Statutory Auditors’ report on the parent 5.4 company financial statements 450
Internal control procedures relating to 5.5 accounting and financial information 455 2020 NON-FINANCIAL PERFORMANCE REPORT
Report by one of the Statutory Auditors, 6.10 appointed independent third party, on the consolidated non-financial performance report 538
LEGAL AND GENERAL INFORMATION9 591 Legal notices and practical information 9.1 relating to Natixis 592
Natixis, creator of customized solutions in asset management, financing, investment, insurance and payments and Annual Financial Report
This universal registration document was filed with the French Financial Markets Authority (Autorité des Marchés Financiers – AMF) on March 9, 2021, as the competent authority designated under EU regulation 2017/1129 without prior approval in accordance with Article 9 of said regulation.
Appointed to Natixis General Management in August 2020, Nicolas Namias looks back on a year that has profoundly changed our environment. He analyzes the profound impacts of the Covid-19 health and economic crisis and how the Company is mobilizing for its clients.
We have accelerated our transformations. We have adapted our team operations within the company with the development of a “hybrid” model combining on-site presence and remote working. We have also redesigned and intensified our exchanges with our clients, always striving to add value to our advice and services. Despite the distance, we made sure to recreate proximity with our customers and, in the face of economic uncertainty, we supported them so that they could continue their activity and continue to undertake new projects.
Since my arrival at the helm of Natixis last August, my mandate has been clear: develop and sustainably grow each of Natixis' four business lines: Wealth & Asset Management, Corporate & Investment Banking, Insurance and Payments. Since my appointment, I have endeavored to address certain urgent issues and, in November 2020, we have taken and announced structuring decisions to put our company on a sustainable path of growth and development. These decisions concern our business lines, in particular Corporate & Investment Banking and Asset Management, but also our functions with better control of our costs and risks. We have started to implement these decisions. By the summer of 2021, in close consultation with Groupe BPCE, we will also specify our strategic roadmap for our four business lines by 2024.
To meet the challenges ahead, we can rely on Natixis′ three key values: the constant search for a lasting impact, by providing our clients with differentiating expertise; the entrepreneurial spirit that we cultivate on a daily basis; finally, collective intelligence, in order to take full advantage of the company's multiple talents, working actively to succeed together as a team with openness and confidence.
“The priority is to create value for all our stakeholders: our customers, our employees and our investors”
As a designer of customized financial solutions, we support companies, banks, institutions and clients of the Banque Populaire and Caisse d'Epargne networks in the realization of their projects, all over the world, and design customized financial solutions for them.
We build a sustainable business model with our clients thanks to our proximity, the quality of the strategic dialogue and the combination of our expertise.
(1) EMEA: Europe, Middle East, Africa (headcount at December 31, 2020) excluding financial investments.
Natixis posted positive net income for the full year thanks to a marked rebound in its business lines
* Second largest banking group in France. Source: Market shares: 22% in customer savings and 21.5% in customer loans (Banque de France Q3- 2020 (all non-financial customers)).
(1) ) Fédération Nationale des Banques Populaires. (2) Fédération Nationale des Caisses d'Epargne. (3) Indirectly through Local Savings Companies (4) Banque Palatine, Subsidiaries grouped together within the Financial Solutions & Expertise division, Oney Bank. (5) Free float: 29%.
…To become one of the banking sector’s leader consistent with its focus on sustainable finance
Sustainalytics ranks Natixis 21st for its ESR practice among 353 Banks worldwide, with a rating of 80/100
Key figures 2020 In 2020, Natixis posted positive net income for the full year thanks to a marked rebound in its business lines. These good results demonstrate the agility of its business model and the daily commitment of its teams to serving its customers. Through its results and its solid financial position, Natixis demonstrates its ability to create sustainable value for all its stakeholders and also returns to dividend payments.
(4) Reported figures including non-recurring items. Excluding non-recurring items, ROE 2019 of 12.5%, ROE 2020 of 6.2%.
NET INCOME (GROUP SHARE) REPORTED 101 1,897 1,577 1,669 1,374 6 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
~€2.5bn Bank in the ranking of women in SBF 120 governing bodies
N°1 Outstanding in assets under management SRI certified €1,082bn 31/12/20 31/12/17 31/12/18 31/12/19 31/12/19 31/12/18 31/12/2031/12/17 31/12/19(2)31/12/20 31/12/17 31/12/18 31/12/19 of State-guaranteed loans (EMP)
… and agile 98% of employees worked remotely during the lockdown period.
VALUE PROPOSAL: Combination of a multi- boutique alpha generating model with an industrial management platform serving major institutional investors.
VALUE PROPOSAL: Development of solutions based on solid industry expertise around our clients and supporting their transition.
VALUE PROPOSAL: Control of flows across the whole payment chain of value promoting the integration of Fintechs.
V Top ten issuers of green and sustainable bonds in euros
V Deployment of specific programs to support the transformation of jobs and skills (e.g. Step Up Academy) V Employee school development (around a hundred flash surveys) to strengthen ties and commitment
V Over €1.3 billion in purchases that contribute to the economic development of our regions
V Multiple actions to support caregivers, research or the most disadvantaged to respond to the Covid health crisis V Arranger of the largest social bond in the world with
V First bank to make measured and dated commitments for biodiversity protection with act4nature international
V Strengthening governance of the multi-affiliate model of Natixis Investment Managers and active management of the affiliate portfolio
V Creation of the Natixis Investment Managers brand and increased visibility
V Strategic repositioning of private banking and simplification of the business model
Asserting our position as world leader in active management, through size, profitability and ability to innovate
V Deployment of the “Easy” program, giving employees more flexibility in their working methods (e.g. deployment of laptops for all and collaborative tools).
V Positioning on the “Banking As a Service” market with the Xpollens payment solution
At the end of November 2020, Natixis adopted a series of structuring decisions in order to lay a solid foundation for preparing its next strategic plan for 2024.
Evolution in the relationship between Natixis Investment Managers and H2O Asset Management. Towards a gradual and orderly outcome of this partnership.
BPCE’s networks and Natixis' strategic clients, i.e. a reduction in the number of clients from more than 400 to around 50.
Continued development of the center of expertise in Porto which has 900 employees.
�Participation in the economic recovery plan�via�the�“Insurers -� Caisse des Dépôts Relance Durable France”�investment� program�to�the�tune�of� €60�million�and�other� market�initiatives.
Proximity, responsiveness, innovation… Natixis teams worked hard throughout the year to support customers and help them prepare for the future.
Chief Financial Officer Nathalie Bricker General Secretary André-Jean Olivier Board Secretary Karine Pinault
In the context of the health crisis, the Board of Directors, working alongside the General Management, regularly monitored the situation: two exceptional Board meetings and one meeting of the Risk Committee were dedicated to crisis management (business continuity plan, employee safety, disaster recovery scenario, etc.). The arrangements for organizing meetings, mostly remote, have been adapted to the circumstances.
Heads of the main functional departmentsHeads of the four business lines
C o n tro l F u n ctio n s C
Natixis has set up a risk management system rolled out throughout the Company and supervised by the Board of Directors.
31/12/19 31/01/20 28/02/20 31/03/20 30/04/20 31/05/20 30/06/20 31/07/20 31/08/20 30/09/20 31/10/20 30/11/20 31/12/20
incidents directly related to internal or service provider failures due to the health crisis (based on incidents identified/
< €1M financial impact of incidents directly related to the health crisis
Structural balance sheet risks cover the risk of managing the bank’s liquidity in order to meet its liquidity commitments, the risk of losses linked to changes in interest rates and credit spreads in bank portfolios, structural foreign exchange risk and the management of regulatory constraints and ratios.
(1) Cost of risk excluding credit institutions. Cost of risk expressed in bps of total outstandings, beginning of period. Main impacts related to COVID-19: IFRS 9, fraudulent credit counterparties, airlines
The Group ’s ESR policy actively contributes to 13 SDGs in its business lines and operations
Employees have been involved in general interest projects for many years. In 2020, this commitment accelerated to tackle the health crisis. Nearly 85 solidarity initiatives have been rolled out worldwide.
V Renewable energy: €1.5 billion arranged in 2020 V Green Bonds: €15.9 billion arranged in 2020 V Natural capital: €110 million managed by Mirova
V Sector policies: selection and exclusion linked to environmental risks: timetable for the total phase-out of coal V Signature of the Equator Principles since 2010 V ESG risk monitoring tool integrated into our compliance and risk systems
V Work to measure the carbon footprint of financing with the Green Weighting Factor proprietary tool V Assessment of the trajectory of all Mirova portfolios with a trajectory of 1.5°C V Natixis Assurance in line with its objective of aligning the investment portfolio with the Paris Agreement by 2030
Natixis combines actions on its own operations and on its financing and investment portfolios to support the environmental transition.
The first Caisse d’Epargne is established in Paris to promote, collect and manage the general public’s savings. The passbook savings account is launched
Groupe BPCE, the N°.2 banking group in France, is formed from the merger of CNCE and the Banque Fédérale des Banques Populaires
Crédit National is founded to help rebuild France after the destruction caused by World War I
Caisse Nationale des Caisses d’Epargne buys CDC IXIS, established in 2001. Caisse d’Epargne Group thus becomes a full-service bank
V Groupe BPCE decides to transfer Natixis’ Specialized Financial Services business lines to BPCE S.A. in order to better meet clients’ needs across the Banques Populaires and Caisses d’Epargne networks
V Natixis announces its withdrawal from shale oil and gas and accelerates its exit from the coal industry
V Natixis unveils its new brand territory and the new visual identity, reflecting its shared culture: the Purple Touch
BPCE Group and Natixis sign the Principles for Responsible Banking and commit to strategically aligning their activities with the United Nations’ Sustainable Development Goals and the Paris Agreement on climate change
V Natixis becomes the first bank to actively manage the climate impact of its balance sheet by implementing the Green Weighting Factor
Natixis launches its 2014-2017 strategic plan New Frontier centered on the goal of becoming a bank for high value-added solutions, focused exclusively on its clients
Including Natixis, all the institutions affiliated with the central institution of Groupe BPCE benefit from a guarantee and solidarity mechanism the purpose of which, according to Articles L.511-31 and L.512-107-6 of the French Monetary and Financial Code, is to guarantee the liquidity and capital adequacy of all affiliated institutions, and to organize financial support within the Group. This financial support is based on legislative provisions imposing a legal solidarity mechanism by which the central institution is required to restore the liquidity or solvency of affiliates in difficulty, and/or all affiliates of the Group, by providing, as necessary, the total capacity and regulatory capital of all contributing affiliates. As a result of this fully-engaged legal solidarity mechanism, one or more affiliates cannot be placed in court-ordered liquidation nor be affected by the resolution measures within the meaning of Directive 2014/59 EU without this being is the case for all the affiliates.
In accordance with Article L. 613-29 of the French Monetary and Financial Code, the judicial liquidation procedure is therefore implemented in a coordinated manner with regard to the central institution and all of its affiliates. Thus, in the event of difficulties for Natixis, (i) BPCE will firstly mobilize its own funds as a shareholder; (ii) if this is not sufficient, BPCE could call on the mutual guarantee fund created by BPCE, which at December 31, 2020 had a total of : €351.4 million in assets, contributed equally by the two Banque Populaire and Caisse d’Epargne networks, which are expected to grow through annual contributions (subject to the amounts that would be used in the event of calls for funds); (iii) if BPCE’s own funds and this mutual guarantee fund were not sufficient, BPCE could call (in equal shares) the guarantee funds of each of the two Banque Populaire and Caisse d'Epargne networks for a total amount of €900 million and the Mutual Guarantee Fund of the Banque Populaire banks and Caisse d’Epargne, made up of deposits made by the Banque Populaire banks and the Caisses d'Epargne in the books of BPCE in the form of term accounts with a term of ten years and renewable indefinitely, in the amount of €176 million at
In the event of court-ordered liquidation concerning all the affiliates, the external creditors of all the affiliates are managed by their ranking and in the order of hierarchy in an identical fashion and irrespective of their association with any given affiliated entity. Consequently, holders of AT1 capital and other pari passu securities would be more affected than holders of T2 capital and other pari
It should be noted that the guarantee funds referred to above comprise a Groupe BPCE internal guarantee mechanism activated at the initiative of the BPCE Executive Board, or the competent authority dealing with banking crises which may request their use if deemed necessary.
A resolution procedure may be initiated against Groupe BPCE if (i) the Group’s default is proven or foreseeable, (ii) there is no reasonable prospect that another measure could prevent this default within a reasonable timeframe and (iii) a resolution measure is required to achieve the resolution objectives: (a) guarantee the continuity of critical functions, (b) avoid significant adverse effects on financial stability, (c) protect Government resources by minimizing the use of exceptional public financial support and (d) protect the funds and assets of customers, in particular those of depositors. An institution is considered in default when it does not comply with the conditions of its authorization, if it is unable to pay its debts or other commitments when they fall due, or if it requests exceptional public financial support (subject to limited exceptions) or the value of its liabilities exceeds that of its assets.
In addition to the bail-in power, resolution authorities are given expanded powers to implement other resolution measures in relation to failing institutions or, in certain circumstances, their groups, which may include, among others: the sale of all or part of the activity of the institution to a third party or a bridge institution, the separation of assets, the replacement or substitution of the institution as debt or of the debt instruments, changes in the terms and conditions of the debt instruments (including modification of the maturity and/or amount of interest payable and/or the temporary suspension of payments), suspension of admission to trading or official listing of the financial instruments, and the removal of executives or the appointment of a temporary administrator (special administrator) and the issue of capital or equity.
Natixis Investment Managers ranks 17th globally by assets under management (Cerulli Associates: Global Markets 2020 report based on AuM as of December 31, 2019).
Its global distribution platform serves two major customer segments: institutional investors (public and private pension funds, insurers and banks, sovereign funds and central banks, etc.) and distribution/retail (investment platforms, financial advisors, funds of funds and Private Banking).
2020 was marked by exceptional uncertainty and unprecedented challenges, with significant repercussions on revenues and results. However, Natixis Investment Managers proved resilient to the test and continued to record new inflows and preserve its return margins. Natixis Investment Managers has once again demonstrated the effectiveness and resilience of the multi-affiliate model. Robust and diversified, focused on performance, sustainable growth sources and the unique needs of investors, Natixis Investment Managers has proven its ability to evolve according to circumstances and has been able to provide advice and services to its clients.
AEW/AEW Europe (€57.4 billion) real estate asset management, real estate investment trusts (SCPI) V and real estate mutual funds (OPCI)
H2O Asset Management (€18.4 billion), global macro multi-strategy and international fixed incomeV
Launched in January 2019 and bringing together three of Natixis Investment Managers’ existing Private Equity affiliates: Euro-PE, Caspian Private Equity and Eagle Asia.(1) A division of Natixis Advisors, LP.(2)
Natixis Wealth Management, with its French and Luxembourg footprint, offers clients (business proprietors, senior executives/company Directors and owners of family wealth), wealth management and financial solutions to support them over the long term.
Groupe BPCE's clients or those won directly benefit from a wide range of expertise covering all aspects of their projects, at all stages of their development: corporate advisory, origination, vanilla and complex financing, investment, wealth engineering and asset management. These offerings have been enhanced with diversification solutions in recent years, particularly in Private Equity and Life insurance, thanks to a dedicated business unit operating on an open-architecture basis. The entire value proposition is tailored to the level of customization requested by clients and is distributed via two channels, BtC (business to consumer) and BtB (business to business).
This year also marked a turning point in the strengthening of ESG commitments, with the enhancement of the management processes of VEGA Investment Managers, which also launched its second SRI fund “VEGA Transformation Responsible”, in collaboration with the Impak Finance start-up, a leader in impact rating.
At the end of 2020, Natixis Wealth Management managed €30.7 billion in assets.
A pioneer in innovation for more than 50 years, its ability to adapt to a constantly changing environment and uses allows it to offer full access to a whole range of employee savings and supplementary pension solutions: company savings plans, company retirement savings plans in securities account format or in insurance format (in partnership with Arial CNP Assurances).
It relies on the financial management offers of Natixis Investment Managers, a specialist in the active management of employee savings.
In 2020, Natixis Interépargne consolidated its position as a leading player in employee savings and retirement savings plans with more than 75,000 corporate clients, nearly three million savers(1) and 26.5% market share in employee savings(2). With a 31.2% SRI market share(3), Natixis Interépargne has consolidated its position as a leader in employee savings through Socially Responsible Investment.
Association Française de Gestion – December 31, 2020.(1) Association Française de Gestion – June 30, 2020.(2) Finansol & CIES.(3) Awarded each year by the monthly magazine Mieux Vivre Votre Argent this award is widely recognized in the industry and rewards the institutions whose funds have achieved (4) the best performance over time.
At December 31, 2020, Corporate & Investment Banking (CIB) comprised 3,681 employees (FTEs) in 27 countries around the world: 38.7% of which in France, and 61.3% internationally.
Organized by client type (banks and the international public sector, insurers, financial sponsors, asset managers and corporates), the Coverage function has a strong regional presence in France and is supported internationally by all Natixis’ teams across 27 countries. This structure encourages responsiveness, close, personalized working relationships and in-depth strategic dialogue with clients over the long term.
In 2020, Corporate & Investment Banking continued to implement the objectives of the New Dimension strategic plan (2018-2020), targets aimed at achieving the following goals: to be recognized as a bank that offers innovative solutions and to become a benchmark bank in four strategic sectors (energy transition, aerospace, infrastructure, real estate and hospitality/tourism).
As part of its resolute specialist positioning, GSH’s center of expertise, which is based in particular on CIB Research is responsible for keeping an active watch over market and regulatory developments, and for focusing efforts in the areas of product or methodology investigation and innovation.
In 2020, the team further expanded its in-depth knowledge of investors in these green and sustainable finance areas, through multiple interactions (and research) centered on their ESG strategies.
The GSH continued to innovate in terms of investment products for various banking distribution (Banque Populaire and Caisses d’Epargne) and insurance (Groupama in France) networks and for institutional clients by offering the Green and Social bond under structured products.
The Global Markets business model is built on the following elements: the development of innovative solutions (as opposed to standardV flow products) in the main asset classes. This tailored approach enables Natixis to respond more pertinently to its clients’ needs and set itself apart from its competitors; in addition, access to a wide range of flow products via electronicV platforms cover all client requests on the markets; the development of an investment policy targeted to clients’ localV needs. The challenge for the bank is firstly to focus on products in which Global Markets enjoys a genuine competitive advantage, and secondly to achieve the necessary critical size in these activities to ensure the sustainability of franchises;
This business line is divided into four divisions: two Solutions divisions aiming to strengthen commercial relationsV with customers: cross-asset solutions offering single, multi-asset access to distributors, family offices, mutual funds and pension funds; multi-asset solutions which address the needs of large institutional investors, asset managers and corporates; a single Financial Engineering division offering clients innovativeV hedging, investment and financing solutions across all asset classes; a Multi-Asset Client Servicing & Execution (MACSE) divisionV coordinating flow products and digital offerings.
On Capital Markets Natixis was able to adapt to the exceptional and unprecedented health crisis conditions by remaining close to its customers and partners by adapting its offering and know-how according to their new needs. The Company upheld its position with institutional investors and supranationals and strengthened its position with large corporations.
In Fixed Income, the teams were heavily involved during the COVID-19 crisis to support Corporate clients to adjust hedges on the foreign exchange market as well as in the monitoring and management of cash flow. Institutional investors faced excess liquidity and relied on the sales teams to seize new investment opportunities, in the bond market but also through dedicated structured offers.
In Europe, GSCS and Alternative Credit Syndications entered into an additional commitment of €500 million from Apollo Management International for the Dutch residential mortgage platform Merius Prime.
Natixis also successfully placed a bespoke senior financing note in the amount of US$100 million linked to a US mid-market warehouse with a Nordic pension fund, thereby marking the first transaction of this type with the client in the context of our initiative to forge strategic O2D partnerships in the asset class. The transaction leverages our leading position in the CLO US mid-market, by leveraging many of the structural features of our CLOs, but also by adapting them to the needs of the pension fund.
