CORPORATE GOVERNANCE 67 3.2 Structure of the corporate and executive bodies 69 3.3 Role and operating rules of the corporate bodies 92 3.4 Policies and rules for determining compensation and benefi ts of any kind paid to members of the corporate bodies 105 3.5 Potential confl icts of interest 113 3.6 Chairman’s report on internal control procedures 114 3.7 Statutory Auditors’ report on the report of the Chairman of the Board of Directors 129
LEGAL INFORMATION 411 6.1 Natixis Bylaws 412 6.2 General information on Natixis’ capital 418 6.3 Distribution of share capital and voting rights 423 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
The document has been prepared by the issuer and its signatories incur liability in this regard. This registration document includes all components of the annual fi nancial report mentioned in section I of Article L.451-1-2 of the French Monetary and Financial Code and Article 222-3 of the general regulations of the French Financial Markets Authority. A cross-reference table showing documents referred to in Article 222-3 of the general regulations of the French Financial Markets Authority and the corresponding sections of this registration document appear on page 440.
1.2 HISTORY AND LINKS WITH BPCE 8 1.2.2 Financial solidarity mechanism 8 1.2.3 BPCE organization chart 9 1.3.1 Income statement 10 1.3.2 Financial structure 10 1.3.3 Net revenues by business 10 1.3.4 Pre-tax profi t by business 11 1.3.5 Long and short-term ratings (as of February 2014) 11 1.3.6 2014 investor relations calendar 11 1.4 NATIXIS’ BUSINESS LINES 12 1.4.1 Wholesale Banking 12 1.4.2 Investment Solutions 17 1.4.3 Specialized Financial Services 22 1.4.4 Major contracts 25 1.4.5 Financial investments 26
with 36 million customers spread over two networks, Banque Populaire and Caisse d’Epargne. Natixis is listed on the Paris stock exchange.
(1) No. 2 in terms of number of branches (source: database, bank websites 2013), No. 2 in terms of market share in customer savings deposits and customer loans (source: Banque de France Q3 2013), No. 2 in terms of market penetration on the individual professional and entrepreneur markets (source: Pépites CSA 2011-2012 survey).
Upon completion of its New Deal strategic plan, Natixis had fi nalized the overhaul of its economic model. It is now refocused on its core business lines, has seen a return to profi tability and enjoys a stronger fi nancial structure. Moreover, Natixis is fully incorporated within Groupe BPCE and has simplifi ed its structure following the sale, effective as of August 6, 2013, of the cooperative investment certifi cates (CCIs) that it owned to the Banque Populaire banks and Caisses d’Epargne.
On November 14, 2013, Natixis presented New Frontier, its 2014-2017 strategic development plan. This plan is part of Groupe BPCE’s “Growing Differently” strategic plan.
New Frontier aims to make Natixis a bank offering high valueadded fi nancial solutions that is dedicated entirely to its customers. The main focus of the new strategic plan is optimizing capital allocation, adapting business models, ensuring operational effi ciency and developing the franchises through Groupe BPCE’s networks and abroad.
The first stage of this strategy is Natixis Assurances’ plan to acquire BPCE SA’s stake in BPCE Assurances (60% of capital). This acquisition is being carried out while maintaining the capital agreements and existing cooperation with MAIF and MACIF.
Natixis is continuing the operational effi ciency program it established in 2012. This program aims to cut spending by a cumulative total of €300 million in 2014. From 2015, a plan reducing costs by an additional €100 million per year will also be introduced. This plan is based on some 700 job cuts, mainly in France, in activities with insuffi cient profi tability profi les.
Natixis was formed by the completion of the following contributions: V CNCE’s contribution to Natexis Banques Populaires of certain subsidiaries and shareholdings in corporate, investment and service banking businesses as well as a share of the cooperative investment certificates (CCI) issued since 2004 by each Caisse d’Epargne et de Prévoyance; and
V the contribution to Natexis Banques Populaires by SNC Champion, a vehicle set up by the Banque Fédérale des Banques Populaires (BFBP) and the Banques Populaires, of the rest of the Caisses d’Epargne CCIs not contributed by CNCE and which had previously been acquired by SNC Champion from CNCE. In addition, CNCE and SNC Champion contributed stakes in Ixis CIB and Ixis AM that they had previously acquired from Sanpaolo IMI.
It should be pointed out that the guarantee funds referred to above consist of a Groupe BPCE internal guarantee mechanism activated at the initiative of the BPCE Executive Board or the French banking regulator, which may request that it be used if deemed necessary.
Net income from GAPC, discontinued operations and restructuring costs (3) (31)
(a) Excl. GAPC (Workout Portfolio Management) net income of discontinued operations and restructuring costs.
