The allegations against Natixis are that Natixis was Natixis Funding’s guarantor in derivatives transactions and that it was Natixis Funding’s agent. The defendants responded to the grievances fi led by the plaintiffs. The parties have entered the discovery phase of litigation. The coming months will be dedicated to the requests for discovery and review of documents by the plaintiffs. At the same time, the parties will prepare for the most important aspect of the legal proceedings; an attempt to obtain certifi cation as a class action by the plaintiffs. The defendants are in the process of recruiting an expert economist and a statistician to analyze the data of all the transactions to prepare arguments against class action certifi cation. Meanwhile, the 26 state prosecutors and the DOJ are continuing their investigations.
Outstanding Madoff assets, net of insurance, were estimated at 351 million at December 31, 2013, and were fully provisioned at this time. The effective impact of this exposure will depend on both the extent of recovery of assets invested in Natixis’ name and the outcome of the measures taken by the bank, primarily legal. With this in mind, Natixis has appointed law fi rms to assist it in these recovery efforts. Moreover, in 2011, a dispute emerged over the application of the insurance policy for professional liability in this case.
On September 11, 2008, CIC and Crédit Mutuel issued a summons against the Lagardère Group and Natixis with a view to obtaining cancellation from the Paris Commercial Court of contracts under which they made forward purchases of EADS shares from Natixis and, consequently, payment of around €28 million by Natixis to the plaintiffs, in exchange for return of the EADS shares to Natixis.
In a ruling handed down on January 27, 2010, the Commercial Court of Paris declared the actions of CIC and Crédit Mutuel inadmissible and ordered them to pay €120,000 to Natixis and €50,000 to Lagardère in accordance with Article 700 of the French Civil Proceedings Code. The ruling of April 28, 2011 by the Paris Court of Appeal upheld the initial decision to dismiss the claimants’ case. Following an appeal fi led by CIC and Crédit Mutuel, the Court of Cassation, in a ruling dated July 10, 2012, overturned the ruling of the Paris Court of Appeal dated April 28, 2011 on technical grounds relating to the drafting of the appeal. The Paris Court of Appeal, under a different judge, confi rmed the rejection of CIC and Crédit Mutuel’s claims.
In March 2009, the Paris public prosecutor’s offi ce (Parquet de Paris) launched a preliminary investigation into a complaint fi led by Natixis minority shareholders and coordinated by the Association to Defend Minority Shareholder Rights (Association de Défense des Actionnaires Minoritaires – ADAM). As the plaintiffs have initiated civil proceedings, a judicial investigation has been opened.
On November 13, 2009, Maximus Master Fund Limited and its portfolio manager, Anakena, fi led a complaint against Natixis before the Commercial Court of Paris seeking the payment of €59.9 million in damages and interest, and alleging that Natixis had abused its rights as the majority investor by asking the fund to redeem its investment in the middle of the fi nancial crisis. A ruling was handed down by the Commercial Court of Paris, dismissing all of the claims fi led by Anakena and Maximus. Anakena and Maximus fi led an appeal against the ruling. The Court of Appeal upheld the lower court’s ruling on March 26, 2013. Anakena and Maximus fi led an appeal to the Court of Cassation.
On August 5, 2011, the Commune of Sanary-sur-Mer in France fi led a complaint against Natixis and other defendants before the Administrative Tribunal of Toulon seeking the joint and several payment of €83 million for the loss of the Commune’s planned investments and the loss of future contributions to its budget following the abandonment of the planned construction of a local casino/hotel complex. Regarding the construction project, Natixis had already committed to issuing a bank guarantee of completion in the amount of €20 million. All of the claims fi led by the Commune of Sanary-sur-Mer were dismissed in a ruling handed down by the Administrative Tribunal of Toulon on April 12, 2013. The Commune of Sanary-sur-Mer has appealed this ruling.
On January 5, 2012, a complaint was fi led against Natixis Asset Management before the Paris District Court (Tribunal de Grande Instance de Paris) by 187 former employees of CDC Gestion (current name Natixis Asset Management.) The purpose of the complaint is the legal recognition of their rights to the common law profi t-sharing schemes from 1989 to 2001.
Following the priority question of administrative constitutionality raised by Natixis Asset Management on the interpretation of an article of the French Labor Code, on August 1, 2013 the
MMR Investment Ltd fi led a joint claim against Natixis and the fi nancial intermediary, claiming not to have received the bonds, despite having paid the subscription price to the fi nancial intermediary. The claim mainly concerns the reimbursement of the subscription price of the bonds and, and as an alternative, the annulment of the subscription in particular on the grounds of defect in consent.
On January 22, 2013, Natixis received a compulsory third-party joinder at the request of SEEM. This company seeks a joint sanction against Natixis and particularly Cube Energy S.C.A. for the payment of approximately €23 million, alleging that Cube Energy S.C.A. acted in breach of its duty of loyalty to its partner SEEM. Natixis believes the outcome of this case will be positive for Natixis and the companies in its Group.
On June 21, 2013, a complaint was fi led against Natixis as well as other defendants before the Commercial Court of Paris by Hermès seeking to cancel the equity swaps on Hermès shares.
In June 2013, Union Mutualiste Retraite fi led three complaints with AEW Europe in relation to the acquisition and management of two real estate portfolios in Germany between 2006 and 2008. The amounts claimed by Union Mutualiste Retraite total €93 million. AEW Europe considers this claim to be unfounded.
Banks in the United States initiated legal proceedings against Natixis for residential mortgage-backed security (RMBS) transactions executed between 2001 and mid-2007.
Natixis considers the negligence of which it is accused to be unfounded and that the proceedings it faces are beyond the statute of limitations.
On June 18, 2013, EDA Selcodis fi led a complaint against Compagnie Européenne de Garanties et Cautions for the sudden termination of commercial relations following the refusal by Compagnie Européenne de Garanties et Cautions to grant EDA Selcodis a guarantee. The amounts claimed by EDA Selcodis total €32 million. In November 2013, EDA Selcodis fi led a joint complaint against Natixis, BRED and CEGC for unlawful agreements for which EDA Selcodis is requesting that each entity pay a sum of €32 million.
Compagnie Européenne de Garanties considers all of these claims to be unfounded.
The liability adequacy test carried out in accordance with IFRS 4 showed that insurance liabilities measured under local standards, for the year ended December 31, 2013, were greater than the fair value of these liabilities, taking into account the redemption option incorporated in the policies.
The sensitivity of equity to variations in interest rates is mitigated by the classifi cation of approximately €3.5 billion, fair value, in interest-bearing securities in the category of held-to-maturity securities.
Natixis Assurances is subject to variations in the value of its fi nancial assets. Management of fi nancial risks involves defi ning a strategic allocation taking into account liability commitments, regulatory constraints (particularly in terms of non-concentration) and commercial requirements. Thus, allocation ranges are defi ned for each type of asset.
According to the sensitivity analysis carried out at endDecember 2013: V a 10% drop in the stock market would have a negative impact of €13.5 million on equity (after taking into account the variation attributable to policyholders and taxation), i.e. 1.1% of equity; V a 10% drop in the real estate market would have a negative impact of €4.6 million on equity (after taking into account the variation attributable to policyholders and taxation), i.e. 0.4% of equity.
In addition to weekly and monthly monitoring at each region and country level, Coface has implemented a system based on: V the centralization of declarations of intent to file a claim exceeding a certain amount (currently €0.5 million for all Coface arbitration centers); V at the risk underwriting level, monitoring of MSE (Maximum Standard Exposure) which generates an approval above a certain level of DRA-based outstandings, and establishment of an overall budget by the Group Arbitration Department; V a DRA risk evaluation system covering all buyers; V external quota share reinsurance treaties (25% cession rate) and excess of loss reinsurance treaties (deductible of €40 million) for 2013, thus limiting frequency and event risks.
RISK MANAGEMENT4 Insurance risks Exposure to debtor risk at end-December 2013
V liquidity risk: a significant portion of held-for-sale securities are invested in money market products with average maturities of three months (38% at December 31, 2013, i.e. more than €750 million). The vast majority of the portfolio is listed on OECD markets and carries a liquidity risk which is currently considered as weak.
Underwriting risk is essentially a type of counterparty risk, as the commitments given by CEGC to benefi ciaries of guarantees give direct exposure to subscribers (policyholders).
The system is based on a risk and solvency management charter which details the Company’s risk appetite and is broken down into a set of updated procedures for risk management and granting sureties and guarantees as well as underwriting risk monitoring (premiums, reserves, natural disaster) listed by business line, market risks (equities, interest rates, defaults, property, etc.), default risks (reinsurers, debtors) and operational risks.
CEGC held an investment portfolio of €1.2 billion on its balance sheet at December 31, 2013 compared to €1.1 billion at end-2012. Market risk resulting from the investment portfolio is considered as minor in terms of underwriting risk. By collecting surety insurance premiums at the time of commitment, CEGC is not required to manage funding diffi culties. There is no mismatch risk either, as the investment portfolio is fully backed by equity and underwriting reserves.
CEGC hedges its liability portfolio by implementing a reinsurance program tailored to its activities. Through this program, the Company is able not only to secure its underwriting income and solvency margin on the loan guarantee markets, but also to protect its equity in the event of high-severity claims on other markets.
( These data form an integral part of the fi nancial statements certifi ed by the Statutory Auditors)
Net exposure as at 12.31.2013 AAA AA A BBB BB B CCC CC
Asset portfolio (fair value option) 0 - - 0 - - - - - - - -
Net exposure as at 12.31.2012 Change in value in 2013 Other changes
The management data published in this registration document are presented pro forma of the disposal of the Cooperative Investment Certificates, based on the following assumptions: V sale of CCIs as at January 1, 2012; V repayment of the P3CI transaction and related operations as at January 1, 2012; V reinvestment of liquidity and exceptional dividend payout of €2 billion as at January 1, 2012.
In accordance with European regulation No. 809/2004 relating to information contained in prospectuses, the management data pertaining to the fi nancial statements for the year ended December 31, 2011, which were published in the 2011 registration document fi led with the AMF on March 23, 2012, are included for reference in this registration document.
The series of 2012 quarterly income statements for the business lines are presented pro forma of this Basel 3 measurement.
Restructuring expenses were isolated in relation to Natixis’ additional cost-saving plan announced in December 2013, net of tax, excluding recurring management income.
V The rate of return on regulatory capital has been revised from 3.5% to 3% to factor in long-term interest rate movements.
V In continuing the development of the Originate-to-Distribute model, the earnings generated by GSCS (Global Structured Credit Solutions combining securitization and credit solutions on the debt platform), previously divided between FIC-T and Structured Financing, are now allocated exclusively to FIC-T.
The 2012 data for all above-mentioned changes in standards have been restated on a pro forma basis.
GAPC is presented as a business line in its own right.
Following the reclassifi cation of the deeply subordinated notes (DSNs) as equity instruments, interest expense on these instruments ceased to be recognized in the income statement as of January 1, 2010.
In energy and commodities fi nance, in 2013 Natixis consolidated its positioning with major traders and producers in the metals sector, taking 3rd place in the “Best Trade Bank in Metals and Mining” category (source: Trade and Forfaiting Review-Excellence Awards 2013). In aircraft fi nancing, Natixis played a key role in the EETC (Enhanced Equipment Trust Certifi cates) market. In PPP project fi nancing, concessions and public service delegations, Natixis was ranked First Arranger in France for the period from January 2011 to June 2013 (source: Magazine des Affaires, MLA ranking by number of deals).
In capital markets, the debt platform combining loan syndication, the primary bond market and Global Structured Credit & Solutions delivered a solid performance despite the slowdown in issue volumes. As a leading player in the euro bond primary market, Natixis was recognized for the third year in a row on the euro covered bond market (Euroweek ranking): “Best Lead Manager” in 2012 and 2013, after being named “Best Overall Bank” in 2011. The Equity Capital Markets team also ended 2013 on a high note with the successful placement of eight convertible bond issues for European corporates in early September, taking fi rst place on the convertible bond market in France in 2013 by number of deals (source: Bloomberg – from 01.01.2013 to 11.14.2013).
On the international market, Natixis focused on developing in Latin America by creating a dedicated unit on the Americas platform in May 2013 in order to process the already substantial number of transactions in the region. Natixis also reinforced its sales teams in Asia on the Capital markets and carried out largescale fi nancing deals such as Shuanghui Group’s acquisition of Smithfi eld Foods in the United States. As a result of its many efforts to develop its international positioning in 2013, Natixis saw an increase in the contribution of activities outside France to Wholesale Banking’s net revenues, with a 32% rise in revenues generated in the United States.
In 2013’s more supportive economic climate in the US and a persistently challenging environment in Europe, Investment Solutions expanded the synergies of its four business lines (Asset Management, Insurance, Private Banking and Private Equity) with Natixis’ other core businesses and the Groupe BPCE networks.
Its subsidiary, VEGA Investment Managers, received the Eurofonds award for best French Asset Management company in the “16 to 25 rated funds” category and Sélection 1818 was ranked the No. 1 banking platform at the 2013 wealth management awards of Gestion de Fortune magazine.
In Bancassurance, the diversifi cation and development driver under the “Ambition Banquier Assureur” (ABA) program launched in 2012, the personal protection and casualty insurance range was further expanded and adapted in 2013. In particular, for new policies taken out as from January 1, 2013, Natixis Assurances put an end to the co-insurance agreements applicable to the Payment Protection Insurance activity distributed by the Banque Populaire network. This activity is now fully within the remit of Natixis Assurances.
The Solvency program launched in 2009 entered a new phase with the implementation of certain risk assessment models and governance systems (Pillars I and II). Furthermore, alongside the additional work on certain aspects of Pillar I, preparations were made in 2013 for the reporting and prospective measurement of risks required by Pillar III.
Consumer Finance implemented the “United” joint venture entered into with BNP Paribas in July 2010. This resulted in particular in the creation, at January 1, 2013, of a software publishing joint venture equally owned with BNPP Personal Finance, responsible for the modernization and upkeep of a shared back offi ce consumer fi nance platform.
At January 1, 2013, Natixis acquired real estate leasing company Sud-Ouest Bail Active. The fi nancial statements were not published on a pro forma basis.
GAPC kept up a strong pace of disposals with €5.4 billion sold in 2013, resulting in a massive reduction of assets under guarantee and risk-weighted assets. It extended its hedging and de-risking operations in complex interest rate derivatives and continued to liquidate its structured fund portfolios.
Revenue synergies were in line with the New Deal strategic plan, with additional revenues generated via the BPCE networks reaching €432 million by end-2013 versus a target of €395 million.
Based on the income generated in fi scal year 2013, the General Shareholders’ Meeting scheduled for May 20, 2014 will propose a dividend payout of €0.16 per share, i.e. more than 50% of earnings available for distribution.
Equity (Average) 17,310 18,934 * Excluding GAPC and restructuring costs, and pro forma of the disposal of CCIs.
Workout portfolio management (GAPC) net restructuring costs were transferred to net income (group share). This presentation facilitates comparisons between reporting periods and makes it easier to interpret business performances.
Natixis’ net revenues (1) amounted to €7,032 million at December 31, 2013, up 6.6% versus December 31, 2012. Revaluation of own senior debt accounted for -€195 million in net revenues for the year (vs. -€352 million in 2012).
FINANCIAL DATA5 Management report at December 31, 2013 Wholesale Banking’s net revenues picked up by 6.4%, restated for the contribution of discontinued operations and the main nonrecurring items (refl ecting the change in model used) despite limited capital and liquidity resources.
The fi nancing activities improved their net revenues by 3%, driven by robust business and service fee income growth.
Specialized Financial Services gained 7% in net revenues, buoyed by strong momentum in Specialized Financing with the Group networks and the scope effect in consumer fi nance associated with the deal to buy out minority shareholders in this business. Financial Services were resilient, with virtually stable net revenues despite the persistently unsupportive securities environment.
Recurring expenses (2) (excluding GAPC) stood at €5,064 million, up 2.5% on 2012. At constant USD exchange rates, the 3% increase mainly took place in the Investment Solutions division, which furthered its development (+11% at constant USD exchange rates linked to the change in revenues) across all geographic regions, while Wholesale Banking recorded a 3% decline in expenses at constant exchange rates and Specialized Financial Services saw a 2% increase in expenses excluding the impact of the expanded United scope (5% total).
The Operational Effi ciency Program generated total savings of €240 million at end-2013 (of which €143 million in respect of fi scal year 2013).
The cost/income ratio (1)(2) (excluding GAPC) improved by 3 points to 72%. Excluding the impact of the revaluation of own senior debt, it improved by 1 point year-on-year to 70%.
Change in the value of goodwill posted a loss of -€14 million in 2013 due to impairments recorded by the Corporate Data Solutions CGU (cash generating unit), amounting to -€6 million, and assets related to a data center (-€8 million).
After incorporating €1 million in minority interests, recurring net income group share (1) (2) (excluding GAPC and pro forma of the CCI disposal) amounted to €1,008 million.
Pro forma of the CCI disposal, consolidated post-tax management ROE came out at 6.0% in 2013 after recognizing a DSN interest expense booked to equity for a net total after tax of €49 million.
Restructuring costs were recorded excluding management income for -€51 million. These restructuring costs included a pre-tax provision for restructuring costs of -€91 million, covering all projected severance payments under the Adaptation Plan presented by Natixis in December 2013 (involving about 700 jobs) and assistance and support expenses. They also include various exceptional expenses of -€13 million recorded in Q4 2013 related to the restructuring plan and a pre-tax reversal of employee benefi ts of +€22 million.
Net book income (group share) totaled €884 million in 2013 versus €901 million in 2012. Accounting ROE stood at 4.8% in 2013.
In 2013, Wholesale Banking’s net revenues amounted to €2,867 million, up 1% versus 2012. Restated for the contribution of discontinued operations that no longer fi t with the Wholesale Banking model as adopted by Natixis in Q3 2012 (€132 million in revenues in 2012 versus a residual loss of €11 million in 2013) and the main non-recurring items (€34 million in 2012 and €38 million in 2013), revenues were up 6.4%.
With management requirements on RWA and liquidity consumption, Wholesale Banking revenues were up 4.0% yearon -year while on-balance sheet conventional loan outstandings fell by 18%. Revenues were driven by fees generated on new transactions and by a reduction in refi nancing costs. Finally, credit line drawdown rates remained very low at 16%.
V Global Energy & Commodities posted an 8% rise in revenues.
V The Real Estate Financing business lines saw a 10% increase in net revenues, including a significant upturn in US securitization activities.
V Revenues from Debt Platform activities were up 2% on 2012, driven by the momentum of syndication deals and the effectiveness of the Originate-to-Distribute model. In the primary segment, Natixis was named Best Euro Lead Bank in Covered Bonds (1) for the third year in a row, No. 1 on the euro bond primary market with French issuers (2), No. 1 in French euro High Yield primary issues (3) and No. 8 on the global euro bond market (4).
V Alternative Assets activities, which contributed €22 million to net revenues in 2012, were discontinued.
In 2013, Wholesale Banking’s expenses dipped by 3.1% to €1,657 million at constant exchange rates. Including non-recurring income of €15 million related to the overhaul of the pension plan in the United States, payroll costs dropped by 4% in line with the average headcount decrease. IT costs fell by 10%. Other operating expenses were down 11% with the management of lifestyle expenses and savings generated on offi ce expenses (€19 million).
At €312 million in 2013, the provision for credit losses increased by nearly €47 million, refl ecting tense economic conditions, particularly in Europe.
Based on average RWA calculated in accordance with Basel 3 rules, allocated capital decreased by €0.8 billion, i.e. 10% on 2012. This change affected both the FICT business lines, with a decline of €0.3 billion, and the Financing business lines, whose contribution was down by €0.5 billion.
Expenses rose by 8.7% (+10.8% at constant exchange rates). Asset Managemeny’s expenses increased with the implementation of new projects (mainly stepped-up distribution) and development in the United States.
Provision for credit losses slid sharply by €11.9 million in line with capital gains on disposals and reversals of impairments recorded by the Asset Management business after selling its NAM 2 securitization portfolio.
Pre-tax profit totaled €614.1 million, up 15.3% at constant exchange rates.
V Loomis took the Best Fund title in the Global Currencies category for Loomis Sayles Multisector Income Fund.
V The international Oakmark fund managed by Harris Associates was ranked 2nd by Morningstar in 2013.
V Seeyond ranked 3rd for Seeyond Flexible MT in the “Cautious Flexible” category at the Globes de la Gestion wealth management awards awarded by Gestion de Fortune magazine.
12.31.2012 Change Market effectNet inflows Other 12.31.201312 31 2012 12 31 2013
Net inflows of €13.4 billion, i.e. €20.5 billion excluding money market products, underscored the momentum enjoyed by the business. Trends varied by region, however: V Europe posted net outflows of -€9.8 billion including -€11.6 billion in money market products, undermined by interest rate levels and the change in sales policy of the networks in favor of balance-sheet inflows; V the United States posted net inflows of €22.4 billion, driven in large part by Harris Associates in equity products and by Loomis in bond products.
