemented in the following areas: during the year, 65 people took part in a series of six disability ■
In the parent company, temporary workers accounted for a monthly average of 201 FTEs, representing 3% of the average salaried workforce in 2008.
Around 7,500 employees of the parent company and its subsidiaries received an individual social audit, a document explaining to each employee what they have received in terms of fi xed remuneration, statutory benefi ts, variable remuneration, employee savings schemes, as well as the benefi ts provided by the Company in terms of social protection (provident insurance, complementary health insurance, retirement benefi ts) and providing a breakdown of other benefi ts (training, employee representative committee, family allowances, etc.).
Environmental aspects of construction work and property facilities management are supervised by a cross-functional unit reporting to the logistics department. It is responsible for tracking consumption, coordinating and spearheading actions taken by the logistics department’s operating units.
Conditions in the financial markets, particularly the primary and secondary debt markets, may have a significant negative effect upon Natixis
Disruptions in these markets have made and in the future may make the issuance of these securities costly or impossible under reasonable conditions. This affects Natixis’ capital ratios and its ability to grow its business. Although Natixis is supported by its two main shareholders, as well as by the programs put in place by the French government and by certain other governments to ensure the strength and liquidity of the banking system, these measures may prove insuffi cient to compensate for the lack of liquidity currently observed in world markets.
Natixis has suffered significant losses, and may continue to suffer losses, on its portfolio of assets affected by the financial crisis
In the event of a disagreement between BFBP and CNCE, the business or operations of Natixis could be subject to significant disruptions
As part of the shareholders’ agreement, Natixis’ two principal shareholders, BFBP and CNCE, have generally agreed not to compete with the activities of Natixis in France or abroad.
Natixis’ ability to attract and retain qualified employees is critical to the success of its business and failure to do so may materially affect its performance
Natixis fails to identify or anticipate. Natixis’ risk management techniques and strategies may also not limit its risk exposure in all market patterns. These techniques and strategies may not be effective against certain risks, particularly those that Natixis has not previously identifi ed or anticipated. Some of Natixis’ qualitative tools and metrics for managing risk are based upon its use of observed historical market behavior. Natixis applies statistical and other tools to these observations to arrive at quantifi cations of its risk exposures. These tools and metrics may fail to predict future risk exposures. These risk exposures could, for example, arise from factors Natixis did not anticipate or correctly evaluate in its statistical models, or from unexpected and unprecedented market movements. This would limit Natixis’ ability to manage its risks. Natixis’ losses could therefore be signifi cantly greater than the historical measures indicate. In addition, Natixis’ quantifi ed modeling does not take all risks into account. Natixis’ qualitative approach to managing those risks could prove insuffi cient, exposing it to material unanticipated losses. In addition, while no material issue has been identifi ed to date, the risk management systems are subject to the risk of operational failure, including fraud. (See “Risk Management” for a more detailed discussion of the policies, procedures and methods Natixis uses to identify, monitor and manage its risks.)
Natixis and its joint venture partners may negatively impact the benefi ts intended to be achieved by the joint venture.
Net banking income for the ■ CIB division was -€595 million in 2008, of which a negative €456 million in the fourth quarter.
Restructuring expenses amounted to €247 million after tax, of which €96 million was recorded in expenses stemming from the Job adaptation plan. The fi gure also includes severance payments linked to departures outside the Job adaptation plan, and expenses relating to the implementation of the various reorganization plans.
In France, there were 212 fewer FTEs at the end of the period, thanks to the initial impact from the Job adaptation plan (the bulk of the departures will be seen in 2009). Internationally, headcount edged up slightly, as the decision to scale down operations, particularly in Asia, will only translate into job cuts in 2009.
The year 2008 as a whole demonstrated the resilience of the
2008 ■ underlying net income (Group share) amounted to €208.2 million, down 21%. At constant exchange rates, the fall was limited to 15%. The cost/income ratio improved by 4 points, moving down from 75% to 71%.