In the United States, Natixis New York Branch is now a sponsor of the Fixed Income Clearing Corporation (FICC) Sponsored Repo program for the financing of global securities.
With 65 employees in Paris, New York, Hong Kong and Tokyo, Global Securities Financing’s primary areas of expertise are secured funding and collateral management (repos, securities lending/borrowing, etc.), repo market-making and credit and sovereign securities lending/borrowing, and index (equity) market-making, and has a Solutions Department.
CIB research also contributes to Natixis’ energy transition goals through its joint venture with the Green & Sustainable Hub. Through this collaboration, it has produced extensive research on the theme of water and helped create the Green Weighting Factor.
The passenger air transport sector was particularly affected by the COVID-19 epidemic. The recovery was slow, driven by domestic and tourism flights, with business and international travel remaining low. In this challenging period, Natixis continued to support its clients, both airlines and leasing companies, by providing liquidity facilities, portfolio financing and transactions guaranteed by export credit agencies.
The new Infrastructure & Energy sector survived the economic crisis relatively well, driven by the telecommunications infrastructure segment and the renewable energy sector. For example, Natixis arranged numerous solar farms in Chile (Sonnedix, CVE, Langa, Reden, Grenergy, Arroyo) which confirms Natixis’ dominant position in this segment. Other highlights include the financing of the world’s biggest Concentrated Solar Power (CSP) project in the United Arab Emirates (DEWA V), the financing of the biggest floating offshore wind farm (Kincardine, £380 million), as sole green loan coordinator, and the financing as Sole Mandated Lead Arranger of the largest next-generation data center in Europe for Vantage Data Center, in the amount of £320 million. In Asia, Natixis was Mandated Lead Arranger for the financing of Next Data Center, contributing to the Group’s growth, particularly in Australia. Natixis also continued the development of its renewable energy franchise with the CFXD deal, an offshore wind farm with a capacity of 589 MW in Taiwan.
Natixis received the IJGlobal “2019-2020 Latin America MLA of the year on Project Finance & Infrastructure” and “2019-2020 MENA MLA of the year on Project Finance & Infrastructure” awards.
The Real Estate and Hospitality/Tourism sector continued to support its clients in all the geographic areas where it operates, and to develop Green and Sustainable financing arrangements.
Natixis co-arranged a green mortgage loan for Swiss Life AG in the amount of €397 million for the acquisition of the Ecocampus, Engie’s future headquarters near La Défense. Natixis also co-arranged a €1,385 million syndicated corporate credit facility for Klépierre, the European leader in shopping centers, including a sustainable development criterion and designed to support the Klépierre group’s ambition to achieve the carbon neutrality of its portfolio by 2030.
Distribution & Portfolio Management (DPM) develops optimal financing solutions for business and attractive investment opportunities for investors. The bank boasts excellent portfolio management and distribution across its three international platforms (Americas, EMEA and Asia-Pacific) consisting of 175 professionals. It is in charge of the syndication and active management of the loan book, and therefore proactively manages the credit quality and profitability of financing put in place by Natixis.
Natixis is a world-class player in strategic and acquisition finance, with over 25 years of experience in the sector and offices in the EMEA region (Paris, London, Milan and Madrid), Asia-Pacific (Hong Kong and Sydney) and the Americas (New York). It offers corporate clients, investment funds, family offices and institutional clients a full range of financing solutions (bonds, loans, private placements) for their various strategic requirements, including acquisitions, shareholder restructuring, investments, debt financing and post-IPO financing. In 2019, Natixis was named No. 1 bookrunner for sponsored loans in France (source: Dealogic) and No. 6 in the EMEA region (source: Refinitiv).
In 2020, in exceptional market conditions, the Strategic and Acquisition Finance teams completed numerous transactions with diversified profiles, in a variety of geographies and sectors.
In 2020, volumes in the leveraged buyout segment for investment funds were smaller despite a recovery at the end of the year. Some successful achievements can be noted: in France, Natixis arranged and coordinated (Sole Sustainability Coordinator and Facility Agent) for IK Partners in connection with the acquisition of Kersia, a leader in biosafety and food safety, the first sustainability-linked LBO (€520 million) for a French loan. In North America, Natixis acted as Joint Lead Arranger and Joint Bookrunner in the acquisition by the Stonepeak Infrastructure Partners fund of Xplornet Communications, the leading Internet access provider in rural areas in Canada. Lastly, as Joint Bookrunner, Natixis set up a funding of existing debts as well as the financing of an exceptional dividend to the shareholders of Astoria Energy I, an electricity producer and supplier, in particular for New York City.
Operating on the principal European, American and Asian markets, Natixis serves all types of issuers (corporates, financial institutions, sovereigns/supranationals/agencies), helping them obtain financing on the euro and foreign-currency bond markets (£, $, ¥), and particularly in the green bond, investment grade, covered bond, high yield, hybrid and private placement segments.
Primary activity without financial intermediaries was particularly strong in 2020 for corporates. Natixis was the preferred institution of French companies for the launch of their public bonds and stood at the top of the league table of the “non-dilutive hybrid segment in France” (Number 1 LT hybrid and senior corporate FR; source: dealogic).
Among other transactions, Natixis acted as Global Coordinator and Structurer of the perpetual double tranche transaction for VEOLIA. Natixis joined as active joint bookrunner in the perpetual issues of TOTAL, EDF, Orange and ABERTIS for their first transaction in a “hybrid” format.
Regarding foreign currency transactions, DCM corporate Natixis acted notably as ESG structurer of the senior secured transaction of NRG Energy Inc. in the amount of US$900 million and assisted LVMH as a global coordinator with its EUR/GBP multi-currency transaction which prefinanced the acquisition of Tiffani & Co. and the general needs of the Company.
Natixis also served in a number of flagship transactions in investment grade and emerging sovereign markets, including bonds issued by the Kingdom of Belgium (€5 billion), the Kingdom of Morocco (€1 billion in double tranche and US$3 billion in triple tranche), and the Sultanate of Oman (US$2 billion in double tranche). In addition, Natixis was the structurer of the Mexico ESG Framework (the inaugural ESG issue for an amount of €750 million).
This year, Natixis maintained a privileged relationship with the World Bank (three mandates totaling €7.5 billion in issues). Natixis also strengthened its international franchise with a new Canadian client Omers (the inaugural issue of €1 billion) and maintained a strong presence in European supranationals, including the European Investment Bank (the €5 billion benchmark) and ESM (€1.5 billion).
On the equity Capital Markets (ECM), Natixis provides clients with tailored advisory services for all transactions that affect their capital structure: IPOs, capital increases and convertible or exchangeable bond issues. Natixis also provides advice on how to conduct takeover bids. Natixis also includes the corporate broking activity, which offers intermediation services to clients: acquisitions or disposals of equity investments, share buybacks and liquidity contracts.
2020 was unprecedented in many aspects. Since one of the largest market lows of all times in the first quarter, markets rallied hard and some equity indices reached record levels again, particularly in the United States.
In these exceptionally volatile market conditions; Natixis benefited from its strong expertise in the convertible bond market to manage five large-scale transactions in 2020, including the issues of Accor, Safran, STMicroelectronics, and Worldline on two occasions.
Its comprehensive range of structured solutions on financial engineering listed securities and listed equity derivatives enables it to provide solutions in three key areas for its clients: equity investment (economic exposure, construction of positions,V M&A on listed shares, strategic investments, capital increase, dilution risk, exchangeable bonds, equity engineering); shareholders (reference shareholders, investment vehicles, FamilyV Office and Holding companies); own shares (treasury shares, employee share ownership plans,V stock options, structured share buybacks, indexed financing, convertible bonds).
To illustrate this performance and thanks to the joint work of Corporate Broking and SET, Natixis remains the number one player in terms of volumes bought back on the French market and number of transactions.
Natixis’ Insurance division had 1,904 full-time equivalent (FTE) employees at the end of 2020, compared to 1,880 at the end of 2019. The Insurance business generated total revenue from direct sales of €10.8 billion in 2020.
In terms of location, most of the Insurance division’s activity is in France via companies established in France. The Personal Insurance business line also owns a Luxembourg-based entity specialized in life insurance products for Wealth Management clients, and is a client of the BPCE networks and non-Group entities in various EU countries. It also owns an entity in Lebanon through an equity interest in a subsidiary in partnership with a local private bank.
Natixis’ Insurance division, through its different operational entities, now offers a comprehensive range of life and non-life insurance policies, with the Banque Populaire and Caisse d’Epargne banks being the main contributors to the business.
Launched at the end of 2017, the division’s strategic plan, New Dimension 2018-2020, aimed to cement Natixis Assurances’ position as a front-running insurer in France, by delivering a differentiated customer experience and top-flight operating performances. The new plan now spans the property & casualty arm’s entire value chain with the creation of a single management platform run by Natixis Assurances to better serve the Banque Populaire banks and the Caisse d’Epargne banks (the Innove#2020 project).
Over the last few years, the Insurance division has been operating in unprecedented market conditions: macroeconomic and financial shifts have resulted in the implementation of monetary policies with significant impacts on life insurance policies for retirement savings, and, to a lesser extent, for the non-life insurance business. In particular, historically low interest rates, which are the main source of revenue for life insurance players, have led to significant changes in product and investment strategies: life insurance products were aimed to improve the sharing ofV outcomes among the various stakeholders in order to ensure balance between sustainable business competitiveness and solvency protection in the medium term. Similarly, the Personal Insurance business line has responded to the sharp decline in market interest rates by lowering the revaluations incorporated into its policies. This has allowed it to accumulate a significant profit-sharing reserve representing over two years of revalued outstandings at the end of 2020. This reserve could be used as a significant cushion to supplement “policy” revaluation over the next eight years; a variety of commercial initiatives targeted at end-customers andV the business provider networks, aimed at increasing the share of inflows and assets invested in unit-linked products; the steady decline in returns from traditional fixed-rate assets hasV led to a number of changes in asset management policy: the diversification of fixed-income investments towards privateV debt, the gradual reallocation of the equity bucket towardsV recurring-dividend shares, development of a bucket for unlisted investments in PrivateV Equity and real assets.
Lastly, the rapid development of digital technology and its application in the development of new methods of distribution and customer interaction is a source of opportunities that the Insurance division is closely monitoring. Accordingly, it has pursued a policy aimed at: digitize its management processes: the business intends toV continue the digitization and automation of low value-added processes, in order to position itself among the most efficient players in terms of management costs in relation to outstandings. In life and health insurance, a multi-site, multi-brand customer relationship model was rolled out in 2018, with identical organization, tools and customer relationship processes for Banque Populaire and Caisse d’Epargne. A platform for managing estates was also created; adapting subscription processes to incorporate new digital toolsV and customer behaviors. A significant share of non-life subscriptions is already carried out and formalized remotely using an electronic signature. Steps have been taken to preempt rapid development in these approaches; continuing to scale down administrative management activities inV favor of in-branch transactions using applications installed on workstations and customer-initiated transactions through the self-care options gradually being rolled out for many products and management operations; continue to adapt information systems with a view to operationalV efficiency and enhanced quality of service: the transformation and digitization process for claims management at BPCE Assurances (Purple#Care project) resulted in the completion of the rollout of the new claims management IT system at the end of June 2020. Finally, plans to modernize Natixis Life’s IT system, with a view to speeding up growth in the business line, increasing profitability and operating performance through process digitization and automation, and improving risk control, were put into action in 2018 and rolled out in 2020; outsourcing low-value-added operations to address variations inV business activity or to process specific operations for which adequate in-house skills or expertise is not immediately available; implementing a single operating model for non-life insuranceV across all Groupe BPCE networks. Project #Pop’Timiz, aimed at pooling non-life middle- and back-office activities for the Banque Populaire and Caisse d’Epargne banks, was successfully finalized. The Innove#2020 program, in which BPCE Assurance is to become the sole non-life insurance platform for Banque Populaire and Caisse d’Epargne retail customers and the BPCE IARD the dedicated platform for professionals of both the Caisse d’Epargne and Banque Populaire networks, was successfully rolled out in 2020 with positive production momentum for the new Auto and MRH offerings in Banque Populaire banks and the new MRH offering in Caisses d’Epargne banks. Now all Banque Populaire and Caisse d’Epargne banks benefit from the work carried out under the program: newly-designed experiences, new offerings, new information system.
Through its various entities, including Natixis Payments Solutions for payment processing solutions, Natixis Intertitres, Dalenys, PayPlug, Comitéo, Titres Cadeaux, Le Pot Commun, S-money and Joinly, Natixis Payments works across the entire value chain, from issuance to acquisition, online payments, e-wallets, prepaid cards, and everything in between. Natixis Payments therefore provides comprehensive management of domestic and international payment instruments.
Built around three new business units reorganized in 2020, the division’s organizational structure reflects all the solutions proposed by the division: the Processing BU (Natixis Payments Solutions), in charge of theV Electronic Banking and Cash Flow processing activities, mainly on behalf of the Banques Populaires and Caisses d’Epargne networks; the Digital Payments BU (Dalenys, Payplug, Smoney, Joinly) whichV markets omnichannel e-commerce solutions (Dalenys/PayPlug) and issuance, payment method management (Smoney) and online contributions for non-profit organizations (Joinly). The Dalenys and PayPlug e-commerce offers are aimed at large remitters and small and medium-sized businesses, respectively. Through its Xpollens platform, Smoney ensures the issuance and management of means of payment, in partnership with Visa; the Benefits BU (NIT, Comitéo, Vouchers Gifts, Lakooz) whichV offers a wide range of services to employees (restaurant vouchers, gift cards, ticketing, online prize pools) while capitalizing on its digital offering.
Natixis Payments covers all market segments with tailored, user-oriented solutions in the retail, major corporate, SME, government, fintech, non-profit, financial institution and individual markets in Europe.
A global expert in trade risk prevention and guarantees for corporate clients 75 years of experience and a dense geographic network have made Coface a benchmark in credit insurance, risk management and the global economy. The experts at Coface, which aims to become the most agile credit insurance partner in its industry, operate in the heart of the global economy. They help their 50,000 customers build successful, dynamic and growth-oriented companies by protecting them from the risk of financial default by their clients. Coface’s services and solutions protect companies and help them make the necessary credit-related decisions to strengthen their ability to sell their products on both domestic and export markets.
Coface launches its new strategic plan for 2023, “Build to Lead”
In 2020, many governments quickly recognized the crucial role of credit insurance in maintaining inter-company credit, the primary source of financing for many companies. In order to guarantee the availability of credit insurance at a time when risk is not necessarily insurable, many states have set up guarantee mechanisms, the form and scope of which vary. Coface had thus finalized 13 agreements in countries that account for 64% of exposures at December 31, 2020.
Rating agencies quickly analyzed the potential consequences of the crisis for the various economic sectors. In the insurance sector, and particularly in credit insurance, the first reaction was the anticipation of a reduction in the credit rating. As of December 31, 2020, Coface’s ratings are as follows: Moody’s: A2/negative outlook; Fitch: AA-/negative outlook & AM Best: ‘A’ (Excellent)/”stable” outlook.
On July 1, Coface announced the completion of the acquisition of GIEK Kredittforsikring AS, a company established in 2001 that brings together the short-term export credit insurance activities previously underwritten by the Norwegian export credit agency GIEK. This activity is now operated under the Coface GK brand.
The Board of Directors of Coface S.A. met on September 9 and appointed Nicolas Namias, Chief Executive Officer of Natixis, as Chairman of the Board of Directors. He succeeds François Riahi, who is leaving the Board of Directors of Coface S.A. following his departure from Natixis.
The consolidated revenue of €1,450.9 million was down 0.6% (on comparable scope and exchange rates) on 2019. The net combined ratio amounted to 79.8%, i.e., up 2.1 points on 2019 (77.7%). This is made up of a loss ratio up by 2.7 points to 47.7%, and a cost ratio down by 0.6 points to 32.1% compared to 2019. The Group ended the year with a net profit attributable to owners of the parent down by 43%, to €82.9 million (compared to €146.7 million in 2019) and a return on equity of 4.8%. The estimated solvency ratio at December 31, 2020 was 204.7%(1) (and 191% excluding the effect of government plans), above the upper bound of the target zone of 155% to 175%. Coface will propose to shareholders a dividend distribution(2) of €0.55 per share, bringing the total distribution rate to 100%.
The start of 2021 was marked by renewed uncertainties in terms of health. As the global vaccination campaign began, new, often more contagious, variants of the virus emerged. They demand stricter measures to curb the spread, further delaying economic recovery. At this stage they still appear to be sensitive to the vaccine. Areas that are little affected by the pandemic (Asia in particular) continue to grow. There are, therefore, major disparities between countries and between economic sectors, as the current crisis has accelerated a number of major trends: increased digitization of the economy, the proliferation of zombie companies and an economic environment similar to the situation in Japan.
This estimated solvency ratio is a preliminary calculation based on Coface’s interpretation of the Solvency II regulations and using the Partial Internal Model. The result of the (1) final calculation could be different from this preliminary calculation. The estimated Solvency Ratio is not audited. The proposed distribution is subject to approval by the General Shareholders’ Meeting of May 12, 2021.(2)
Monitoring table of compliance 2.1.3 with the recommendations of the Afep-Medef Code 40
Management and oversight 2.2 of corporate governance 65 Board of Directors2.2.1 65
Policies and rules established 2.3 for determining compensation and benefits of any kind for corporate officers 90 Compensation policy for corporate 2.3.1 officers 90
This chapter partially corresponds to the Board of Directors’ report on corporate governance as required by the Article L.225-37 of the French Commercial Code (refer to the cross-reference table for the annual financial report and the management report in Chapter [9] of this universal registration document) and includes information on the composition of the Board and the conditions under which its work is prepared and organized, how its governance is structured, and its policy for compensating corporate officers.
The information in this section takes into account in particular Appendices 1 and 2 of Commission Delegated Regulation (EU) No. 2019/980 of March 14, 2019, AMF Recommendation No. 2012-02 as amended on December 3, 2019, consolidating the recommendations published since 2009 by the Autorité des Marchés Financiers (AMF), the guide to compiling universal registration documents published by the AMF on January 8, 2021, and lastly the Afep-Medef Corporate Governance Code for listed companies as amended in January 2020 (“Afep-Medef Code”).
At its meeting of April 30, 2009, Natixis’ Board of Directors opted to separate the positions of Chairman of the Board and Chief Executive Officer. This decision was a result of the Company’s desire to comply with best practices in corporate governance and to make a clear distinction between the strategic direction, decision-making and control functions that come under the Board of Directors’ responsibilities, and the operational and executive functions that fall to the Chief Executive Officer. This decision complies with the obligations applicable to credit institutions since 2014 by the French law transposing the CRD 4 Directive.
The composition of the Board reflects the Group’s architecture, which includes the Banques Populaires and Caisses d’Epargne networks.
Following the merger of Banque Fédérale des Banques Populaires (BFBP) and Caisse Nationale des Caisses d’Epargne (CNCE) that resulted in the creation of BPCE, Natixis has been majority-owned by BPCE since August 1, 2009, with its shareholding standing at 70.57% as of December 31, 2020.
This governance, specific to Natixis, is illustrated by the composition of its Board of Directors at December 31, 2020 (see section 2.1.2 below) and explains the specific cases of derogation from the Afep-Medef Code (see section 2.1.3 below).
Summary table of the Board of Directors 2.1.2 at December 31, 2020
Diane de Saint Victor F 65 French 1,000 04/04/2019 2023 AGM 1 100% 1 ● ★ ●
Nicolas de Tavernost M 70 French 1,000 31/07/2013 2021 AGM 7 100% 1 ★ ● ●
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Monitoring table of compliance with the recommendations 2.1.3 of the Afep-Medef Code
Appointment Committee (Article 17.1 of the Code) “It […] must mostly consist of independent directors.”