At December 31, 2013, net revenues were up 9.7% year-on-year to €1,832.3 million (i.e. +12.2% at constant exchange rates), driven primarily by fees on assets under management in the US.
After several fi scal years impacted by volatility and negative trends in the fi nancial environment, coupled with the indirect consequences of regulatory or tax constraints, 2013 saw the relative stabilization of business conditions refl ected in a sharp rebound in infl ows and net insurance revenues.
In Life Insurance, gross infl ows bounced back by 40.4% to €3.3 billion, thanks in large part to the considerable development of Natixis Life in Luxembourg, which posted increased premiums of almost 50%. The 36% rise in gross infl ows generated in France compared very favorable to the improvement in the French market, limited to 6%. The second half, however, recorded a steep slowdown in gross premium infl ows, as contributing banks rebuilt their on-balance sheet resources. With business picking up again in 2013, Natixis Assurance saw its net redemption infl ows return to the black in 2013 (+€0.4 billion) versus net outfl ows of -€1.2 billion in 2012.
Driven by the rebound in net infl ows and the revaluation sparked by the rally on the fi nancial markets, assets under management gained nearly 4.5% year-on-year.
Thanks to the rebound in the profi tability of Life Insurance activities, the cost/income ratio improved signifi cantly to 51.1% versus 66.5% in 2012, while operating income soared by 103.9% to €131.0 million (vs. €64.3 million in 2012).
Associates (ABP IARD in auto insurance & multi-risk home insurance in France, ADIR in Lebanon) maintained solid profi tability, with a share of income up 6.8% to €7.8 million.
Capital under management, including commitments not paid-up in the funds, amounted to €5,099 million at December 31, 2013, up 38.7% compared to December 31, 2012. Capital managed for third parties accounted for 83.1% of capital under management (74.0% in 2012), confi rming the higher proportion of third parties in managed funds. Funds of funds accounted for 59.4% of total capital under management, Private Equity 31.1% and venture capital 9.5%.
Net revenues totaled €34.5 million in 2013. Results were down sharply in France compared to 2012, impacted by low sellside volumes (reduced liquidity on the market) and limited revaluations, while European and US funds generated solid performances in 2013. Asia did not do as well as anticipated (delayed IPOs and negative foreign exchange rate effects).
Gross operating income 439 399 +9.8% Provision for credit losses (79) (76) +4.6%
FINANCIAL DATA5 Management report at December 31, 2013 Specialized Financing posted solid momentum overall in 2013.
Factoring consolidated its competitive position with market share of 15.1% thanks to factored revenue of €29.8 billion (+5%).
Sureties and Financial Guarantees generated revenue of €320 million, up 42% year-on-year, thanks in large part to the persistently active individual customers market, with the milestone of €250 million in revenue reached (i.e. +61% yearon -year).
2013 was in line with 2012 in terms of the deterioration in the global economic environment, with the euro zone still in recession (1) (-0.4%). Customer business volumes were on the decline, but credit insurance premiums proved resilient thanks to solid debtor risk diversifi cation (in terms of geographic regions and sectors). Overall, credit insurance premiums recorded a limited decline of less than 1% (on a like-for-like basis) to €1,033 million. The refocusing of the Factoring business line on the more profi table contracts in Germany and Poland was fi nalized in 2013. As a result, despite an annual drop of 11.1%, the business line posted a 12.4% rise in net revenues between H1 and H2 2013.
The net combined ratio totaled 83.5%. It should be noted that the combined ratio before reinsurance was stable at 81.5% excluding moving costs, thanks to rigorous risk control (the loss ratio improved by 0.5 points to 51.1%) and nearly stable costs.
Net revenues totaled €101 million in 2013, down 14.3% on 2012 due to the gradual reduction of factoring activities in 2012 and the disposals carried out in 2012 (TKB) and 2013 (Coface Services Belgium). On a comparable scope basis, net revenues were up 1% year-on-year.
FINANCIAL DATA5 Management report at December 31, 2013 GAPC pre-tax profi t was -€5.4 million in 2013, after recognizing an expense of €52.5 million in respect of the BPCE guarantee (-€45.8 million and +€67 million, respectively, in 2012).
A number of transactions were carried out over the course of the year with a view to scaling down the portfolios and the related risks. As such: V GAPC significantly stepped up its pace of disposals with €5.4 billion sold in 2013, resulting in a massive reduction of assets under guarantee; V the division expanded its hedging and de-risking operations in complex interest rate derivatives; V it continued to liquidate structured fund portfolios.
Net revenues generated by the Corporate Center came out at -€221 million in 2013 versus -€387 million in 2012. Excluding the impact of the revaluation of the issuer spread, net revenues would have been -€26 million versus -€35 million in 2012.
Corporate Center expenses comprised expenses that were not re-invoiced to the Natixis business lines. These expenses were up 5% on 2012 due to various non-recurring expenses (mainly the pro rated VAT adjustment).
The current provision for credit losses (excluding GAPC) was -€392 million at December 31, 2013, compared to -€373 million at December 31, 2012. The breakdown by division and geographic area is as follows.
Against this backdrop, Natixis again took the opportunity to secure its funding. On one hand, its historical commitment abroad provided access to abundant liquidity in dollars across all maturities. On the other hand, Natixis’ aim of adopting a faster timetable for the LCR required greater constraints in terms of shortand long-term mismatch thresholds, but also provided better security for its liabilities. Finally the Liquidity pool, set up with BPCE, paved the way for Natixis to optimize its refi nancing costs.
Demand for the longest maturities remained strong from investors looking for yield, and although volumes in negotiable debt securities showed a downward trend in the wake of AuM in money market funds, the average maturity of issues increased signifi cantly.
The diversifi cation of resources continued, with an increase in AuM from UK institutional investors and non-fi nancial customers in France, Asia and the United States.
During 2013, bank credit spreads were affected on two occasions: the fi rst time during the spring following the failure of the legislative elections in Italy and the crisis in Cyprus, and then a second time during the summer: at the beginning of June, the ECB did not announce additional economic stimulus measures despite the downward revision of its growth forecasts for the current year, thus causing bank credit spreads to widen. In July, the introduction of forward guidance by the ECB (an announcement regarding the expected direction of interest rate fl uctuations) helped calm the markets. Following a period of tightening, spreads stabilized during the second half of 2013.
In these market conditions, Natixis raised a total of €14.9 billion for its medium- and long-term refi nancing program (vs €7.4 billion in 2012). Natixis’ long-term funding requirements increased due to higher mismatch ratios (the one-year mismatch ratio increased by 10% to 80%) and the increase in new long-term fi nancing operations.
As the only long-term issuer in the public issues segment, BPCE provided Natixis with fi nancing for a total euro-equivalent amount of €11.9 billion.
In 2013, net revenues increased by €194 million to +€3,684 million thanks to: V a €376 million increase in the interest margin,
V a €758 million decrease in income from trading book transactions,
V a €618 million increase in income from transactions on securities held for sale,
V a €54 million decline in other banking operating income and expenses.
Excluding the depreciation, amortization and write-down of fi xed assets, operating expenses increased by €76 million. Taking into account the depreciation, amortization and write-down of fi xed assets, operating expenses rose by €78 million.
Natixis’ fi nancial statements at December 31, 2013 showed positive net income of €2,323,073,936.17.
The third resolution that will be put before the General Shareholders’ Meeting on May 20, 2014 proposes to: V allocate €116,153,696. 81 to the legal reserve,
R 1 - MANAGEMENT RESULTS RECLASSIFIED AS CONSOLIDATED RESULTS IN 2013
Gain or loss on other assets 17 0 142 0 160
Customer loans and receivables 6.5 87,975 99,418 o/w institutional operations 608 550
TOTAL ASSETS 510,131 528,411 * The comparative 2012 fi nancial statements have been restated to refl ect the impact of the application of IAS 19 (revised). The effects of the change in accounting policy associated with the implementation of IAS 19 (revised) are described in Note 12.2.3.
Financial liabilities at fair value through profi t and loss 6.1 186,049 200,913
Revaluation adjustments on portfolios hedged against interest rate risk 163 348
Accruals and other liabilities 6.9 28,970 28,212 o/w institutional operations 5 2
Equity group share 17,900 19,349 - Share capital and reserves 9,334 10,199 - Gains and losses recorded directly in equity (95) (1,094)
Net income/(loss) for the period 883 958 of which: V Attributable to equity holders of the parent 884 913
Consolidated net income/(loss) – group share – per share, calculated on the basis of the average number of shares over the period excluding treasury shares and including shares that could be issued on the exercise of stock options and bonus shares 5.24 0.27 0.27 * The comparative 2012 fi nancial statements have been restated to refl ect the impact of the application of IAS 19 (revised). The effects of the change in accounting policy associated with the implementation of IAS 19 (revised) are described in Note 12.2.3.
Equity as of December 31, 2012 after appropriation of income 4,938 5,307 1,262 (17)
* The comparative 2012 fi nancial statements have been restated to refl ect the impact of the application of IAS 19 (revised). The effects of the change in accounting policy associated with the implementation of IAS 19 (revised) are described in Note 12.2.3.
(3) Additional goodwill related to buyback commitments granted to the minority shareholders of fully consolidated subsidiaries and buybacks of noncontrolling interests subsequent to the exclusive takeover are booked to equity.
(4) Of which -€675 million concerning the change in capital of the Local Savings Companies and the Sociétés de Caution Mutuelle. Under the sale of the cooperative investment certifi cates (CCIs) to the Caisses d’Epargne and Banque Populaire banks, the Sociétés Locales d’Epargne and Sociétés de Caution Mutuelle were deconsolidated on January 1, 2013.
+/- Net charge to other provisions (including insurance companies’ technical reserves) 2,365 269
+/- Decrease/(increase) in fi nancial assets and equity interests (1) 12,985 683
+/- Decrease/(increase) in property, plant and equipment and intangible assets (51) (176)
Cash fl ow of assets and liabilities held for sale 3
CHANGE IN CASH AND CASH EQUIVALENTS 9,318 20,007 * The comparative 2012 fi nancial statements have been restated to refl ect the impact of the application of IAS 19 (revised). The effects of the change in accounting policy associated with the implementation of IAS 19 (revised) are described in Note 12.2.3.
(2) Flows received from/(paid to) shareholders can be broken down into dividends paid €2,361 million and a capital increase for employees of €24 million.
NOTE 2 CONSOLIDATION METHODS AND PRINCIPLES 218 2.1 Consolidation scope 218 2.2 Consolidation methods 218 2.3 Institutional operations 219 2.4 Currency conversion of the statements of foreign subsidiaries and branches 220 2.5 Business combinations and goodwill 220 2.6 Dilutive/accretive impact resulting from ownership of the CCIs issued by the Caisses d’Epargne and Banque Populaire banks 222 2.7 Treatment of put options granted to minority shareholders 223 2.8 Subsidiaries held for sale 223 2.9 Standardization of individual data and treatment of intra-group transactions 223 2.10 Consolidation of insurance companies 223
NOTE 3 CONSOLIDATION SCOPE 225 3.1 Key events 225 3.2 Changes in consolidation scope since January 1, 2013 225
NOTE 5 ACCOUNTING PRINCIPLES AND VALUATION METHODS 230 5.1 Financial assets and liabilities (excluding derivatives) 230 5.3 Credit risk on assets classifi ed as loans and receivables 233 5.4 Derivative fi nancial instruments and hedge accounting 234 5.5 Currency trading 236 5.6 Fair value of fi nancial instruments 236 5.7 Guarantee mechanism for GAPC assets 242 5.8 Property, plant and equipment, intangible assets (excluding goodwill) and investment property 243 5.9 Non-current assets held for sale and associated liabilities 244 5.10 Financial liabilities at fair value through profi t and loss 245 5.13 Offsetting fi nancial assets and liabilities 246 5.14 Provisions and contingent liabilities 246 5.15 Employee benefi ts 247 5.16 Distinction between debt and equity 247 5.17 French State support 248 5.18 Share-based payments 248 5.19 Treasury shares and treasury share derivatives 248 5.20 Fees and commissions received 249 5.21 Income taxes 249 5.22 Financing and guarantee commitments 249 5.23 Use of estimates in preparing the fi nancial statements 250 5.24 Earnings/(loss) per share 252
NOTE 6 NOTES TO THE BALANCE SHEET 253 6.1 Financial assets and liabilities designated at fair value through profi t and loss 253 6.2 Hedging derivatives 257 6.3 Offsetting fi nancial assets and liabilities 258 6.4 Available-for-sale fi nancial assets 260 6.5 Loans and receivables 261 6.6 Held-to-maturity fi nancial assets 262 6.7 Other information relating to fi nancial assets 262 6.8 Deferred tax assets and liabilities 271 6.9 Accrual accounts, other assets and liabilities 272 6.10 Property, plant and equipment, intangible assets, investment property 273 6.11 Assets obtained by taking possession of guarantees 274
NOTE 7 NOTES TO THE INCOME STATEMENT 290 7.1 Interest margin 290 7.2 Net fee and commission income 290 7.3 Gains and losses on fi nancial instruments at fair value through profi t and loss 291 7.4 Net gains or losses on available-for-sale fi nancial assets 292 7.5 Other income and expenses 292 7.6 General operating expenses 294 7.7 Provision for credit losses 294 7.8 Share in income of associates 295 7.9 Gain or loss on other assets 296 7.10 Reconciliation of the tax expense in the fi nancial statements and the theoretical tax expense 296
NOTE 9 PRO FORMA STATEMENTS 298 9.1 Pro forma consolidated income statement 299 9.2 Contribution by division to the pro forma consolidated income statement 301
NOTE 11 RISK MANAGEMENT 308 11.1 Capital adequacy 308 11.2 Credit risk and counterparty risk 308 11.3 Market risk, overall interest rate risk, liquidity risk and structural foreign exchange risk 313 11.4 Sovereign risk exposures 313
NOTE 17 OPERATIONS BY COUNTRY 337 17.1 Entity operations by country 337 17.2 Net revenues and headcount by country 341
FINANCIAL DATA5 Consolidated fi nancial statements and notes NOTE 1 BASIS OF PRESENTATION
(1) The complete body of standards adopted by the European Union may be consulted on the European Commission website at: internal_market/accounting/ias/index_en.htm.
IFRS 11 replaces IAS 31, “Interests in Joint Ventures,” and SIC 13, “Jointly Controlled Entities – Non-Monetary Contributions by Venturers”. It bases the recording of partnerships on their substance, thereby making it necessary to analyze the rights and obligations of the joint agreement. The application of this standard at January 1, 2014 will have no significant impact on Natixis’ consolidation scope at this date.
The consolidated fi nancial statements are based on the individual fi nancial statements as at December 31, 2013, of the entities included in Natixis’ scope of consolidation.
If the put option granted to non-controlling interests is associated with a currently exercisable call option held by Natixis, in principle the potential voting rights are included in the calculation of the percentage of ownership and voting rights held.
A review of potential voting rights held by Natixis had no impact on the newly consolidated entities in 2013.
Companies controlled exclusively by Natixis are fully consolidated. Under IAS 27 (revised), control is presumed to exist when the parent has: V ownership, directly or indirectly through subsidiaries, of more than half of the voting rights of an entity; V power to govern the financial and operating policies of the entity under the by-laws or an agreement; V power to appoint or remove the majority of the members of the Board of Directors or equivalent governing body;
Companies jointly controlled by Natixis are proportionally consolidated. Joint control is the contractually agreed sharing of control over an economic activity between a limited number of associates or shareholders, the implementation of the strategic fi nancial and operating decisions relating to the activity thus requiring the unanimous consent of the parties sharing control.
Signifi cant infl uence is the power to participate in the fi nancial and operating policy decisions of the corporate entity owned without having control over such policies. Signifi cant infl uence is presumed to exist when the reporting entity directly or indirectly owns at least 20% of the voting rights.
Since the cooperative investment certifi cates were sold to the Banque Populaire banks and Caisses d’Epargne that issued them, Natixis no longer holds signifi cant infl uence over these institutions at December 31, 2013 and the fi nancial statements of these entities are no longer accounted for using the equity method in Natixis’ consolidated fi nancial statements.
As a reminder, since the Banque Populaire CCIs and the Caisse d’Epargne CCIs do not carry any voting rights, Natixis’ signifi cant infl uence over the issuers resulted from (i) de jure infl uence arising from its involvement in the operational and fi nancial management of the Banque Populaire and Caisse d’Epargne networks, and (ii) de facto infl uence deriving from operational and technical cooperation by the Banque Populaire banks and Caisses d’Epargne with Natixis.
In accordance with Article 41 of the Amended Finance Act for 1997 (No. 97-1239 of December 29, 2007), amended by Article 121 of the Amended Finance Act for 2008 (No. 2008-1443 of December 30, 2008) and the agreement signed with the French State on September 21, 2011, Natixis manages certain public procedures on behalf of the French State, mainly consisting of loans and gifts to foreign States conferred in the framework of Public Development Aid (“Emerging Country Reserve” loans and gifts to the “Fund for Private-Sector Aid and Studies”) and the stabilization of interest rates for export credit guaranteed by Coface. The related transactions, some of which may be guaranteed by the State, are recognized separately in the fi nancial statements. The State and other related creditors have a specifi c right over the assets and liabilities allocated to these institutional operations. The bank’s assets, liabilities and commitments relative to these operations are identifi ed on the balance sheet under each of the headings concerned with these operations.
€60 million was booked for 2013, versus €63 million in 2012.
FINANCIAL DATA5 Consolidated fi nancial statements and notes Premiums paid by customers, claims covered and amounts recovered as a result of these guarantees are paid over to the State. Accordingly, they are not included in the Group’s consolidated fi nancial statements. Expenses relating to public procedures management are mainly incurred in delivering State guarantees, managing claims, and recovering debts covered by the guarantees.
The following accounting treatment is applied to business combinations giving rise to control: V IFRS 3 before revision because they are prior to January 1, 2010, except for those that occurred before January 1, 2004. On the initial application date of the IFRS, Natixis chose the option offered by IFRS 1 – First-Time Adoption to not retroactively restate business combinations previous to January 1, 2004 pursuant to IFRS 3; V the revised IFRS 3 (IFRS 3R) if they are realized after January 1, 2010. Indeed, IFRS 3R can be applied prospectively to business combinations whose acquisition date is the same or later than the adoption date of IFRS 3R.
Positive goodwill is recorded on a separate line on the asset side of the balance sheet if it relates to a controlled entity. It is allocated at the purchase date to one or more cash-generating units (CGUs) expected to benefi t from the acquisition. It is tested for impairment at least once per year, and more often where there is objective evidence of impairment. The impairment test consists of comparing the carrying amount of the CGU or group of CGUs including goodwill with its recoverable amount.
Barring clarifi cation of IFRS 3R on the accounting treatment of business combinations under joint control, Natixis applies a method based on historic carrying amount to such transactions. According to this method, the difference between the price paid and Natixis’ share in the historic carrying amounts of the assets and liabilities of the acquired entity is recorded as a deduction
Consolidated fi nancial statements and notes from shareholders’ equity. In effect, in using this method, any goodwill and valuation differences resulting from the application of the purchase method are deducted from shareholders’ equity.
PRINCIPLE ADOPTED FOR MEASURING OTHER TRANSACTIONS AFFECTING THE STRUCTURE OF THE GROUP THAT LED TO THE CREATION OF NATIXIS
At December 31, 2012, goodwill arising on the CCIs had been defi nitively allocated to the following valuation adjustments: V valuation adjustments on Banque Populaire land and buildings in the amount of €102 million (Banque Populaire CCIs); V valuation adjustments on Caisse d’Epargne land and buildings in the amount of €47 million (Caisse d’Epargne CCIs).
From December 31, 2013, the valuation differences above are no longer included in Natixis’ consolidated balance sheet, given that the cooperative investment certifi cates were sold.
In 2013, goodwill decreased by €22 million, excluding translation losses of €53 million and write-down losses of €14 million.
The main changes are described below: V within the Asset Management business, the treatment under IFRS of the entity HANSBERGER resulted in the reclassification of the €9 million in goodwill assigned to the entity under the balance sheet item “Non-current assets held for sale”.
V within the Corporate Data Solutions division, the disposal of a portion of Coface Services’ activities to INTRUM JUSTICIA via the entity IJCOF, reduced goodwill by €11 million.
All items of goodwill are impaired, based on the value in use of the cash-generating units (CGUs) to which they have been allocated, except for the “Private Equity” CGU, which is evaluated using the restated net asset value, as all of the assets of the
FINANCIAL DATA5 Consolidated fi nancial statements and notes entities included in that CGU are recognized at fair value. For the Coface CGU, with regard to Natixis’ likely withdrawal, a standalone evaluation was also carried out (particularly regarding the suspension of synergies with Natixis and taking into account of Insurance regulatory constraints).