A small amount of net infl ows, totaling $0.8 billion, was recorded over the year, coming chiefl y from the distribution platform. They relate mainly to fi xed-income products sold by Loomis, and
The Services division was extended at the end of June 2008, and now has six business lines: Insurance and Guarantees: life insurance, provident insurance, ■
Gains on fixed assets ■ amounted to €6.4 million, refl ecting capital gains on the disposals of (i) a 33% interest in SLIB
The impressive performance in revolving credit can be ascribed to the successful launch of the Créodis card in the
The Payments business line held up well over the year. ■
Net banking income in Private Banking amounted to €110.2 million, down from €127.0 million in 2007, a fall of 13%
(2) which represents four times the volume of short-term bank lending.
The credit crisis depressed earnings substantially: the division’s underlying net income (Group share) amounted to €70.8 million in 2008, compared with €186.1 million in 2007, down 62%, or -€115.3 million.
Share accounted for under the equity method 205.0 267.9 (62.9) (23)%
The year 2008 was marked by strong growth in lending, with total loans up 8% compared with 2007. Growth came to 6% among retail customers, driven by home loans (+5%) and consumer lending (+6%).
Natixis’ share came to €183.6 million, down 42%. There was also an accretion gain of €78.4 million.
the organization of the Group’s control functions and units on ■
Management Department has used a single set of resources, methodologies and tools.
The mechanism is based on: internal rating methodologies specifi c to the various Basel ■
Basel Committee. The decision on whether a guarantee’s riskreducing effects make it eligible to be included in risk-exposure calculations is made on a case-by-case basis. Checkpoints are set up throughout the process. They cover the approval of the transaction, the monitoring of credit-risk exposure and the calculation of the resulting capital requirements.
For each transaction, the proportion of RWAs is calculated not only on the basis of the counterparty’s internal rating (probability of default), but also depending on whether the exposure is senior or subordinated, on the nature of the assets received as collateral
Small and medium-sized businesses listed in the retail customer category 103
FINANCIAL DATA 6 Management Report 5.4 – Market risk 5.4.1 – Organization and control of market risk (data certified by the Statutory Auditors in accordance with IFRS 7)
Division Number of action plans carried out in 2008 Number of action plans underway Number of new action plans in 2008
certain amount (currently €0.5 million for all the underwriting centers, and €1 million for the two main underwriting centers,
The banking portfolio’s exposure to equities corresponds to fi nancial assets classifi ed in the following categories in accordance with IAS 39: available-for-sale assets; ■
BREAKDOWN OF EXPOSURE AT DEFAULT IN THE EQUITIES CATEGORY BY DIVISION
(in millions of euros ) Cost or historic value (after permanent decline in value)
(in millions of euros ) Total amount of capital gains or losses on disposalAssets
Financial liabilities at fair value through profi t and loss and hedging instruments 269.4 163.3
Natixis’ short-term refi nancing is organized by business line on three distinct sites, in Paris, New York and Singapore, with the aim of facilitating the refi nancing of the various business lines and being more effective in each currency. The Treasury Department’s short-term goal is to secure and diversify Natixis’ refi nancing, to optimize the cost of its borrowings and to manage risks within the bounds of VaR and mismatching limits. The size of certifi cate of deposit and commercial paper issues was increased to match the new entity’s funded balance sheet.
The Bear Stearns crisis in March prompted a change in internal rules governing transformation into liquidity. As of that time,
These notes are subject to a number of covenants: non-payment of the coupon at the due date under certain ■
To speed up the merger momentum, and to facilitate the best possible coordination of the work leading to its effective creation,
The parties concerned continue their work and expect to obtain the required authorizations with the intention of signing the fi nal agreements before the end of the fi rst half of 2009. The employee representative bodies will naturally be consulted on the project, according to the legal and regulatory requirements in force…
After these inspections, the Supervisory Board has no comments to make either on the unconsolidated and consolidated accounts for 2008, or on the management report presented by the Executive Board.
In March 2009, the press described a criminal complaint fi led by Natixis minority shareholders and coordinated by the Association de défense des actionnaires minoritaires Association to Defend Minority Shareholder Rights) (ADAM). The Paris public prosecutor will launch a preliminary investigation. At this point, the facts underlying the complaint have not been made known to Natixis.