The number of independent directors on the Compensation Committee is not greater than half the total number of members, despite the recommendation by the Afep-Medef Corporate Governance Code. It has a balanced composition (50% independent, 50% non-independent), and the Committee is chaired by an independent director. Like the Audit Committee and the Appointment Committee, strictly following the Afep-Medef Code recommendations on the composition of the Compensation Committee would require Natixis’ independent directors to sit on more than three Special Committees, at the risk of negatively affecting the quality of that Committee’s work, in light of the resulting increased workload. That is why Natixis promotes a balance of directors within the Committee, which is, additionally, always chaired by an independent director. It should be noted that the opinions and recommendations of the Appointment Committee are only adopted if the majority of members present, including the Chairman, voted for them.
Session of the Board of Directors held without the executive officers (Article 11.3 of the Code) “It is recommended that at least one meeting not attended by the executive corporate officers should be organized each year.”
Natixis’ Board of Directors does not have a formal arrangement to hold a session without the executive officer present. However, the Chief Executive Officer was not present at the part of the Board Meeting dated February 6, 2020 during which his performance was evaluated and his compensation.
Positions and functions held by the corporate officers 2.1.4 during the fiscal year
Born 28/12/1963 Nationality: French Natixis shares held: 255,771 Address: 50 avenue Pierre Mendès-France, 75201 Paris Cedex 13
A graduate of the HEC business school and Stanford Executive Program, Laurent Mignon worked in several divisions of Banque Indosuez over more than 10 years, including positions on the trading floor and in investment banking. In 1996 he joined Schroders in London, then AGF in 1997 as Chief Financial Officer. He was appointed to the AGF Executive Committee in 1998, then became Deputy CEO in charge of Banque AGF, AGF Asset Management and AGF Immobilier in 2002. He became CEO in charge of the Life Insurance and Financial Services and Credit Insurance divisions in 2003, before his appointment as Chief Executive Officer and Chairman of the Executive Committee in 2006. From September 2007 to May 2009 he was managing partner at Oddo et Cie alongside Philippe Oddo.
Other offices held in 2020: Within BPCE Group: Member of the Management Board (since 06/08/2013) and V Chairman of the Management Board (since 01/06/2018) by BPCE; Member of the Board of CE Holding Participations V (since 06/06/2018); Director of Sopassure (from 18/06/2018 to 02/02/2020);V
Outside BPCE Group: Member of the Executive Committee of the Fédération Bancaire V Française (French Banking Federation) (01/09/2019); Member of the Board of Arkema (1) (since 27/10/2009), AROP V (Association pour le Rayonnement de l’Opéra National de Paris) (since 10/12/2015), CNP Assurances (1) (since 01/06/2018); Non-voting member of ODDO BHF SCA (since 29/03/2019) V and FIMALAC (since 16/04/2019).
Director of Peter J. Solomon GP, LLC V (since 15/12/2017); (until 30/05/2018)O
Chairman of the Board of Directors V of Crédit Foncier de France (since 17/05/2018); (until 31/07/2019)O
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Member of the BPCE Management Board (since 01/06/2018) V and member of the Management Board of BPCE in charge of Finance and Strategy (from 01/06/2018 to 03/08/2020); Permanent representative of BPCE, Director of CE Holding V Participations (from 01/06/2018 to 01/12/2020); Deputy Chief Executive Officer of CE Holding Participations V (from 06/06/2018 to 01/12/2020); Chairman of the Board of Directors: GIE BPCE Financial Services V (from 18/04/2019 to 15/10/2020), Crédit Foncier de France (from 01/08/2019 to 02/10/2020), Natixis Investment Managers (since 28/08/2020), Natixis Payment Solutions (since 10/09/2020), Natixis Assurances (since 21/09/2020), Coface S.A. (1) (from 09/09/2020 to 10/02/2021); Director of: Natixis Coficiné (from 30/11/2018 to 05/05/2020), V PJ Solomon GP LLC (since 14/09/2020), GIE BPCE Services Financiers (from 01/03/2019 to 15/10/2020); Permanent representative of Natixis, Member of the Board V of IFCIC (Institut pour le Financement du Cinéma et des Industries Culturelles) (from 16/12/2016 to 16/06/2020).
Chairman of the Board of Directors V of HCP NA LLC (from 30/10/2014 to 31/03/2016); Member of the Board of Natixis V Partners (since 13/05/2015); (until 10/07/2018)O Member of the Board of Natixis V Partners Espana (since 29/01/2016); (until 17/01/2018)O Permanent representative of Natixis V HCP, Member of the Board of Ellisphère (since 30/09/2014); (until 13/04/2017)O Chief Executive Officer of Natixis HCP V (since 30/09/2014); (until 27/06/2017)O Vice-Chairman and Member of the V Supervisory Board of Seventure Partners (since 24/07/2015); (until 18/10/2017)O Member of the Executive Committee, V Head of Strategy of Natixis (1) (since July 2014). (until September 2017)O
Member of the Senior Management V Committee, Finance and Strategy Director of Natixis(1) (since 19/09/2017); (until 31/05/2018)O
Permanent representative of Natixis, V Director of Natixis Investment Managers (since 11/12/2017); (until 06/09/2018)O
Governance of Natixis at December 31, 2020 43NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Permanent representative of Natixis, V Director of Compagnie Française d’Assurance pour le Commerce Extérieur (since 11/12/2017). (until 06/09/2018)O
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BPCE: Natixis shares held: 2,227,221,174 Address: 50 avenue Pierre Mendès-France, 75201 Paris Cedex 13 Catherine Halberstadt
First appointed: co-opted by the Board of Directors on 25/08/2009 and ratified at the AGM of 27/05/2010 Term expires: 2023 AGM (a)
Catherine Halberstadt holds a postgraduate degree in Accounting and another in Business, Administration and Finance from the École Supérieure de Commerce de Clermont-Ferrand. In 1982 she joined Banque Populaire du Massif Central, where she was successively appointed Head of Human Resources, Chief Financial Officer, Chief Operations Officer and, from 2000, Deputy Chief Executive Officer. Catherine Halberstadt became Chief Executive Officer of Natixis Factor in 2008.
Other offices held in 2020: Within BPCE Group: Member of the BPCE Management Board in charge of Human V Resources (since 01/01/2016); Director of: Crédit Foncier (from 10/05/2012 to 02/12/2020).V
2023 AGM called to approve the financial statements for the year ended 31/12/2022.(a) Non-Group Company.(1)
Daniel de Beaurepaire Chairman of the Steering and Supervisory Board of Caisse d’Epargne Île-de-France
Born 23/09/1950 Nationality: French Natixis Shares held: 1,000 Address: 26-28 rue Neuve Tolbiac, 75013 Paris
A graduate of ESC Rouen and a certified chartered accountant and auditor, Daniel de Beaurepaire began his career in 1978 at audit firm Deloitte, where he was appointed partner in 1985 until his departure in 1995.
From 1996, he worked at the firm International Audit Company, becoming its Chairman in 2005, then joined accounting firm GEA Conseil where he became Co-Manager in the same year. He was appointed Co-Manager of audit firm GEA Finances in 2010 until June 2018.
Other offices held in 2020: Within BPCE Group: Member of the Steering and Supervisory Board of Caisse V d’Epargne Côte d’Azur (since 29/04/2015) then Chairman (since 26/04/2017); Member of the Board of S.A. Compagnie Européenne de Garanties V et Cautions (from 10/07/2018 to 09/07/2020); Member of the Board (since 16/01/2015) then Chairman V of the Paris Ouest local savings company (since 26/04/2017).
2023 AGM called to approve the financial statements for the year ended 31/12/2022.(a) Non-Group company.(1)
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Born 06/04/1957 Nationality: French Natixis Shares held: 1,000 Address: 33-43 avenue Georges Pompidou, 31135 Balma Cedex
Alain Condaminas has a Master’s Degree in Economics and a postgraduate degree in Finance and Banking Techniques. He joined Groupe Banque Populaire in 1984. In 1992, he began working at Banque Populaire Toulouse-Pyrénées as Head of Production, supervising the Human Resources Department, and subsequently as Head of Operations. In 2001 he became Chief Executive Officer of Banque Populaire Quercy-Agenais. In 2003 he oversaw a merger with Banque Populaire du Tarn et de l’Aveyron, then a second merger in 2006 with Banque Populaire Toulouse-Pyrénées to create today’s Banque Populaire Occitane.
Dominique Duband (since February 6, 2020) Chairman of the Steering and Supervisory Board of Caisse d’Epargne and Prévoyance Grand Est Europe
First appointed: co-opted by the Board of Directors on 06/02/2020 and ratified at the AGM of 20/05/2020 Term expires: 2022 AGM (a)
In 1991 he joined the Batigère group as a new building operations Manager. After five years in charge of rental management, he became Director of Batigère Nancy in 1997. In 2001, he was appointed to the Management Board, then Chairman of the Management Board of Batigère in 2002, until 2014. From June 2014 to June 2018 he was Chairman of the Supervisory Board of Batigère.
In 2018 he became member of the Supervisory Board of Banque BCP Luxembourg, and has been Chairman of the Steering and Supervisory Board at Caisse d’Epargne Grand Est Europe since
Other offices held in 2020: Within BPCE Group: Chairman of the Steering and Supervisory Board, Member V of the Risk Committee, Chairman of the Compensation Committee and Appointment Committee of Caisse d’Epargne et de Prévoyance Grand Est Europe CEGEE (since 28/05/2018); Member of the Board of Société Locale d’Épargne V Meurthe-et-Moselle (since 15/02/2016); Member of the Supervisory Board of: Banque BCP Luxembourg V (since 03/07/2018).
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Director of GIE Batigère Développement V Grand Paris (1) (since 27/06/2017); (until 15/05/2019)O
Chairman of the Supervisory Board V of Batigère (1) (since 29/06/2017). (until 25/03/2019)O
Permanent representative V of the Batigère group, Member of the Supervisory Board of Batigère Île-de-France (since 26/06/2018). (until 31/10/2019)O
2022 AGM called to approve the financial statements for the year ended 31/12/2021.(a) Non-Group company.(1)
Governance of Natixis at December 31, 2020 49NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Nicole Etchegoïnberry Chairwoman of the Management Board of Caisse d’Epargne Loire-Centre
First appointed: co-opted by the Board of Directors on 20/12/2018 and ratified at the AGM of 28/05/2019 Term expires: 2024 AGM (a)
Nicole Etchegoïnberry has been Chairwoman of the Management Board of Caisse d’Epargne Loire-Centre since August 1, 2009.
2024 AGM called to approve the financial statements for the year ended 31/12/2023.(a)
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Born 14/04/1965 Nationality: French Natixis Shares held: 1,000 Address: 1 bis rue Jean Wiener, Champs-sur-Marne, 77474 Marne-La-Vallée Cedex 2
Outside BPCE Group: Member of the Board of CNRS (since 24/11/2017).V
Born 19/06/1956 Nationality: French Natixis shares held: 1,000 Address: 847 avenue de la République 59700 Marcq-en-Barœul
With a postgraduate degree from the IAE business school in Lille, Philippe Hourdain began his career in 1979 in sales at France Rail Publicité before taking over as regional head for the company. In 1983, he joined advertising publishing agency Epure as sales Director, and in 1986, he was appointed special advisor at the French Ministry for Industry, seconded to the State Secretary for Tourism. From 1988 to 1994, he held the position of sales Director of printing group Techniphoto. He then chaired SAS Investissements et Actions from 1994 to 2018.
Within BPCE Group, Philippe Hourdain has been Chairman of the Board of Directors of Banque Populaire du Nord since October 16, 2016. He has also been a Director at BPCE Financement since 2018.
Chairman of CCI Région Hauts de France (since 23/06/2016);V Member of the Board of SAS CCIWEBSTORE (since 26/09/2018);V Chairman of GIE CMDU (from 20/04/2012 to 30/09/2020);V Non-associate Manager of SCI Templemars 4 (since 17/08/2018);V Manager of SCI Lille II (since 19/01/2005);V Chairman of Ports de Lille (from February 2010 to April 2020).V
Vice-Chairman (from 19/10/2012 V to 15/10/2016), Chairman of the Compensation Committee (from 28/09/2012 to 15/10/2016), Member of the Audit Committee and the Risk Committee (from 05/05/2011 to 2016) of Banque Populaire du Nord; Chairman of the Norlink Ports V association (from 25/01/2017). (until December 2019)O
Chairman of SAS Investissements V et Action (1) (since 1994). (until 2018)O
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First appointed: co-opted by the Board of Directors on 18/02/2015 and ratified at the AGM of 19/05/2015 Term expires: 2022 AGM (a)
First appointed: Board Meeting of 18/02/2015 Chairwoman – CSR Committee First appointed: Board Meeting of 17/12/2020 with effect as of 01/01/2021
2022 AGM called to approve the financial statements for the year ended 12/31/2021.(a) Listed company.(1) Non-Group company.(2)
Catherine Leblanc (Since June 23, 2020) Chairwoman of the Board of Directors of Banque Populaire Grand Ouest
First appointed: Board Meeting of 23/06/2020 Term expires: 2023 AGM (a)
A graduate of Université Paris XI and holder of a PhD in law, Catherine Leblanc began her career in 1980 as legal counsel at the Fédération Nationale de la Mutualité Française, and then as senior advisor for the Centre National sur les Droits de la Femme in 1982.
First appointed: Board Meeting of 17/12/2020 with effect as of 01/01/2021
As Deputy Director of the Financial Management division (1980-1987), Bernard Oppetit joined Paribas North America first as a Risk Arbitrage Trader (1987-1990), and then as Global Head of Risk Arbitrage (1990-1995). In 1995, while still heading up Risk Arbitrage, he moved to London to become Global Head of Equity Derivatives (1995-2000). In 2000 Bernard Oppetit founded Centaurus Capital, a hedge fund investment management company. Having sold its global investment business, Centaurus Capital is a holding company of which Bernard Oppetit remains Chairman.
Member of the Board and Chairman of Cnova (1) Audit Committee V (since 20/11/2014); Trustee of The Academy of St Martin-in-the-Fields V (since June 2016).
2022 AGM called to approve the financial statements for the year ended 31/12/2021.(a) Listed company.(1)
First appointed: co-opted by the Board of Directors on 14/12/2016, and ratified at the AGM of 23/05/2017 Term expires: 2023 AGM (a)
With a master’s degree in Management from the University of Paris IX Dauphine, Catherine Pariset spent thirty-five years in audit and consulting, and was a partner at PricewaterhouseCoopers (PwC) from 1990 to 2015. Catherine Pariset was the partner in charge of the global audit of AXA, Sanofi, Crédit Agricole, Caisse des Dépôts, Compagnie des Alpes and Generali France. She also served as a member of the PwC Board for seven years, and was partner overseeing the insurance and banking sectors.
Other offices held in 2020: Director, Chairwoman of the Appointment and Compensation V Committee, Member of the Audit Committee and of the Risk Committee of Banque PSA Finance (since 22/02/2019); Director and member of the specialized Committees of Generali V Vie and Generali lA (since 11/03/2020).
Member of the Supervisory Board of V Eurodisney SCA (1) (since 17/02/2016); (until 13/09/2017)O Member of the Supervisory Board V of Eurodisney Associés SCA (since 17/02/2016); (until 13/09/2017)O Member of the Audit Committee V of Eurodisney (since 09/11/2016). (until 13/09/2017)O
Christophe Pinault Chairman of the Management Board of Caisse d’Epargne and Prévoyance Bretagne Pays de Loire
Other offices held in 2020: Within BPCE Group: Chairman of the Management Board of Caisse d’Epargne V Bretagne Pays de Loire CEBPL (since 24/04/2018); Chairman of the Supervisory Board of: Batiroc Bretagne-Pays de V Loire (since 04/05/2018), Sodero Gestion SAS (since 04/05/2018), CE Développement SAS (from 13/12/2016 to 03/12/2020); Chairman of the Board of Directors of Sodero Participations SAS V (since 04/05/2018); Permanent Representative of CEBPL, Member of the Board of GIE V IT-CE (since 14/05/2018); Director of: FNCE (since 27/04/2018), BPCE Assurances V (from 12/06/2007 to 02/07/2020) and member of the Audit and Risk Committee (from 05/12/2017 to 02/07/2020), Natixis Investment Managers (from 21/05/2013 to 09/12/2020) and member of the Audit and Accounts Committee (from 12/12/2017 to 09/12/2020) then Chairman of the Audit and Accounts Committee (from 11/09/2018 to 09/12/2020), Turbo (since 18/07/2019); Member of the Board and Treasurer of the Belem Foundation V (since 02/07/2015); Member of the Supervisory Board of: Seventure Partners V (from 25/07/2016 to 16/12/2020), Alliance Entreprendre SAS (from 29/09/2016 to 17/11/2020), Caisse d’Epargne Capital (from 08/11/2016 to 15/12/2020) then President (from 14/06/2017 to 15/12/2020).
Member of the Board of Natixis V Payment Solutions (from 24/09/2013 to 29/09/2016); Chairman of the Management Board V of Caisse d’Epargne et de Prévoyance Côte d’Azur CECAZ (since 01/07/2013); (until 26/04/2018)O Permanent Representative of CECAZ, V Member of the Board of ERILIA (since 03/06/2016); (until 26/04/2018)O Member of the Board of GIE Caisse V d’Epargne Syndication Risque (since 22/05/2014). (until 26/04/2018)O
Member of the Board of IXION V (from 29/03/2018 to 12/11/2018);
Governance of Natixis at December 31, 2020 57NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Diane de Saint Victor Member of the Board of Directors of Transocean
A lawyer by training with an advanced degree in corporate law and another in international law, Diane de Saint Victor started her career as a lawyer in 1977 before joining Thales in 1987 as a legal consultant. From 1988 to 1993 she was a legal consultant at General Electric in the Healthcare division, and then internationally in France and the United States.
From 2007 to November 2020, she was General Secretary and General Counsel of ABB and then General Secretary of ABB until the end of March 2020.
Since May 2020, she has been a member of the Board of Directors of Transocean.
ABB General Secretary (from 2007 to 31/03/2020);V Member of the Board of Directors, member of the Audit V Committee, the Stakeholders Relations Committee and the Corporate Social Responsibility Committee of ABB India Ltd (1) (from 13/11/2019 to 31/07/2020).
Member of the Board of Directors, Chairwoman of the V Compensation Committee and member of the Audit Committee of Altran Technologies (from 15/05/2019 to 21/04/2020); Member of the Board of Directors, member of the Audit V Committee and the Health, Safety, Environmental & Sustainability Committee (since 07/05/2020) of Transocean (1).
Member of the Board of Directors V of the US Chamber of Commerce in France (since 2017). (until 31/12/2019)O
2023 AGM called to approve the financial statements for the year ended 31/12/2022. The GM of May 28, 2021, will be asked to reappoint Diane de Saint Victor (a) as a director, following her resignation to come at the end of the Board meeting preceding the GM (in order to avoid a group renewal of directors in 2023). Listed company.(1) Non-Group company.(2)
2 CORPORATE GOVERNANCEGovernance of Natixis at December 31, 2020 58 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
Member of the Board of GL Events S.A. (since May 2008);V Volunteer member of the Board of the RAISE endowment fund V (since 22/11/2013), Polygone S.A. (since 02/03/2013); Chairman of SPILE, an association under French law 1901 that V helps ex-offenders find work, and Chairman of the Groupe M6 Management Board (since April 2013); Chairman of the Association des Chaînes Privées V (since December 2020).