The following assumptions have been used: V estimated future cash flows: forecast data drawn from Natixis’ medium-term business plans, established in conjunction with the businesses and prepared as part of the strategic plan; V perpetual growth rate: 2.5%; V discount rate: use of a specific rate for each CGU: 10% for Investment Solutions (9.9% in 2012), 11.2% for Specialized Financial Services (11.6% in 2012), 11.2% for Coface (10% in 2012), 11.2% for Wholesale Banking (11.6% in 2012), 12.3% for the Corporate Data Solution (CDS) CGU, previously called Coface “non-core” entities (11.1% in 2012).
The discount rates were determined by factoring in the following: V for the Investment Solutions, Specialized Financial Services and Wholesale Banking CGUs, the risk-free interest rate of the Euro-Bund zone, averaged over a depth of 10 years, plus a risk premium calculated according to a sample of CGUrepresentative companies; V for the Coface CGU, interest-rate references used by listed companies operating a similar business; V for the CDS CGU, the revenue-weighted average 10-year risk-free interest rates of the countries in which the various entities do business, plus a risk premium calculated according to a sample of companies that are representative of the sector and an additional risk premium to account for the relative size of the CGU in comparison with sample references.
Consolidated fi nancial statements and notes 2.7 Treatment of put options granted to minority shareholders
In addition, on December 31, 2012 Natixis received a fi rm offer for the sale of its subsidiary Coface Services Belgium. In accordance with the provisions of IFRS 5, Natixis had maintained the full consolidation of its subsidiary and had combined Coface Services Belgium’s assets and liabilities under two separate balance sheet line items. As the sale was completed during the fi rst half of 2013, Coface Services Belgium is therefore no longer included in Natixis’ consolidation scope as of December 31, 2013.
In addition to this statistical estimation, specifi c reserves are recognized for major disasters based on the probability of default and of severity, estimated on a case-by-case basis.
In the event of net unearned losses, a deferred profi t-sharing asset is recognized up to the amount for which future deferred profi t-sharing of policyholders is estimated to be highly probable.
Deferred profi t-sharing assets and liabilities arise mainly on: V the remeasurement of “available-for-sale financial assets” and “financial assets at fair value through profit and loss”; V the remeasurement of real estate assets held to cover insurance policies; V the restatement in the consolidated financial statements of the capital reserve and the liquidity risk reserve.
These are sensitive to: V changes in the equity and bond markets; V changes in net inflows, which result from the commercial appeal of policies and the propensity of policy holders to renew their contracts; V available reserves and own resources within companies to hold assets for a period compatible with changes in liabilities and consistent with market cycles.
The completion of this repurchase resulted in a capital surplus, most of which was be paid to shareholders in an exceptional payment of around €2 billion in August 2013.
The main changes in scope since January 1, 2013 were as follows: 3.2.1 WHOLESALE BANKING/GAPC
V Creation of Natixis Export Credit Agency (securitization fund) in the first half of 2013; V Creation of 720 Olive Street LLC, an entity holding a real estate asset acquired after the implementation of a guarantee relating to funding said asset.
V Dissolution on July 2, 2013 of Federal Street Management LLC; V Dissolution on December 31, 2013 of AEW Advisors, INC.
V Creation of Natixis Ultra Short Term Bonds Plus insurance investment mutual fund on February 11, 2013.
V Liquidation of Assurances Banque Populaire MIDCAP; V Liquidation of Assurances Banque Populaire Croissance Rendement.
V Liquidation of Akco Fund and MSL1 Fund in connection with the consolidation of Colombes funds.
V Disposal of Coface Belgium Service; V Disposal of IGNIOS (formerly Coface Servicios Portugal).
Acting as manager of the Asset Management company does not in itself transfer the majority of a fund’s risks and benefi ts to the NGAM sub-group. In fact, the Asset Management company does not guarantee and is not exposed to risk in respect of the fund’s assets, and any provision for profi t-sharing with the Asset Management company only applies to a small part of the gains. NGAM’s compensation as manager is marginal compared to the returns generated for investors.
SIC 12’s “risks” and “benefi ts” criteria must therefore be assessed in terms of any interest of the Asset Management company or any other Natixis entity in the funds. As neither NGAM nor any other Natixis entity have a majority interest in the funds, Natixis neither retains a majority of the benefi ts nor incurs a majority of the risks associated with these non-guaranteed mutual funds. Accordingly, these mutual funds are not consolidated.
Several funds managed by the Asset Management companies in the NGAM Corp. sub-group are consolidated given the subgroup ’s majority interest in these funds. Funds in which it does not hold a majority interest are not consolidated, as none of the SIC 12 criteria is met.
At December 31, 2013, no fund was consolidated with regard to the principle set out above.
V unit-linked policies are policies under which the insured party selects the funds in which the insurer invests on its behalf. The value of the insurer’s interest in such funds in the form of unit-linked policies is reflected in the insurance policies, the remuneration of which is not guaranteed. The risks and benefits inherent to these investments are borne by the insured party. None of these funds were consolidated as of December 31, 2013.
V Natexis Investment Corp., a wholly-owned Natixis subsidiary, holds a series of interests in Private Equity funds. The vehicles are not consolidated given that they represent marginal interests (generally under 1%) in each fund and thus do not meet all the SIC 12 criteria (activities, decision-making powers, majority of benefits and majority of risks).
4.2.5 SPES FOR WHOLESALE BANKING’S STRUCTURED FINANCING OPERATIONS (EXCLUDING FINANCIAL ENGINEERING)
Consolidated fi nancial statements and notes 4.2.6 SPES USED FOR FINANCING OPERATIONS
Natixis does not hold a majority interest in these entities. Furthermore, the risks and benefi ts criteria are not met because the risk is either borne by the capital provider or by a third party which provides Natixis with a guarantee as to the value of the assets in the vehicle.
The purpose of such SPEs is to diversify and tranche the underlying credit risks, with a view to their acquisition by investors seeking a certain level of remuneration based on the level of risk assumed.
The assets of these conduits, and the liabilities they issue, are rated by the rating agencies, which continually monitor the suitability between the level of risk associated with each tranche sold and the rating attributed.
A new special purpose entity was consolidated in this respect as of December 31, 2013 – the “NECA” securitization fund, which allows a portfolio of export credits to be refi nanced.
Finally, it should be noted that at December 31, 2013, one entity was implicitly de facto consolidated, with Natixis remaining the main investor and the risks associated with the underlying assets being factored in via the valuation of the Natixis interest classifi ed under “Instruments at fair value through profi t and loss – Trading” and in respect of which provisions have been fully funded.
At initial recognition, fi nancial assets and liabilities are measured at fair value, corresponding to their acquisition price at that date. Their subsequent accounting treatment depends on their balance sheet classifi cation. In accordance with IAS 39, fi nancial assets are classifi ed in one of the four categories of fi nancial assets set out below: FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT AND LOSS
These are instruments held for trading purposes or designated at fair value through profi t and loss on initial recognition in accordance with the fair value option amendment to IAS 39 (published by the IASB in June 2005 and adopted by the European Union on November 15, 2005).
Securities valued under this option fall into one of the following three categories: V hybrid instruments that contain one or more significant and separable embedded derivative features; V instruments belonging to a group of financial assets valued and managed on a fair value basis; V instruments that present an inconsistency in accounting treatment with a related financial liability.
Financial assets at fair value through profi t and loss are measured on initial recognition at market value, with transaction recognized in the income statement.
The market value is reviewed at each subsequent reporting date in line with the principles outlined in Note 5.6 “Fair value of fi nancial instruments”. Any changes including accrued interest are recorded in “Net gains or losses on fi nancial instruments at fair value through profi t and loss” in the consolidated income statement.
Loans outstanding with a theoretical syndication date expired as at the reporting date were analyzed on a case-by-case basis in order to take into account the market discounts observed at the end of the reporting period. Changes in the discounts recognized for the period are shown in “Net gains or losses on available-forsale fi nancial assets” and are discussed in Note 7.4.
The carrying amount of reclassifi ed fi nancial assets are provided in Note 6.7 .2 and the fair value is disclosed in Note 6.7.8.
However, they are not considered as restructured loans due to the debtor’s situation: V commercial renegotiations solicited by sound customers evoking the competition rule and who are accepted by the bank; V “technical” restructuring; V contracts whose credit spread is enhanced, particularly those that from the start include in their contract terms an enhancement of the spread when financial ratios or the counterparty’s credit rating deteriorates, with this credit spread enhancement not considered a concession granted to the customer.
FINANCIAL DATA5 Consolidated fi nancial statements and notes V the difference between the book value of the derecognized loan (or portion of the loan) and the fair value of the assets received in exchange is entered as a loss under provision for credit losses; V any previous provision created on the loan is adjusted on the basis of the discounting of the new recoverable flows from the non-derecognized portion of the loan and is reversed in full if the loan is converted into new assets.
These general criteria were not applicable to BPCE securities held by the Caisses d’Epargne and Banque Populaire banks and entered until December 31, 2012 on the line, “Investments in associates”; V for shares in venture capital funds (FCPRs), net asset value alone is not enough to determine whether there is any evidence that the initial investment might not be recovered. This is because net asset value during the investment phase is reduced by start-up costs (structuring and brokerage fees, etc.). Accordingly, for investments of this type which are not quoted on an active market, the following impairment principles apply: R no impairment is recognized if, at the reporting date, the position and results of the fund are in line with the business plan; R if this is not the case, the business plan must be revised in order to determine whether or not the securities should be impaired.
For geographic risk, the analysis takes into account the sovereign rating, which itself includes a number of inputs such as the country’s political situation, its ability to withstand a severe shock, and the fundamentals of the economy (e.g. GDP per capita, external debt), government effi ciency, economic performance and economic outlook. In turn, each of these inputs is itself measured by one or more indicators. Qualitative information from specialist independent agencies is also considered.
Since risk measurement under the terms of Basel 2 is based on the probability of default within one year, the calculation of expected losses is adjusted to refl ect the probability of default over the remaining term of the loans affected.
Hedging of variable-rate borrowings and issues: Natixis uses interest rate swaps borrowing at fi xed rates to fi x future costs of interbank borrowings and public/private issues.
Retrospective hedge effectiveness tests are used to verify whether or not the hedge was effective at different reporting dates. At each such date, changes in the fair value of hedging instruments (excluding accrued interest) are compared with changes in the fair value of the hypothetical derivative instruments hedged (synthetic instruments representative of hedged assets or liabilities and management intentions). To be effective, changes in the fair value of hedging instruments must offset changes in the fair value of hedged items in a range of 80%-125%. Outside these limits, the hedge would no longer qualify for hedge accounting under IFRS.
Net investment hedges are used to hedge the exchange risk arising on net foreign currency investments (consolidated subsidiary or investment). They are accounted for in the same way as cash fl ow hedges. The effective portion of changes in the fair value of hedging instruments (monetary derivative or liability denominated in foreign currency) is recognized in equity, while the ineffective portion is recognized in income. Unrealized gains or losses recognized directly in equity are transferred to income when all or part of the net investment is sold.
Monetary assets and liabilities (mainly bonds and other fi xedincome securities) denominated in foreign currencies are translated into the functional currency at the spot rate prevailing at the reporting date. The resulting exchange gains and losses are recognized directly in income, or in equity for derivatives designated as cash fl ow hedges.
Non-monetary items denominated in foreign currencies and measured at historical cost are translated at the exchange rate on the transaction date (or the date of reclassifi cation in equity for deeply subordinated notes issued: see Note 13.3).
Non-monetary items denominated in foreign currencies and measured at fair value are translated at the prevailing exchange rate at the end of the reporting period. Gains or losses on a nonmonetary item (e.g., equity instruments) denominated in foreign currency are recognized as income when the asset is classifi ed as “Financial assets at fair value through profi t and loss” and in equity when the asset is classifi ed as “available-for-sale fi nancial assets”, unless the fi nancial asset is designated as a hedged item in a fair value hedge, in which case foreign exchange gains and losses are recorded as income.
In this case, fair value is based on the following: V if the instrument is quoted on an active market, fair value is its quoted price. A financial instrument is regarded as quoted on an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and
Observing certain prices or inputs used in valuation techniques may be difficult or too regularly unavailable to determine the sale price. Under these circumstances, an adjustment may be necessary to reflect the probability that when evaluating the financial instrument’s fair value, market players adopt more conservative values for the same inputs.
This adjustment applies to valuations that do not account for the counterparty’s credit quality. It corresponds with the expected loss related to a counterparty’s default risk and aims to account for the fact that Natixis cannot recover all of the transactions’ market value.
V Value adjustment for internal credit risk (Debit Valuation Adjustment – DVA)
The following criteria are used to determine whether or not a market is active: V the level of activity and trend of the market (including the level of activity on the primary market); V the length of historical data of prices observed in similar market transactions; V scarcity of prices recovered by a service provider; V wide bid-ask price spread; V steep price volatility over time or between different market participants.
The factors taken into account include the following: V the origin of the external source (stock market pages, content contribution services, etc.); V the consistency of the various sources; V the frequency with which the data are updated; V the representative nature of inputs from recent market transactions.
It involves verifying that the model is consistent with and relevant to its intended function (price setting, valuation, coverage, measurement and control of risk) and the product to which it applies, based on: V the theoretical approach: the financial and mathematical foundations of the model; V the application of the model: the pricing models used to generate risk and earnings data; V the stability of the model under parametric stress; V an assessment of the stability and consistency of the numerical methods used;
The methods for determining fair value are monitored by a number of bodies, in particular the Observability Committee, the Valuation Committee and the Impairment Committee, which bring together representatives of the Risk Department, the Finance Department and the market data monitoring department.
Instruments measured using level 2 inputs also include: V securities not quoted on an active market whose fair value is determined based on observable market data. Example: use of market data published by listed peer companies or the multiple method from techniques commonly used by market participants. This category notably includes Private Equity assets that are not recorded under level 1; V listed securities with low liquidity whose fair value is determined by similar instruments listed on an active market, or identical or similar instruments listed on an inactive market but for which regular transactions have been observed; V shares of UCITS whose NAV is not determined and published on a daily basis, but are subject to regular reporting or offer observable data from recent transactions; V debt issues measured at fair value through profit and loss. The valuation of the “issuer credit risk” component is based on the discounted cash-flow method, using parameters such as yield curves, revaluation spreads, etc. For each issue, this valuation represents the product of its remaining notional amount and its sensitivity, taking into account the existence of calls, and based on the difference between the revaluation spread (based on BPCE’s cash reoffer curve as at December 31, 2013 and December 31, 2012) and the average issue spread. Changes in the issuer spread are generally not material for issues with an initial maturity of less than one year.
The main models used for equity products are local volatility models, Tskew and Pskew.
The main models used to value and manage currency products are local volatility and stochastic models.
Inputs relating to all such level 2 instruments were demonstrated to be observable. From a methodology perspective, observability is based on four inseparable criteria: V inputs are derived from external sources (a recognized contributor); V they are updated periodically; V they are representative of recent transactions; V their characteristics are identical to the characteristics of the transaction. If necessary, an approximation may be used, provided that the relevance of such an arrangement is demonstrated and documented.
The fair value of instruments obtained using valuation models is adjusted to take account of liquidity, counterparty, internal credit (measurement of liability positions), modeling and input risks.
Level 3 comprises instruments measured using unrecognized models and/or models based on non-observable market data, where they are liable to materially impact the valuation. This mainly includes: V unlisted shares and non-consolidated investments whose fair value could not be determined using observable inputs; V instruments with a deferred day-one margin; V shares of UCITS for which the fund has not published a recent NAV at the valuation date, or for which there is a lock-up period or any other constraint calling for a significant adjustment to available market prices (NAV, etc.) in respect of the low liquidity observed for such shares; V instruments carried at fair value on the balance sheet and for which data are no longer available due to a freeze in trading in the wake of the financial crisis, which were not reclassified within “Loans and receivables” pursuant to the amendment to IAS 39 and IFRS 7 published on October 13, 2008 (see below). When there is a significant drop in trading in a given market, a valuation model is used based on the only available relevant data.
In accordance with the decree of February 20, 2007 on requirements resulting from the Pillar 3 of Basel 2, a description of crisis simulations and ex-post controls (validation of the accuracy and consistency of internal models and modeling procedures) is provided for each model used in Chapter [4] “Risk Management”.
FINANCIAL DATA5 Consolidated fi nancial statements and notes For these instruments, the following table provides the main unobservable inputs as well as value ranges.
Sticky CMS/Volatility Bond Valuation models for interest rate options Forward CMS volatility
Default and recovery data according to the various asset classes (b)
Correlation between foreign exchange rates and interest rates as well as long-term volatility levels
Bi-Lognormal model to understand the time value of Spread-Lock options, and replication for CMS and TEC Forwards
Pursuant to this procedure: V US and European RMBS recognized in the portfolio at fair value have been valued at the market price at June 30, 2013 (with no significant impact on Natixis’ consolidated financial statements in relation to the previously applied valuation model) (see Note 6.7.7.2); V Spread Locks as well as a transaction undergoing restructuring were subject to a transfer to level 3 of the fair value hierarchy (see Note 6.7.7.2).
In the absence of observable market data, directly and indirectly held ABS CDO portfolios with subprime exposure are measured using a valuation method based on a discounted cash fl ow approach using Intex modeling.
The following assumptions applied in previous years remained unchanged: V the current rating of assets posted as collateral rated CCC+ or below is taken into account by applying a 97% discount to the underlyings. This discount was reduced to 70% for underlying assets initially rated AAA in standard securitization transactions (i.e., excluding Commercial Real Estate CDOs – CRE CDO, ABS CDO, ABS CDO Mezzanine, on which a 97% discount continues to be applied); V non-subprime underlying assets held (excluding RMBS and CLOs) are valued using a discount matrix taking into account transaction types, ratings and vintages; V underlying RMBS are valued by projecting final losses from estimated losses to date, as calculated by the “delinquency pipeline”, the severity of loss given default and the losses already incurred based on assets and pool vintages; these parameters may, where applicable, be stressed according to the inherent characteristics of the assets; V valuation of underlying CLOs based on the model used for directly held CLO positions.
Commercial Real Estate CDOs (CRE CDOs) and Commercial Mortgage Backed Securities (CMBS)
The credit stress approach for CDO CREs differs depending on the type of underlying. For US CMBS included in the collateral, it is based on projected future cash fl ows using an identical approach to the one applied for European CMBS and described below. For other categories of underlying assets, the previous model, based on loss tables determined according to the rating and the vintage, is retained.
FINANCIAL DATA5 Consolidated fi nancial statements and notes Trust Preferred Securities (Trups) CDOs
The valuation model is based on projected future cash fl ows and default rates determined according to a statistical approach that deduces the default probability of banks according to their fi nancial ratios. For other sectors, default rates are estimated considering the current ratings of assets.
The model is based on detailed knowledge of the features of the transactions and a credit risk evaluation that includes several parameters including: V the benchmarked average cumulative default rate, the level of which is determined according to changes in inventory; V the collection rate; V and the correlation rate.
In addition, the valuation of recoverable cash fl ows from instruments reclassifi ed as “Loans and receivables” is based on the following methodologies: V for US and European RMBS, projection of final losses based on estimated losses to date, as calculated by the “delinquency pipeline”, the severity of loss given default and the losses already incurred based on assets and pool vintages; these parameters may, where applicable, be stressed according to the inherent characteristics of the assets; V the valuation method for CMBS and CLOs is identical to the model described above.
On the fi rst-time adoption of IFRS, property, plant and equipment and investment property were maintained at historical cost as permitted by the options available under IFRS 1, with the exception of property held by insurance companies which is carried at fair value through profi t and loss.
In accordance with Article R.332-210-1 of the French Insurance Code, a fi ve-year appraisal is conducted by an independent expert approved by the ACPR. Between two appraisals, the market value of property is certifi ed by experts on a half-yearly basis.
In line with IAS 16, a specifi c depreciation schedule is defi ned for each signifi cant component of an item of property, plant and equipment which has a different useful life or is expected to consume future economic benefi ts differently from the item as a whole.
Assets are tested for impairment whenever there is objective evidence that they may be impaired and at least annually in the case of intangible assets with an indefi nite useful life. Natixis considers whether there is any evidence of impairment at each reporting date. When any such evidence exists, the recoverable amount of the individual asset is estimated wherever possible; otherwise the recoverable amount of the CGU to which the asset belongs. The recoverable amount is the higher of fair value less selling costs and value in use, which is the present value of future cash fl ows expected to be derived from continuing use of the asset or cash-generating unit. If the recoverable amount of the asset or CGU is lower than its carrying amount, an impairment loss is recognized in income under “Depreciation, amortization and impairment of property, plant and equipment and intangible assets”.
A non-current asset (or group of assets) is meant to be disposed of when its book value is recovered by means of a sale. This asset (or group of assets) must be immediately available for the sale, and it must be highly likely that the sale will happen within twelve months.
In accordance with IAS 39, Natixis derecognizes all or part of a fi nancial asset if the contractual rights to the cash fl ows from the fi nancial asset expire. Natixis also derecognizes all or part of a fi nancial asset if these contractual rights or substantially all of the risks and rewards of ownership are transferred.