Equity attributable to equity holders of the parent 15,552 16,885 - Share capital and reserves 17,135 14,118 - Unrealized or deferred gains or losses (1,969) 55 - Net income/(loss) (2,799) (1,101)
Net income/(loss) after tax from discontinued operations or operations in the process of disposal 0 (369)
Equity component ofshare-based payment plans 2007 dividend paid in 2008 (546)
A key event of the year for Natixis shareholders was the announcement on October 8, 2008 of a plan to merge the central institutions of the Banque Populaire and Caisse d’Epargne
Among the standards and amendments applicable for the fi rst time at January 1, 2008, only the amendment to IAS 39 and
This amendment was published on October 13, 2008 and adopted by the European Commission on October 15, 2008.
This interpretation should have no impact on Natixis’ fi nancial statements. IFRIC 11 provides guidance on applying IFRS 2 in two share-based payment arrangements in which: an entity chooses or is required to buy its own equity ■
In accordance with IAS 27.14, potential voting rights resulting from a put option granted to minority interests are not taken into account in calculating the percentage of ownership and voting rights held, since they are not currently exercisable and do not give access to the associated economic benefi ts.
Natixis and the Caisses d’Epargne banks also agreed to maintain, for a minimum period of ten years as from the date of the contributions, any industrial and commercial relations existing in the following areas: custodial services; ■
subsidiaries; a portion of the corporate investment certifi cates (CCIs) ■
In accordance with IFRS 4, insurance and investment contracts with a discretionary participation feature (life insurance) give rise to the recognition of a deferred participation asset or liability to offset the difference in value between assets and liabilities
4.2 - Nature of the SPEs with which Natixis has relationships
Management of the holding company does not in itself confer the majority of a fund’s risks and benefi ts onto the NGAM sub-
OPCVM funds. Analysis of the risk incurred by Natixis via such guarantees shows that it is neutralized either via the management policies and control procedures applied, or via the funds’ composition (monetary assets), or via careful attention to counterparty risk, or by systematically reversing swaps in the market (when Natixis is the counterparty for the performance swap contracted by the fund). Therefore such OPCVM investment funds are not consolidated.
chooses the funds in which the insurer invests on the insured’s behalf. The value of the insurer’s shareholdings in such funds is mirrored by the value attributed to the unit-linked insurance contracts, the remuneration of which is not guaranteed. The risks and benefi ts inherent in these investments are borne by the insured. Such funds do not therefore require consolidation.
In analyzing the associated risks, a distinction must be made between the contracts entered into by the German subsidiary
SPEs lodging specifi c fi nancing arrangements on behalf of a client. Such entities do not meet any of the consolidation criteria defi ned by SIC 12 because: the SPE’s business is conducted fi rst and foremost on behalf ■
of the client; Natixis is rarely a shareholder in these entities and when it ■
4.2.8 – CIB securitization entities (Paris – Natixis Capital Market New-York) – segregated operations
Natixis is mainly involved in securitization entities in its capacity as: developer of the securitization operations; ■
NOTE 6 IMPACT OF THE FINANCIAL CRISIS ON THE CONSOLIDATED FINANCIAL STATEMENTS
Net exposure (after cumulative impairment losses) as of 31.12.2008 12 7 13 298 443 363 55 12
As this model mainly uses non-observable data, it is positioned at level three of the fair value hierarchy.
As of October 1, 2008 most of the exposed CLO portfolios classifi ed as “Available-for-sale assets” and “Assets at fair value through profi t and loss – trading” were reclassifi ed as “Loans and advances” as provided for by the “Reclassifi cation of
6.6 - Specific impairment of certain shares in Special Investment Vehicles (SIVs)
Debt instruments issued by Lehman Brothers Treasury Co BV and Lehman Brothers Holdings Inc. 77.5 (11.5)*
September 16, 2008; the liquidation of Lehman Brothers Inc. commenced on ■
Natixis duly notifi ed its counterparties concerned by these events, thereby canceling the derivatives and repo transactions entered into with these companies.
of €950 million have been subscribed, one in totality by Banque
FINANCIAL DATA6 Financial data Notes to the consolidated fi nancial statements 6.13 - Exposure relating to LBO finance
Revenues under the fi nance lease are recognized in income at the interest rate implicit in the lease so as to produce a constant periodic rate of return on the lessor’s net investment. The interest rate implicit in the lease is the discount rate that, at the inception of the lease, causes: the aggregate present value of the minimum lease payments ■
In the fi rst risk group comprising individual and small business customers, loans in default under the terms of Basel II are recognized as impaired, in accordance with their pre-dispute status.