Governance of Natixis at December 31, 2020 59NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Permanent Representative V of Métropole Télévision (2), Chairman of TCM DA SAS (since 27/06/2013); (until 20/11/2017)O Chairman of the Groupe M6 V Fondation d’Entreprise (from 2011 to 12/07/2016); Member of the Board of the Football V Club des Girondins de Bordeaux (since 2001); (until 06/11/2018)O Permanent Representative V of Métropole Télévision, Member of the Board of SASP Football Club des Girondins de Bordeaux (since 2012); (until 06/11/2018)O Permanent representative V of Métropole Télévision, Director of Société Nouvelle de Distribution S.A. (since June 2011); (until 27/06/2019)O Permanent representative of V Métropole Télévision, Chairwoman of M6 Digital Services (since June 2011); (until 01/02/2019)O Permanent representative of V Métropole Télévision, Chairwoman of SNC Catalogue MC SAS (since 22/07/2016); (until 20/06/2019)O Member (since 18/12/2002).V then Chairman of the Supervisory Board V
Permanent representative of Métropole V Télévision, Director of IP Régions S.A. (since 02/10/2017); (until 31/05/2018)O
Permanent representative of Métropole V Télévision, Chairman of SNC Audiovisuel FF SAS (since 20/07/2017). (until 20/06/2019)O
2021 AGM called to approve the financial statements for the year ended 31/12/2020.(a) Listed company.(1) Non-Group company.(2)
Born 26/06/1949 Nationality: French Natixis Shares held: 1,000 Address: 9 avenue Mercier, 75008 Paris
KEY ADVISORY SKILLS A nationally and V internationally recognized industrialist; Expertise in managing large V corporations; Extensive knowledge V of strategic issues.
In 2005 he was also appointed Chairman of the School Council of his Alma Mater, HEC.
Born 25/09/1956 Nationality: French Natixis Shares held: 1,000 Address: Immeuble Le W 1A place de Haguenau CS10401, 67001 Strasbourg Cedex
First appointed: co-opted by the Board of Directors on 28/01/2013 and ratified at the AGM of 21/05/2013 Date term of office expires: after the GM of 20/05/2020 Member – Appointment Committee
First appointed: Board Meeting of 09/02/2017 Date term of office expires: after the GM of 20/05/2020 Member – Strategic Committee
First appointed: Board Meeting of 28/01/2013 Date term of office expires: after the GM of 20/05/2020
Thierry Cahn has been Chairman of the Board of Directors of Banque Populaire Alsace Lorraine Champagne since September 30, 2003.
Bernard Dupouy (until May 20, 2020) Chairman of the Board of Directors of Banque Populaire Aquitaine Centre Atlantique (BPACA)
First appointed: Board Meeting of 28/05/2019 Date term of office expires: after the GM of 20/05/2020 Member – Strategic Committee
KEY ADVISORY SKILLS Expertise in business V administration; In-depth knowledge of retail V banking, the regional economy and the economy of the French overseas territories.
A graduate of the École Supérieure de Commerce, administration et des Entreprises de Bordeaux, Bernard Dupouy became a Member of the Board of Banque Populaire du Sud-Ouest (BPSO) in 1996. He was appointed Secretary in 2006, then Vice-Chairman in 2009. In November 2011, BPSO became Banque Populaire Aquitaine Center Atlantique (BPACA). Bernard Dupouy became Executive Vice-Chairman and then Chairman of the Board of Directors in January 2015. He was also Chairman of the Board of Directors of BPSO subsidiary Crédit Commercial du Sud-Ouest from 2008 to 2011. From 2011 to 2015, he was a Member of the Board and Chairman of the Audit Committee and Risk Committee.
Other offices held in 2020: Within BPCE Group: Chairman of the Board of Directors of Banque Populaire Aquitaine V Centre Atlantique (BPACA) (since 27/01/2015) Member of the Appointment Committee (since 19/12/2019); Member of the Supervisory Board and the Compensation V Committee (since 02/08/2018) and the Audit Committee of BPCE (since 24/05/2019); Member of the Board (since May 2015) and Vice-Chairman V of the Board of Directors (since 06/06/2018) of the National Federation of Banques Populaires; Permanent Representative of BPACA, Member of the Board V of Société Centrale des Caisses de Crédit Maritime Mutuel (since 05/06/2018).
Outside BPCE Group: Chairman and Chief Executive Officer of Groupe Dupouy S.A. V (since 22/07/1993); Chairman and Chief Executive Officer of ETS DUPOUY SBCC V (since 01/02/2004); Director of Union Maritime du Port de Bordeaux (since 2008);V Manager of SCI Badimo (since 26/01/2000).V
Member of the Board of BPCE Vie V (since 03/08/2017); (until 03/08/2018)O
Member of the BPCE Appointments V Committee (since 08/01/2018). (until 24/05/2019)O
First appointed: co-opted by the Board of Directors on 30/07/2015 and ratified at the AGM of 24/05/2016 Date term of office expires: Board Meeting of 06/02/2020 Member – Audit Committee
First appointed: Board Meeting of 09/02/2017 Date term of office expires: Board Meeting of 06/02/2020 Member – Strategic Committee
First appointed: Board Meeting of 30/07/2015 Date term of office expires: Board Meeting of 06/02/2020
KEY ADVISORY SKILLS Entrepreneurial experienceV Extensive knowledge V in accounting and finance AuditingV
In 1999 she became a founding Director of local savings company SLE de Cannes, before being elected as its Chairwoman in 2009. She sat on the Steering and Supervisory Board of Caisse d’Epargne Côte d’Azur as a Non-Voting Member, then from 2009 as Chairwoman of the LSC, joining the Audit Committee at the same time. Françoise Lemalle was appointed Steering and Supervisory Board Chairwoman on April 23, 2015.
In addition, she has been a Member of the Board of IMF Créasol (1) and a member of the association’s Audit Committee since 2013. Françoise Lemalle has also been a member of the BPCE Supervisory Board since May 22, 2015.
Outside BPCE Group: Chief Executive Officer of Lemalle Ares X-Pert (since 1991);V Member of the Board and Member of the Audit Committee: IMF V Créa-Sol (since July 2013).
Director of Fondation Caisses V d’Epargne pour la Solidarité (from October 2015 to October 2016).
Management and oversight of corporate governance 65NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Natixis’ Board of Directors had 15 members at December 31, 2020. It is composed as follows: two members from BPCE, namely Laurent Mignon and BPCE itself,V represented by Catherine Halberstadt; four members from the Banque Populaire banks, namely AlainV Condaminas, Sylvie Garcelon, Philippe Hourdain and Catherine Leblanc; four members from the Caisse d’Epargne banks, namelyV Daniel de Beaurepaire, Dominique Duband, Nicole Etchegoïnberry and Christophe Pinault; and five independent members, namely Anne Lalou, Bernard Oppetit,V Catherine Pariset, Diane de Saint Victor and Nicolas de Tavernost.
Pursuant to Articles L.22-10-5 and L.225-27-1 and L.22-10-7 of the French Commercial Code, Natixis’ Board of Directors does not have any employee directors, or any employee shareholder directors. However, two representatives of the Social and Economic Committee attend every Board of Directors’ Meeting in an advisory capacity.
In accordance with Article L.225-19 of the French Commercial Code, the number of directors who are over the age of 70 is limited to one third of the number of directors in office. Two Natixis directors are over the age of 70 as of December 31, 2020 (please refer to the summary table of the Board of Directors in section 2.1.2 of this chapter for more details on their number of shares).
In addition, in accordance with Article 14.1 of the Afep-Medef Code, the term of office of Natixis directors is four (4) years .
A – Main changes in the composition of the Board of Directors
co-opted with immediate effect Dominique Duband as DirectorV to replace Françoise Lemalle, who resigned, for the remainder of her term of office, terminating at the end of the Natixis General Shareholders’ Meeting convened in 2022 to approve the financial statements for the year ending December 31, 2021. Dominique Duband is also a ex-officio member of the Strategic committee; on May 20, 2020, the General Shareholders’ Meeting of Natixis:V
ratified the co-opting of Dominique Duband, which took placeV during the meeting of the Board on February 6, 2020, to replace Françoise Lemalle, who resigned, to serve out the remainder of his predecessor’s term of office, terminating at the end of the General Shareholders’ Meeting convened in 2022 to approve the financial statements for the year ending December 31, 2021, reappointed Alain Condaminas as Director for a term of four (4)V years, terminating at the end of the General Shareholders’ Meeting convened in 2024 to approve the financial statements for the year ending December 31, 2023, reappointed Nicole Etchegoïnberry as Director for a term of fourV (4) years, terminating at the end of the General Shareholders’ Meeting convened in 2024 to approve the financial statements for the year ending December 31, 2023, reappointed Sylvie Garcelon as Director for a term of four (4)V years, terminating at the end of the General Shareholders’ Meeting convened in 2024 to approve the financial statements for the year ending December 31, 2023.
co-opted with immediate effect Philippe Hourdain as a DirectorV to replace Thierry Cahn, who resigned, for the remainder of his term of office, terminating at the end of the Natixis General Shareholders’ Meeting convened in 2022 to approve the financial statements for the year ending December 31, 2021, and appointed his successor as member of the Appointment Committee. Philippe Hourdain is also a ex-officio member of the Strategic committee, co-opted with immediate effect Catherine Leblanc as a DirectorV to replace Bernard Dupouy, who resigned, for the remainder of his term of office, terminating at the end of the Natixis General Shareholders’ Meeting convened in 2023 to approve the financial statements for the year ending December 31, 2022, and appointed his successor as member of the Compensation Committee. Catherine Leblanc is also a ex-officio member of the Strategic committee.
Subject to the approval by the General Shareholders’ Meeting of the corresponding resolutions, the staggering of the terms of office above will be modified in order to avoid the renewal of seven terms en bloc in 2023 and to spread them more harmoniously over time (for more details, see the report of the Board of Directors to the General Shareholders’ Meeting).
Convinced that the quality of the Board of Directors should be assessed in the light of the complementarity of the profiles and ethics of its members, Natixis has implemented a diversity policy pursuant to Articles L.22-10-10 of the French Commercial Code and 7.2 of the Afep-Medef Code. The initial version of this policy was approved by the Board of Directors at its meeting of February 12, 2019 and updated on December 17, 2020. This diversity policy highlights the specific characteristics of Natixis’ governance as well as the skills that the Board of Directors must bring together, with the appropriateness of the directors' profile being assessed with regard to the collective and balanced representation of skills, as illustrated by the skills map detailed below.
In addition to the rules governing the composition of the Natixis Board of Directors, this policy describes the criteria used to ensure the diversity of the Board, in particular: the knowledge and qualifications needed to perform the duties of aV Board member in particular in relation to Natixis’ specific activities (solid understanding of the banking and financial sector, financial management and accounting principles applicable to credit institutions, corporate management, risk management and internal control, corporate strategy, technologies and digital transformation, Human Resources, international development, regulatory environment and governance, social and environmental responsibility); a balanced representation of women and men within the BoardV (with a long-term gender balance of 40%) and as regards the Chairmanship of its specialized Committees; a balance in terms of directors’ seniority with, on the one hand,V the term of office of director set at four years and, on the other hand, the rule for determining independence (for independent directors, not having been a director for more than 12 years when reappointed); and international outreach with regard to Natixis’ activities andV geographical deployment.
It is specified that the Appointment Committee favors the complementarity of skills and the diversity of cultures and experiences in order to have sufficiently rich and varied profiles.
Implementation and monitoring of the diversity policy The Board of Directors (and its Appointment Committee) regularly examines the best way to balance its membership and that of its Committees. To this end, the Appointment Committee periodically assesses, at least once a year, the structure, size, membership and effectiveness of the Board with regard to the missions assigned to it and submits any useful recommendations to the Board.
D. de Beaurepaire � � � � � � � � �
N. Etchegoinberry � � � � � � � � � � � � � � �
P. Hourdain � � � � � � � � � �
B. Oppetit � � � � � � � � � � � � � �
C. Pinault � � � � � � � � � � � � � �
Independent directors Therefore, one-third of the members of the Board of Directors are independent, in accordance with the Afep-Medef Code. As of December 31, 2020, the five independent directors of Natixis are Anne Lalou (Dean of the Web School Factory and Chairwoman of Innovation Factory), Bernard Oppetit (Chairman of the Centaurus Capital Limited fund that he created), Catherine Pariset (today released from her professional obligations), Diane de Saint Victor (Director of Transocean) and Nicolas de Tavernost (Chairman of the Management Board of the M6 group).
As is the case every year, at its meeting of December 17, 2020, and following the report submitted by the Appointment Committee, Natixis’ Board of Directors examined each independent director’s expertise, judgment and freedom of thought and expression, specifically with respect to the independence criteria recommended by the Afep-Medef Code, and the criteria in the Board’s Internal Rules (see section 2.2.1.2 A of this chapter).
To this end, the Board of Directors analyzes a range of indices, criteria and parameters including the duration, extent and nature of the banking, trade or consulting relationships, the volume of commitments and the weight of Natixis compared to total indebtedness, and the Company’s liquidity requirements.
Based on this review, it determined that Natixis is not the “reference banker” for companies in which its independent directors exercise their executive corporate officer duties or their professional activity, in particular as regards the Web School Factory, Centaurus Capital Limited and the M6 group.
Natixis has few or no business relations with any of these companies.
Cannot be or have been during the last five years: an employee or executive corporate officer of Natixis;V an employee, executive corporate officer or director of a company V consolidated by Natixis; an employee, executive corporate officer or director of BPCE V or of a company consolidated by BPCE.
Is not an executive corporate officer of a company in which Natixis directly or indirectly holds a Directorship, or in which an employee of Natixis or an executive corporate officer of Natixis (currently or within the last five years) holds a Directorship.
Is not a major customer, supplier, or corporate or investment banker or advisor (or linked directly or indirectly to these persons) to the Company or the group; does not derive a significant portion of business from the Company or its Group.
Is not a Board member representing a major shareholder of Natixis or BPCE.
Four of the six Board Committees are also chaired by a woman.
Balance in terms of seniority The average length of service of the members of the Board of Directors was four years at December 31, 2020. No independent director has been a member of the Board for more than twelve years.
The aim is to ensure that the members of the Board of Directors are collectively able to: make informed, judicious and objective decisions taking intoi. consideration Natixis’ business model, its risk appetite, its strategy and the markets in which it operates; challenge and monitor the decisions taken by Seniorii. Management.
This selection policy for future directors, the content of which is described in the diagram below concerns both Group Board members and independent directors.
> List of potential candidates together with background information shared by the Chairman of the Board with the Appointments Committee.
> Discussions between the Chairman of the Appointments Committee (in conjunction with the General Secretary) and the Chairman of the Board of Directors on shortlisted profiles.
Guarantee the collective ability of the Board to: V make informed decisions; V ensure the smooth running of the company; V challenge and monitor decisions made by senior management.
Proposal made to shareholders at the General Shareholders’ Meeting to appoint the chosen candidate (approval of the appointment or ratification if a temporary appointment has been made).
The range of skills, knowledge and experience of the Board must be sufficiently broad and diverse in accordance with the diversity policy for directors.
The current version of the Internal Rules, adopted on December 17, 2020, completes the legal and statutory dispositions by stipulating the rules governing the Board of Directors’ operation and setting out the rights and duties of its members. These rules are available in full on the Natixis website (www.natixis.com).
The Board of Directors, assisted by the specialized Committees, is involved in the following matters: Strategic orientationsV
The Board of Directors determines the orientations of the Company’s activity and sees to the implementation thereof, in accordance with its corporate interest, taking into account the social and environmental issues associated with its activity. Within the limits of the company’s corporate purpose and the powers expressly granted by law or its bylaws to the General Shareholders’ Meetings, the Board concerns itself with all matters affecting the Company’s performance and governs by virtue of its deliberations. The Board of Directors performs the controls and checks it deems appropriate.
It reviews and approves the parent company and consolidatedV financial statements of the Company, ensuring their accuracy and fairness.
The Board of Directors verifies that the executive managersV have properly implemented the supervisory mechanisms, especially in terms of the separation of duties and the prevention of conflicts of interest, that ensure the Company is effectively and prudently managed.
In accordance with the law and the bylaws, the ChairmanV convenes and chairs the Board and organizes and guides its work. He chairs General Shareholders’ Meetings. The Chairman of the Board or the Chief Executive Officer are required to provide each director with all the documents and information needed to carry out their duties.
As a reminder, the Board of Directors of a credit institution may not be chaired by the Chief Executive Officer.
Management and oversight of corporate governance 71NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
In light of Natixis’ corporate purpose and in accordance with the provisions of the French Commercial Code (Article L.823-19) and the French Monetary and Financial Code (Article L.511-89), the Board of Directors must draw on an Audit Committee, a Risk Committee, a Compensation Committee and an Appointment Committee.
With respect to the assessment of the Board of Directors’ work,V the Internal Rules specify that, at least once a year, an agenda item will be devoted to evaluating the Board’s and its Special Committees’ operation, an account of which will be included in Natixis’ annual report (for 2020, see section 2.2.1.4 “Assessment of the Board of Directors’ work in 2020”).
It issues an opinion on how well Natixis’ compensation policyV complies with current regulation, particularly regarding the Company’s regulated staff.
B – Compliance Charter for members of the Board of Directors
The members of Natixis’ Board of Directors agree to comply with the guidelines contained in this charter, which are reproduced below.
Article 1: Attendance All directors must devote sufficient time and attention to the performance of their duties and regularly attend the meetings of the Board and Committees of which they are a member, as well as the General Shareholders’ Meeting. Consequently, they must ensure that the number and commitment level of their directorships permit them to be available when required, especially if they also hold executive positions.
Article 3: Shareholding and Transparency It is recommended that each director hold at least 1,000 Natixis shares. They have six months to acquire the 140 shares stipulated by the bylaws and another 12 months to bring their holding to 1,000 shares.
In keeping with the laws in force, each director must enter the shares they hold in registered form.
This duty to abstain concerns shares and any investment securities issued or to be issued by Natixis, as well as the rights that may be detached from those securities (e.g. preemptive rights) and any derivative whose underlying assets are the rights or securities issued by Natixis.
As per the MAR Regulation, Natixis places the names ofV directors and non-voting members on the list of permanent insiders provided to the AMF. A permanent insider is any individual or legal entity that, on account of the nature of their functions or position in an issuing entity, has continuous access to inside information held by that issuing entity. Directors are individually informed that they are on this list by a letter from the Head of Compliance with acknowledgement of receipt.
Directors and non-voting members undertake to strictlyV observe and comply with the provisions of the Natixis S.A. Compliance Manual regarding any transactions relating to Natixis shares or debt securities, as well as any other related derivatives or financial instruments.
In particular, the director and the non-voting member agreeV not to perform any transaction during shutdown periods, also known as “negative windows,” which begin 30 calendar days before the publication dates of the quarterly, half-year and annual results and end on the publication date of these financial statements.
Directors and non-voting members must also inform NatixisV of the number of shares they hold on December 31 of each year and any financial transactions carried out, so that this information may be disclosed by the Company.
The Chairman of the Board of Directors, or the Corporate Secretary if applicable, shall conclude whether a conflict of interest exists and ensure compliance with the Related Party Agreements Procedure.
In accordance with regulations, a list of the functions performed by the corporate officers of Natixis is included in section 2.1.4 of this chapter.
Disclosure of conviction To the best of Natixis’ knowledge, none of the members of the Board of Directors or Senior Management has been convicted of fraud, filed for bankruptcy, liquidation or receivership, convicted and/or punished by official or regulatory bodies, disqualified from acting as a member of administrative, management or supervisory bodies of an issuer, or from participating in the management or conduct of the business of an issuer within at least the previous five years.
Conflicts of interest Members of the Natixis Board of Directors include BPCE (Natixis’ main shareholder) and employees or individuals holding other jobs within BPCE Group, particularly in the Caisse d’Epargne and the Banque Populaire banks. Natixis and its subsidiaries maintain business relations with BPCE and the entities of BPCE Group.
Summary of NATIXIS’ share transactions disclosed to the AMF by persons discharging managerial responsibilities and by persons closely associated with them
Summary of transactions in the Company’s shares by executives during fiscal year 2020, reported to the AMF in accordance with Article L.621-18-2 of the French Monetary and Financial Code and Articles 223-22 to 223-26 of the AMF General Regulations.