At subsequent reporting dates, the securities continue to be valued by the assignor in accordance with the rules applicable to the category in which they were initially classifi ed. In the assignee’s accounts, the amount receivable from the assignor continues to appear in the balance sheet.
FINANCIAL DATA5 Consolidated fi nancial statements and notes 5.13 Offsetting financial assets and liabilities
In accordance with IAS 32, Natixis offsets fi nancial assets and liabilities, and a net balance is presented on the balance sheet, on the twofold condition that it has the legally enforceable right to offset the recorded amounts, and the intention either to settle the net amount or to simultaneously realize the asset and settle the liability.
R and the date the plan will be implemented; V Natixis has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features on the closing date to those affected by it.
Natixis booked a provision for restructuring in its fi nancial statements at December 31, 2013 in respect of the workforce adaptation plan presented to employee representative bodies on December 2, 2013 and in respect of the winding up of GAPC for an amount of €90.6 million.
The plan includes the elimination of 697 positions without any forced departures, in two phases: V first phase: 537 positions involved and identified in detail. The characteristics of this first phase were presented to management and union bodies on December 2; V second phase: 160 positions involved. This phase was announced in principle to management and union bodies, specifying the number of positions affected in each Natixis department.
A description of the main risks and litigation to which Natixis is exposed is given in section 4.5, “Legal Risks”, in the Risk Management chapter.
The change over the fiscal year is presented in Note 6.16, “Changes in subordinated debt over the period”, and in Note 13, “Capital management”; V the share of third party investors in the net assets of dedicated mutual funds included in Natixis’ consolidation scope comprises a financial liability recorded on the balance sheet under “Financial liabilities at fair value through profit and loss”. The share of third party investors in the profits of the mutual funds is recorded in “Net gains or losses on financial instruments at fair value through profit and loss” in the consolidated income statement; V the units held by third party investors in dated funds, which are fully consolidated by Natixis, entitling the unit-holders to the repayment of a share of the fund’s net assets upon its liquidation, are classified in liabilities on the consolidated balance
FINANCIAL DATA5 Consolidated fi nancial statements and notes sheet under “Accruals and other liabilities”. The share of third party investors in the fund’s profits is recorded under “Interest and similar expenses” on the consolidated income statement.
Through its principal shareholder BPCE, within the framework of the support plan to the fi nancial sector approved by the European Commission in 2008, Natixis indirectly receives inter-bank medium-term loans guaranteed by the transfer of full ownership of receivables meeting certain eligibility criteria. The transfer of ownership enables the lenders to pledge the receivables with Société de Financement de l’Économie Française (SFEF) as security for any loans they receive from SFEF. The corresponding loans granted to Natixis by BPCE, itself eligible for SFEF fi nancing, are shown in the consolidated balance sheet within “deposits from fi nancial institutions”.
The receivables provided as security have been maintained in Natixis’ consolidated balance sheet with their original classifi cation, since the criteria for derecognition defi ned by IAS 39 are not met. They are included in the “loans and receivables” line item of the table entitled “Financial assets provided as security against liabilities” presented in Note 6.7.3.
This fi nancing is itemized in balance sheet Note 6.1.7. “French State support”.
Natixis grants stock options to some of its employees. The options are exercisable over a period of three years after a lockup period of four years. No performance conditions apply. In accordance with the provisions of IFRS 2, the options attributed after November 7, 2002 and not yet vested at the reporting date are measured at their fair value at the date they were granted to the employees. This fair value is determined using the Black & Scholes valuation method and recognized in payroll costs over the vesting period, with a corresponding entry in equity. The expense is revised at each reporting date and adjusted whenever subsequent information regarding the number of benefi ciaries alters the initial estimates of rights vested. The resulting adjustments affect the expense for the period and for subsequent periods.
The variable compensation plan set up by Natixis in early 2010 for some of its employees complies with the professional standards issued by the Fédération Bancaire Française and the provisions of the decrees of November 3, 2009 and December 13, 2010 amending Regulation No. 97-02 of the French Banking and Financial Regulations Committee (CRBF). Some plans are settled in Natixis shares, while others are settled in cash indexed to the Natixis share price.
The tax expense for the year comprises: V tax payable by French companies at the rate of 38% (36.1% in 2012), and by foreign companies and branches at the local rate; The French rate of 38% includes the additional contribution of 10.7% passed in December 2013 (French Finance Act for 2014) affecting the 2013 and 2014 fiscal years; V deferred taxes arising from temporary differences between the carrying amount of assets and liabilities and their tax basis, which are calculated using the balance sheet liability method.
Deferred tax assets and liabilities are offset at the level of each tax entity. The tax entity may either be a single entity or a group of entities that have elected for Group tax relief.
The amended Finance Act of August 2012 introduced an additional contribution in the case of distribution of dividends in the form of cash fl ows. In accordance with IAS 12, the expense related to taxes on dividend payouts is recorded on the tax line for the period during which the payout decision was made. This amounted to €31.7 million in the 2013 fi scal year.
FINANCIAL DATA5 Consolidated fi nancial statements and notes The exercise of these rights is subject to the occurrence of an uncertain future event.
In preparing its fi nancial statements, Natixis is required to make certain estimates and assumptions based on available information that is likely to require expert judgment. These estimates and assumptions constitute sources of uncertainty which may affect the calculation of income and expenses in the income statement, the value of assets and liabilities in the balance sheet and/or certain disclosures in the notes to the fi nancial statements. The fi nancial crisis has led to greater use of accounting estimates. As a result, future results of certain operations may differ signifi cantly from the estimates used in the fi nancial statements at December 31, 2013.
At the reporting date, Natixis assesses whether or not there is any objective evidence of impairment for loans and receivables, either on an individual basis or collectively by risk category. To identify evidence of impairment, Natixis analyzes trends in a number of objective criteria, but also relies on the judgment
Consolidated fi nancial statements and notes of its own expert teams. Similarly, Natixis may use its expert judgment to establish the likely timing of recoveries (where the aim is to calculate the amount of individual impairment losses), or to adjust the amount of expected losses under the Basel 2 framework, on which the amount of collective provision is based.
Unlisted equity instruments classifi ed as available-for-sale fi nancial assets primarily consist of investments in non-consolidated companies. The fair value of investments in unlisted nonconsolidated companies is obtained principally by using valuation methods based on multiples or DCF (discounted cash fl ow). Use of these methods requires certain choices and assumptions to be made in advance (in particular, projected expected future cash fl ows and discount rates).
All goodwill is assigned to a CGU so that it may be tested for impairment. The tests conducted by Natixis consist in comparing the carrying amount of each CGU (including goodwill) with its recoverable amount. Where the recoverable amount equals the value in use, it is determined by discounting annual free cash fl ows to infi nity (not including the Private Equity CGU or the Coface CGU) (see Note 2.5). Use of the discounted cash fl ow method involves: V estimating future cash flows. Natixis has based these estimates on forecasts included in its business units’ medium-term plans spanning five years; V projecting cash flows for the last year of the plan to infinity, at a rate reflecting the expected annual growth rate; V discounting cash flows at a specific rate for each CGU.
Natixis calls on independent actuaries to calculate its principal employee benefi ts. These commitments are determined using assumptions such as the salary growth rate, discount rates and rates of return on plan assets (see Note 12.2.3). These discount rates and rates of return are based on observed market rates at the reporting date, for example the yield curve on AA Corporate bonds for discount rates. When applied to long-term benefi t obligations, these rates introduce uncertainty into the valuations.
Insurance technical reserves are calculated using assumptions and estimates that may lead to adjustments in amounts reported over the subsequent period: V for personal protection insurance, claims reserves are calculated by modeling claims experience; V for life insurance, underwriting reserves are computed based on economic and financial assumptions, mortality and morbidity tables, and behavioral statistics, for example concerning surrenders; V for credit insurance, claims reserves include an estimate of claims reported but not settled at the reporting date. In addition to the amount of claims payable, a provision is set aside for unknown claims, calculated on a statistical basis by reference to the final amount of claims to be paid following settlement of risks and any debt recovery measures. Provisions for debt recovery procedures, representing estimates of expected recoveries, are calculated by applying a terminal recovery rate to all subscription periods not yet settled.
As a precaution, Natixis records a net deferred tax asset linked to its ability to generate taxable income over a given period (10 years maximum), while tax loss carry forwards are deductible with no time limitation in France and the UK or over very long periods (20 years in the US).
Net income/(loss) attributable to shareholders (in millions of euros) (a) 835 837
Average number of shares used to calculate earnings/(loss) per share 3,087,418,898 3,078,019,240
Average number of ordinary shares issued and outstanding over the period 3,093,523,996 3,083,910,364
Number of potential dilutive shares resulting from stock option and bonus share plans (b) 8,943,962 15,163,611
DILUTED EARNINGS/(LOSS) PER SHARE IN EUROS 0.27 0.27 * The comparative 2012 fi nancial statements have been restated to refl ect the impact of the application of IAS 19 (revised). The effects of the change in accounting policy associated with the implementation of IAS 19 (revised) are described in Note 12.2.3.
(a) The difference between net income/(loss) attributable to the Group and net income/(loss) attributable to shareholders corresponds to the interest generated on deeply subordinated notes and on preference shares, i.e. -€76 million after tax savings at December 31, 2012 and -€49 million at December 31, 2013.
(b) This number of shares refers to the shares granted under the deferred share-based bonus plans (2009, 2010, 2011, 2012 and 2013 plans). In 2013, based on the average share price, the 2008 stock option plan presented in Note 12.2.4 is not considered as potential dilutive shares.
At December 31, 2013, fi nancial assets at fair value primarily comprised securities and derivative instruments.
Securities at fair value through profi t and loss 6.1.1.2 87,293 97,559
6.1.1.1 Loans and receivables designated at fair value through profi t and loss and credit risk
Loans and receivables due from customers 3,791 103 499 3,190 2,821 27 211 2,583 6.1.2 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS
Instruments designated at fair value through profi t and loss 6.1.2.1 and 6.1.2.2 80,351 87,041
Consolidated fi nancial statements and notes 6.1.2.1 Financial liabilities designated at fair value through profi t and loss and credit risk
Financial liabilities are designated at fair value through profi t and loss when this choice provides more pertinent information or when the instruments incorporate one or more signifi cant and separable derivatives (see Note 5.1).
(a) Natixis has contracted Total Return Swaps (TRS) with BPCE. These instruments are used to hedge changes in the fair value of GAPC instruments carried at fair value through profi t and loss at December 31, 2013 and are included on this line for an amount of €42 million in assets (versus €108 million at December 31, 2012) and €48 million in liabilities (versus €194 million at December 31, 2012).
(b) Natixis has contracted a call option with BPCE for the purpose of recovering, 10 years after its implementation, any net gains in fair value transferred to BPCE via TRS. The call option was recognized on this line in assets for €557.9 million versus €549.1 million at December 31, 2012.
FINANCIAL DATA5 Consolidated fi nancial statements and notes 6.3 Offsetting financial assets and liabilities
The table below presents the amounts offset on the Natixis balance sheet meeting the criteria set out in IAS 32 discussed in Note 5, “Accounting Principles and Valuation Methods”, as well as the impacts linked to the existence of an enforceable right of set-off under a master netting arrangement or similar agreements that do not meet the criteria set out in IAS 32 dealing with offsetting.
The gross offset amounts refl ect derivatives and repurchase agreements with clearing houses for which the criteria set out in IAS 32 are met: V as regards derivatives, the information is presented in consideration of the effects of the currency offset between asset valuations and liability valuations of the derivatives processed through the “LCH Clearnet Ltd” clearing house via the “Swapclear” clearing system; V as regards repurchase agreements, the information presented includes repurchase agreements processed through the clearing houses LCH Clearnet Ltd (Repoclear), LCH Clearnet
Financial assets at fair value through profi t and loss 131,455 28,707 102,748 179,382 45,912 133,470
Gross amount of fi nancial assets recognized in the balance sheet
Gross amount of fi nancial liabilities recognized in the balance sheet
The table below shows available-for-sale fi nancial assets by type of instrument (loans outstanding, fi xed-income securities, variable-income securities). It discloses the gross value before impairment, the amount of impairment and the carrying amount net of impairment.
(b) In 2013, permanent impairment of variable-income securities stood at €82 million compared with €172 million in 2012. This expense involves insurance portfolios for €60 million (€122 million for 2012), the impact of which is neutralized at 94.8% and 100% respectively for 2013 and 2012 given the profi t-sharing mechanism. The 2013 expense is divided between an additional impairment on previously-impaired securities for €58 million, including €45 million on the insurance portfolios (€94 million in 2012, including €70 million on insurance portfolios), newly-impaired provisions on securities tied to the application of automatic criteria as defi ned in accounting principles and methods for €21 million, including €14 million for insurance portfolios (€29 million in 2012, including €5 million on insurance portfolios) and provisions on newly-impaired securities tied to the application of criteria for analysis for €3 million, including €1 million for insurance portfolios (€49 million in 2012, including €48 million on insurance portfolios).
Consolidated fi nancial statements and notes 6.5 Loans and receivables 6.5.1 LOANS AND RECEIVABLES DUE FROM BANKS
(a) Loans that have been restructured due to the debtor’s fi nancial situation stand at €1.105 billion at December 31, 2013 compared to €1.794 billion at December 31, 2012.
(b) The amount of restructured non-performing loans at December 31, 2013 takes account of a stock of loans of €123 million representing the restructuring of loans to the HIME Group, which took place during H2 2013.
Customer lease fi nancing outstandings 6,650 3,972 10,622 6,717 4,148 10,865
No fi nancial assets were reclassifi ed in 2013 by Natixis pursuant to the IASB’s “Reclassifi cation of fi nancial assets” amendment to IAS 39 and IFRS 7 published on October 13, 2008.
Pursuant to the options provided for by the IASB’s amendment to IAS 39 and IFRS 7 published on October 13, 2008, Natixis reclassifi ed the following items within “Loans and receivables” as at October 1, 2008: V €8.8 billion relating to the fair value of assets previously classified as “Financial assets at fair value through profit and loss – Trading”; V €2.8 billion relating to the fair value of assets previously classified as “Available-for-sale financial assets”.
FINANCIAL DATA5 Consolidated fi nancial statements and notes R SECURITIES LENDING
Financial assets at fair value through profi t and loss 1,638 1,215
Income earned on all these transactions stands at €8 million at December 31, 2013.
6.7.5 FINANCIAL ASSETS RECEIVED AS SECURITY AND ABLE TO BE SOLD OR REUSED AS SECURITY
The fair value of fi nancial assets acquired under repurchase agreements that Natixis may sell or reuse as security was €102 billion at December 31, 2013, versus €118 billion at December 31, 2012.
“Technical” delinquencies, meaning those related to incidents occurring in the collection process and unrelated to the counterparty’s fi nancial situation, are not included.
Amounts less than 90 days past due represent 100% of the total.
FINANCIAL DATA5 Consolidated fi nancial statements and notes 6.7.7 FAIR VALUE OF FINANCIAL ASSETS CARRIED AT FAIR VALUE IN THE BALANCE SHEET
Other fi nancial assets at fair value through profi t and loss 79,512 79,015 497
Derivative instruments not eligible for hedge accounting (positive fair value) 67,137 1,759 64,106 1,271
Securities at fair value through profi t and loss 14,150 10,250 3,026 873 o/w fi xed-income securities 4,368 3,495 873 o/w variable-income securities 9,782 6,756 3,026
Other fi nancial assets at fair value through profi t and loss 86,509 86,298 211
Fixed-income securities at fair value through profi t and loss 874 (166) 4
The main impacts recognized in the income statement are mentioned in Note 7.3.
6.7.7.2 Financial assets designated at fair value: Transfer between fair value levels
Securities held for trading o/w fi xed-income securities 47 574 100 115 o/w variable-income securities 12
o/w interest rate derivatives 21 o/w currency derivatives o/w credit derivatives 12 o/w equity derivatives 602
Financial assets at fair value through profi t and loss 693 175 7
(a) The liquidity of the US and European RMBS held by Natixis showed an improvement in H1 2013 (available market prices). Accordingly, at December 31, 2013 these securities were valued on the basis of market prices from December 31, 2012, according to a valuation model. This had no signifi cant impact on the results of the period.
Total deferred tax recognized 2,993 3,083 of which: deferred tax assets 3,139 3,227 deferred tax liabilities (146) (144)
(a) Including Day One P&L for €35 million at December 31, 2013 compared to €48 million at December 31, 2012 (see Note 6.8.2).
The instruments on which the day-one margin is deferred are described in Note 5.6.
DEFERRED MARGIN AT THE END OF THE PERIOD 35 48 6.9.3 INSURANCE ACCRUAL ACCOUNTS
Other payables 3 3 6.10 Property, plant and equipment, intangible assets, investment property 6.10.1 CHANGES IN PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS OVER THE PERIOD
During fi scal year 2013, Natixis recognized assets obtained by taking possession of guarantees.
FINANCIAL DATA5 Consolidated fi nancial statements and notes 6.13 Due to banks and customer deposits
The fair value of amounts due to banks is presented in Note 6.20.
(a) The variance chiefl y represents the repayment of the €6.9 billion P3CI bond issue in H2 2013 in connection with the disposal of the Banque Populaire and Caisse d’Epargne CCIs (cooperative investment certifi cates).
In order to protect policyholders, insurance companies record under liabilities technical reserves determined on the basis of statistical calculations.
Provisions for unearned premium income refl ect the portion (calculated on an accrual basis) of premiums issued during the fi nancial year that relate to a period after the reporting date.
(a) At December 31, 2013, net deferred profi t-sharing liabilities amounted to €1.317 billion, compared with deferred profi t-sharing assets of €1.674 billion at December 31, 2012 (See Note 2.10).
Provisions for impairment deducted from assets 4,448 951 (319) (787) (34) (158) 4,102
Provisions for employee benefi ts 597 97 (81) (23) 2 (54) 538 * The comparative 2012 fi nancial statements have been restated to refl ect the impact of adopting IAS 19 (revised). The effects of the change in accounting policy associated with the implementation of IAS 19 (revised) are described in Note 12.2.3.
(a) o/w: - Subtraction of €151 million from provisions for impairment deducted from assets attributable to changes in the consolidation scope.
(b) o/w: A €70 million change in actuarial assumptions in 2013 for employee benefi ts recorded directly in non-recyclable equity.
The amounts shown in the above tables include write-downs of assets held by the life insurance companies.
Provisions for loans and receivables 2,921 590 (342) (366) (5) 32 2,831
Impairment and amortization of property, plant and equipment and intangible assets (1) 1 1
The amounts shown in the above table include write-downs of assets held by the life insurance companies. They are shown without the impact of changes in insurance company technical reserves.
(c) Other changes mainly pertained to the revaluation of debts subject to hedging and variations in intra-group securities held by Natixis Funding for the purposes of market making with respect to Natixis’ debt on the secondary market. This involved the line of participating loans from November 1985 and the DSN issues from December 2006 and May 2007.
FINANCIAL DATA5 Consolidated fi nancial statements and notes 6.18 French State support
Securities issued for trading purposes 41,294 40,615 679 46,249 45,228 1,022
Securities at fair value through profi t and loss 11,364 11,364 13,260 13,260
Other fi nancial liabilities at fair value through profi t and loss 68,987 68,987 73,781 73,781
FINANCIAL DATA5 Consolidated fi nancial statements and notes 6.19.1 FINANCIAL LIABILITIES AT FAIR VALUE MEASURED USING LEVEL 3 OF THE FAIR VALUE HIERARCHY
(a) The above amounts include the effect of changes in exchange rates, which had no impact on the income statement as these transactions were hedged.
Total fi nancial liabilities recognized at fair value 188 232 (54)
Transactions carried out in the period Reclassifi cations in the period
FINANCIAL DATA5 Consolidated fi nancial statements and notes 6.19.2 FINANCIAL LIABILITIES DESIGNATED AT FAIR VALUE: TRANSFER BETWEEN FAIR VALUE LEVELS
Consolidated fi nancial statements and notes 6.20 Fair value of financial liabilities valued at amortized cost
The table below presents the balances of fi nancial assets and liabilities by contractual maturity in the balance sheet. Variableincome assets, derivative fi nancial instruments for trading and hedging purposes as well as revaluations of components hedged or unhedged by fi nancial assets and liabilities are considered as having an “undated” maturity. Likewise, delinquencies and nonperforming loans are deemed to have an “undated” maturity.
Assets at fair value through profi t and loss - excluding trading derivatives 29 14 17 9 14 73 155
Revaluation adjustments on portfolios hedged against interest rate risk - - - - - -
Other fi nancial liabilities at fair value through profi t and loss 44 16 9 4 7 43 123
Fees and commissions that form an integral part of the effective yield on an instrument, such as commitment fees or loan setup fees, are recognized and amortized as an adjustment to the effective interest rate over the estimated term of the applicable loan. These fees and commissions are recognized as interest income rather than fee and commission income.