The documentation for these structural hedges is based on repricing schedules for all variable-rate transactions.
They are classifi ed as assets or liabilities at fair value through profi t and loss.
FINANCIAL DATA6 Financial data Notes to the consolidated fi nancial statements 7.5 - Foreign currency transactions
For these instruments, the extent to which models are used and the observability of parameters has been documented.
For buildings used in the business and investment property, the following components and depreciation periods have been identifi ed: Component Depreciation period
Non-current assets that Natixis intends to sell within a period not exceeding 12 months and for which it is actively seeking a buyer are identifi ed separately in the balance sheet under “Non-current assets held for sale”. Assets reclassifi ed to this category are no longer depreciated or amortized as from the reclassifi cation date. An impairment loss is recognized if their carrying amount is higher than their fair value less costs to sell. Associated liabilities are also identifi ed on a separate line of the balance sheet.
Debt originated by Natixis that is not classifi ed within fi nancial liabilities at fair value through profi t and loss is measured using the amortized cost method and recognized in the balance sheet under “Deposits from banks”, “Customer deposits” or “Debt securities in issue”.
Provisions for employee benefi ts are assessed regularly by independent actuaries using the projected unit credit method.
Board of December 8, decided to adjust the exercise conditions and number of shares underlying the options.
Any gains or losses recognized in the individual fi nancial statements in respect of the sale, measurement or impairment of treasury shares held as trading or available-for-sale securities are eliminated in the consolidated fi nancial statements through equity.
In preparing its fi nancial statements, Natixis is required to make certain estimates and assumptions based on available information that is likely to require expert judgment. These estimates and assumptions constitute sources of uncertainty which may affect the calculation of income and expenses in the income statement, the value of assets and liabilities in the balance sheet, and/or certain disclosures in the notes to the fi nancial statements. The fi nancial crisis that took hold in 2008 led to more extensive use of accounting estimates. As a result, future results of certain operations may differ signifi cantly from the estimates used in the fi nancial statements at December 31, 2008.
return to infi nity on listed stocks in the relevant sector.
Other liabilities 3,444 4,231 8.1.2.1 Financial liabilities designated at fair value ■
Average effective interest rate at the date of reclassifi cation 5.40%
The instruments reclassifi ed as “Loans and advances” meet the defi nition applying to this category because , at the date of reclassifi cation, the payments to be made under the instruments were determinable and the instruments were no longer listed on an active market since they had become subject to a fall in or absence of transactions or signifi cant price dispersion.
The age of each amount in arrears is determined according to the age of the fi rst unpaid amount observed for the debt in question. The breakdown for the period is prepared on the basis of the fi rst amount in arrears.
The derivatives and complex instruments valued using a valuation model not in common use, and/or on the basis of wholly or partly unobservable market parameters, are separately disclosed in the column entitled “Fair value based on techniques not using observable market data”. The nature of these instruments is detailed in Note 7.6. This column also includes the securitization securities valued on the basis of one of the valuation models described in Note 6.1.
(in millions of euros ) 01.01.2008 Increase Utilization Reversals not used
The other provisions for counterparty risk include €375 million of charges for the risk associated with the Madoff affair
Net gains/(losses) on fi nancial assets and liabilities held for trading (1) (2,026) 3,202 o/w non-hedging instruments (555) 176
+ Change in value of goodwill 73 1 - Share in income from associates (484) (672)
This division encompasses: private equity operations developed under the impetus of ■
Natixis’ own sales force principally focused on generally unlisted small and medium enterprises. These operations may take the form of equity fi nance for mature corporations, leveraged buyouts, risk capital for young and innovative companies, and international private equity transactions; wealth management activities in France and Luxembourg, ■
FINANCIAL DATA6 Financial data Notes to the consolidated fi nancial statements international banking services: corporate services supplied ■
networks, which are a major source of business for factoring activity in France and offer substantial development potential for the other activities of the business line.