Anne LEBEL 02/03/2020 Vesting of free shares (PAGA 2017) (b) 6,902 NA
André-Jean OLIVIER 02/03/2020 Vesting of free shares (PAGA 2017) (b) 8,763 NA
Jean RABY 02/03/2020 Vesting of free shares (PAGA 2017) (b) 188,457 NA
Pierre Antoine VACHERON 02/03/2020 Vesting of free shares (PAGA 2018) (c) 8,030 NA
Marc VINCENT 02/03/2020 Vesting of free shares (PAGA 2017) (b) 39,195 NA
Bonus share allocation plan approved at the Board of Directors Meeting of 28/07/2016 (PAGA 2016).(a) Bonus share allocation plan approved at the Board of Directors Meeting of 10/04/2017 (PAGA 2017).(b) Bonus share allocation plan approved at the Board of Directors Meeting of 13/04/2018 (PAGA 2018).(c)
Internal charter At its meeting of February 17, 2013, the Board of Directors of Natixis drew up an internal charter on “related party agreements” in accordance with AMF recommendation No. 2012-05, updated on December 17, 2014 to include the changes made by Order No. 2014-863 of July 31, 2014.
Management and oversight of corporate governance 75NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com at its meeting of 23 June 2020, the agreement (memorandum ofV understanding) aimed at formalizing a partnership to create a leading European player in asset management by combining, within Ostrum Asset Management (subsidiary of Natixis Investment Managers), the euro rate and credit management activities and expertise, as well as the insurance management of Ostrum Asset Management and LBP Asset Management.
The common officers who did not take part in the deliberations or take part in the vote in accordance with Article L.225-40 of the French Commercial Code were: Laurent Mignon, Chairman of the Management Board of BPCEV (BPCE is also a Director of Natixis Investment Managers and Ostrum Asset Management) and Chairman of the Board of Directors of Natixis; Catherine Halberstadt, member of the BPCE Management BoardV (BPCE is also a Director of Natixis Investment Managers and Ostrum Asset Management) and permanent representative of BPCE on the Board of Directors of Natixis; Alain Condaminas, Director of Natixis and Ostrum AssetV Management; Christophe Pinault, Director of Natixis and Natixis InvestmentsV Managers; François Riahi, member of the Management Board of BPCE,V Chief Executive Officer of Natixis and Chairman of the Board of Directors of Natixis Investment Managers.
In addition, in accordance with Article L.225-40-1 of the French Commercial Code, at its meeting of December 17, 2020, the Board of Directors examined agreements entered into and authorized during previous financial years that were still being executed in the past fiscal year.
At the end of this review, the Board: approved the downgrading of four agreements related to the SmithV disposal agreement authorized by Natixis’ Board of Directors on February 12, 2019 (TSA/SLA, Reverse TSA, TSA/SLA IT and expired mandate agreement); and duly noted the lapse, termination and expiry of three otherV regulated agreements (agreements made in favor of François Riahi upon his appointment as Chief Executive Officer, Natixis’ adherence to the insurance policy taken out by BPCE with Arial CNP Assurances and authorization of an underwriting agreement).
This information on regulated agreements is included in the Statutory Auditors’ special report presented to the General Shareholders’ Meeting. (see section 8.2.4 of Chapter 8 of this universal registration document).
The memorandum of understanding as authorized by the Board of Directors on June 23, 2020 as a regulated agreement (see details above) is also an agreement identified under Article L.225-37-4 (2) of the French Commercial Code. This agreement, to which Natixis Investment Managers, a wholly-owned subsidiary of Natixis, Natixis and Ostrum Asset Management, a subsidiary of Natixis Investment Managers with a stake of 57%, are parties, was signed by BPCE, a shareholder of Natixis with a stake of 70.57%.
The Board of Directors held a total of 15 meetings in 2020. The attendance rate was 96% for the year as a whole (versus 91% in 2019).
The Chief Financial Officer, the Corporate Secretary and, as and when required, one or more business line heads have been invited to provide further information on subjects raised in meetings. Finally, the representatives of the Social and Economic Committee were invited to every Board of Directors Meeting.
The main topics addressed by the Board of Directors in 2020 were as follows: Financial position and monitoring of Natixis activity
Management and oversight of corporate governance 77NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Renewal of the Natixis liquidity contract;V Information on the capital increase following the bonus share allocations of the 2017 and 2018 plans;V Examination and authorization of strategic projects;V Opinion of the Social and Economic Committee on the Company’s financial and economic position in accordance V with Article L.2312-22 (2) of the French Labor Code; Renewal of bond and warrant issue authorizations for fiscal year 2021;V Reversal of issuance decision and delegation of powers in relation to issuance of US Commercial Paper (USCP).V
Every three years (2010, 2013, 2016, 2019), Natixis enlists the services of an independent outside firm to assess the work of its Board and Special Committees. Natixis conducts its own internal assessment for the other years. As such, for 2020, Natixis conducted an internal assessment to review the structure and operation of the Board of Directors and its Special Committees and evaluate their overall performance.
the decision-making and information process, particularly in theV context of a crisis; board performance monitoring;V
Each director as well as the non-voting director and the Chairman of the Board of Directors answered the questionnaire in an individual interview. An interview was also conducted with a representative of the SEC (Social and Economic Commitee).
In addition, in accordance with the recommendations of the Afep-Medef Code, as part of the assessment of the actual contribution of each director to the work of the Board of Directors, each of them was invited to assess and express their views on the individual skills of the Board members.
With regard to the composition of the Board of Directors, the directors consider that it is balanced in terms of profiles and experience as illustrated by the skills mapping updated in 2020.
The directors emphasized the role and involvement of the Chairman of the Board of Directors in the organization and facilitation of Board meetings. They noted more specifically that the latter promotes debates, encourages discussions and ensures that responses are provided. The separation of duties between the Chairman of the Board of Directors and the Chief Executive Officer is considered functional.
The directors believe that Board meetings are conducted in a courteous and constructive environment, with open debates where participants are free to speak their minds. They suggest making greater use of executive summaries in order to optimize the management of meetings with heavy schedules and to ensure a more detailed follow-up of certain decisions, particularly in terms of external growth. The directors also believe that the Board devotes a significant portion of its time to regulatory matters and would like the time devoted to strategy and business to be increased at Board meetings, given that these topics are discussed elsewhere during meetings of the Strategy Committee.
The directors also believe that the Board’s cohesion could be improved, in particular by organizing informal opportunities for discussion. As for the training of directors, the training program is considered to be of excellent quality. Lastly, as regards the committees, the directors consider that the work carried out is of good quality and, like the Board, suggest using more executive summaries, particularly for the meetings of the Risk Committee, whose agendas are also dense.
In 2020, Natixis renewed the training program for Board members. The training program implemented is in line with the existing one for the members of the BPCE Supervisory Board.
In 2020, 12 training sessions on 13 different topics were conducted. The 2020 training sessions were open to members of the BPCE Supervisory Board and members of the Social and Economic Committee. Directors were also invited to attend sessions held by BPCE for Supervisory Board members.
The training provided by Natixis in 2020 covered the following topics: cybersecurity;V
capital and financial market activities: rules, operation, controlsV (with a focus on complex market products and associated risks); the new IFRS 17 accounting standard on insurance contracts;V
Attendance rate at Board Meetings and Committees in 2020 Nationality First appointed Date term of office expires
As of April 4, 2019, Natixis’ Board of Directors includes a non-voting member, Henri Proglio. He was an independent director until November 17, 2018, the term of his twelve years’ mandate as member of the Supervisory Board and then as Board member of Natixis.
His knowledge of the Group dating back to 2006, his recognized expertise in financial matters, and his experience in managing large corporations and tackling strategic challenges make for a useful and effective contribution to the Board of Directors. Henri Proglio attends
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The Audit Committee has five members. As of December 31, 2020, it was composed as follows: Catherine Pariset Chairman
Independent members do not make up two thirds of the Natixis Audit Committee, as recommended by the Afep-Medef Code, in order to represent the different components of the Company’s main shareholders (members from the Caisse d’Epargne and the Banque Populaire banks, in addition to a BPCE Group representative) (see summary table of compliance with the recommendations of the Afep-Medef Code in section 2.1.3 of this chapter). Furthermore, the opinions and recommendations of the Audit Committee are adopted if the majority of members present, including the Chairwoman, vote for them.
Natixis’ Audit Committee has Internal Rules specifying its powers and its operating procedures, the latest version of which was approved by the Board of Directors on February 9, 2017.
Under the authority of the Natixis Board of Directors, the Audit Committee’s primary duties are: checking the clarity of information published by Natixis, assessingV the relevance of the accounting methods adopted for the preparation of Natixis’ individual and consolidated financial statements, monitoring the process of preparing financial information (preparing the financial statements, the management report, etc.) and making recommendations to guarantee the integrity of this information; monitoring the statutory audit of the quarterly, half-yearly andV annual consolidated financial statements and annual individual financial statements, as well as Natixis’ draft budgets and material off-balance sheet commitments, far enough in advance to allow their presentation to Natixis’ Board of Directors; and the half-yearly and annual management reports; monitoring the effectiveness of the internal control and riskV management systems with regard to the procedures for preparing and processing accounting and financial information; ensuring the Statutory Auditors’ adherence to the independenceV conditions by which they are bound; accordingly, the Committee must: ensure that the fee amount paid by Natixis, or the percentage ofV the net sales of the firms and networks represented by that fee, does not, by its nature, undermine the independence of the Statutory Auditors, establish the rules governing the services that the StatutoryV Auditors may provide and governing the authorization of services other than the certification of the financial statements; monitoring the Statutory Auditors’ performance of their duties;V
The Company’s Chief Executive Officer provides the Audit Committee with any documents and information it needs to perform its duties. The following list is not exhaustive: parent and consolidated financial, accounting, and regulatoryV documents prepared periodically by the Company; summary reports by the Company’s Statutory Auditors;V
The Audit Committee met five times in fiscal year 2020. The attendance rate was 92% for the year as a whole.
Within a reasonable amount of time before a Committee Meeting, a file containing the items on the agenda is sent to each director via a secure digital platform for review and analysis in preparation for the meeting.
In 2020, the Audit Committee’s duties focused on the following items in particular: Financial position Review of the quarterly, half-yearly and annual parent company and consolidated financial statements;V Natixis individual balance sheet at December 31, 2019 prepared on the basis of IFRS;V Review of the 2021 budget, including an update on the financial framework of the strategic plan;V Statutory Auditors’ observations;V Review of the results of the sharing arrangements for the US affiliates of Natixis Investment Managers and DNCA.V
Other items Presentation of the valuation system and its governance;V Presentation and results of the work relating to the renewal of the Statutory Auditors' term of office;V Statutory Auditors’ audit plan for 2020, budget allocated for audits, and follow-up on completed/ongoing audits;V Follow-up on Statutory Auditors’ fees for 2020 (certification and other assignments);V Information on prior authorizations given by the leader of the Audit Committee for the completion of the Statutory V Auditors’ services; Follow-up on the preparation of the 2020 Statutory Auditors’ reports on the annual and consolidated financial V statements.
In anticipation of the expiration of the terms of office of the Statutory Auditors PwC and Deloitte at the end of fiscal year ended on December 31, 2021, it was decided, in accordance with Regulation (EU) No. 537/2014, to submit all mandates to be renewed to a call for tenders carried out jointly by BPCE and Natixis.
Statutory Auditors certifying BPCE’s financial statements and one chosen from among the list of firms referenced by BPCE. This approach aims to optimize the legal audit process within BPCE Group and harmonize the services of the Statutory Auditors appointed within the Group.
The Risk Committee is composed of five members. At December 31, 2020, the Risk Committee was composed as follows: Bernard Oppetit Chairman
Natixis’ Risk Committee has Internal Rules specifying its powers and its operating procedures, the latest version of which was approved by the Board of Directors on November 7, 2017.
Within a reasonable amount of time before a Committee meeting, a file containing the items on the agenda is sent to each director via a secure digital platform for review and analysis in preparation for the meeting.
Internal control Presentation of the annual report on internal control;V Evaluation of the effectiveness of the internal control framework and procedures of the Risks function in place V for fiscal year 2019, in accordance with the Order of November 3, 2014 (including evaluation of the performance of Risk Management and Compliance); Review of assignments conducted by Natixis General Inspection and BPCE General Inspection during the fiscal year;V Monitoring of the implementation of recommendations made by Natixis General Inspection and BPCE General V Inspection; Main risks identified during the Natixis General Inspection missions;V Update on the “zero delay” campaign as of December 31, 2020 as part of the system for monitoring V recommendations; Presentation of the proposed audit program for 2021;V Presentation of the Natixis General Inspection department’s budget.V
The US Risk Committee is an offshoot of the Risk Committee. This Committee, created in 2016, meets an American regulatory requirement (Dodd Franck Act) applicable from July 1, 2016 to foreign banks established in the United States and meeting certain activity threshold criteria.
The US Risk Committee’s membership is the same as the Risk Committee. It is tasked with monitoring the management of risks related to Combined US Operations.
review and follow-up of the priorities and resources of the USV Chief Risk Officer for 2020 and update of the associated action plan; review of the US Contingency Plan;V
review and approval of the compliance and credit risk plansV for the US CIB; examination of the impacts of the health crisis on theV activities of the US platform (in particular in terms of credit risk, liquidity risk, market risk and cost of risk); periodic review of changes to the business and risks of the USV platform, including compliance risks; periodic review of the macro-economic and regulatoryV environment of the platforms as well as the CUSO activity and business lines; periodic monitoring of the conclusions of the Loan ReviewV and the Audit; assessment of the conclusions of regulatory reviews andV approval (when necessary) of related action plans; monitoring of the liquidity risk management system;V
Three of the members are independent (Anne Lalou, Diane de Saint Victor and Nicolas de Tavernost).
The Compensation Committee has been chaired by Nicolas de Tavernost since August 6, 2013.
The number of independent directors on the Compensation Committee is not greater than half the total number of members, despite the recommendation by the Afep-Medef Code. It has a balanced composition (50% independent, 50% non-independent) and is chaired by an independent director (see summary table on compliance with Afep-Medef Code recommendations in section 2.1.3 of this chapter). Furthermore, the opinions and proposals of the Compensation Committee are adopted if the majority of members present, including the Chairman, vote for them.
The role of Natixis’ Compensation Committee is to prepare the decisions that Natixis’ Board of Directors issues with regard to compensation, including those of Natixis employees who have a significant impact on the Company’s risk. The Compensation Committee’s powers and operating procedures are detailed in the Internal Rules, the latest version of which was approved on December 17, 2014 by the Board of Directors.
84 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 whether Natixis’ compensation policy complies with regulations,V including for the category of staff referred to in the French Ministerial Order of November 3, 2014, as well as for employees referred to in French Law No. 2013-672 on the Separation and Regulation of Banking Activities (“SRAB”) and Section 619 of the US Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”), or regulated categories of staff within Asset Management (AIFMD) or insurance activities (Solvency II); the annual review of Natixis’ compensation policy, specificallyV those employee categories whose professional activities are likely to have a significant impact on the risk profile of Natixis or the Group.
The Compensation Committee met four times in fiscal year 2020. The attendance rate was 97% for the year as a whole.
Each director’s individual attendance rate at Compensation Committee Meetings is provided in section 2.1.4 of this chapter (see directors’ individual fact sheets).
Within a reasonable amount of time before a Committee meeting, a digital file containing the items on the agenda is sent to each director via a secure digital platform for review and analysis in preparation for the meeting.
In 2020, the Committee focused on the following areas: Executive corporate officers Senior Management Committee members
Approval of the variable compensation factors for 2019 after assessing the degree to which the quantitative V criteria and strategic objectives of the annual variable compensation of executive corporate officers were met and validation of the compensation principles for fiscal year 2020 put to a vote of the General Shareholders’ Meeting on May 20, 2020; Review of the financial conditions relating to the termination of the duties of François Riahi, Chief Executive Officer V of Natixis; Review of the compensation policy for the new Chief Executive Officer of Natixis, Nicolas Namias;V Long Term Incentive Plan for Senior Management Committee members;V Annual analysis of the recommendations of the Afep-Medef Code in terms of corporate officers' compensation.V
Review of regulatory aspects;V Review of the compensation policy for members of the Board of Directors;V Deferred pay policy: definition of the performance conditions for the regulated staff for 2020;V Review of Natixis’ compensation policy, including of the deferred income rules and conditions for paying variable V compensation as well as the amounts of variable compensation for each business line; Review and monitoring of the achievement of performance conditions applicable to deferred variable V compensation; Analysis of the compensation for the heads of control functions and the regulated staff for fiscal year 2019;V Review of specific Risk and Compliance targets (2019 review & presentation of 2020 targets);V Analysis of compensation awarded to the 100 highest-paid employees;V 2019 annual report on compensation for the regulated staff under CRD IV;V Policy on gender equality and presentation of the Equal Pay Indexes.V
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The responsibilities assigned to Natixis’ Appointment Committee are, in essence, reviewing the selection of corporate officers and members of the Board, and assessing their individual and collective expertise, as well as the effectiveness of the Board of Directors. The Appointment Committee’s powers and operating procedures are described in detail in the Internal Rules of the Board of Directors, the latest version of which was approved on December 17, 2014.
The Committee’s primary duties are: issuing an opinion and, upon request from Natixis’ Board, makingV proposals and recommendations to the Board on the appointment of a CEO and, when appropriate, one or more Deputy Chief Executive Officers of Natixis; issuing an opinion and making recommendations to the Board ofV Directors on the selection/appointment of directors; evaluating the balance and diversity of knowledge, skills andV experience that the Board members have, both individually and collectively; detailing the duties and the qualifications required for serving onV Natixis’ Board of Directors, and assessing the time to be spent on that service; deciding on a set of targets for the balanced representation of menV and women on the Board of Directors. The Committee prepares a policy aimed at achieving those targets. Natixis’ target and policy as well as the implementation procedures are made public; periodically, at least once a year, assessing the structure, size,V composition and effectiveness of the Board of Directors with regard to the responsibilities that are assigned to it, and submitting any useful recommendations to the Board; periodically, at least once a year, assessing the knowledge, skillsV and experience of the Board of Directors, both individually and collectively, and presenting it with a report on this topic; and periodically scrutinizing the policies of the Board of Directors onV selecting and appointing Natixis’ executive managers, Deputy Chief Executive Officers and the Chief Risk Officer and making recommendations thereon.
Qualification as an independent director is discussed by the Appointment Committee, which prepares a report for the Board. Each year, based on this report and before the publication of the annual report, the Board of Directors reviews the status of each of its members based on independence criteria set out in the Board of Directors’ Internal Rules (see section 2.2.1.2 A of this chapter).
The Appointment Committee met six times in fiscal year 2020. The attendance rate was 97%.
In 2020, the Committee focused on the following areas: Independence of directors Verification of independence criteria for each director.V
As part of its work, the Appointment Committee reviewed the CEO succession plan at various meetings.
Through its work and discussions, the Committee has endeavored to design a plan that is adapted to short-, medium- and long-term situations while making diversity, in all its components, a key element. The Committee enlisted the services of a specialized consulting firm to assess and implement the plan.
The Appointment Committee will conduct an annual review of the CEO succession plan. To carry out its mission, the Appointment Committee keeps the Board informed of the progress of its work and coordinates with the Compensation Committee.
The Strategic Committee meets at least once a year. In 2020, the Strategy Committee met three times, including a day dedicated to discussing strategy.
During these meetings, the Committee was involved in discussions on the preparation of the next strategic plan.
Natixis’ CSR Committee has Internal Rules specifying its powers and its operating procedures, which were approved by the Board of Directors on December 17, 2020.
The main tasks of the Committee are: to review the Group’s CSR strategy and commitments,V particularly in relation to the green and sustainable finance strategy of all its business lines; to examine the results of actions taken by Natixis to reduceV its own environmental footprint (control of resource consumption, waste management and mobility practices) and that of its financing and investment activities; to monitor employee awareness-raising measures;V
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As of December 31, 2020, Senior Management is structured around the Chief Executive Officer, Nicolas Namias, and the Senior Management Committee, whose activities for 2020 are detailed below (see section 2.2.3.4 below).