These line items also include interest on held-to-maturity fi nancial assets.
Interest accrued on impaired loans and receivables (including restructured items) 16 16 15 15
At December 31, 2013, the expense recognized in respect of the premium totaled -€135 million (-€183 million in 2012), of which -€117 million was recognized in net revenues under guarantee commissions (-€152 million in 2012) and -€19 million in provision for credit losses (-€31 million in 2012).
7.3 Gains and losses on financial instruments at fair value through profit and loss
Net gains/(losses) on fi nancial assets and liabilities excluding hedging derivatives 1,603 2,042
Net gains/(losses) on fi nancial assets and liabilities held for trading (a) 1,196 1,610 o/w derivatives not eligible for hedge accounting (1,819) 2,218
(a) "Net gains/(losses) on fi nancial assets and liabilities held for trading" include: V The valuation of unhedged ABS CDOs with subprime exposure (see Note 5.6), resulting in the recognition of income of €12 million in 2013 (excluding the impact of the BPCE guarantee), versus an expense of €24 million at December 31, 2012, for a net exposure of €91 million at December 31, 2013.
V Impairments taken against the fair value of CDS entered into with monoline insurers (see Note 5.6), which led to a decrease of €149.1 million in cumulative impairments in 2013, versus income of €1,222.5 million in 2012 (excluding the impact of exchange rate fl uctuations and the BPCE guarantee), bringing cumulative impairments to €197 million at December 31, 2013 versus €351 million at December 31, 2012.
V Impairments taken against credit derivatives contracted with CDPC (Credit Derivatives Product Companies - See Note 5.6), a 100% reversal of the €1 million provision for the 2013 reporting period versus a writeback of €13.7 million in the previous period (excluding the impact of the BPCE guarantee and exchange rate fl uctuations), for an economic exposure of €0.5 million at December 31, 2013.
FINANCIAL DATA5 Consolidated fi nancial statements and notes 7.4 Net gains or losses on available-for-sale financial assets
This line item also includes market discounts on syndicated loans. In fact, loans outstanding with a theoretical syndication date expired as at December 31, 2013 were analyzed on a caseby -case basis in order to take into account any market discounts observed at the end of the reporting period.
Discounts on syndicated loans 8 13 7.5 Other income and expenses
Income and expenses from other operations mainly comprise income and expenses relating to fi nance leases and investment property.
Net charge to/reversal of insurance companies’ technical reserves (1,519) (1,519) 2,229 2,229
Other insurance income and expenses 7.5.2 4,254 (3,120) 1,135 1,359 (4,120) (2,761)
Other related income and expenses 245 (189) 56 198 (167) 31 7.5.2 OTHER INSURANCE INCOME AND EXPENSES
(a) In 2012, life insurance premium income included a -€2.2 billion change in income resulting from the change in the reinsurance share (see Note 7.5).
(a) These correspond to sales of credit information, marketing information and receivables collection services provided by Corporate Data Solutions subsidiaries.
Pensions and other employee benefi ts 12.2.2 & 12.2.3 (186) (184)
(b) Of which €90.6 million in provisions in respect of the workforce adjustment plan in 2013.
Total net reversals: 430 342 7.8 Share in income of associates
The share in income of associates at December 31, 2012 mainly concerned income arising from cooperative investment certifi cates recognized using the equity method. Given that these entities were deconsolidated on January 1, 2013, no share of net income and other comprehensive income of the Banque Populaire banks and Caisses d’Epargne for the period has been recognized in Natixis’ fi nancial statements at December 31, 2013.
Net capital gains/(losses) on disposals 144 16 160 (3) (4) (7)
The December 31, 2013 income statement mainly contains capital gains on cooperative investment certifi cates in the amount of €142 million.
7.10 Reconciliation of the tax expense in the financial statements and the theoretical tax expense
+ Impairment of goodwill 14 16 - Share in income of associates (21) (480)
= Consolidated taxable income/(loss) 1,361 421 x Theoretical tax rate 33.33% 33.33%
+ Losses for the period not recognized for deferred tax purposes (28) (49)
deferred tax 30 92 * The comparative 2012 fi nancial statements have been restated to refl ect the impact of adopting IAS 19 (revised). The effects of the change in accounting policy associated with the implementation of IAS 19 (revised) are described in Note 12.2.3.
(a) The main permanent differences are the tax-exempt earnings of foreign subsidiaries in Luxembourg, Belgium and the United States and the capital cost allowance for goodwill in the United States.
Shares in unrealized or deferred gains/(losses) of associates, net of tax (a) 830 434
Revaluation of available-for-sale fi nancial assets 328 (1) 328 360 (24) 337
Items recorded defi nitively in other items of comprehensive income 70 (26) 44 (39) 15 (24)
In light of the sale of the cooperative investment certifi cates (CCIs) held by Natixis, and in order to make it easier to understand the operation and its fi nancial impact, a pro forma consolidated income statement at December 31, 2013 and a pro forma consolidated income statement for 2012 are set out below, based on the following assumptions: V arrangement to sell the CCIs on January 1, 2012; V repayment of the P3CI transaction and related operations on January 1, 2012; V an exceptional distribution of around €2 billion as at January 1, 2012; V reinvestment of net liquidity resulting from the above (€7.7 billion) in the form of loans to Groupe BPCE: R given that the terms for reinvestment of the cash raised were unknown on the date on which the pro forma disclosures were fi rst drawn up, the rate adopted in 2012 was that applying to an investment with an average maturity of 10 years, i.e. 3.25%,
All of the pro forma items presented below are for illustration only. By defi nition, they relate to a hypothetical situation and therefore do not represent Natixis’ actual fi nancial situation or results.
Consolidated fi nancial statements and notes 9.1 Pro forma consolidated income statement
FINANCIAL DATA5 Consolidated fi nancial statements and notes (in millions of euros) 12.31.2012 Adjustments Pro forma 12.31.2012
Consolidated net income/(loss) attributable to shareholders (see Note 8.2.2) – group share – per share, calculated on the basis of the average number of shares over the period, excluding treasury shares and including shares that could be issued on the exercise of stock options and bonus shares 0.27 (0.03) 0.24
This organization was confi rmed as part of the framework for the 2014-2017 Natixis Strategic Plan, “New Frontier”.
FINANCIAL DATA5 Consolidated fi nancial statements and notes Coface, Corporate Data Solutions, Private Equity businesses (proprietary funds and share of sponsored funds), Natixis Algérie and the Ho Chi Minh branch are managed as fi nancial holdings due to their lower synergies with Natixis’ other businesses.
Coface reorganized its business in 2011, refocusing on core business lines (credit insurance and factoring in Germany and Poland), grouped under Coface.
Non-strategic activities (primarily service activities) coming out of Coface have been grouped under Corporate Data Solutions, and are now managed directly by the Natixis CFO’s offi ce.
It is structured into two sub-divisions with complementary objectives: V Coverage and Advisory, whose mission is to develop customer relationships and contribute to strengthening synergies between Natixis business lines. It includes M&A Advisory Services, Primary Equity, Economic Research, Vanilla Finance and Coverage. Coverage, in partnership with all of Natixis’ business lines, designs innovative, tailored solutions adapted to the specific requirements of each one of its customers - from vanilla finance to the most sophisticated structures; V The Financing & Global Markets Department, which combines: R Global Markets, which includes the Equity, Credit Rate, Currency, Commodities and Global Structured Credit and Solutions business lines,
R Structured Financing, which originates and develops fi nancing for aircraft, exports and infrastructure, energy and commodities, Strategic and Acquisition Finance, Real Estate Finance and Equity Linked Finance,
V Film Industry Finance: this business line is operated via Coficiné, a subsidiary specializing in structured loans for film and audiovisual activities in France and Europe.
V Asset Management: Asset Management activities are grouped together within Natixis Global Asset Management. They cover all asset categories and are carried out mainly in the US and France. These activities are performed by autonomous entities (specialized management companies and specialized distribution units) coordinated by a holding company that ensures the organization’s consistency by overseeing its strategic direction. These companies are thus able to focus on their core business of achieving high performance, while retaining the option of developing their own institutional clientele and drawing on the business line’s other support functions, based on appropriate economic models. A number of them have forged a strong reputation, such as Loomis Sayles, Harris Associates, AEW and Natixis Asset Management.
At the end of 2008, Natixis ring-fenced its most illiquid and/or high-risk fi nancial markets exposures, in particular: convertible arbitrage, complex equity and interest rate derivatives, trading correlation derivatives, structured fund-based derivatives, proprietary credit activities and residential ABS.
FINANCIAL DATA5 Consolidated fi nancial statements and notes At December 31, 2013, the scope of activities covered by GAPC was as follows: V GAPC 0 – Management; V GAPC 1 – Structured Credit Euro; V GAPC 2 – Structured Credit US; V GAPC 3 – Vanilla Credit; V GAPC 4 – Correlation Trading; V GAPC 5 – Complex Interest Rate Derivatives; V GAPC 8 – Fund-Based Structured Products (formerly Alternative Assets).
This information is determined based on the accounting principles applied in accordance with IFRS as adopted by the European Union at December 31, 2013.
(b) Segment disclosures have been restated to refl ect the impact of the application of IAS 19 (revised).
Assets at fair value through profi t and loss 149,792 11,036 4 104 524 68,273 2,137 231,870
Loans and receivables due from banks 32,811 1,354 1,483 263 1 3,386 22,634 61,932
FINANCIAL DATA5 Consolidated fi nancial statements and notes R DECEMBER 31, 2012 REPORTED
The capital adequacy ratio encompasses credit risk, market risk, settlement risk and operational risk. This ratio measures the adequacy of regulatory capital in relation to risk. The numerator represents the bank’s consolidated equity, calculated in accordance with CRBF Regulation No. 90-02. The denominator represents all of the bank’s weighted credit and market risks, its settlement risk and its operational risk. Natixis complied with the 8% minimum capital adequacy ratio at December 31, 2013.
The minimum liquidity ratio under prudential rules is 100%. At December 31, 2013, Natixis’ liquidity ratio was 143%.
Procedures for managing large exposures are designed to prevent excessive concentration of risks on a single benefi ciary. The regulation is underpinned by an obligation to be respected at all times: all risks associated with a single counterparty cannot exceed 25% of the bank’s capital. Natixis complied with this regulation in 2013, except for one day due to a technical incident that had no ultimate impact.
Financial assets at fair value through profi t and loss (excluding variable-income securities) 184,850 0 0 184,850 206,302
Held-to-maturity fi nancial assets 3,029 0 (4) 3,025 3,506 * Including collective provisions
The reclassifi cation of consolidated accounting volumes as gross exposure and exposure at default with respect to prudential credit risk (explained in the “Risk Management” section in Note 4.2.5.3, “Credit Risk”), involves the following key operations: V exclusion of equity-accounted insurance companies in the prudential scope; V exclusion of exposure classified in the trading scope; V inclusion of all netting agreements on market transactions; V restatement of factoring positions to take into account exposure to the risk of default and a position in risk dilution; V application of a credit-equivalent conversion factor on financing and guarantee commitments.
FINANCIAL DATA5 Consolidated fi nancial statements and notes 11.2.2 IMPACT OF GUARANTEES
Consolidated fi nancial statements and notes 11.2.3 BREAKDOWN OF INDIVIDUAL AND COLLECTIVE PROVISIONS BY GEOGRAPHIC AREA
FINANCIAL DATA5 Consolidated fi nancial statements and notes 11.2.4 BREAKDOWN OF COLLECTIVE PROVISIONS BY BUSINESS SECTOR
(in millions of euros) Provisions as at 12.31.2012 Additions (+) Reversals (-) Translation adjustments Provisions as at 12.31.2013
Consolidated fi nancial statements and notes 11.3 Market risk, overall interest rate risk, liquidity risk and structural foreign exchange risk The disclosures on the management of market risk, overall interest rate risk, liquidity risk and structural foreign exchange risk required under IFRS 7 are presented in sections 4.2 and 4.3 of Chapter 4, “Risk Management”.
At December 31, 2013, exposure to sovereign risk in the European Union countries listed below is presented according to the methodology applied for the stress tests conducted by the EBA (European Banking Authority), excluding insurance operations: Exposure at December 31, 2013
(b) The difference of €14 million in loans and receivables is mainly linked to the change in the balance of the current account opened with the Bank of Italy for €7 million.
(c) The difference of -€18 million in fi nancial assets measured at fair value through profi t and loss is linked to the acquisition of new securities for €7.8 million on Spain, disposals on Italy for €12.2 million and disposals on Spain for €13.6 million.
(b) The Greek sovereign exposures held directly by Natixis were sold in Q2 2012, generating a capital loss of €3.5 million at June 30, 2012; the CDS positions were unwound, with no material impact on the income statement. Residual exposure of €3 million is linked to securities held by transparent funds.
December 31, 2012 (a) (b) Acquisitions Disposals Redemptions Provisions Premium/ Discount
(b) Without applying contractual rules governing shares of profi ts on life insurance activities.
Gross exposure at December 31, 2013 Gross exposure at December 31, 2012 1 year 2 years 3 years 5 years 10 years >10 years Total 1 year 2 years 3 years 5 years 10 years >10 years Total 11.4.2 GREEK NON-SOVEREIGN PORTFOLIO
(a) Exposure is primarily linked to the “shipping fi nancing” sector for €178 million.
On July 21, 2011, Europe reaffi rmed its support for Greece with a private sector rescue package. The implementation of this plan was confi rmed by the European Summit on October 26-27, 2011. The fi nal conditions were enacted on February 21, 2012, with the approval of the representatives of the Eurogroup, the Greek government and private sector investors
This private sector plan consisted of a security exchange including a 53.5% haircut on the nominal value of the securities eligible for trade and the receipt of new shares issued by the European Financial Stability Facility (EFSF) and the Greek government, representing 15% and 31.5%, respectively, of the nominal value
Consolidated fi nancial statements and notes of securities eligible for trade. In addition, warrants indexed to Greece’s GDP and attached to the newly issued securities were received under the terms of the exchange.
The European Summit of June 28-29, 2012 enhanced the support measures for struggling countries, by easing the rules of intervention for the European Stability Mechanism (ESM). The ESM came into force on September 27, 2012 with a fi nancing capacity of up to €700 billion. Its purpose is to issue securities on the markets in order to provide loans, with conditions, to ailing countries, once a supervisory organization is established in the euro zone.
It may also take preventive action on the primary and secondary bond markets and recapitalize banks via loans to ESM member countries.
At the European Summit of October 26, 2011, euro zone government leaders confi rmed that the private sector’s contribution will remain specifi c to the exceptional situation of Greece and that there is no debt-restructuring plan for Ireland or Portugal, which have received an aid package from the European Union. In exchange, those two countries undertook to implement substantial debt-reduction measures.
Regarding Spain, Spanish and European authorities enacted an aid package for the Spanish banking sector on July 20, 2012. This package totals €100 billion, €41 billion of which has been disbursed so far by the ESM to the Spanish government. In return, the Spanish government was required make a specifi ed number of reforms to its banking sector. The funds received were then transferred to the relevant fi nancial institutions. By late 2013 the reforms drew to a successful conclusion in accordance with the original timetable and the Spanish government announced that it would not require additional fi nancial aid under the current ESM.
The fi nancial stabilization program for Portugal, formally adopted in May 2011, includes a joint fi nancing package of €78 billion, €67 billion of which has been disbursed so far. The aid will end in May 2014 and Portugal will attempt to restore full access to the markets between now and June 2014.
The sovereign debt securities of these countries classifi ed in the “Available-for-sale assets” or “Financial assets at fair value through profi t or loss” categories were recorded at their market price at December 31, 2013.
(a) Net carrying value, excluding accrued interest, after impairments and without applying the profi t-sharing rules on life insurance portfolios.
Compensation and employee benefi ts include wages and salaries net of rebilled expenses paid within twelve months of the end of the reporting period in which the services were rendered, deferred cash-settled or equity-settled variable compensation, employee incentives and profi t-sharing for the period, the cost of pensions and other employee benefi t obligations such as long-service awards.
October 2017 * The expected number of units at the acquisition date is funded by equity swaps.
Payments under these plans are subject to presence and performance criteria.
FINANCIAL DATA5 Consolidated fi nancial statements and notes Expense for the period for retention and performance plans
Deferred retention and performance bonuses paid in cash are awarded to some staff. These bonuses are subject to presence and performance criteria. In terms of accounting treatment, they are recorded under “Other long-term employee benefi ts”. The estimated expense is based on an actuarial estimate of the probability of these conditions being met. The expense is recognized over the vesting period. The amount recognized in respect of fi scal year 2013 was: Year plan (in millions of euros) Grant date Acquisition dates Expense for 2013
Post-employment defined-benefit plans include all postemployment benefi ts for which Natixis has committed to pay a specifi ed level of benefi ts.
They mainly include: termination benefi ts (52%), supplemental bank pension schemes (26%), health insurance and other contractual benefi ts received by retired former employees (22%) of the net benefi t obligations recognized on the balance sheet.
During H2 2013, the defi ned benefi t plan in which some employees in New York were enrolled was liquidated and replaced by a defi ned contribution plan.
Amounts recognized under IAS 19 R at 01.01.2012 (comparison at 01.01.2012) 444 (33) (63) (90) (258) (348) Income booked under IAS 19 R for H1 2012 9 (9) (9)
Impact of the change in standard on income for H1 2012 (8) 8 8
Amounts recognized under IAS 19 R at 06.30.2012 (comparison at 06.30.2012) 444 (33) (60) (90) (261) (351) Income recorded under IAS 19 for H2 2012 9 (9) (9)
Amounts recognized under IAS 19 R at 12.31.2012 (comparison at December 31, 2012) 464 (10) (73) (115) (267) (382) Impact of restatements at 01.01.2013 Amounts recognized under IAS 19 at 12.31.2012 292 (40) (252) (252)
Amounts recognized under IAS 19 R at 12.31.2012 464 (10) (73) (115) (267) (382)
(a) Separate asset components are for the most part segregated in the balance sheets of Natixis insurance subsidiaries (ABP Life Insurance), hedging the benefi t liabilities of other entities within the Natixis group of consolidated companies which were transferred to hedge the post-employment benefi ts of a few categories of employees.
Actuarial liabilities at start of period 579 234 50 89 952 504 228 48 74 854 o/w plan liquidation and reduction (1) (23) (1) (24)
Amounts recognized directly in non-recyclable equity (30) 2 (27) 71 (1) 70
Revaluation adjustments - fi nancial assumptions (22) (11) (33) 68 3 71
V €3 million in revaluation adjustments generated in 2013 stem from the increase in social security costs (payroll tax, higher mandatory pension contributions, higher social security contributions, and the doubling of the tax on end-of-service retirement plans), generating a 1.6% increase in actuarial liabilities .
FINANCIAL DATA5 Consolidated fi nancial statements and notes d) Changes in recognized amounts on the balance sheet (change in hedging assets)
Revaluation adjustments - Return on plan assets 23 21 44 28 1 30
Fair value of plan assets at end of period 352 43 395 343 40 383 e) Composition of plan assets
Total revaluation adjustments at start of period 193 7 200 124 7 131
Total revaluation adjustments at end of period 64 64 41 (21) 20 o/w effect of ceiling on plan assets g) Analysis of expenses for the period
The annual payroll costs recognized in respect of defi ned-benefi t plans consist of: V the costs of services rendered, representing rights vested by beneficiaries over the period; V past service costs, arising from possible plan changes or curtailments as well as the effects of possible plan settlements; V the net interest cost reflecting the impact of unwinding the discount on the net obligation.
Total Total Supplementary pension benefi ts and other End-of-career awards Long-service awards Other h) Main actuarial assumptions at December 31, 2013
Rate of increase in salaries 2.76% 3.63% 4.00% 3.34% 2.73% 3.47%
Rate of increase in healthcare costs 4.40% 4.50% 5.00% 4.50% 0.00% 5.00%
Rate of increase in salaries (incl. infl ation) 3.19% 2.70% 2.73% 3.36% 3.38% 3.28% 3.27% 3.55%
Rate of increase in healthcare costs (incl. infl ation) 4.49% 4.54%
-1% change in rate of increase in salaries and income (incl. infl ation) (19.63%) (8.95%) (8.35%) (17%) (11%) (9%)
Consolidated fi nancial statements and notes k) Impact of the Workforce Adjustment Plan
In light of the workforce adjustment plan presented to the employee representative bodies on December 2, 2013, a portion of the employees concerned will not fi nish their careers at Natixis, which has just reduced the amount of social security liabilities related to end-of-career awards, supplemental health insurance and personal protection plans and long-service awards.
In accordance with IAS 19R, the impact is treated as a plan change. The measurement of gross liabilities as such is fully recognized under “Past service costs”, with an impact on consolidated net income of -€21.7 million.