Management”, sections 5.1 to 5.5 and 5.9 . This information is an integral part of the audited fi nancial statements.
(1) Full-time equivalent employees active within the Natixis Group at December 31, 2008.
For end-of-career awards, consolidated entities cover all or part of their commitments through insurance policies with ABP Vie, the life insurance subsidiary of Natixis, which is fully consolidated.
Loans and advances to banks 24,773 10,444 7,469 3,042 9,152 10,692 65,573
Financial assets at fair value through profi t and loss 6,042 6,329
Net gains or losses on fi nancial instruments at fair value through profi t and loss (34) 12
From November 17, 2006 to December 18, 2008, Natixis had in place for the members of its Executive Board a group pension plan carried by an insurer similar to that provided to the chief executive offi cers of the Banque Populaire banks.
The potential benefi ciaries of this plan will continue to receive benefi ts if they serve out their careers in the Natixis Group and provided they have served for at least 7 years. Benefi ts under this plan vest upon retirement at retirement age, which varies from 55 to 63 years of age, depending on the date of entry into the plan.
Notes to the consolidated fi nancial statements 16.4.2 Insurance companies’ contribution to the consolidated income statement
Other services relating directly to auditor’s duties 1,560 1,461 16% 23% 605 1,483 13% 35% 99 20 3% 1%
NATIXIS DERIVATIVES Inc Brokerage FC 100 100 100 100 United States
NATIXIS VENTURE SELECTION Investment fund FC 100 100 100 100 France
LA COMPAGNIE 1818 - BANQUIERS PRIVÉES (35) ** Holding company FC 100 98 76 74 France
AEW VIF II INVESTORS, Inc. Asset Management FC 89 89 89 89 United States
NATIXIS GLOBAL ASSOCIATES AUSTRALIA HOLDINGS, LLC Holding company FC 89 89 89 89 Australia
LOOMIS SAYLES CONSUMER DISCRETIONARY, LLC (1) Asset Management FC 89 89 89 89 United States
NATIXIS OAKMARK GLOBAL LARGE CAP (1) Asset Management FC 89 89 89 89 United States
COFACE SERVICE Receivables management data FC 100 100 100 100 France
COFACE UK - SUCC (COFACE SA) Insurance FC 100 100 100 100 Great Britain
COFACE JAPAN - SUCC (COFACE SA) Insurance FC 100 100 100 100 Japan
NATIXIS CONSUMER FINANCE * (formerly Ecrinvest 11) Holding company FC 100 100 100 100 France
BP COVERED BONDS (2) Financial institution EM 20 20 0 0 France
We also verifi ed the information provided in the management report, in accordance with French law.
3 Cash and balances with central banks and post offi ces 857 175 44 3 Government securities and equivalent 23,161 20,566 3,977 23 institutional business activities: 83 166 5 Bonds and other fi xed-income securities 61,966 58,917 15,586 5 Equities and other non-fi xed-income securities 17,219 34,080 3,873
INCOME (LOSS) BEFORE TAX (5,228) (603) 570 20 Funding/reversal of fund for general banking risks and mandated provisions (1) (5) 231
which involved defi ning the level of risk for each structure according to distinguishing criteria benchmarked against observable data.
The gross amount of Natixis’ exposure to Lehman Brothers risks was €301.6 million. It recorded an impairment of €176.6 million as of December 31, 2008.
Commercial Code. The number of treasury shares held for this purpose was 5,760,188 as of December 31, 2008, with shares valued at €59 million classifi ed as securities held for sale. The cost of acquiring these shares is provisioned for contingencies and charges spread over the vesting period (two years on a pro rata basis).
The future cash fl ows discount rate applied for each subsidiary was based on the following: the average 10-year OAT (French government bond) yield, ■
Value adjustments and gains or losses on disposal of securities ■
or losses are recorded on the line “cost of risk” when they refl ect counterparty risk, and “net gains (losses) on disposals of non-current assets” when they refl ect market risk or the result of disposal, investments in affi liates and other securities held for ■
Natixis has issued perpetual and dated subordinated notes, which in the event of the issuer’s liquidation rank behind all other creditors.