With regard to the latter, in 2019 Natixis built and implemented the “Women’s Sponsorship Program” to enable the most talented female employees to benefit, for one year, from the support of a member of the Senior Management Committee or the Executive Committee. The objective is to promote these female talents, increase their visibility and thus actively prepare their access to career opportunities within Natixis.
In addition, for more than ten years, coaching programs dedicated to women such as "career success for women" are offered, and these enable employees to develop their leadership skills and assert their ambitions every year.
Thanks to the actions it has undertaken, Natixis is now the leading bank in the ranked list of women in SBF 120 governing bodies produced by the State Secretariat for Gender Equality and published in July 2020.
This ranking recognizes the progress and efforts made to increase female presence in the leadership circles to which the members of the Senior Management Committee belong.
B – Gender balance in the top 10% of positions with the highest responsibility
The Chief Executive Officer is responsible for the Natixis’ Senior Management, in accordance with the Board of Directors’ decision of April 30, 2009 to separate the offices of Chairman of the Board and Chief Executive Officer.
The Chief Executive Officer has not been convicted of fraud, filed for bankruptcy, liquidation, receivership or companies put into administration, convicted and/or punished by official or regulatory bodies, disqualified from acting as a member of administrative, management or supervisory bodies of an issuer, or from acting in the management or conduct of the business of an issuer within at least the previous five years.
In addition, there are no service agreements binding the Chief Executive Officer to Natixis that could confer benefits according to the terms of such an agreement and that might call into question his independence or interfere in his decision-making.
Namias, Chief Executive Officer, and Nathalie Bricker, Chief Financial Officer. Ms. Bricker was appointed by the Board of Directors on November 5, 2020 to replace Marc Vincent.
As executive officers, Nicolas Namias and Nathalie Bricker stand surety and assume full liability toward the supervisory authorities, and specifically the Autorité de Contrôle Prudentiel et de Résolution (ACPR–French Prudential Supervisory and Resolution Authority) and the European Central Bank (ECB), for the following activities: the bank’s effective management, within the meaning ofV Article L.511-13 of the French Monetary and Financial Code; disclosure to the ACPR of any accounting or financial documentsV that the ACPR may request, and responses to any questions or requests for information, per Articles L.571-4 to L.571-9 of the same Code; the periodic evaluation and control of the effectiveness of theV mechanisms and procedures set up to comply with the French Ministerial Order of November 3, 2014 on internal control of banking sector businesses; the determination of capital requirements.V
In this context, the executive officers are authorized to request and receive all useful information from any division, department, controlled entity or subsidiary of Natixis.
Following Natixis’ conversion into a French société anonyme with a Board of Directors, a Senior Management Committee was set up in early May 2009 in order to examine and validate the Company’s main decisions and steer its management.
In terms of strategic transactions, in the Asset & Wealth Management business, the merger between Ostrum AM and Banque Postale AM has been finalized, creating a European leader in interest rate and insurance management on behalf of large companies. institutional clients and strengthening the positioning of Natixis Investment Managers as a leading player in asset management in Europe. Also noteworthy were the announcement of the changing relationship between Natixis Investment Managers and H20 AM and the beginning of discussions with a view to a gradual and orderly unwinding of their partnership.
It also encouraged employee engagement initiatives, through a project focused on culture to define and affirm Natixis’ “Purple Way” around three values (sustainable impact, entrepreneurship and joint intelligence), the creation of the Natixis Foundation, and the implementation of a new mobility pact.
The Executive Committee, which has over 40 members, met quarterly at seminars during which its members were invited to provide insight and analysis on the strategies proposed by the Senior Management Committee and to incorporate managerial information for the purposes of distributing it to the teams. Some ad hoc meetings were organized to deal with the health crisis and its impact on the business lines and teams.
They are also regularly involved in the Company’s various projects, particularly in the areas of Human Resources, finance and business lines.
Policies and rules established 2.3 for determining compensation and benefits of any kind for corporate officers
As a preliminary point, it is specified that, in the context of the offer initiated by BPCE for Natixis shares, the Board of Directors will be required to review the adjustments to the terms of the instruments granted as compensation to employees and corporate officers of Natixis and its subsidiaries. The performance conditions and settlement methods of these instruments could be affected in the event of the implementation of a squeeze-out procedure following BPCE's offer. Any adjustments decided upon will be the subject of an additional communication in the documentation of the draft offer.
Natixis’ compensation policy is a key component in the implementation of the Company’s strategy. It is structured in a way that promotes employee engagement over the long term and increases the Company’s employer appeal, while discouraging excessive risk-taking.
This section first details the principles of the compensation policy and the criteria applicable to compensation of executive corporate officers, which will be submitted for the approval of the next General Shareholders’ Meeting, and then provides information on the components of compensation paid during or allocated in respect of the previous fiscal year.
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The overall annual budget for compensation to be allocated to members of the Board of Directors for attendance at Board and Committee Meetings is €650,000 (see the 36th resolution of the Combined General Shareholders’ Meeting of May 19, 2015).
The main changes to the compensation policy as approved by the Board of Directors on February 11, 2021 on the proposal of the Compensation Committee are as follows: the adjustment of the methods for distributing the overall annual compensation package to be allocated to the members of the Board ofV Directors in order to take into account the creation of the CSR Committee; waiver by the Chairman of the Board of Directors of any compensation due in respect of his office as director(1).V
This amount will be divided between incoming and outgoing Directors in the event of a change in the composition of the Board of Directors during a given fiscal year.
In accordance with the rules applicable within Groupe BPCE, the portion of compensation due to Laurent Mignon, as a director, was allocated and paid directly to BPCE.(1)
As an example, a director who is also a member (not a Chairman or Chairwoman) of all the Committees would receive €57,000 over a full year for 100% attendance of all the meetings of the Board of Directors and of the Committees.
The compensation paid to Committee Chairs is greater than that paid to members, given the workload and responsibilities involved.
Given the waiver by the Chairman of the Board of Directors of any compensation due in respect of his office as a director, it is specified, as necessary, that this policy does not apply to the Chairman of the Board of Directors.
The methods for distributing the fixed and variable compensation of directors were approved by the Board of Directors for the fiscal year 2021, it being noted that these may be adapted by the Board of Directors in the event of a change in the composition of the Board of Directors or a change to take account of an increase in workload or responsibilities.
For the fiscal year 2021, the gross annual fixed compensation of Nicolas Namias remains at €800,000.
Furthermore, the compensation of the Chief Executive Officer is closely tied to the Company’s performance, especially through annual variable compensation that is contingent upon the achievement of predetermined targets. Details regarding these targets and the extent to which they have been achieved at the end of the period, as assessed by the Board of Directors after consulting with the Compensation Committee, are then submitted to a vote at the General Shareholders’ Meeting. The criteria include quantitative objectives relating to the financial performance of BPCE and Natixis, and strategic objectives as well, including in terms of CSR.
Target set at 100% of the fixed compensation with a range from 0% to 156.75% of the target, i.e. a maximum of 156,75% of the fixed compensation
25% 12.5% net income (Group share);V 8.3% cost/income ratio;V 4.2% net revenues.V
Strategic criteria 30% 10% finalization and launch of the new Strategic Plan;V 5% progress on Transformation initiatives;V 5% oversight in terms of control and risks;V 5% accentuate the positioning of Natixis as a player with an impact on CSR V and energy transition issues in the various business lines; 5% promote and encourage employee engagement.V
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The terms of payment of the Chief Executive Officer's annual variable compensation comply with applicable regulations, especially regulatory provisions relating to supervision of remuneration as provided for by the European Directive CRD V of May 20, 2019. In particular, the payment of a fraction of the variable compensation awarded is deferred over time, is conditional, and is subject to the condition of presence and performance criteria.
The total variable compensation awarded (annual variable compensation and LTIP) to the Chief Executive Officer during the fiscal year cannot exceed twice his fixed gross annual compensation.
Pension Plan Like the rest of the staff, the Chief Executive Officer is covered by the mandatory pension plan. He is not covered by the kind of supplementary pension plans described in Article 39 or Article 83 of the French General Tax Code.
It is specified that the severance and non-compete benefits will be submitted to Natixis ‘General Shareholders’ Meeting to be held in May 2021.
Compensation and benefits of any kind for the Chairman 2.3.2 of the Board of Directors and the Chief Executive Officer for 2020
In accordance with the principles approved by the General Shareholders’ Meeting on May 20, 2020, Laurent Mignon received gross compensation of €300,000 for fiscal year 2020 in connection with his duties as Chairman of the Natixis Board of Directors.
For fiscal year 2020, the annual variable compensation target was set at 120% of François Riahi’s fixed compensation, with a range of between 0% and 156.75% of the target, i.e. a maximum of 188.1% of his fixed compensation. The target variable compensation of François Riahi was €960,000 for a full year, i.e. €560,000 for 2020 (prorata temporis).
The Board of Directors has decided not to grant annual variable compensation to François Riahi for fiscal year 2020.
Under the principle of eligibility of the Chief Executive Officer for the award of free performance shares under the Long Term Incentive Plans intended for members of the Natixis Senior Management Committee (“LTIP CDG”), Natixis' Board of Directors, as part of the LTIP CDG 2020 during its meeting of May 20, 2020, allocated 77,783 performance shares to François Riahi, which may give rise to a maximum vesting of 93,339 shares depending on the application of the performance conditions, i.e. a maximum of 0.00246% of the share capital on the grant date. This allocation corresponds to 20% of François Riahi’s gross annual fixed compensation.
Vesting of these shares is contingent upon meeting the continued service requirement with Groupe BPCE and performance conditions, which are based on both the relative Total Shareholder Return (TSR) achieved on Natixis stock and the fulfillment of CSR targets. The presence condition was lifted by a decision of the Board of Directors of August 3, 2020 on all elements of deferred variable compensation previously granted to François Riahi and in the process of vesting; the other vesting conditions were maintained.
CSR objectives are based on the change in Natixis’ CSR performance over the four-year vesting period as assessed by extra-financial rating agencies. The vesting process includes a rating scale corresponding to the CSR assessments of each agency, with requirements becoming more stringent over the last two years.
At the end of the four-year vesting period, the average of the overall annual ratings determines the additional percentage of shares compared to those acquired by applying the TSR condition. The absolute vesting limit in the event of outperformance on the TSR and CSR criteria is equal to 120%.
François Riahi also receives health benefits and personal protection insurance, the terms of which are identical to those applicable to Natixis’ employees or implemented by Groupe BPCE for its executive officers. The corresponding employer contribution amount for this protection is €13,302.
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Chief Executive Officer - Total 2.3.2.3 compensation and benefits of any kind paid during the 2020 fiscal year and/or granted in respect of this fiscal year to Nicolas Namias (from August 4 to December 31, 2020)
The components of the Chief Executive Officer’s compensation for the 2020 fiscal year comply with the principles approved by the General Shareholders’ Meeting on May 20, 2020. At its meeting of August 3, 2020, the Board of Directors decided to maintain compensation components for Nicolas Namias similar to those previously provided.
The fixed compensation of the Chief Executive Officer for the 2020 fiscal year was €800,000 gross on a full-year basis, i.e. €330,159 for Nicolas Namias in 2020 (prorata temporis).
The fixed compensation paid to Nicolas Namias during the 2020 fiscal year for his duties as Chief Executive Officer of Natixis represents 63% of the total compensation granted.
The Board of Directors assessed the level of performance of Nicolas Namias with regard to the criteria defined for 2020 and, after obtaining the opinion of the Compensation Committee, decided to allocate a gross amount of €190,581 to Nicolas Namias, i.e. 57.17% of the target variable compensation: with respect to BPCE quantitative criteria: 48.70% of the annualV bonus target, i.e. €40,581 euros for Nicolas Namias; with respect to Natixis quantitative criteria: 20.00% of the annualV bonus target, i.e. €30,000 for Nicolas Namias; with respect to strategic criteria: 120% of the annual bonus target,V i.e. €120,000 for Nicolas Namias.
Reminder of the deferred variable compensation structure in force in 2020
with 50% indexed to the Natixis share price with 50% indexed to the Natixis share price
Annual variable compensation * CRD IV rules governing the portion of annual variable compensation that must be deferred. Deferred bonuses are subject to a continued service requirement and performance criteria.
Annual variable compensation for Nicolas Namias for the 2020 fiscal year, for the period from August 4 to December 31, 2020
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Nicolas Namias did not benefit from any allocation under the 2020 Long Term Incentive Plan for members of the Natixis Senior Management Committee.
Fringe benefits Nicolas Namias received a family allowance under the same terms and conditions as those applied to Natixis employees, i.e. €670. The benefit in kind for Nicolas Namias' company car is €3,710.
Quantitative targets 25% BPCE’s financial performance (12.5% net income (Group share), 8.3% cost/income ratio, 4.2% net revenues) 45% Natixis’ financial performance (11.25% net revenues, 11.25% net income (Group share), 11.25% cost/income ratio, 11.25% ROTE)
Severance payments and non-compete indemnities Nicolas Namias did not receive any severance or non-compete benefits in 2020.
Natixis’ performance – underlying net income, Group share 517 1,370 1,607 1,715 1,372
Chg. vs. N-1 (7) pp (2) pp (0.3) pp 2.4 pp 0.1 pp
Compensation granted to the Chief Executive Officer (a) 1,159,862 1,950,646 2,023,129 2,815,242 1,914,761
CEO pay ratio vs. average employee compensation (c) 10.3 15.4 16 21.4 15.2
Chairman’s pay ratio vs. average employee compensation (c) 2.7 2.4 1.4 N/A N/A
Chairman’s pay ratio vs. median employee compensation (c) 3.6 3.5 2.1 N/A N/A
Compensation granted in respect of each fiscal year and for duties as Chief Executive Officer of Natixis, including bonus share awards. As information, (a) the Chief Executive Officer of Natixis was Laurent Mignon until May 31, 2018, François RIAHI from June 1, 2018 to August 3, 2020 and Nicolas Namias from August 4, 2020. Compensation granted in respect of each fiscal year and for duties as Chairman of the Board of Directors of Natixis. As information, François Pérol (b) was Chairman of the Board of Directors of Natixis until May 31, 2018, and Laurent Mignon is Chairman of the Board of Directors as of June 1, 2018.
Average and median compensation awarded to Natixis S.A. employees each year, including foreign branches, and used to calculate pay ratios, is calculated (c) based on permanent employees for each year (full-time employees on permanent contracts working the entire year, excluding corporate officers) and represents fixed compensation plus total variable compensation granted, including bonus share awards, and any profit-sharing and incentive plan amounts awarded during the year in respect of the previous fiscal year. In accordance with AFEP recommendations, severance payments for corporate officers or employees are excluded from the calculated compensation. On a like-for-like basis (disposal of Coface), the change in underlying net revenues between 2019 and 2020 is -12.5%. (d) pp: percentage point.NB:
Compensation due or granted for the fiscal year €474,743 (a) €1,790,646 (a)
Value of performance shares granted during the fiscal year €160,000 (b) €160,000 (b)
François Riahi’s other compensation for his duties at BPCE €0 €0
Laurent Mignon’s other compensation for his duties as Chief Executive Officer of Natixis (a) N/A €539,924 (a) €0 €1,000,371 (a)
Laurent Mignon’s other compensation for his duties at BPCE €2,171,169 €1,901,439 €2,458,800 €1,428,837
Nicolas Namias’ other compensation for his duties at BPCE €672,548 €753,322 N/A N/A
This amount includes payment of deferred variable compensation and securities delivery in respect of previous years and granted for his duties as Chief (a) Executive Officer of Natixis. The securities delivery under the Senior Management Committee Long-Term Incentive Plans is presented in AMF Table No. 7. This amount includes payment of deferred variable compensation and securities delivery in respect of previous years and granted for his other duties. (b) The securities delivery under the Senior Management Committee Long-Term Incentive Plans is presented in AMF Table No. 7. The reported amount corresponds to the family allowance and/or the company car benefit in kind.(c) François Riahi, as Chief Executive Officer, was also awarded 31,708 performance shares corresponding to €160,000 at the allocation date at the Meeting (d) of the Board of Directors of May 28, 2019, and 77,783 performance shares, corresponding to €160,000 at the allocation date at the Meeting of the Board of Directors on May 20, 2020. For departures during the month, the payroll rules lead to the most favorable option being used between a calculation in working days or a calculation (e) in calendar days.
This amount includes payment of deferred variable compensation and securities delivery in respect of previous years and granted for his other duties.(f)
The compensation paid to Nicolas Namias in 2020 in connection Natixis’ net operating income be strictly positive. As this condition with his duties as Chief Executive Officer of Natixis was composed was met for the 2020 fiscal year, the portion relating to the three of €334 538 in fixed compensation and fringe benefits, and €79 947 previous periods was paid to the beneficiary. The difference between in variable compensation, the items of which are detailed below, and amounts granted and the amounts actually paid is correlated to the corresponding to variable compensation awarded for previous change in the share price for the portion indexed to the Natixis positions at Natixis. The performance condition for the deferred share price.
Deferred securities or similar instruments portion of variable compensation for fiscal year 2016
Portion of instruments similar to securities for fiscal year 2019 paid in October 2020 Total
Catherine Leblanc (term of office since June 23, 2020) 9,796.72 5,600 5,049.18 4,000 14,845.90 N/A
The amount allocated corresponds to the amount paid, the payment being made over the same fiscal year.(a) Amounts before withholding tax of 30% or 12.8% for non-resident Directors in France.(b) Including the remuneration of Laurent Mignon in respect of his office as Director.(c) In accordance with the rules applicable within Groupe BPCE, the compensation due to Laurent Mignon, as Director, is allocated and paid directly to BPCE. (d) Laurent Mignon receives a gross amount of €300,000 for his duties as Chairman of the Board of Directors (see section 2.3.2.1 above). Directors not resident in France (withholding tax of 12.8%).(e)
Policies and rules established for determining compensation and benefits of any kind for corporate officers 103NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Daniel de Beaurepaire, Nicole Etchegoinberry, Sylvie Garcelon, Philippe Hourdain and Catherine Leblanc also received compensation from BPCE and/or * its subsidiaries for the fiscal year 2020. The compensation paid for the fiscal year 2020 by BPCE and/or its subsidiaries to Laurent Mignon, Thierry Cahn, Bernard Dupouy, Catherine Halberstadt and Françoise Lemalle, are detailed in the BPCE universal registration document for 2020. Including a portion of compensation for the fiscal year 2019.(a) Including a portion of compensation for the fiscal year 2018.(b) Compensation for the fiscal year 2019.(c) Compensation for the fiscal year 2018.(d)
No subscription or call options were granted in fiscal year 2020.
No subscription or call options were exercised in fiscal year 2020.
Bonus shares granted by the General Shareholders’ Meeting during the period to each corporate officer by the issuer and by all Group companies Plan date
Value of options according to the method adopted for the consolidated financial statements
Performance shares granted by Natixis to François Riahi in respect of his position as Chief Executive Officer of Natixis.(a) The presence condition was lifted by a decision of the Board of Directors of August 3, 2020, on all elements of deferred variable compensation previously (b) granted to François Riahi and in the process of vesting; the other vesting conditions were maintained.
Number of shares that became transferable during the period (a) Vesting conditions
30% of the shares issued to corporate officers will be subject to a lock-in period ending upon their termination of office.(a) Regarding principles of compensation for corporate officers, see section [2.3.1.3] “Annual variable compensation” and “Free allocation of performance shares”.(b)
Group (Natixis, BPCE, Caisse d’Epargne, Banque Populaire) – Record of purchase or subscription options granted
No subscription or call options have been granted by the Company since 2009.
Stock options or call options granted to the top ten non-corporate officer employees and options exercised by them
Total number of free shares granted (a) Share vesting date End of lock in period (b)
30% of these shares are subject to a lock-in obligation until the end of his term of office, except for the 90 shares allocated in 2013 for which the lock-in obligation applies to all vested shares until the end of his term of office.