Natixis grants stock options to some of its employees. The options are exercisable over a period of three years after a lock-up period of four years. In accordance with the provisions of IFRS 2, the options attributed after November 7, 2002 and not yet vested at the reporting date are measured at their fair value at the date they were granted to the employees. This fair value is determined using the Black & Scholes valuation method and recognized in payroll costs over the vesting period, with a corresponding entry in equity. The expense is revised at each reporting date and adjusted whenever subsequent information regarding the number of benefi ciaries alters the initial estimates of rights vested. Any adjustment required also affects both current and subsequent accounting periods.
Number of options granted - Natixis consolidation scope Exercisable as at
There were no transfers of options during the 2012 or 2013 fi scal years.
13.3 Equity instruments issued 13.3.1 UNDATED DEEPLY SUBORDINATED NOTES AND PREFERENCE SHARES
Changes in these items over the period are presented below: (in millions of euros) 01.01.2013 Issues Redemptions Translation adjustments 12.31.2013
The amounts shown represent the nominal value of the commitment undertaken: (in millions of euros) 12.31.2013 12.31.2012
In addition to the commitments set out above, Coface’s contracts with clients in relation to its credit insurance activities represent a total credit risk exposure of €453 billion before the impact of reinsurance versus €440 billion at December 31, 2012 (see Section 4.6 – Risk Management).
The following fi nancing commitments fall within the scope of IAS 39: V commitments classified as financial liabilities at fair value through profit and loss. If an entity has a practice of reselling or securitizing loans immediately after they are issued, these loans are accounted for in accordance with IAS 39 as from the date the loan commitment is undertaken; V those which are settled net (i.e. sold); V commitments which result in a loan granted at below-market interest rates.
Natixis also extended liquidity lines to several funds arranged by third parties for a total of €623 million.
At December 31, 2013, none of these vehicles was consolidated as Natixis does not exercise control and is not exposed to the majority of the risks and rewards associated with the securitized assets.
In light of Natixis Assurances’ ownership interest in BPCE Assurances (60%), Natixis will exercise control over Natixis Assurances pursuant to IFRS 10 and will fully consolidate this entity.
As it involves an entity controlled by Natixis and an entity controlled by BPCE, the transaction will be deemed to be carried out under joint control. According to this method, the difference between the price paid and Natixis’ share in the historic carrying amounts of the assets and liabilities of the acquired entity is recorded as a deduction from shareholders’ equity. In using this method, any goodwill and valuation differences resulting from the application of the purchase method are deducted from shareholders’ equity. The carrying amounts used are those listed in the consolidated fi nancial statements of BPCE at the date of completion of the transaction.
Unsecured residual value accruing to lessor 602 14 616 660 16 676 16.1.2 LEASES AS LESSEE
Assets at fair value through profi t and loss 8,803 3,614 14,243 8,587 4,202 19,895
Net fee and commission income (108) (225) 95 (143) (205) 81
Net gains or losses on fi nancial instruments at fair value through profi t and loss 461 (62) (614) (1,546) 150 1,451
Net gains or losses on available-for-sale fi nancial assets 246 267
(a) Net outstandings at December 31, 2012 were restated in the amount of €75 ,454 million based on the guarantees given by CEGC (See Note 14.1). The guarantees given by CEGC as part of its activity are now treated for accounting purposes as insurance contracts in accordance with IFRS 4, “Insurance Contracts”, and are recognized on the liabilities side of the balance sheet as stated in Note 2.10.
(a) In 2012 and 2013, attendance fees paid to members of the Board of Directors included a fi xed portion (€10,000 per year per person) and a variable portion (€2,000 per Board Meeting per person). The members of the Audit Committee and the Compensation Committee received a fi xed payment (€5,000 and €3,000 respectively, €20,000 for the Chairman of the Audit Committee and €10,000 for the Chairman of the Compensation Committee) and a variable payment of €1,000 per meeting per person.
(b) The amounts shown for 2012 and 2013 represent the total amount of compensation (fi xed, variable, benefi ts in kind, etc.) paid to the members of the Management Board in the 2012 and 2013 fi scal year. The change in compensation mainly refl ects the changes that took place in 2012 in the membership of the Natixis Management Board.
Value of options granted during the fi scal year n/a n/a
Value of performance shares granted during the fi scal year €350 n/a
Natixis’ Chief Executive Offi cer currently enjoys the retirement benefi ts plan offered to upper management offi cers (“hors classifi cation”): V Social Security contributions in tranche A*; V Mandatory ARRCO contributions in tranche A* (overall rate of 7.50%); V Additional ARRCO contributions in tranches A* (6.563%) and B* (5.625%); V AGIRC contributions in tranches B* (20.30%) and C* (20.30%).
At the end of this commitment, it is expected that the Chief Executive Offi cer will not receive severance payments if he leaves the Company at his initiative to perform new duties or changes his position within Groupe BPCE. Furthermore, this payment will not be made if the Company is experiencing serious economic diffi culties. Furthermore, in accordance with the provisions of the AFEP-Medef code of corporate governance, the right to compensation is subject to a certain number of criteria and performance conditions.
* Tranche A corresponds to the fraction of annual compensation between €0 and €37,032.
Tranche B corresponds to the fraction of annual compensation between €37,032 and €148,128.
As regards net revenues, in the interest of consistency, insurance income and expenses that are similar to banking income and expenses (principally interest and fees and commissions) are reclassifi ed under the corresponding line items in the banking format.
Change in fair value of investments carried at fair value through profi t and loss 482 482 482 482
FINANCIAL DATA5 Consolidated fi nancial statements and notes AT DECEMBER 31, 2012
Consolidated fi nancial statements and notes 16.3.2 INSURANCE COMPANY CONTRIBUTIONS TO THE CONSOLIDATED INCOME STATEMENT
Net gains or losses on available-for-sale fi nancial assets 340 147
V Deloitte & Associés – 185, avenue Charles-de-Gaulle – 92524 Neuilly-sur-Seine Cedex represented by signatory partners José-Luis Garcia and Jean-Marc Mickeler; V KPMG Audit, Département de KPMG S.A. – 1 cours Valmy – 92923 Paris La Défense Cedex, represented by signatory partner, Jean François Dandé; V Mazars – Immeuble Exaltis 61, rue Henri-Régnault – 92075 La Défense Cedex, represented by signatory partners Michel Barbet–Massin and Emmanuel Dooseman.
Deloitte & Associés, KPMG Audit and Mazars are registered as Statutory Auditors with the Compagnie Régionale des Commissaires aux Comptes of Versailles (Regional Association of Statutory Auditors of Versailles) and under the supervision of the Haut Conseil du Commissariat aux Comptes (French High Council of Statutory Auditors).
V Independent audit, certifi cation and examination of the separate and consolidated accounts 14,365 75% 14,397 75% 0% 7,299 65% 7,318 69% 0% 3,854 90% 3,917 80% (2%) 3,212 86% 3,163 86% 2%
V Other procedures and services directly related to the Statutory Auditor’s assignment 2,367 12% 1,391 7% 70% 1,785 16% 807 8% 121% 190 4% 195 4% (3%) 392 11% 389 11% 1%
Legal, tax and employee related 1,143 6% 1,385 7% (17%) 879 8% 773 7% 14% 158 4% 576 12% (73%) 107 3% 36 1% 196%
FINANCIAL DATA5 Consolidated fi nancial statements and notes Country of operation Activity
NATIXIS ENVIRONNEMENT & INFRASTRUCTURES Luxembourg Management of venture capital mutual funds
AEW Asia Pte Ltd (formerly AEW GLOBAL ADVISORS (Asia) Pte, LTD) Asset Management
Consolidated fi nancial statements and notes 17.2 Net revenues and headcount by country
UNITED STATES 1,817.9 2,815 * Full-time equivalent current employees of Natixis at the reporting date.
FINANCIAL DATA5 Consolidated fi nancial statements and notes NOTE 18 COMPARATIVE CONSOLIDATION SCOPE
WHOLESALE BANKING NATIXIS S.A. Holding FC 100 100 100 100 France
Other fi nancial company FC 100 100 100 100 Hong Kong
Issuance of debt securities FC 100 100 100 100 United States
OWNERS LLC (1) Real estate fi nance FC 100 100 100 100 United States
PROPERTY LP (1) Real estate fi nance FC 100 100 100 100 United States
(No. 2) INC. (1) Other fi nancial company FC 100 100 100 100 United States
NGAM Advisors, LP Retail FC 100 100 100 100 United States
NGAM Distribution, LP Retail FC 100 100 100 100 United States
NGAM Nedelands fi lial Retail FC 100 100 100 100 Netherlands
NGAM SA, Italy branch Retail FC 100 100 100 100 Italy
IB, LP (1) Private Equity FC 29 29 29 29 United States
Mutual fund holding company FC 100 100 100 100 France 1818 IMMOBILIER
VERTRIEB GMBH (21) Financial data FC 100 100 0 0 Germany
COFACE POLAND CMS Financial data FC 100 75 100 75 Poland
-SUCC (COFACE S.A.) Insurance FC 100 100 100 100 Hong Kong
(29) Acquisition of 42% of IJCOF Corporate in the fourth quarter of 2013 following the partial contribution of assets of Coface Services.
(30) Dilution following €1.5 billion increase of unsubscribed capital on December 18, 2013 by Natixis Belgium Investments.
Statutory Auditors’ report on the consolidated fi nancial statements 5.3 Statutory Auditors’ report on the consolidated financial statements
In compliance with the assignment entrusted to us by your General Meeting, we hereby report to you, for the year ended December 31, 2013, on: V the audit of the accompanying consolidated financial statements of Natixis; V the justification of our assessments; V the specific verifications required by law.
The Group uses internal models and methodologies to measure fi nancial instruments that are not traded on an active market, as well as to book certain impairment losses (Notes 5.6, 6.6.7 and 6.19 to the consolidated fi nancial statements). We examined the control procedures relating to the assessment of whether a given market was inactive, to the validation of models and to the defi nition of the parameters used.
FINANCIAL DATA5 Statutory Auditors’ report on the consolidated fi nancial statements Impairment of available for-sale fi nancial assets
The Group recognizes impairment losses against available forsale fi nancial assets when there is objective evidence that such assets have suffered a decline in value (Notes 5.1, 6.4, 7.4 and 7.7 to the consolidated fi nancial statements). We examined the control procedures relating to the identifi cation of evidence of impairment and measurement of the largest impairment losses, as well as the estimates made in recognizing impairment losses to cover the decline in value of these assets where applicable.
The Group recognizes technical provisions in respect of risks related to insurance contracts (Notes 6.9.3, 6.15 and 7.5.2 to the consolidated fi nancial statements). We examined the methodology used to measure these insurance contracts, as well as the main assumptions and parameters used.
These assessments were made as part of our audit of the fi nancial statements, taken as a whole, and therefore contributed to the opinion we formed which is expressed in the fi rst part of this report.
Parent company fi nancial statements and notes 5.4 Parent company financial statements and notes
3 Cash and balances with central banks 40,833 34,652 3 Government securities and equivalent 34,683 40,317 3 Advances to banks 143,853 127,365 24 o/w institutional operations: 5 Bonds and other fi xed-income securities 17,220 25,410 5 Shares and other variable-income securities 26,211 14,450 7 Equity interests and other long-term investments 355 11,038 7 Investments in subsidiaries and affi liates 14,375 14,694 4 Leasing 4 Operating leases 12 Property, plant and equipment 153 217
Revaluation adjustments 21 Regulated provisions and investment subsidies 13 13 22 Retained earnings 523
GROSS OPERATING INCOME (LOSS) 1,500 1,384 33 Provision for credit losses (357) (298)
OPERATING INCOME 1,143 1,086 34 Net gains/(losses) on fi xed assets 1,391 (204)
NOTE 8 INVENTORY – INVESTMENT PORTFOLIO AT DECEMBER 31, 2013 368
NOTE 9 DISCLOSURES REGARDING SHAREHOLDINGS EXCEEDING THE INVESTMENT THRESHOLD IN FRENCH COMPANIES DURING THE YEAR 371
NOTE 38 ASSETS, LIABILITIES AND FORWARD FINANCIAL INSTRUMENTS BY MATURITY 397
NOTE 40 ESTABLISHMENTS AND OPERATIONS IN NON-COOPERATIVES STATES OR TERRITORIES WITHIN THE MEANING OF ARTICLE 238-0A OF THE FRENCH GENERAL TAX CODE 399
The fi nancial statements are presented in accordance with CRC Rule no. 2000-03 as amended for the individual summary fi nancial statements of companies coming under CRBF regulation.
Where there is a risk of partial or total non-recovery of loans or of borrowers breaching their covenants, impairment charges or provisions corresponding to the amount of the probable loss are recognized on the income statement under “Provision for credit losses”. Impairment is assessed quarterly on a case-by-case basis taking into account an analysis of the risk and available collateral.
Financial assets that do not have individually allocated credit risk are included in groups of assets with similar risk characteristics. The composition of these portfolios of similar assets is based on two criteria: geographic risk and sector risk.
Each group of assets is assessed for objective evidence of impairment based on observable data indicating a likely decrease in the estimated recoverable cash fl ows for that group of assets. A collective write-down in the balance sheet liabilities is taken against any group of assets showing objective evidence of impairment. Assets belonging to that group, which are subsequently specifi cally identifi ed as impaired (specifi c risk), are removed from the collective write-down calculation base.
V Securities held for trading: securities that are originally bought or sold with the intention of reselling or repurchasing them in the short term, securities held as part of a market making operation, and securities bought or sold for the purposes of the specialized management of a trading portfolio. When initially recognized, these securities must be traded on an active market with easily obtainable prices representing actual and regularly occurring market transactions on an arm’s length basis. On acquisition, securities held for trading are recognized at the price paid including any accrued interest. Transaction costs are recognized in expenses. At each balance sheet date, they are measured at market value and the grand total of any valuation differences is recognized on the income statement under the heading, “Balance of transactions on securities held for trading”.
In line with regulatory requirements, unrealized losses are not subject to impairment unless there is a strong likelihood that the instruments will be sold before maturity due to unforeseen circumstances and without prejudice to impairments included in provisions for credit losses pursuant to CRC Regulation 2002-03 as amended, if there is a risk of default by the issuer of these instruments. Unrealized gains are not recognized.
Investment securities are recognized at their acquisition date at the purchase price excluding acquisition costs. They are included in the balance sheet at the lower of their historical cost and their value in use, which is determined based on the issuer’s general development outlook and the projected holding period. In particular, for the determination of this value, Natixis refers to the International Private Equity and Venture Capital Valuation Guidelines published in September 2009 by the Association Française des Investisseurs en Capital (AFIC French Private Equity Investors Association), the British Venture Capital Association (BVCA) and the European Private Equity and Venture Capital Association (EVCA).
R an average credit spread on the market in which the subsidiary is listed,
Income, value adjustments and proceeds on disposal of securities portfolios are recognized as follows: V income from variable-income securities is recognized as and when received; V income from fixed-income securities is recognized based on the accrual method; V value adjustments and proceeds from the disposal of securities are recognized under different headings depending on which portfolio they belong to: R under “Net revenues” for securities held for trading and securities held for sale,
FINANCIAL DATA5 Parent company fi nancial statements and notes The regulation allows banks to sell all or part of the securities reclassifi ed as “held for investment” if the following two conditions are met: V the transfer was motivated by exceptional circumstances; V the market for these securities has become active again.
Natixis has carried out no such transfers in its separate fi nancial statements.
This transaction consisted of issuing new bonds for an amount of €6.9 million, subscribed in full by BPCE.
Accrued interest payable relating to this issue was disclosed separately as a related payable, with an offsetting entry in the income statement under “Interest and similar expenses on bonds and other fi xed-income securities”.
The P3CI issue was redeemed in August 2013 following the repurchase by all the Banque Populaire banks and the Caisses d’Epargne of all the CCIs held by Natixis S.A., followed by their cancellation (see Note 2 “Key events”).
Commitments likely to be given within this framework to banks that extend export credits denominated in foreign currencies, with the aim of guaranteeing the exchange rate of their foreign currency borrowings, are not included in published off-balance sheet commitments. Income and expenses from institutional operations (exchange rate swaps and guarantees) are charged or paid to the French Treasury in accordance with the agreed-upon terms and conditions.
V “Termination benefits” granted to employees upon the termination of their employment and prior to retirement. A provision is accrued for these benefits.
FINANCIAL DATA5 Parent company fi nancial statements and notes V “Post-employment benefits” such as pensions, other supplementary retirement benefits applicable to the banking industry, end-of-career awards and other contractual benefits payable to retirees. Natixis distinguishes between two types of post-employment benefits: R defined contribution plans, which mainly consist of the social security basic pension scheme and the supplementary schemes AGIRC and ARCO, under which an entity has no obligation to pay a specifi ed benefi t amount. Contributions paid under defi ned contribution plans are expensed in the corresponding period; R defined benefit plans under which Natixis has a legal or constructive obligation to pay a specifi ed benefi t amount are valued and funded.
A provision is set aside for defi ned benefi t plans based on an actuarial assessment of the benefi t obligation using the projected unit credit method. This method draws on demographic and fi nancial assumptions. The value of any plan assets is deducted from the obligation to determine the provision to be recognized on the balance sheet. This valuation is carried out on a regular basis by independent actuaries.
The amount recognized as a provision in the balance sheet represents the present value of the obligation under defi ned benefi t plans: R minus any past service cost not yet recognized in income,
• differences between the actual return and expected return on plan assets,
R the interest cost reflecting the impact of unwinding the discount on the obligation,
Every year since 2010, a share-based payment plan has been granted to specifi c categories of personnel in accordance with regulations. Some plans are settled in Natixis shares, while others are settled in cash indexed to the Natixis share price. Each plan is a three-year plan, with one-third of the plan settled each year, with the exception of “short-term” plans settled in cash indexed to the Natixis share price, which are settled in the year of granting.
There was no provision set aside for expenses related to sharebased payment plans at December 31, 2013, as these plans will be settled through the issue of new shares.
Off-balance sheet receivables, debts and commitments denominated in foreign currencies are converted to euros at the going exchange rate at the balance sheet date through the revaluation of foreign exchange positions. The difference between amounts resulting from the valuation of euro-denominated foreign exchange positions and amounts reported in equivalent euro denominated foreign exchange positions is reported on the income statement.
No change in accounting method had any impact on the fi nancial statements for the 2013 fi scal year.
FINANCIAL DATA5 Parent company fi nancial statements and notes NOTE 2 HIGHLIGHTS OF THE PERIOD
Advances to banks 143,853 127,365 o/w accrued interest o/w non-performing 1 1 o/w write-downs of non-performing (1) (1)
o/w accrued interest 193 595 o/w non-performing 214 254 o/w write-downs of non-performing (109) (155)
INTERBANK AND SIMILAR TRANSACTIONS 219,369 202,334 * o/w subordinated loans: non-performing 0 0 accrued interest 0 3 o/w reverse repurchased securities: 60,007 62,491 o/w accrued interest 25 22
Subordinated loans 555 982 o/w accrued interest 2 4 o/w non-performing o/w write-downs of non-performing
Other loans 19,394 28,405 o/w accrued interest 41 43 o/w non-performing 4,505 3,777 o/w write-downs of non-performing (1,451) (1,318)
FINANCIAL DATA5 Parent company fi nancial statements and notes NOTE 5 BONDS, SHARES AND OTHER FIXEDAND VARIABLE-INCOME SECURITIES
Breakdown of listed and unlisted securities: (in millions of euros) 2013 2012
NOTE 7 INVESTMENTS IN ASSOCIATES AND RELATED COMPANIES, EQUITY INTERESTS, OTHER LONG-TERM INVESTMENTS AND TREASURY SHARES
FINANCIAL DATA5 Parent company fi nancial statements and notes NOTE 8 INVENTORY – INVESTMENT PORTFOLIO AT DECEMBER 31, 2013
D) Investments with a book value less than or equal to €150,000 1,085,501.76
D) Investments with a book value less than or equal to €150,000 816,286.75
FINANCIAL DATA5 Parent company fi nancial statements and notes NOTE 10
COFACE HOLDING 30 av. Pierre Mendès France 75013 Paris 784,207 EUR 652,254 EUR 100.00%
NATIXIS ASSURANCES 30 av. Pierre Mendès France 75013 Paris 110,677 EUR 696,695 EUR 100.00%
NATIXIS CONSUMER FINANCE 30 av. Pierre Mendès France 75013 Paris 35,340 EUR 318,945 EUR 100.00%
NATIXIS FACTOR 30 av. Pierre Mendès France 75013 Paris 19,916 EUR 183,682 EUR 100.00%
NATIXIS FONCIERE 30 av. Pierre Mendès France 75013 Paris 685 EUR 62,859 EUR 100.00%
NATIXIS FUNDING 30 av. Pierre Mendès France 75013 Paris 67,555 EUR 2,730 EUR 100.00%
NATIXIS LEASE 30 av. Pierre Mendès France 75013 Paris 267,242 EUR 277,882 EUR 100.00%
Shareholders’ equity other than capital (in thousands of units) Share of capital at 12.31.2013
NATIXIS TRUST 51 av. John F. Kennedy L-1855 Luxembourg 609,865 EUR 120,635 EUR 100.00%
FINANCIAL DATA5 Parent company fi nancial statements and notes NOTE 11 TREASURY SHARES - ASSETS
Average purchase price Amount sold or cancelled Sale price Average sale price
(in millions of euros) End 2012 Acquisitions Disposals Other End 2013
(in millions of euros) End 2012 Charges Reversals Other End 2013
CUSTOMER TRANSACTIONS 76,732 85,480 * o/w repurchased securities: 24,380 38,546 o/w accrued interest 3 3
Securities transactions 53,500 56,243 o/w securities held for trading 0 0 o/w liabilities on securities held for trading 53,492 56,234 o/w accrued interest 8 8
Future salary increases are estimated by grade based on a constant population and a three-year average. At December 31, 2013, this average (including infl ation) was 2.75%.