The fi rst two categories are treated for income statement ■
The tax charge for the year comprises current taxes payable in
NOTE 5 BONDS, SHARES AND OTHER FIXED-INCOME AND FLOATING RATE SECURITIES
Investments in affi liates and other securities held for investment (2) 254 98 85
Income before tax, depreciation and provisions 280,959,662.75 457,665,461.91 677,795,500.73 852,134,041.69 (2,548,305,710.82)
In view of the end-2007 merger between Natixis and Ixis Corporate & Investment Bank (“Ixis CIB”), this report presents the agreements and commitments approved by Natixis together with those approved by Ixis CIB and taken on by Natixis.
FINANCIAL DATA6 Financial data Special report on related party agreements and commitments 1.2 Shareholder advance agreement between Natixis, Banque Fédérale des Banques Populaires (BFBP) and Caisse Nationale des Caisses d’Epargne (CNCE); Addendum and Letter of Agreement concerning early repayment
Regarding the closed collective pension scheme available to members of the Executive Board: ■
BFBP and the CNCE, setting the contribution paid by Natixis at €10 million excluding VAT, representing €5 million for each central body , with annual indexing based on objective criteria.
CRBF regulation 97-02 under which applicable companies must implement a consolidated internal control system providing for: permanent checks of compliance, security and validation of ■
tools and various reports); the application of procedures. This involves ensuring that ■
Internal Audit is responsible for verifying the bank’s controls and is one of the bodies responsible for the correct functioning of the Bank’s internal control system within the meaning of CRBF
Day-to-day monitoring is performed by the front offi ce business lines while fi nancing is performed by the middle offi ce and second-tier controls by the Risk Department.
During 2008, Natixis’ Risk Department has regularly reported to the Executive Board and central institutions on the areas affected by the fi nancial crisis.
to reorganize its operations during the fi nal quarter of 2008 and transfer part of its operations to an ad hoc portfolio denominated
In addition to the Committee, a system of delegations was set up in order to enable decisions to be taken between scheduled committee meetings.
Executive Board and the Head of Operational Risk serves as its secretary.
These permanent and periodic controls encompass reviews of account justifi cation work undertaken by the various departments, clearance of suspense items, reconciliation with management accounts (for both balance sheet and income statement), proper accrual of income and expenses, rectifi cation of errors identifi ed through these controls and the corresponding analyses and documentation.
functionalities of an accounting ERP package (account codes, multi-currency accounting, scheduling, audit trail, etc.); new databases for the various account code dimensions ■
Natixis’ accounting control system is based on the following core principles: strict separation of recording and accounting control ■
In the case of the CIB/Capital Markets entities the coexistence of the two different systems environments (as described above)
In the context of the fi nancial crisis and resulting tighter controls, the Group’s accounting control teams have been particularly active, especially regarding validation of risk exposure and the corresponding fi nancial reporting requirements.
The Finance Department teams of Natixis have been temporarily reinforced in order to develop consistency, control and analysis procedures for the reporting packages received, as well as monitor the second-tier controls performed by the fi nance or accounting departments of each subsidiary or branch. To this end, a Group-wide process of analytical review has been ongoing since June 2007 and will become an integral part of the Group’s accounting organization with effect from 2009.
Commercial Code, approves the regulated party agreements mentioned therein, pursuant to Article L.225-88 of the French
Commercial Code, expressly approves and ratifi es, under the terms of Articles L.225-88 and L.225-90 of the French
Ninth resolution (Ratification of the provisional appointment of Luigi Maranzana as non-voting member of the Supervisory Board)
October 8, 2008 of Luigi Maranzana as non-voting member of the Supervisory Board, replacing Alfonso Iozzo, who tendered his resignation, for a six-year period, i.e. until October 8, 2014.