The presence condition was lifted by a decision of the Board of Directors of August 3, 2020, on all elements of deferred variable compensation previously (d) granted to François Riahi and in the process of vesting; the other vesting conditions were maintained. Shares allocated as part of the deferred component of annual variable compensation in respect of previous years.(e)
Policies and rules established for determining compensation and benefits of any kind for corporate officers 105NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
See section 2.3.1.3 “Severance payments" and "non-compete indemnities”.(a) Like the rest of the staff, the Chief Executive Officer is covered by the mandatory pension plan. He is not covered by the kind of supplementary pension plans (b) described in Article 39 or Article 83 of the French General Tax Code. Furthermore, François Riahi paid into an “Article 82” type life insurance policy (inreference to the French General Tax Code) put in place by Groupe BPCE. Under this scheme, the contributions of which are financed by the Chief Executive Officer and not by Natixis, François Riahi made a payment of €69,391 in 2020.
The components of the compensation due or granted to each executive corporate officer in respect of fiscal year 2020 must be submitted to Natixis’ General Shareholders’ Meeting for approval. For Natixis, this recommendation concerns the compensation of Laurent Mignon, Chairman of the Board of Directors, and of François Riahi, Chief Executive Officer from January 1 to August 3, 2020, and of Nicolas Namias, Chief Executive Officer from August 4 to December 31, 2020.
allocation of stock options/bonus shares V and any other long-term compensation; signing bonuses;V
The target for the annual variable compensation of Nicolas Namias was set at 100% of his fixed compensation (vs 120% for François Riahi), with a range of 0 to 156.75% of the target, i.e. a maximum of 156.75% of fixed compensation. The target variable compensation of Nicolas Namias was €800,000 for a full year, i.e. €333,333 for the fiscal year 2020 (prorata temporis).
Extraordinary compensation 0 In 2020, neither François Riahi nor Nicolas Namias received any exceptional compensation.
Policies and rules established for determining compensation and benefits of any kind for corporate officers 107NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
The ratio varies in a linear manner between each performance category. CSR objectives are based on the change in Natixis’ CSR performance over the four-yearV vesting period as assessed by extra-financial rating agencies. The vesting process includes a rating scale corresponding to the CSR assessments of each agency, with requirements becoming more stringent over the last two years. At the end of the four-year vesting period, the average of the overall annual ratings determines the additional percentage of shares compared to those acquired by applying the TSR condition. The absolute vesting limit in the event of outperformance on the TSR and CSR criteria is equal to 120%.
On February 11, 2021, the Board of Directors adopted the recommendation of the Compensation Committee following the reassessment of the financial conditions of François Riahi's departure. As a result, the Board noted that the payment of the severance indemnity to François Riahi was irregular, and therefore decided to request the repayment of such indemnity to François Riahi. It should be noted that this decision does not call into question the role of François Riahi in the development of Natixis, particularly in the context of the COVID crisis, which justified in principle a severance payment.
Like the rest of the staff, the Chief Executive Officer is covered by the mandatory pension plan. He is not covered by the kind of supplementary pension plans described in Article 39 or Article 83 of the French General Tax Code. Furthermore, François Riahi paid into an “Article 82” type life insurance policy (in reference to the French General Tax Code) put in place by BPCE. The premiums on this policy were paid by the Chief Executive Officer and not by Natixis. In 2020, François Riahi paid €69,391 into his policy.
Directors’ compensation - In 2020, neither François Riahi nor Nicolas Namias received any compensation as Directors in respect of the 2020 fiscal year as part of their responsibilities within Groupe BPCE.
Benefits of any kind €1,625 for François Riahi €670 + €3,710 for Nicolas Namias
Basel 3 Pillar III disclosures3.3 171 Capital management 3.3.1 and capital adequacy 171
FY20 results RWA & other FY20 ordinary dividends Strategic operations CET1 FL
Pursuant to Article 16 of Regulation (EU) 2017/1129, known as “Prospectus 3”, of June 14, 2017, whose provisions with respect to risk factors came into effect on July 21, 2019, the intrinsic risks of Natixis’ business are presented as six main categories: credit and counterparty risk;V
Credit and counterparty risk is one of the major risks identified by Natixis and represented 73% of total RWA at December 31, 2020.
Should one or more of its counterparties fail to honor their contractual obligations, Natixis could suffer varying degrees of financial loss depending on the concentration of its exposure to said counterparties. Moreover, should the ratings of counterparties belonging to a single group or single business sector deteriorate significantly, or should a country’s economic situation were to worsen, Natixis’ credit risk exposure may be compounded.
In the context of the COVID-19 pandemic, Natixis believe that the following six sectors in its portfolio are particularly vulnerable: oil/gas (4.7% of total exposure), air transport and aviation/defense (3% of total exposure), automotive (1.4% of total exposure), hotels/catering and tourism/leisure (0.4% of total exposure), specialized distribution (1% of total exposure) and communication/media (0.8% of total exposure).
3 RISK FACTORS, RISK MANAGEMENT AND PILLAR IIIRisk factors 112 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
At December 31, 2020, Natixis applied the methodology for impairments or provisions for expected credit losses as described in Note 5.3 of Chapter [5.1] “Financial data – Consolidated financial statements and notes” of this universal registration document, with adjustments in order to take into account the recommendations published by standard setters and supervisory authorities with respect to the health crisis.
The health crisis has had a major impact on the economy, with significant repercussions on many business sectors. Due to the exceptional circumstances and uncertainties, Natixis relied on the various press releases published by ESMA, the EBA, the ECB and the IASB to determine the expected credit losses in the context of the COVID-19 crisis. With this in mind, Natixis has revised its macroeconomic forecasts (forward looking) and adapted them to take into account the specific context of COVID-19 and measures to support the economy. Natixis used three main scenarios to calculate IFRS 9 provisioning parameters with projections for the year 2023: -the base case scenario was updated based on scenarios determined by its economists and validated by Natixis' governance bodies in September 2020; -a pessimistic scenario, corresponding to a more deterioration in the macro-economic variables defined in the framework of the base case scenario; -an optimistic scenario, corresponding to a more favorable development of the macro-economic variables defined in the framework of the base case scenario. Following the historic economic shock linked to the COVID-19 crisis in 2020, the base case scenario forecasts a strong recovery in GDP starting in 2021, gradually returning to a more usual trend in economic activity in subsequent years. Economic activity will then recover its pre-crisis (2019) level in 2023.
In addition, as part of the preparation of the 2021-2024 strategic plan, a new baseline scenario was developed. This new baseline scenario, validated by the authorities in December, is largely in line with the consensus forecast of November 2020. As regards the projections for financial variables used in the model for determining the transition matrix, the new baseline scenario and the consensus of November 2020 are identical.
Given this proximity between the different sets of assumptions, IFRS 9 provisions for performing loans were therefore determined on the basis of the scenarios validated in September, adjusted by the weightings validated in December 2020.
The weightings of the scenarios used reflect the deterioration of several economic variables following the restrictive measures implemented but also the positive impact on the financial markets of the vaccination-related announcements last November. The weightings applied are now 5% for the pessimistic scenario, 85% for the median scenario and 10% for the optimistic scenario.
Probabilities of default (PD) are adjusted by sector based on an assessment of each sector’s rating over a 6-12-month period. The sector’s forward looking weighted average PD, determined by the transition matrix, is compared and adjusted to align with the PD that is equivalent to the sector’s expected rating. From a methodology standpoint, the sectoral adjustment of probabilities of default, carried out on December 31, 2020, replaces changes to sector ratings as a criterion for monitoring the increase in risk (see below).
are provisioned for 12 months of expected losses. Underperforming loans (Stage 2), for which there has been a material increase in credit risk since initial recognition but not to the point of having to classify them as non-performing loans, are provisioned based on lifetime expected losses. Non-performing loans (Stage 3) are loans for which there is objective evidence of impairment loss. Natixis determines the provisions for non-performing loans based on an individual expected cash flow recovery analysis, whether these cash flows come from the counterparty’s activity or from the potential execution of guarantees. Non-performing loans that are not impaired following the individual analysis are provisioned at a standard rate based on historical unexpected losses on unprovisioned loans.
Under this framework, performing loans (Stage 1), for which there has been no material increase in credit risk since initial recognition,
The uncertainties surrounding the health crisis (duration, magnitude, resurgence) have made it difficult to forecast the impact of the crisis on the economy, as well as on the countries and business sectors of Natixis’ counterparties. This could result in a substantial increase in losses and provisions, adversely affecting Natixis’ provision for credit losses, results and financial situation.
If there is less liquidity on the syndication or securitization markets in particular for these assets, or if Natixis is unable to sell or reduce its positions, Natixis may have to bear more credit risk and market risk associated with these assets for longer than anticipated. The lack of liquidity in the secondary markets for such assets may require Natixis to reduce its origination activities, which could impact revenues and could affect its relations with customers, which in turn could adversely affect its results and financial position. Furthermore, depending on market conditions, Natixis may have to recognize a value adjustment on assets that are likely to adversely affect its results.
In recent years, the financial markets have fluctuated significantly in a sometimes exceptionally volatile environment which could reoccur and potentially result in significant losses for Capital Markets activities.
For example, the COVID-19 health crisis negatively affected the Natixis business lines that deal with products sensitive to equity risk factors. Negative effects included: a sharp increase of share price volatility with adverse effects onV the valuation of equity index options; a sharp decrease or cancellation of dividend payouts, announcedV at General Shareholder Meetings of major corporations, due to the steep decline in their provisions which has had a negative impact on equity products.
In the wake of the massive central bank interventions, including in particular the ECB’s LTRO (Long Term Refinancing Operation) and the Fed’s PEPP (Pandemic Emergency Purchase Program), in addition to government measures, the various market participants (funds, corporates, banks) are holding cash surpluses which they are looking to invest. Customers also have decreased funding requirements in light of these surpluses. At 31/12/2020, Natixis’ various liquidity risk monitoring indicators (notably LCR, Gap and liquidity stress) showed excess positions in relation to internal limits.
3 RISK FACTORS, RISK MANAGEMENT AND PILLAR IIIRisk factors 114 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
During the COVID-19 health crisis, credit spreads reflecting issuer creditworthiness underwent significant changes. After widening very rapidly in early March, indicating the deterioration of the perception of issuers’ credit quality, credit spreads gradually narrowed from the end of May, albeit not to pre-crisis levels. Given the quality of assets held as part of its liquid asset buffers, the fair value variations of shares were mostly contained, and remained in compliance with the risk appetite Natixis set for itself for this kind of risk. The resurgence of a crisis (especially the COVID-19 crisis) could cause credit spreads to deteriorate further.
The banking and insurance sectors are subject to sectoral regulation, both in France and internationally, aimed in particular at regulating the financial markets and relations between investment service providers and clients or investors. These regulations have major impacts on the Company’s operational processes. In addition, the banking and insurance sector is also subject to dedicated supervision by the competent French and supranational authorities.
Non-compliance risk includes, for example, the use of inappropriate means to promote and market the bank’s products and services, inadequate management of potential conflicts of interest, disclosure of confidential or privileged information, or failure to comply with new client or supplier due diligence procedures, particularly with respect to financial security (including anti-money laundering and counter terrorist financing, compliance with embargoes, anti-fraud and corruption).
Natixis’ compliance department oversees compliance risk prevention and mitigation (see section 3.2.8 of this universal registration document). Natixis nevertheless remains exposed to the risk of fines or other major sanctions imposed by regulatory and supervisory authorities, as well as civil or criminal legal proceedings that could have a material adverse effect on its financial position, business and reputation.
In the course of business, Natixis is exposed to employee or third-party actions and behaviors that are unethical or violate laws and regulations, and that could damage its reputation and expose it to sanctions Applicable to all Natixis employees, Natixis’ Code of Conduct formalizes the general principles of conduct in force at Natixis, and establishes guidelines for all employees regarding expected behavior when carrying out their duties and responsibilities.
An operational failure, or an interruption or failure of Natixis’ third-party partners’ information systems, or a breach of Natixis’ information systems could result in losses or reputational damage Natixis is exposed to several types of operational risks, including process and procedural weaknesses, acts of fraud (both internal and external), system failures or unavailability, as well and cybercrime, and an operational failure related to a health risk.
Operational difficulties could also arise as a result of unforeseen or catastrophic events, such as terrorist attacks, natural disasters or a major health crisis. In 2020, Natixis demonstrated its resilience in the face of the COVID-19 pandemic and was able to cope with the successive phases of the crisis. Although minor incidents were noted, requiring the commitment of limited additional resources and resources to deal with this exceptional situation, all the players in charge of operational continuity management have collectively contributed, thanks to their expertise and responsiveness, to keep all business lines and support functions operational. Natixis’ resilience in the technological and logistical fields has made it possible to support the remote working system by maintaining the minimum number of teams on site that are essential to protecting employees, maintaining information systems and ensuring site security.
Natixis cannot guarantee that interruptions, failures in its communication and information systems or third-party systems or that a breach of its information systems will not occur or, should they occur, that they will be immediately resolved with no impact on the bank. The occurrence of one or more of the events described above may result in lost business and other additional costs and losses for Natixis, or result in reputational damage.
The occurrence, whether once or repeatedly, of one or more of the risks identified in this section, a lack of transparency or communication errors could harm Natixis’ reputation. There is greater reputation risk today due to the growing use of social media across the economic sphere. Beyond the inherent negative impact, any damage to Natixis’ reputation could also result in lost business, and a drop in Natixis’ share price, both of which would weigh on its financial position.
Other items also negatively impacted the net banking income of Natixis' business lines during the first quarter of 2020 (and in some cases also during the second quarter of 2020), before recovering over the rest of the year. These include the CVA/DVA impacts related to the widening of credit spreads on Corporate & Investment Banking (-€55 million in Q1 2020 and +€16 million over the full year), FVA impacts (increase in financing costs relating to financial instruments) on the non-divisional scope (-€71 million in Q1 2020 and +€10 million over the full year), and the impact of the markdown of portfolio seed money (listed and unlisted) on Asset and Wealth Management (-€48 million in H1 2020 and +€30 million over the full year).
Lastly, in terms of solvency, the crisis had an impact of around -45 bps on Natixis' CET1 ratio, explained by the increase in RWAs for an amount of around €4.0 billion, particularly in Corporate & Investment Banking due to drawdowns and new lines of credit (€1.7 billion in gross operating figures), the granting of State-guaranteed loans (€0.4 billion in gross operating figures) and market effects, in particular related to the calculation methods of regulatory VaR (€1.9 billion).
Preventing risks linked to climate change could have a negative impact on the performance of Natixis’ activities that operate in sectors with a negative environmental and climate impact Natixis has committed to adhering to the Paris Agreement to limit global warming to below 2°C by the end of the century. Natixis has announced numerous initiatives to support the energy transition towards a low-carbon economy, and includes initiatives to reduce financing in sectors with a material climate impact.
Unfavorable economic or market conditions and an economic environment of persistently low interest rates can weigh on Natixis’ profitability and financial position Natixis is the Groupe BPCE subsidiary operating in Asset & Wealth Management, Corporate & Investment Banking, Insurance and Payments.
Thus, after the financial crisis of 2008, texts were promulgated or proposed to avoid the occurrence of another similar global crisis. Similarly, the economic crisis linked to COVID-19 has already given
All of these changes have significantly changed, and are likely to change in the future, the environment in which Natixis and other financial institutions operate. Natixis is exposed to risk related to these legislative and regulatory changes.
Among the measures that have been or may be adopted could potentially: prohibit or limit some kinds of financial products or activities,V thereby partially restricting the diversity of Natixis’ sources of income. For example, the introduction a withholding tax on dividends from borrowed securities under certain circumstances could weaken the appeal of some of Natixis’ current products; strengthen internal control requirements, which would requireV investing heavily in Human Resources and materials for risk monitoring and compliance purposes; amend the capital requirement framework and necessitateV investment in internal calculation models. For example, changes related to the Basel 3 regulations (in particular revised Basel 3) being transposed in Europe could lead to a review of the Risk-Weighted Asset calculation models for certain activities; strengthen the requirements regarding the conditions for grantingV and monitoring loans, but also influence the management of transactions for customers in difficulty; introduce new prescriptive provisions to identify, measure andV manage environmental, societal and governance risks, particularly in relation to sustainable development and the transition to a low-carbon economy (e.g. amendment to the regulations on financial products, enhanced information disclosure requirements); strengthen requirements pertaining to personal data protectionV and cybercrime, as they can lead to higher costs due to additional investments in the bank’s information system; modify, create or strengthen regulations related to digitization andV technological innovations in connection with the emergence of crypto assets, discussions on the digital currencies of central banks, the use of artificial intelligence and robotization or because of the technological developments in payment services and fintechs; transform the banking model with disintermediation and increasedV competition linked to European “open banking” initiatives such as the “PSD2” Payment Service Directive; require the bank to make a substantial financial contribution toV guarantee the stability of the European banking system and limit the impact of a bank failure on public finances and the real economy.
In this changing legislative and regulatory environment, it is impossible to predict the impact these new measures will have on Natixis. Natixis is incurring, and could incur in the future, significant costs to update or develop programs to comply with these new legislative and regulatory measures, and to update or enhance its information systems in response to or in preparation for these measures. Despite its efforts, Natixis may also be unable to fully comply with all applicable legislation and regulations and could therefore be subject to financial or administrative penalties. Furthermore, the new legislative and regulatory measures may require Natixis to adapt its businesses, which could affect its results and financial position. Lastly, under new regulations Natixis may be obligated to increase its capital requirements or its overall funding costs.
At 2020, net revenues from the Insurance business line stood at €901 million, which represents 12% of Natixis’ net revenues. Insurance net revenues (excluding cross-business net revenues of €6 million) was split between personal insurance for €565 million and non-life insurance for €330 million.
Due to the allocation of the general funds, widening spreads and a decline in the equity markets could also have a material adverse impact on the results of Natixis’ personal Insurance business.
Natixis uses both its own experience and industry data to develop estimates of future policy benefits, including information used to price the insurance products and establish the related actuarial liabilities. However, there is no guarantee that actual experience will match these estimates, and expected risks, such as pandemics and natural disasters, could result in higher-than-expected pay-outs to policyholders.
During the COVID-19 pandemic, Natixis’ Insurance business was significantly impacted by the crisis and adapted by taking appropriate measures, aimed in particular at keeping the business running and remaining operational for its clients.
The pandemic caused a downturn in sales activity. At €11 billion, revenue for the year 2020 was down by 15%. The closure of bank branches due to the first lockdown weighed on activity levels in the first half of the year, particularly savings activities.
The results for the year 2020 were also marked by the economic consequences of the health crisis, in particular the decline in the equity markets. The latter was largely mitigated by the hedges put in place in the euro savings business in personal insurance, which was the most impacted by the market decline.
During this crisis, Natixis Assurances is monitoring the risks to which it is exposed, and especially market and credit risks. To this end, Natixis Assurances has increased the monitoring of its investments which benefited from a share hedging strategy.
In underwriting risk, the impacts remain contained: in non-life insurance: the claims expense decreased for theV automotive sector, due to reduced risk during the lockdown period. Conversely, a negative impact is expected in business interruption insurance. However, this activity is covered by reinsurance; personal insurance: in personal protection insurance, there was aV slight decline in death risk claims (main risk covered), while there was an observable increase in work cessation guarantees for professionals.
Excluding non-recurring items, the gross operating income of the Insurance business therefore remained very resilient and delivered positive growth.
Nevertheless, to keep pace with growth and take advantage of supportive market conditions, Natixis Assurances issued €350 million in subordinated debt in October 2020, subscribed by Natixis (eligible for Tier 2 capital).
At 31/12/2020, Natixis’ CET1 capital stood at €12.1 billion, total Tier 1 capital at €14.2 billion, and Tier 2 regulatory capital at €2.1 billion. Natixis issued $300 million in senior non-preferred debt on November 30, 2020.