Total net obligation at January 1 79 113 30 95 317 83 105 29 54 271
Benefi ts vested over the period 2 8 3 30 43 8 3 26 37
Change in actuarial gains and losses not recognized (7) (17) 0 (3) (27) 4 (7) 0 8 5
Unrecognized actuarial gains and losses 28 (9) 11 30 39 8 15 62
Total net obligation at December 31 71 78 26 97 272 79 113 30 95 317
Total transfer of assets and liabilities - Val A 6 6
FINANCIAL DATA5 Parent company fi nancial statements and notes NOTE 28 FEES AND COMMISSIONS
FINANCIAL DATA5 Parent company fi nancial statements and notes NOTE 32 GENERAL OPERATING EXPENSES
FINANCIAL DATA5 Parent company fi nancial statements and notes NOTE 34 NET GAINS/(LOSSES) ON FIXED ASSETS
(a) Including the contribution on the dividend payout for -€32 million.
Any losses transferred to the parent company give rise to a provision for restitution of corporate tax, deemed to offset the additional group tax incurred if subsidiaries return to profi t, and their tax contribution is decreased by the amount of prior year losses.
NOTE 37 OFF-BALANCE SHEET ITEMS - FOREIGN CURRENCY COMMITMENTS AND TRANSACTIONS
(in millions of euros) ≤ 1 month 1-3 months 3-6 months - 1 year 1-5 years > 5 years Perpetual Total
FINANCIAL DATA5 Parent company fi nancial statements and notes (in millions of euros) < 1 year 1-5 years > 5 years
Independent audit, certifi cation and examination of the separate and consolidated accounts 5.0 4.7
Other procedures and services directly related to the Statutory Auditor’s assignment 1.7 1.0
As at December 31, 2013 Natixis hereby reports, in accordance with the above-mentioned article, that no Natixis entity operates in a non-cooperative state or territory.
FINANCIAL DATA5 Parent company fi nancial statements and notes Company financial performance over the last five years (Art. 133, 135 and 148 of the Commercial Companies Decree)
Income after tax, depreciation, amortization and provisions (0.70) 0.10 0.28 0.29 0.75
Social security and other employee benefi ts 264,166,185.19 322,453,719.64 334,569,060.30 364,133,590.12 365,395,752.03
Statutory Auditors’ report on the parent company fi nancial statements 5.5 Statutory Auditors’ report on the parent company financial statements
We conducted our audit in accordance with professional standards applicable in France; those standards require that we plan and perform the audit to obtain reasonable assurance about whether the company fi nancial statements are free of material misstatement. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the annual fi nancial statements. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made, as well as the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
In our opinion, the company fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the Company, and of the results of its operations for the year then ended in accordance with French accounting principles.
FINANCIAL DATA5 Statutory Auditors’ report on the parent company fi nancial statements Investment securities, shares in affi liates and other long-term securities
The Company records provisions to cover the contingencies and litigation arising from its business activities (Notes 1.1, 1.2, 1.6, and 18 to the company fi nancial statements). We examined the methodology used to measure these provisions, as well as the main assumptions applied.
In accordance with French law, we have verifi ed that the required information concerning the purchase of investments and controlling interests and the identity of the shareholders and holders of the voting rights has been properly disclosed in the Management Report.
General Shareholders’ Meeting called to approve the fi nancial statements for the fi nancial year ended December 31, 2013
1 .1 Agreements and commitments authorized during the past fi nancial year
The impact of this transaction on the income statement during the 2013 fi nancial year was as follows: V a capital gain of €1,417,347,720.88 on the disposal of the CCIs;
as a result of the excess cash generated by the implementation of Operation Yanne; V payment of an exceptional dividend of €2,011,123,919.35.
1.2.1 AMENDMENT TO THE AGREEMENT ENTERED INTO ON APRIL 9, 2013 REGARDING THE GUARANTEE GRANTED BY NATIXIS’ BRANCH OFFICE IN NEW YORK TO BPCE BONDHOLDERS AS PART OF A BOND ISSUE IN THE UNITED STATES GOVERNED BY SECTION 3(A)(2) OF THE 1933 SECURITIES ACT
The purpose of this amendment, which was authorized at the Board Meeting of February 19, 2014, is to amend the sub-ceilings provided for in Article 4 of the Agreement, namely: raising the total maximum nominal amount of the bonds that can be issued by BPCE under Program 3 (a)(2) each year from USD 4 billion to USD 6 billion, and raising the total maximum nominal amount of the proceeds from the bond issues under Program 3 (a)(2) that cannot be re-loaned to Natixis within 90 days of their settlement & delivery from USD 2 billion to USD 3 billion. Furthermore, BPCE may loan securities to Natixis for shorter maturities than those of the bonds, depending on Natixis’ needs.
Statutory Auditors’ special report on related-party agreements and commitments 1.2.3 NON-COMPETE AGREEMENT IN THE EVENT OF THE TERMINATION OF LAURENT’S MIGNON’S OFFICE AS CHIEF EXECUTIVE OFFICER
II - AGREEMENTS AND CO MMITMENTS ALREADY APPROVED BY THE GENERAL SHAREHOLDERS’ MEETING
This fi nancial guarantee took the legal form of a risk participation to cover Natixis Real Estate Capital Inc., in proportion to a share of a portfolio of assets held by Natixis Real Estate Capital Inc. at June 30, 2009, following the clear failure to pay amounts due in relation to the assets on the contractually agreed payment date.
On July 10, 2009, the Board of Directors approved the tripartite agreements between Natixis, SFEF and each of the central institutions (BFBP and CNCE) designed to set up trust accounts (comptes d’affectation spéciaux, CAS), and to allow Natixis collateral to be pledged directly to SFEF. The agreements also established SFEF’s direct right of recourse against Natixis. The agreements cover: V délégation imparfaite agreements (agreements in which the original debtor remains liable as well as the person instructed to pay on their behalf), establishing SFEF’s right of recourse against Natixis, between (i) Natixis, BFBP and SFEF, and between (ii) Natixis, CNCE and SFEF; V subsidiary financial guarantee master agreements, allowing Natixis collateral to be pledged directly to SFEF, between (i) Natixis, BFBP and SFEF, and between (ii) Natixis, CNCE and SFEF (term: the financial guarantee will remain in force until the date on which all the assignee’s guaranteed liabilities towards the assignor have been paid, reimbursed or satisfied in full); V trust agreements, setting up trust accounts (comptes d’affectation spéciaux (CAS)) between (i) Natixis, BFBP and SFEF, and between (ii) Natixis, CNCE and SFEF (term: the agreement will end on date when the trust account is closed); V representation agreements, allowing Natixis’ central institutions to represent it in its dealings with SFEF, between (i) Natixis and BFBP, and between (ii) Natixis and CNCE; V side agreements aimed at limiting the credit risk incurred by Natixis in respect of its central institutions by allowing early repayments to be made at Natixis’ initiative, between (i) Natixis and CNCE, and between (ii) Natixis and BFBP;
On August 25, 2009, the Board of Directors approved a preliminary agreement between Natixis and BPCE for the purpose of protecting Natixis against future losses and earnings volatility caused by assets ring-fenced in its Workout Portfolio Management structure (GAPC).
The premium pertaining to Natixis was spread out and transferred to the income statement in an amount of €48,651,281.14 for the fi nancial year ended December 31, 2013. The deferment of the premium pertaining to the Reciprocal guarantees with the subsidiaries had a neutral impact on Natixis’ income statement.
The income recognized by Natixis in respect of cancellation payments amounted to €95,391,001.79 in the 2013 fi nancial year.
2.1.5 NATIXIS’ ROLE AS ARRANGER IN THE €25 BILLION COVERED BOND ISSUE PROGRAM LAUNCHED BY BPCB AND UPDATED IN 2009
On May 13, 2009, the Board of Directors approved an amendment to the credit and fi nancial guarantee master agreement with BFBP, Banques Populaires Covered Bonds (BPCB), Natixis and all Banque Populaire banks. The amendment was designed to incorporate Banque Monétaire and Financière and Compagnie Européenne de Garanties and Cautions as providers of loan collateral subsequently pledged by certain Banque Populaire banks participating in the BPCB program.
No severance payment shall be made to the Chief Executive Offi cer if he leaves on his own initiative to take up a new position, or if he changes positions within the BPCE Group.
2.1.8 AUTHORIZATION OF AN AGREEMENT BETWEEN NATIXIS AND BPCE PERTAINING TO THE COCCINELLE PROJECT
The expenses relating to this agreement recognized by Natixis during the fi nancial year ended December 31, 2013 amounted to €220,750,053.27, after taking the interest rate review into account following the signing of Amendment No. 1 to the P3CI subscription agreement entered into between Natixis and BPCE (see Point 2.2.2 of this report).
This new invoicing agreement is aimed at better refl ecting the proportion of BPCE’s governance functions that relate to affi liated entities. It provides for annual invoicing based on the actual cost of the tasks performed by BPCE.
The expenses recognized by Natixis in respect of this agreement amounted to €29,741,000.00 for the fi nancial year ended December 31, 2013.
Natixis’ General Shareholders’ Meeting of April 30, 2009 expressly approved and ratifi ed the credit and fi nancial guarantee master agreements set up in December 2008 between (i) Natixis and BFBP, and between (ii) Natixis and CNCE, within the scope of agreements signed by BFBP and CNCE with SFEF.
The purpose of these agreements was to allow Natixis to borrow from its two central institutions against collateral. The amounts lent represent reciprocal credit facilities granted under the terms of the agreements between the central institutions and SFEF. The terms therefore refl ect the agreement entered into between the central institutions (and all other banks in the marketplace) and SFEF.
FINANCIAL DATA5 Statutory Auditors’ special report on related-party agreements and commitments Under the agreements, Natixis can indirectly benefi t from the facilities granted by SFEF. The principle is as follows: V each central institution borrows from SFEF against a pledge of collateral; V all or part of the income arising on this arrangement is used to grant Natixis a loan, in return for a guarantee in the form of collateral, which will be pledged by the central institution to SFEF to secure the loan.
Populaire banks to Natixis’ corporate officers appointed after May 1, 2005.
On June 6, 2007, the Supervisory Board approved a service agreement between Ixis CIB, CNCE and Banque Palatine pertaining to CNCE’s transfer to Banque Palatine of the operating and technical management of the “Click’n Trade” website, with CNCE retaining ownership of the website and remaining the counterparty in forward and cash currency transactions for Ixis CIB.
These agreements had no fi nancial impact on the 2013 fi nancial year.
Likewise, Ixis CIB was required to sign letters of joint and several guarantee and commitment with its US subsidiaries, namely Natixis Municipal Products Inc. (formerly CDC Municipal Products Inc.), Natixis Derivatives Inc. (formerly CDC Derivatives Inc.), Natixis Financial Products Inc. (formerly CDC Financial Products Inc.), Natixis Funding Corp. (formerly CDC Ixis Funding Corp.), and Natixis Commercial Paper Corp. (formerly CDC Ixis Commercial Paper Corp.).
All of these letters of joint and several guarantee and commitment had expired or been terminated at the date of this report, but continue to apply retrospectively to all guaranteed transactions entered into prior to the date on which the underlying joint and several guarantees were terminated or expired, until these transactions have been fully unwound.
The conditions governing the payment and calculation of the fees payable by Ixis CIB in respect of the guarantees were defi ned in an agreement with CDC Finance-CDC Ixis and CNCE.
The expenses recognized by Natixis in respect of these agreements came to €2,846,804.00 for the fi nancial year ended December 31, 2013.
2.1.16 CURRENT LETTERS OF JOINT AND SEVERAL GUARANTEE AND COMMITMENT BETWEEN IXIS AND ITS SUBSIDIARIES
On June 15, 2006, the Supervisory Board approved letters of joint and several guarantee and commitment between Ixis CIB and: a) Natixis Financial Products Inc. (formerly Ixis Financial Products Inc.) for the USMTN issuance program. The guarantee given by Ixis CIB in connection with this agreement can be invoiced at 0.02%; b) Natixis Financial Products Inc. (formerly Ixis Financial Products Inc.) for the warrant issuance program. The guarantee given by Ixis CIB in connection with this agreement can be invoiced at 0.02%; c) Natixis Securities North America Inc. (formerly Ixis Securities NA) for securities lending transactions. The guarantee given by Ixis CIB in connection with this agreement can be invoiced at 0.02% per year, and is applicable to the overall average risk exposure over the period.
We have been informed that the following agreements covered by the Statutory Auditors’ special report dated March 18, 2013, which had been approved by the General Shareholders’ Meeting of May 21, 2013, were implemented during the past fi nancial year.
2.2.1 “3A2” DEBT ISSUANCE PROGRAM IN THE UNITED STATES IMPLEMENTED BY BPCE
On 17 February, 2013, the Board of Directors approved the guarantee given to BPCE by the Natixis NY Branch. This guarantee was granted in Natixis’ corporate interest, in the event that BPCE re-lends all or part of the USD resources raised from Natixis.
This agreement had no fi nancial impact on the 2013 fi nancial year.
6.1 NATIXIS BYLAWS 412 6.2 GENERAL INFORMATION ON NATIXIS’ CAPITAL 418 6.2.1 Form and transfer of shares (Chapter II, article 4 of the bylaws) 418 6.2.2 Share capital 418 6.2.3 Authorized but unissued capital – Capital increase authorizations 418 6.2.4 Securities not conferring rights over the share capital 421 6.2.5 Other securities giving access to capital 421 6.2.6 Changes in the capital over the last fi ve fi scal years 422 6.2.7 Other information on the capital 422
Legal information 6.3 DISTRIBUTION OF SHARE CAPITAL AND VOTING RIGHTS 423 6.3.1 Distribution of share capital at December 31, 2013 423 6.3.2 Ownership of shares by members of management and supervisory bodies 423 6.3.3 Treasury shares 423 6.3.4 Employee share ownership 424 6.3.5 Changes in the shareholder base over the past three years 424 6.3.6 Natural or legal persons exercising or potentially exercising control over Natixis 424 6.4 INFORMATION FROM ARTICLE L.225-100-3 OF THE FRENCH COMMERCIAL CODE 425 6.5 DRAFT RESOLUTIONS OF THE ORDINARY GENERAL SHAREHOLDERS’ MEETING OF MAY 20, 2014 426 6.5.1 Report of the Board of Directors on the resolutions submitted to the Shareholders’ Meeting 426 6.5.2 Agenda and draft resolutions of the ordinary General Shareholders’ Meeting of may 20, 2014 432
The number of directors who are over the age of 70 shall not exceed one-third of the number of directors in offi ce. When this percentage is exceeded, the oldest of the directors leaves offi ce at the end of the next Ordinary General Shareholders’ Meeting.
LEGAL INFORMATION6 Natixis Bylaws The Board takes valid decisions only if at least one-half of its members are present or deemed present.
V provided all directors, along with the notice of said meeting, with all the necessary information for their analysis.
The Company’s Executive Management is the responsibility of either the Chairman of the Board of Directors, or that of another individual appointed by the Board of Directors bearing the title of Chief Executive Offi cer.
The Board of Directors may appoint a Chief Executive Offi cer from among the directors or outside their ranks.
Shareholders’ Meetings are chaired by the Chairman of the Board of Directors, or in the event of his absence, by one of the Deputy Chief Executive Offi cers, or by a director appointed by the General Shareholders’ Meeting.
Scrutineers’ duties are performed by the two attending shareholders holding the highest number of shares who accept this position.
The Extraordinary General Shareholders’ Meeting may be convened at any time either by the Board of Directors or pursuant to any legal provision. It may amend any of the provisions of these bylaws, in particular it can increase or reduce the share capital, extend the Company’s duration or decide its early dissolution,
The annual dividends are paid at the dates established by the Board of Directors within a period of 9 months following the close of the fi scal year.
The share capital amounted to €4,970,490,073.60 at March 3, 2014, divided into 3,106,556,296 fully paid-up shares of €1.60 each.
In addition, the Combined General Shareholders’ Meeting of May 21, 2013 authorized the Board of Directors to grant new shares to employees and corporate offi cers of Natixis and related companies, for a period of 38 months and on one or more occasions, for a total nominal amount of two-hundred forty-six (246) million euros, to be deducted from the overall one and a half (1.5) billion euro ceiling mentioned above (these authorizations replaced those granted by the Combined General Shareholders’ Meeting of May 21, 2010).
During its session on February 17, 2013, the Board of Directors used the authorization that was granted to it by the Combined General Shareholders’ Meeting on May 27, 2010 pertaining to the allocation of free shares (18th resolution) for fi nancial market professionals, having their tax residence in France, as well as certain employees falling within the scope of the deferred compensation mechanism implemented by Natixis.
In a decision taken on June 25, 2013, the Chief Executive Offi cer of Natixis set the subscription/withdrawal period for the proposed shares under the Mauve 2013 offer from June 26 to June 3 0, 2013 and set the benefi ciary subscription price for the shares at €2.80 per share.
Finally, during its session of November 6, 2013, the Board of Directors used the authorization that was granted to it by the Combined General Shareholders’ Meeting of May 21, 2013 on the allocation of free shares (17th resolution) to the Chief Executive Offi cer.
Since the end of fi scal year 2013, the Board of Directors at its meeting of February 19, 2014 decided to use the authorization relating to the capital increase with waiving of preferential subscription rights reserved for members of employee savings plans granted by the Combined General Shareholders’ Meeting of May 21, 2013 (16th resolution), for the launch of the Mauve 2014 employee share ownership plan with an overall par value ceiling of €48,000,000, representing a maximum of 30,000,000 shares. In order to implement the Mauve 2014 offer, the Board of Directors invested the Chief Executive Offi cer with all the necessary powers in particular to set the Subscription Price and the subscription period for the shares to be issued.
Amount authorized Duration Date used Amount used 05.27.2010 18 In order to grant shares €233 m (a) 38 months €10,552,493 (d)
In order to determine the issue price of new shares in the event of a capital increase without preferential subscription rights maintained 10% of the share capital (c) 26 months None None
In order to carry out a capital increase through the issue - without preferential subscription rights maintained - of shares and/or securities giving access to the capital of the Company through an offer as set out in Article L.411-2 (II) of the French Monetary and Financial Code €1.5 bn (c) 26 months None None
In order to increase the number of securities to be issued in the event of capital increases with or without preferential subscription rights 15% of initial issue (c) 26 months None None
In order to increase the share capital by issuing shares or securities giving access to the Company’s capital, reserved for members of employee savings plans with waiving of preferential subscription rights in favor of said members, pursuant to Article L.225-129-6 of the French Commercial Code €48 m (c) 26 months 02.19.2014
(a) Amount deducted from the ceiling decided in resolution No. 13 of the General Shareholders’ Meeting of April 30, 2009 (€5 bn).
General information on Natixis’ capital 6.2.4 SECURITIES NOT CONFERRING RIGHTS OVER THE SHARE CAPITAL
(1) Due to the exceptional dividend payout approved by the Company’s General Shareholders’ Meeting on July 31, 2013, subsequent to the buyback of the cooperative investment certifi cates held by Natixis in each Banque Populaire bank and Caisse d’Epargne, the number of options and the subscription prices were adjusted, in accordance with the provisions of the French Commercial Code.
Observations: The fi gures factor in the adjustments to the option exercise price and the number of options following the cash capital increase of September 2008 and the exceptional dividend payout approved by the Company’s General Shareholders’ Meeting of July 31, 2013.
In 2008, no Natixis corporate offi cer received stock options in respect of his corporate offi ce at Natixis.
Options held in respect of the issuer and the companies referred to above, exercised during the period, by the 10 salaried employees of the issuer and of these companies who hold the most options thereby awarded 0 n/a n/a 0 n/a n/a 6.2.6 CHANGES IN THE CAPITAL OVER THE LAST FIVE FISCAL YEARS
The table below gives details of the amount of issue premiums for each of the transactions impacting the capital.