any delegation of power relating to capital increases with preferential subscription rights, covering the securities and transactions referred to in this resolution and, in particular, the 1st resolution of the Extraordinary General Shareholders’
Articles L.228-91 et seq. of said Code: 1) Delegates to the Board of Directors, with the right to subdelegate pursuant to legal requirements, its powers to decide to increase the share capital, on one or more occasions, in the proportion and at the times that it deems fi t, subject to the provisions of Article L.233-32 of the French Commercial
Eighteenth resolution (Delegation of power to the Board of Directors for the purpose of deciding to increase the share capital by issuing shares or securities giving access to capital, reserved for members of company savings plans with removal of said members’ preferential subscriptions rights in application of Article L.225-129-6 of the French Commercial Code)
Board’s report and the Statutory Auditors’ special report and pursuant, on the one hand, to the provisions of Articles L.225129 -2, L.225-129-6 and L.225-138-1 of the French Commercial
Twentieth resolution (Appointment of Banque Fédérale des Banques Populaires, represented by Philippe Queuille as director)
Shareholders’ Meeting, having heard the Executive Board’s report, appoints Bernard Jeannin as director, with effect from the end of this General Shareholders’ Meeting, for a period of six years, ending at the close of the General Shareholders’
Didier Patault has already indicated that he accepts this appointment and that he does not hold any offi ce, and is not subject to any measure likely to prevent him from performing this role.
Thirty sixth resolution (Appointment of Luigi Maranzana as a non-voting member)
Shareholders’ Meeting, having heard the Executive Board’s report and pursuant to the provisions of Articles L.225-209 et seq. of the French Commercial Code, authorizes the Board of Directors, with the right to sub-delegate pursuant to legal requirements, to purchase Company shares, or have Company shares purchased by third parties and: 1) Decides that these shares may be purchased so as to: guarantee the buoyancy of Natixis securities, in ■
Shareholders’ Meeting on May 22, 2008, is granted for a period of 18 months from today’s date.
The Supervisory Board shall appoint one of the members of the
Impact of the issue on shareholders: on a non-diluted basis, a shareholder with a 1% capital interest prior to the issue and not subscribing for the new shares (calculation made on the basis of the number of shares comprising the capital on August 29, 2008) would have a 0.43% capital interest after the issue.
before suspension of the right to exercise, effective from August 27, 2008 for a period of three months after the issue of the shares underlying these options and 1,643,729,997 shares resulting from the capital increase, the theoretical price of the Natixis share would be €3.92.
For the purpose of allocating free shares shares 38 months 12.11.2007 replaced on shares
The subscription price for these shares corresponds to the average price quoted for Natixis shares in the last 20 market sessions prior to the date of the Executive Board meeting.
CHANGES IN THE DISTRIBUTION OF THE CAPITAL DURING THE LAST THREE YEARS
and CNCE, for as long as they remain shareholders of Natixis, and including in the event of disagreement between them, to contribute any funds that may be necessary for Natixis to comply with the provisions of banking legislation and regulations as regards prudential equity capital.
A - DESCRIPTION OF THE MAIN PROVISIONS OF THE BANQUES POPULAIRES CIC AGREEMENT
Upon the expiry of the ten-year period provided above, either of the parties may terminate, in whole or in part, the existing commercial and industrial relations and any other relations which might have been added in the meantime, in accordance with the special contractual provisions governing those relations and subject to giving one year’s prior notice.
Agreement are as follows: 1 - Restriction on the free transferability of Caisses d’Epargne CICs
The considerable legal infl uence of Natixis over Caisses d’Epargne will arise notably from the following provisions of the
Ulrich Brixner (died in February 2009), is of German nationality and has a doctorate in management. He has held various positions of responsibility at major German banks and was Chairman of the board of DZ BANK AG from 2000 to 2006.
Vice-Chairman of the Board of Directors of Groupement Européen des Caisses d’Epargne
Member of the Supervisory Board of Caisse Nationale des Caisses d’Epargne et de Prévoyance
France’s leading retail groups. He began his career as an auditor with the French Treasury before becoming chief of staff at the
Chairman of the Val d’Oise Departmental Committee of Tourism and Leisure
In May 2002, the German bank DZ Bank AG acquired shares in
Global”) for institutional investors in France and abroad, with: December 6: establishment of the defi nitive price of the open ■
Statutory Auditors’ report thereon, pages 316 to 317, and the Group management report, on pages 136 to 178 of the registration document fi led with the AMF on April 18, 2008 under number D.08-0261, the consolidated fi nancial statements for the year ended ■