As a member of Groupe BPCE, Natixis may be subject to resolution proceedings in the event of the failure of Natixis and Groupe BPCE. The relevant resolution authority would manage the resolution proceeding at the level of BPCE, which would be the “single point of entry” of Groupe BPCE, especially with the application of cooperative solidarity mechanisms. Should the financial position of Natixis or of Groupe BPCE deteriorate, or be perceived as deteriorating, the existence of the powers provided for by the BRRD could cause the market value of Natixis financial securities to decline more rapidly.
Natixis’ internal control system comprises: first-level permanent controls performed by operational staff onV the processing in their charge, following internal procedures and legal and regulatory requirements; second-level permanent controls performed by four departmentsV that are independent of operational staff: the Compliance Department, which reports to the CorporateV Secretary, is notably responsible for managing compliance risk, performing second-level controls, and organizing the first-level permanent control system, the Information Systems Security and Business ContinuityV Department (ISS-BC), reporting hierarchically to the Compliance Department, ensures the control of technological risks. These may relate to information system security, business continuity, IT governance and strategy, IT production activities or processes related to changes in the information system, the risk division, which is headed by the chief risk officer, reportsV directly to senior management and is responsible for measuring, monitoring and managing the risks inherent to the business activities, in particular credit and counterparty risk, market and liquidity risk, operational risk and model risk, the Permanent Financial Control team within the AccountingV and Ratios division, which reports functionally to the Compliance Department, verifies the quality and accuracy of accounting and regulatory information; periodic control, exercised by the general inspectorate.V The General Inspection Department reports to the Chief Executive Officer and performs periodic audits to assess the risks to which the businesses are exposed and ensure the effectiveness of the entire internal control system.
Natixis organizes its control functions on a global basis in order to ensure that the internal control mechanism is consistent throughout the Company. Second-level permanent and periodic control functions within subsidiaries or business lines report to Natixis’ corresponding Central Control Departments, either on a functional basis in the case of subsidiaries or on a hierarchical basis in the case of business lines.
The purpose of this structure is to ensure adherence to the following principles: a strict segregation of duties between units responsible forV performing transactions and those that approve them, in particular accounting teams; strict independence between the operational and functional unitsV responsible for undertaking and validating transactions, and the units that control them.
The Board of Directors is kept regularly informed of all significant risks, risk management policies and changes made thereto.
3 RISK FACTORS, RISK MANAGEMENT AND PILLAR IIIRisk management 122 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
The risk division performs controls on credit and counterparty risk, market and liquidity risk, overall interest rate risk, operational risk and model risk. Specific risks related to the Insurance and Asset Management activities are included in these controls, and its scope of action extends to all the entities within Natixis’ consolidation scope (see section 3.2 for more detailed information).
The permanent financial control team in the Accounting and Ratios Department reports functionally to the Compliance Department. This team helps to ensure the reliability of accounting and financial information, through the implementation of control systems covering accounting, tax returns and essential reports produced by the Finance Department, which cover all the reports required by the regulator (see Chapter 5 section 5.5 – Internal control procedures relating to accounting and financial information).
It conducts audits across Natixis’ full scope (parent company, subsidiaries and branches) and covers all classes of risk arising from the various business activities carried out. It has full and unrestricted access to all information, confidential or otherwise. Its field of investigation encompasses all of Natixis’ operational activities, its support functions – including entities in charge of permanent control assignments – and its outsourced activities. For all the business lines, these audits lead to an assessment of the suitability of existing control points in the processes audited as well as an appraisal of the risks arising from the relevant activities. It makes use of recurrent work in the area carried out by operational departments and permanent control teams. The audits lead to recommendations ranked in order of priority to strengthen the mechanisms for controlling and managing audited risks and to make them more comprehensive.
The General Inspection Department monitors the implementation of recommendations and presents its findings to Natixis’ Senior Management Committee, the Risk Committee and the Board of Directors via the Chairman of the Risk Committee. To this end, it performs due diligence and carries out follow-up audits.
The work of Natixis’ General Inspection Department is based on an annual Audit Plan drafted and executed jointly with BPCE’s General Inspetion Department, after consulting the various members of the Senior Management Committee. The Chairmen and Chairwomen of the Audit and Risk Committees are also consulted. This annual program is part of a four-year plan that sets out the intervention frequency and adapts resources to the risks and to the relevant regulatory requirements.
The audit plan may be revised during the year, at the request of general management or if circumstances require (current events, deterioration of the environment or the emergence of new risks, for example). In addition to conventional audit assignments, the General Inspection Department is also able to carry out ad hoc audits in order to address issues arising during the year and not initially included in the Audit Plan.
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Lastly, Natixis’ General Inspection Department collaborated with its BPCE counterpart on a number of projects and assignments. The two departments held six meetings in 2020. These meetings provided a forum for addressing matters related to audit plans and practices, as well as matters related to risk assessment and assignment evaluation (Joint General Inspection Coordination Committee).
The risk management function, carried out by the risk division, is structured as an independent and global matrix that covers all scopes and related geographic areas.
In 2020, the risk management function was slightly adjusted to better support Natixis’ transformation and its target operating model. It is now organized around four main areas: six cross-functional departments (Credit Risk, Market Risk,V Operational Risk, Structural Balance Sheet Risk, Enterprise Risk Management and Model Risk & Risk Governance) covering their specific risks, with Enterprise Risk Management dedicated to risk model development and risk and regulatory project management activities and the newly created Structural Balance Sheet Risk (SBSR) aimed at structural balance sheet risks operations, thereby including a number of tasks that were initially carried out by the MARPL (Market Activities Risks, P&L and Liquidity) Department, known as Market Risk since 2020; three regional departments operating in the geographic areas ofV the platforms (Americas, Asia-Pacific and EMEA [Europe, Middle East, Africa]); three departments dedicated to Asset & Wealth Management,V Insurance and Payments; a dedicated IT department.V
In addition, it regularly reports on its work, submitting its analyses and findings to Natixis’ executive managers, to Natixis’ supervisory body, and to Groupe BPCE. A dedicated function generates a consolidated risk overview using a scorecard that indicates the various risks (credit, market, liquidity, operational, modeling, etc.). To fulfill these responsibilities, the risk division uses an IT system tailored to the activities of Natixis’ core businesses, applying its modeling and quantification methods for each type of risk.
The Compliance function oversees the non-compliance risk management system of Natixis S.A. and of its French and international branches and subsidiaries. It is also in charge of fraud risk prevention, information systems security, and business continuity.
Its operating rules are governed by a charter signed off by the Senior Management Committee.
The risk culture is central to the risk function’s guiding principles, as set out in the Risk Charter. Its priorities are twofold: harmonizing best practices within the bank by deploying aV compendium of risk policies, standards and procedures covering all the bank’s major risks (credit, market, operational and model) and outline the bank’s strategic vision and risk appetite; deploying a three-pillar strategy in respect of the bank’s riskV culture: a first pillar seeking to raise awareness and inform, byV strengthening the division’s digital communications (Risk in Mind digital magazine, strengthened presence of the risk function on Yammer, etc.) and implementation of “Lessons learned” sessions, the aim being to learn from past incidents and share the lessons learned,
Initiatives aimed at inculcating the risk culture are run throughout the year. 2020 was marked by the first edition of the Risk Meeting Point newsletter and by the overhaul of the risk intranet tool, which was replaced by a sharepoint aimed at increasing and facilitating access to risk-related information through more interactive environment.
An analysis was then presented at Conduct Committee Meetings held for each entity. They are four-party Committees that bring together the business line, human resources, compliance and the risk division.
Lastly, Natixis’ compensation policy is structured in a way that encourages the long-term commitment of the Company’s employees while ensuring appropriate risk management.
Natixis incurs risks that are intrinsic to its Corporate & Investment Banking, Asset & Wealth Management, Insurance and Payments business activities: credit risk generated by Corporate & Investment Banking isV managed under specific risk policies adapted by business and subsidiary, concentration limits defined by counterparty, country (mature and emerging), sector, and through extensive portfolio monitoring with stress tests and segment reviews. The system allows for the selective management of issuance commitments through independent analyses (business lines/risk function) conducted by the various Credit Committees; the bank’s market activities – which aim to meet the needs of itsV clients and exclude all forms of proprietary trading – incur market risk. The market risk supported thereby is managed according to a body of risk policies and specific qualitative and quantitative indicators (e.g. list of authorized instruments, VaR measurement, stress tests, sensitivity); leverage risk and liquidity risk are monitored by financialV management and are subject to specific oversight by senior management within a dedicated governance body (ALM Committee every two months). These two risks require setting specific objectives for managing scarce resources using a dedicated framework and management objectives for leverage required for business lines. In addition, liquidity risk is monitored in collaboration with BPCE, the “ultimate lender” for affiliates and responsible for MLT issues of public “vanilla” funding transactions. Within structural balance sheet risks, Natixis is exposed to credit spread risk; the bank’s solvency trajectory is set by senior management andV overseen by the accounting and ratios department, which sets the target levels of capital and regulatory capital requirements. This trajectory takes into account changes in the bank’s scope and activity, methodological changes, particularly with regard to regulatory capital requirements, as well as debt issuance or equity;
It is regularly reviewed, consolidated and presented to the Senior Management Committee and the Board of Directors’ Risk Committee.
The risk appetite framework forms part of Natixis’ main processes, especially regarding: risk identification: every year risks are mapped to give an overviewV of the risks to which Natixis is or could be exposed (by business line and type of risk). With this approach it is possible to identify material risks, the indicators of which are included in the risk appetite framework; the budget process and overall stress tests.V
Cyber risk is caused by a malicious and/or fraudulent act, perpetrated digitally in an effort to manipulate data (personal, banking/insurance, technical or strategic data), processes and users, in order to cause material losses to companies, their employees, partners and clients. The transformation of banking information systems, the new technologies it heralds and the increased outsourcing of related services offer cybercriminals new opportunities to carry out increasingly sophisticated and automated attacks.
Reputational risk employees, shareholders, supervisors, or any other third parties whose trust, in whatever respect, is a prerequisite for the normal conduct of business.
Reputational risk is essentially a risk contingent on the other risks incurred by the bank.
The overall interest rate risk is defined as the risk of losses on the banking portfolio as a result of adverse changes in interest rates due to inconsistencies between the rates in use and those of the assets.
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Environmental and social risks arise from the operations of the clients and companies in which Natixis invests.
The purpose of comprehensive internal stress tests is to assess the impact of a baseline economic scenario and of stressed economic scenarios on a bank’s income statement, risk-weighted assets and equity.
Furthermore, due to the uncertainty of an economic recovery related to the coronavirus epidemic, in the second quarter of 2020, an additional assessment of the P&L and solvency trajectories for 2020 and 2021 was prepared based on three economic scenarios.
A central scenario based on the latest IMF forecasts, a second more downgraded central scenario with in particular a sharper decline in GDP and an adverse scenario: the central scenarios simulate an improvement in 2021 unlike the adverse scenario which shows no recovery.
In order to mitigate the effects of the COVID-19 health crisis, the stress test planned for 2020 was postponed to 2021 by the EBA, to allow the European banking sector to prioritize operational continuity.
The risk control framework is overseen by the risk division with the active involvement of all the bank’s businesses and support functions. All the internal standards, policies and procedures are consistent with BPCE’s framework and are reviewed periodically to take into account the results of internal controls, regulatory changes and the bank’s risk appetite.
Credit risk management and control are performed in accordance with the segregation of duties. Accordingly, together with the other divisions, the risk division is in charge of monitoring credit risk through various departments that: define the credit risks policies and internal credit riskV management procedures; set credit risk limits and exposure thresholds;V
Working with the businesses, the main duty of the risk division is to provide an opinion, based on all relevant and useful information, on the risks taken by the bank.
Credit decisions are made within the limit authorizations granted jointly to the business lines and to certain members of the risk function, and are approved personally by the Chief Executive Officer or any other person he authorizes to that end. They are sized by counterparty category and internal credit rating, and by the nature and duration of the commitment. Furthermore, these authorizations can be exercised only when the transaction satisfies the criteria set out in the risk policy of each sector and activity.
The framework defined by these risk policies distinguishes between recommendations based on best practices, and strict (qualitative or quantitative) supervisory criteria, any deviation from which affects the decision-making process and the usual system of limit authorizations.
The qualitative framework is, for its part, built on the following criteria: business sectors: preferred sectors, banned sectors;V
Natixis uses an internal model to measure and manage its own counterparty risk. Based on Monte Carlo-type simulations for the main risk factors, the model measures the positions for each counterparty and for the entire lifespan of the exposure, taking into account the netting and collateralization criteria.
The limits are in line with Natixis’ credit approval process and are reviewed and approved either by means of delegated authority or by credit Committees.
Natixis includes credit valuation adjustments (CVA) in the valuation of derivative instruments.
General wrong-way risk is covered through limits defined for emerging countries.
Pursuant to regulatory requirements, all counterparties in the banking book and the related exposures must have an internal rating if they: carry a loan or are assigned a credit limit;V
Indicative equivalents between internal ratings based on expert appraisal and external agency ratings (corporates, banks, Specialized Financing institutions)
For Natixis, the corporate (including structured finance), interbank and sovereign portfolios, which are handled using dedicated rating tools, have the lowest default rates (Low Default Portfolios). These portfolios are backtested in accordance with their specific nature, namely the low number of defaults and the difficulty in creating and maintaining a PD scale based on internal data.
The backtesting procedure, which draws on these data (and sometimes external data in the case of backtesting of the banking model or the major corporates rating grids particularly), consists of two stages: an analysis of the absolute performance, which is based on the default rate and internal migrations, and an analysis of the relative performance, which is based on a comparison with external ratings. Alerts are triggered by performance rules and indicators as necessary.
internal validation team (Model Risk Management) and presented to the various Committees in order to inform the bank’s Management.
The CRMMC Committee: serves as a forum for presenting the results of performance andV stability measurements; analyzes the indicators whose alert thresholds have beenV exceeded; decides on any measures to be taken to correct any deviations orV anomalies. These measures may take different forms, including changing rating practices, methodologies, performance analyses or alert threshold values.
The change in the portfolio’s credit quality over one year is also analyzed by looking at internal rating migrations. Additional indicators are also calculated to verify the internal risk ranking (Gini Index, average rating, previous year’s ratings, ratings of counterparties that have defaulted) and provide statistics as a supplement to the qualitative analyses.
Loss given default models (internal LGD) are calculated: based on internal and external histories and an externalV benchmark for banks and sovereigns; on a statistical basis for the corporate asset class;V
using stochastic models if there is a claim against a financialV asset.
an overall opinion of the results in accordance with the Group’sV standards.
Backtesting of LGDs and PDs by exposure class 2020 backtesting figures
This table provides a general summary of the system’s performance but differs from the annual backtests carried out within the Group, which are conducted on a model-by-model basis and not overall by portfolio. However, this table allows a comparison of estimates and actual results for each internal input over an extended period and for a significant, representative percentage of each exposure class. The results come from data warehouses used for modeling. This is based on all performing customers for default rates and PD, and on all customers in default for LGD. These results also take into account the latest regulatory changes (guidance on probability of default (PD) estimates and loss given default estimates (LGD) estimates).
Backtesting and validation are key items of governance in the Internal Model Method approach. In accordance with general regulatory requirements, the reliability of internal models must be monitored regularly using a comprehensive backtesting program. This process is essential for ensuring the quality and relevance of the results obtained from the models that have been developed and used for both internal risk management, and to meet regulatory obligations.
The developed framework is based on the following two backtests: market risk factor backtesting, i.e. to assess the predictive capacityV of the stochastic processes used to describe the dynamics of unique risk factors; portfolio backtesting: i.e. to assess the full exposure modelV (stochastic process, correlations and pricing) for portfolios representing Natixis’ exposures.
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Specialized Financing 6 Expert analysis-based rating models by type of financed asset
Banks 1 Qualitative models based on internal and external defaults by type of counterparty. LGD assessed in this model include defaults occurring in periods of decline
2 Statistical models (decision trees or assessment of recoverable assets) by type of financed asset. The safety buffers included in the LGD models serve to cover periods of decline (primarily via bootstrap techniques)
CCF Corporate Financing (incl. SMEs), financial institutions and sovereigns 1 Model calibrated on internal defaults and segmentation by type of product and type of counterparty
Calculating the EEPE (Effective Expected Positive Exposure) requires simulating the potential changes in risk factors at future dates over a large number of scenarios using a Monte Carlo approach. The Mark-to-Market value of each transaction is then remeasured at each simulated time horizon and under each scenario. For offsetting, exposure is then calculated by price aggregation taking into account the legal framework (master agreements and credit support annex) allowing price offsetting and offsetting for collateral exposures. The exposure value for a given counterparty is equal to the sum of the exposure values calculated for all offsetting sets.
distribution models of the factors distributed and called duringV the valuation stage.
Credit risk mitigation is a technique for mitigating the credit risk incurred by the bank in the event of partial or total counterparty default.
The creditor is granted real security rights to one or more assets belonging to the borrower or guarantor. Forms of collateral include cash deposits, securities, commodities (such as gold), real estate assets, mortgage-backed securities, life insurance policy pledges.
Collateral eligibility is governed by the following process: vetting by the legal department of the documents relating to theV collateral and the enforceability of the collateral; validation by the risk division.V
Depending on their nature, collateral guarantees must meet specific eligibility criteria: non-financial guarantee: the eligibility of personal guaranteesV depends on the quality of the guarantor and must fulfill several conditions: represent a direct claim opposite to the guarantor and refer toV specific exposures, be irrevocable and unconditional,V
if the counterparty defaults, the bank can take legal actionV against the guarantor within the permitted time frame to settle payment arrears under the legal document governing the transaction, the guarantee is an obligation secured by a legal document thatV established the guarantor’s liability, the guarantor covers all types of payment to be made by theV borrower in question; financial guarantee: eligibility is determined by the relevant legalV framework, the nature of the guarantee (financial collateral, real collateral or netting agreement), borrower and liquidity. It must be valued at least once a year and meet all of these conditions: all the legal documents are binding to all parties and are legallyV valid in all relevant jurisdictions, the bank has the right to realize or take ownership of theV collateral in case of default, insolvency or bankruptcy, there is no material positive link between the quality of theV counterparty credit and the value of the collateral, the asset must be liquid and its value sufficiently stable overV time for its realization to be certain.
Similarly, providers of sureties (via signature guarantees, CDS or private credit insurance) are examined, rated and monitored, as with debtors.
various second-level control actions conducted by the Credit RiskV Department of the risk department (e.g. rating and limit checks, etc.).
It incorporates a growing number of indicators thereby making it possible to act in advance of a deteriorating situation (e.g. review of the file, switch to watch list or default).
They are then placed on the watchlist, as decided by the risk division or the competent Credit Committee depending on the amount of exposure.
Corporate & Investment Banking risks are monitored by the Restructuring and Special Affairs Department (DRAS), which intervenes in difficult and default cases where necessary. The litigation department handles collections of loans in litigation.
Individual provisions The Natixis Watchlist and Provisions Committee meets once a quarter and covers all the bank’s businesses. It reviews all non-performing loans under watch that may give rise to provisions or adjustments to existing provisions, and decides on the amount of provisioning necessary, based on the provision amounts submitted to it individually by the business lines, the Restructuring and Special Affairs Department and the risk division.
This Committee is organized by the risk division and chaired by the Chief Executive Officer and assembles the chief risk officer, members of the Senior Management Committee in charge of the business lines and finance, the accounting and prudential ratios division and the heads of the relevant support functions.
It draws on a structure of preparatory Committees that are jointly steered by the risk division and each of the bank’s business lines.
Provisions for expected credit losses In addition to individual provisions, Natixis records provisions for expected credit losses (ECL) at initial recognition.
These financial instruments are divided into three categories depending on the increase in credit risk observed since their initial recognition. An impairment charge is recorded on outstanding amounts in each category.
Exposures secured by mortgages on immovable property 279 112 9 221 91 7
Exposures to institutions and corporates with a short-term credit assessment 79 46 4 122 64 5