Shares issued in respect of the capital increase reserved for employees 8,439,630 13,503,408 10,127,556 6.2.7 OTHER INFORMATION ON THE CAPITAL
Distribution of share capital and voting rights 6.3 Distribution of share capital and voting rights 6.3.1 DISTRIBUTION OF SHARE CAPITAL AT DECEMBER 31, 2013
At December 31, 2013, Natixis’ main shareholders were as follows: % capital % voting rights
LEGAL INFORMATION6 Distribution of share capital and voting rights 6.3.4 EMPLOYEE SHARE OWNERSHIP
The portion of Natixis’ capital held by Groupe BPCE employees (ESOPs and Bonus share grant plan) stood at 1.64% at December 31, 2013.
By the resolution of November 12, 2007 and on the basis of the authorization of the Combined General Shareholders’ Meeting of May 24, 2007, the Management Board had granted a maximum of 6,600,000 bonus shares, split equally between employees of Natixis and of companies that are directly or indirectly related to it as per Article L.225-197-1 et seq. of the French Commercial Code.
Furthermore, in accordance with the provisions of Articles L.225197 -1 et seq. of the French Commercial Code: V the Natixis Board of Directors, at its meeting on August 5, 2010 (by virtue of the authorization granted by the General Shareholders’ Meeting of May 27, 2010, 18th resolution), decided to grant 6,595,308 free shares to certain employees of Natixis and its subsidiaries by virtue of their employment contracts; V the Natixis Board of Directors, at its meeting on February 22, 2011 (by virtue of the authorization granted by the General Shareholders’ Meeting of May 27, 2010, 18th resolution), decided to grant 6,892,424 free shares to certain employees of Natixis and its subsidiaries by virtue of their employment contracts; V the Natixis Board of Directors, at its meeting on February 22, 2012 (by virtue of the authorization granted by the General Shareholders’ Meeting of May 27, 2010, 18th resolution), decided to grant 6,119,373 free shares to certain employees of Natixis and its subsidiaries by virtue of their employment contracts; V the Natixis Board of Directors, at its meeting on February 17, 2013 (by virtue of the authorization granted by the General Shareholders’ Meeting of May 27, 2010, 18th resolution), decided to grant 1,724,325 free shares to certain employees of Natixis and its subsidiaries by virtue of their employment contracts; V the Natixis Board of Directors, at its meeting on November 6, 2013 (by virtue of the authorization granted by the General Shareholders’ Meeting of May 21, 2013, 17th resolution), decided to grant 90 free shares to the Chief Executive Officer of Natixis.
Employee shareholding (ESOPs and Bonus share grant plan) 1.64% 1.17% 1.00%
Information from Article L.225-100-3 of the French Commercial Code 6.4 Information from Article L.225-100-3 of the French Commercial Code
Article L.225-100-3 of the French Commercial Code requires companies whose securities are admitted for trading on a regulated market to make available and explain certain information, where said information may have an impact in the event of a public offer.
LEGAL INFORMATION6 Draft resolutions of the Ordinary General Shareholders’ Meeting of May 20, 2014 6.5 Draft resolutions of the Ordinary
These resolutions concern fiscal year 2013 (approval of the financial statements and related party agreements, allocation of earnings), the advisory opinion on the components of compensation due or granted in respect of fiscal year 2013 to each executive corporate officer; the overall budget for compensation paid in fiscal year 2013 to the employees referred to in Article L.511-71 of the French Monetary and Financial Code, the variable compensation ceiling for these same employees, the ratification of the decision to co-opt a new director, the Company’s transactions in its own shares on the market, and the powers to complete formalities.
In resolutions One and Two, the General Shareholders’ Meeting is asked to approve the Natixis 2013 parent company and consolidated fi nancial statements, respectively.
Natixis’ fi nancial statements as at December 31, 2013 show net income of €2,323,073,936.17 and, taking into account the lack of retained earnings, distributable profi ts of €2,323,073,936.17.
Accordingly, the dividend per share is set at 16 (sixteen) euro cents per share.
In accordance with legal provisions, we remind you that for the three fi scal years prior to fi scal year 2013, the following dividends were distributed: Fiscal year
Resolution Four concerns the approval of related party agreements, in application of Articles L.225-38 et seq. of the French Commercial Code, authorized by the Board of Directors during fi scal year 2013 and after this period until this Shareholders’ Meeting. These commitments and agreements are presented in the Statutory Auditors’ special report along with those entered into prior to fi scal year 2013 and still effective, which do not require re-approval by the shareholders (see section [5.6] of this registration document).
In resolution fi ve, you are asked, in accordance with Article L.22542 -1 of the French Commercial Code, to approve the commitments taken in favor of Laurent Mignon, CEO. This mainly includes: V amendment No. 1 on the commitment establishing the terms and conditions of the indemnity due or likely to be due to Laurent Mignon in the event he ceases his duties as Chief Executive Officer (hereinafter referred to as the “Commitment related to the severance payment”).
The amount of the indemnity (hereinafter referred to as the “Severance payment”) is equal to: Monthly reference compensation x (12 months + 1 month per year of seniority).
Board of Directors on February 19, 2014, in the event the CEO leaves office. This non-compete clause is limited to a period of six (6) months and is associated with an indemnity equal to 6 months of fixed compensation, as in force at the date on which the CEO leaves office (hereinafter referred to as the “Non-compete indemnity”).
It should be noted that, in the event a severance payment is made to the CEO, the total amount of this indemnity and the non-compete indemnity may not exceed a ceiling of twentyfour (24) months of Monthly reference compensation, as defined in the Commitment related to the severance payment.
In accordance with the recommendations of the AFEP-Medef Corporate Governance Code as revised in June 2013 (section 24.3) to which Natixis refers in application of Article L. 225-37 of the French Commercial Code, resolutions 6 and 7, aimed at submitting to the General Shareholders’ Meeting the components of the compensation due or granted to each executive corporate offi cer in respect of the fi scal year ended December 31, 2013, i.e.: François Pérol, Chairman of the Board of Directors, and Laurent Mignon, Chief Executive Offi cer .
Draft resolutions of the Ordinary General Shareholders’ Meeting of May 20, 2014
Components of compensation due or granted in respect of the fi scal year ended December 31, 2013 to Laurent Mignon, Chief Executive Offi cer of Natixis
Annual deferred variable compensation €958 ,000 The variable compensation in respect of fi scal year 2013 was calculated on the basis of quantitative and qualitative criteria validated by the Board of Directors in advance. Variable compensation consists of: V quantitative targets (70%), 25% of which based on the performance of Groupe BPCE (net revenues, net income Group share and cost/income ratio) and 45% based on the performance of Natixis (net revenues, net income Group share, cost/income ratio and Core Tier 1 ratio).
Directors’ fees N/A Laurent Mignon did not receive any directors’ fees for fi scal year 2013.
Benefi ts of any kind €8,120 Laurent Mignon uses a company car and receives a family allowance.
In accordance with the provisions of Article L.511-73 of the French Monetary and Financial Code, the purpose of resolution eight is to consult with shareholders at the General Shareholders’ Meeting about the overall budget for compensation paid to Natixis employees referred to in Article L.511-71 of the same Code during fi scal year 2013.
The employees referred to by the French Monetary and Financial Code, representing 218 people, are: V the senior executives, including the CEO and the Chief Financial and Risk Office of Natixis; V categories of staff including risk takers, persons exercising control functions, and any employees who, based on their total income, find themselves in the same income bracket, whose professional activities have a material impact on the risk profile of the company or group, i.e. employees qualified as Material Risk Takers (MRT).
The total budget for compensation paid to the above-mentioned Natixis employees during the fi scal year ended December 31, 2013, who due to the system of deferred compensation in place for the past 3 years is not equal to the compensation paid in respect of fi scal year 2013, amounted to €113.1 million (excluding employer social security charges). This amount includes the fi xed compensation paid in 2013, the variable compensation paid in 2013 in respect of fi scal year 2012, the variable compensation paid in 2013 in respect of previous fi scal years (2010, 2011 and 2012) and the shares granted in 2010 and 2011 and delivered in 2013.
EXEMPTION TO THE CEILING ON VARIABLE COMPENSATION OF EMPLOYEES REFERRED TO IN ARTICLE L.511-71 OF THE FRENCH MONETARY AND FINANCIAL CODE IN RESPECT OF FISCAL YEARS BEGINNING ON OR AFTER JANUARY 1, 2014 (RESOLUTION NINE)
The employees referred to by the French Monetary and Financial Code, as for resolution eight, are: V the senior executives, including the CEO and the Chief Financial and Risk Office of Natixis; V categories of staff including risk takers, persons exercising control functions, and any employees who, based on their total income, find themselves in the same income bracket, whose professional activities have a material impact on the risk profile of the company or group, i.e. employees qualified as Material Risk Takers (MRT).
Resolution ten asks the shareholders to ratify the decision made by the Board of Directors on February 19, 2014 to co-opt Michel Grass as director (on the favorable opinion of the Appointments and Compensation Committee at its meeting of February 10, 2014) to replace Stève Gentili, who resigned, for his remaining term of offi ce, until the end of the General Shareholders’ Meeting convened to approve the fi nancial statements for the fi scal year ending December 31, 2014.
The maximum share price cannot exceed seven (7) euros per share.
LEGAL INFORMATION6 Draft resolutions of the Ordinary General Shareholders’ Meeting of May 20, 2014 SUMMARY TABLE ON THE FINANCIAL RESOLUTIONS SUBMITTED TO THE SHAREHOLDERS’ MEETING BY YOUR BOARD OF DIRECTORS
V Any other goal authorized or that may be authorized by law or regulations in effect
V The Board of Directors will ensure that these buybacks are executed in accordance with prudential requirements, such as those established by regulation and by the Autorité de Contrôle Prudentiel et de Résolution (ACPR – French Prudential Supervisory Authority).
6.5.2 AGENDA AND DRAFT RESOLUTIONS OF THE ORDINARY GENERAL SHAREHOLDERS’ MEETING OF MAY 20, 2014
V Report of the Board of Directors and of the Statutory Auditors on the Company’s activities during the year ended December 31, 2013; V Report of the Chairman of the Board of Directors; V Approval of the 2013 parent company financial statements; V Approval of the 2013 consolidated financial statements; V Appropriation of earnings; V Statutory Auditors’ special report and approval of the agreements and commitments covered by Articles L.225-38 et seq. of the French Commercial Code; V Statutory Auditors’ special report and approval of the regulated commitments referred to in Article L.225-42-1 of the French Commercial Code in favor of Laurent Mignon; V Opinion on the components of compensation due or granted in respect of the fiscal year ended December 31, 2013 to François Pérol, Chairman of the Board of Directors; V Opinion on components of compensation due or granted in respect of the fiscal year ended December 31, 2013 to Laurent Mignon, Chief Executive Officer; V Overall budget for compensation paid to the employees referred to in Article L.511-71 of the French Monetary and Financial Code during the fiscal year ended December 31, 2013;
V Ceiling on variable compensation of employees referred to in Article L.511-71 of the French Monetary and Financial Code in respect of fiscal years beginning on or after January 1, 2014; V Approval of the co-opting of Michel Grass as Director; V Trading by the Company in its own shares: authorization to be granted to the Board of Directors; V Powers to complete formalities.
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for ordinary business, having reviewed the report of the Chairman of the Board of Directors on the structure of the Board, preparation and organization of the Board’s work and the internal control and risk-management procedures established by the Company, the report of the Board of Directors on the parent company fi nancial statements and the management report relating thereto, and the reports of the Statutory Auditors on the parent company fi nancial statements for fi scal year 2013, hereby approves the 2013 parent company fi nancial statements as presented, including the balance sheet, income statement and notes to the fi nancial statements, as well as the transactions refl ected in these fi nancial statements or summarized in these reports.
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for ordinary business, having reviewed the report of the Chairman of the Board of Directors on the structure of the Board, preparation and organization of the Board’s work and the internal control and riskmanagement procedures established by the Company, the report of the Board of Directors on the consolidated fi nancial statements and the management report relating thereto, and the reports of the Statutory Auditors on the consolidated fi nancial statements for fi scal year 2013, hereby approves the 2013 consolidated fi nancial statements as presented, including the balance sheet, income statement and notes to the fi nancial statements, as well as the transactions refl ected in these fi nancial statements or summarized in these reports.
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for ordinary business, hereby notes that the fi nancial statements fi nalized as of December 31, 2013 and approved by the shareholders at this meeting show earnings for the fi scal year of €2,323,073,936.17 and that, taking into account the lack of retained earnings, distributable earnings amount to €2,323,073,936.17, the appropriation of which is submitted for the approval of the shareholders at today’s meeting.
(a) The total distribution amount mentioned in the table above is calculated on the basis of the number of shares comprising the capital as of December 31, 2013 and may vary depending on changes in the number of treasury shares held and options exercised from January 1, 2014 to the date the dividend is detached.
The shareholders hereby resolve to distribute an aggregate dividend of €496,047,230.40 by appropriating from distributable earnings.
The dividend is set at €0.16 (sixteen cents) per share for each of the 3,100,295,190 shares entitling holders to dividends. For individual benefi ciaries who are residents for tax purposes in France, this dividend will be taken into account automatically by law to determine total gross income subject to the progressive income tax scale, and will be eligible for an allowance of 40% of the gross amount received (Article 158-3-2 of the French General Tax Code).
LEGAL INFORMATION6 Draft resolutions of the Ordinary General Shareholders’ Meeting of May 20, 2014 In accordance with legal provisions, the shareholders hereby note that for the three fi scal years prior to fi scal year 2013, the following dividends were distributed: Fiscal year Number of shares on which a dividend was paid Dividend per share
The dividend will be detached from the share on May 23, 2014 and paid starting on May 28, 2014. In the event the Company should hold some of its own shares upon payment of these dividends, the amounts corresponding to the unpaid dividends for these shares will be appropriated to retained earnings.
Resolution fi ve (Approval of the regulated commitments referred to in Article L.225-42-1 of the French Commercial Code in favor of Laurent Mignon)
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for ordinary business, having reviewed the report of the Board of Directors and the Statutory Auditors’ special report on the commitments referred to in Article L.225-42-1 of the French Commercial Code, approved the terms and conditions of Amendment No. 1 to the Commitment related to the severance payment due or likely to be due to Laurent Mignon in the event he leaves his offi ce as CEO, and Laurent Mignon’s non-compete clause, as authorized by the Board of Directors on February 19, 2014.
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for ordinary business, consulted in accordance with the recommendation in paragraph 24.3 of the Afep-Medef June 2013 Corporate Governance Code for listed companies, hereby approves the components of compensation due or granted in respect of the fi scal year ended December 31, 2013 to Laurent Mignon, Chief Executive Offi cer, as presented in Natixis’ 2013 annual report/registration document in Chapter 6, Paragraph 6.5.1.
Resolution eight (Overall budget for compensation paid to the employees referred to in Article L.511-71 of the French Monetary and Financial Code during the fiscal year ended December 31, 2013)
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for ordinary business, hereby approves the co-opting on February 19, 2014 by the Board of Directors of Michel Grass as Director, to replace Stève Gentili, who resigned, for the remainder of his term of offi ce, i.e. until the General Shareholders’ Meeting called to approve the fi nancial statements for the fi scal year ending December 31, 2014.
R tender shares (for exchange, payment or another reason) in connection with acquisitions, mergers, spin-offs or contributions; or
R promote Natixis shares in the secondary market or the liquidity of the Natixis share through an investment services provider in connection with a liquidity contract that meets the terms of the compliance charter recognized by the Autorité des Marchés Financiers.
4) resolves that the aggregate amount allocated to the share buyback program authorized above may not exceed €2,170,206,633; 5) fully empowers the Board of Directors, with the right to sub-delegate said power, to decide upon and implement this authorization, to specify its final terms and conditions if necessary and to determine its procedures, in order to carry out the buyback program and, in particular, to place any stock market order, enter into any agreement, allocate or reallocate the shares acquired to the objectives sought under the applicable legal and regulatory provisions, establish the terms and conditions
LEGAL INFORMATION6 Draft resolutions of the Ordinary General Shareholders’ Meeting of May 20, 2014 according to which the rights of holders of securities or options will be protected, if appropriate, in accordance with legal, regulatory or contractual provisions, make any filings with the AMF and any other competent authorities, and complete all other formalities and, in general, do whatever is necessary.
7.1 STATEMENT BY THE PERSON RESPONSIBLE FOR THE REGISTRATION DOCUMENT 438 7.2 DOCUMENTS AVAILABLE TO THE PUBLIC 439 7.3 CROSS-REFERENCE TABLE OF REGISTRATION DOCUMENT 440 7.4 CROSS-REFERENCE TABLE FOR THE ANNUAL FINANCIAL REPORT 442
Additional information 7.5 CROSS-REFERENCE TABLE FOR THE MANAGEMENT REPORT 443 7.6 CROSS-REFERENCE TABLE OF SOCIAL AND ENVIRONMENTAL INFORMATION 444
ADDITIONAL INFORMATION7 Statement by the Person responsible for the registration document 7.1 Statement by the Person responsible for the registration document
The historical fi nancial data, relative to consolidated fi nancial statements for the past fi nancial year on December 31st, 2013, presented in this Registration Document, has been discussed in the Statutory Auditors’ reports found on pages 351-352, which contains an observation.
ADDITIONAL INFORMATION7 Cross-reference table of registration document 7.3 Cross-reference table of registration document
Heading Registration document page number 1. Persons responsible 438 2. Statutory Auditors 335-336 3. Selected fi nancial information 3.1. Selected historical fi nancial information regarding the issuer for each fi scal year 10 to 11 3.2. Selected historical fi nancial information for interim periods N/A
4. Risk factors 133 to 138 5. Information about the issuer 5.1. History and development of the Company 4 to 9 6. Business overview 6.1. Main activities 12 to 29 6.3. Exceptional events N/A
6.4. Extent to which the issuer is dependent on patents or licenses, industrial, commercial or fi nancial contracts or new manufacturing processes 179 6.5. The basis for any statements made by the issuer regarding its competitive position 12 to 26 7. Organizational structure 7.1. Brief description of the Group 4-5 ; 9 7.2. List of principal subsidiaries 216 to 230 ; 342 to 350 8. Property, plant and equipment 8.1. Existing or planned material tangible fi xed assets 243-244 ; 279 8.2. Environmental issues that may affect the issuer’s utilization of the tangible fi xed assets 58 to 62 ; 36 to 48 9. Income and Financial position 10. Treasury and Capital resources 10.1. Information concerning the issuer’s capital resources 141 to 144 ; 210-211 10.2. Sources and amounts of the issuer’s cash fl ows 212-213 10.3. Information on the issuer’s borrowing conditions and funding structure 203-204 10.4.
10.5. Information regarding the anticipated sources of funds needed to fulfi ll commitments referred to in items 5.2. and 8.1 203-204 ; 207 11. Research and development, patents and licenses 179 13. Profi t forecasts or estimates N/A
20.8. Legal and arbitration procedures 175 to 179 20.9. Signifi cant changes in the issuer’s fi nancial or commercial situation 328 21. Additional information 21.2. Memorandum and by-laws 412 to 417 ; 425 22. Material contracts 25 23. Third party information and statement by experts and declarations of any interest N/A
ADDITIONAL INFORMATION7 Cross-reference table for the annual fi nancial report 7.4 Cross-reference table for the annual financial report
Heading Registration document page number 1. Parent company fi nancial statements 353-400 2. Consolidated fi nancial statements 206-350 3. Management report (French Monetary and Financial Code)
Heading Registration document page number 1. Operations during 2013 1.1. Consolidated results 206 to 350 1.2. Other items of 2012 consolidated results N/A
V Parent company results for the last fi ve years 400
ADDITIONAL INFORMATION7 Cross-reference table of Social and Environmental information 7.6 Cross-reference table of Social and Environmental information
V Total workforce and employee distribution by gender and geographic region V New hires and layoffs V Compensation G4-10, G4-LA1 50-51
c) Labor relations V The organization of employer-employee communication V Collective bargaining agreements 53
V Gender equality V Employment and integration of disabled employees V The fi ght against discrimination and the promotion of cultural diversity G4-LA12 55-56
V Company organization to consider environmental issues and, if applicable, evaluation or certifi cation procedures for environmental concerns
Art. R. 225-105-1-II 2° a) Amount of provisions and guarantees for environmental risks
V The prevention of waste production, recycling and disposal V Taking into account noise pollution and all types of pollution specifi c to a particular activity G4-EN23
Art. R. 225-105-1-II 2° d) V Adapting to the impact of climate change 61-62
Art. R.225-105-1 – II 3° e) e) Other human rights initiatives 64
Art. R.225-105-2 The independent third-party organization called to give its opinion (...) on social and environmental information that appears or should appear on the report 65-66
ADEME Agence de l’environnement et de la maîtrise de l’énergie/Agency for the environment and control of energy consumption
P3CI Prêt couvrant les Certifi cats Coopératifs d’Investissements/Loan covering the cooperative investment certifi cates
p e n t h e r e a d e r a n d s c a n t h e c o d e t o a c c e s s N