Wholesale Banking advises corporate clients, institutional investors, public sector entities and Private Equity funds. It offers them a wide range of fi nancing products and access to capital markets, as well as transaction banking services. Drawing on the technical expertise of the teams and a renowned research department, Natixis is able to develop solutions adapted to the specifi c needs of each its customers.
V Capital markets: Natixis’ experts offer a wide range of diversified, standard and bespoke products on the fixed income, foreign exchange, commodities, credit and equities markets.
V Transaction banking: Natixis offers its customers four main sets of products and services: Account Management and Treasury Services, Cash management, Trade finance and Correspondent Banking.
V Research: Natixis has developed renowned expertise in economic, credit, equities and quantitative research and is regularly acknowledged by international investors. Daily publications by analysts help develop a strategic dialog with investors and issuers.
Within the Wholesale Banking division, Coverage is the key contributor to Natixis’ client coverage. It relies on the expertise of its employees in terms of management consultancy (Mergers & Acquisitions, capital increases, initial public offerings, and fi nancing alternatives), structured fi nance and local and international capital market transactions.
The structure set up in 2012 allows for greater responsiveness and ability to anticipate customers’ needs thanks to increased dialog between bankers responsible for client coverage and banking advisers: V the Mergers & Acquisitions business line offers strategic support to Natixis’ customers – corporate clients, institutional investors, investment funds - in preparing and implementing disposals or business combinations (via acquisition, merger, partnership or exchange of assets), fund raising, restructuring or capital protection. In 2013, the team advised large US and European companies on modifying their shareholding structure or disposing of business lines; V the Financing advisory business line aims to define the most appropriate equity and debt-based financing strategies for its customers and advise them on their investment decisions and their choice of lenders. The fragmentation of the international capital markets and the emergence of alternative investors in equity and debt have led Natixis to develop a rating advisory service within this business line to facilitate access for the bank’s customers to new international sources of liquidity;
In 2013, Natixis consolidated its positioning with its negotiator and producer customers in the three large sectors covered: (1) in energy, with the arrangement of financing in particular for Isramco, Perenco, participation in the financing of Rosneft’s acquisition of TNK and the award of the role of No. 6 bookrunner in oil and gas financing for the EMEA region (3); (2) in metals and fertilizers, with the arrangement of financing, among others, for Ternium Mexico, Russian Copper Company and the award of the bronze medal for the “Best Trade Bank in Metals and Mining” (4), and
In terms of Real Estate Finance, Natixis’ teams are specialized in advising on balance-sheet transactions and arranging corporate and specialized fi nancing solutions. Natixis is one of the leading banks in France and has strong, well-known franchises in Europe and the United States. Created in 2012, mortgage lending bank Natixis Pfandbriefbank, whose primary activity is fi nancing commercial real estate transactions in Europe, continued and stepped up its development (€242 million in Pfandbriefe bond issues in 2013, rated Aaa by Moody’s since October 2013). At the same time, this business line saw high-level growth in Europe in landmark transactions such as the €620 million refi nancing of the Selec portfolio on behalf of LBO France, which comprises about 7,600 homes that are leased to EDF; the €447 million refi nancing of a portfolio of 142 buildings used for operational purposes on behalf of Foncière des Murs (Foncière des Régions Group); as well as the €406 million refi nancing of a portfolio of 12 commercial properties on behalf of CBRE Global Investors. In the United States, Natixis originated almost 90 transactions this year while strengthening its presence on the CMBS (Commercial Mortgage-Backed Securities) market with three new transactions for a total amount of nearly $460 million.
(1) Source: Global Transport Finance, December 2013 (Virgin Australia “Aircraft Debt Deal of the Year Asia/Pacifi c”, Air Canada “Aircraft Finance Debt Deal of the Year North America”, Synergy Aerospace “Aircraft PDP Deal of the Year”).
(3) Source: Thomson Reuters - 2013 annual classifi cation for EMEA oil & gas fi nancing.
(5) Source: Thomson Reuters over the fi rst nine months of 2013.
With the 2013 market environment dominated by uncertainty regarding changes in monetary policies, shrinking margins and lower volumes in Europe, Natixis’ development in Fixed Income, Credit and Forex was boosted by the expansion of its customer franchise and its international roll-out, in particular in the United States and Asia.
This organization allowed Natixis to successfully continue the development of its Originate-to-Distribute model on a global level and to transform its product range into even more appropriate and tailor-made solutions. Further confi rming this success, for the third year in a row Natixis was recognized as best lead manager in covered euro bonds (in 2012 and 2013) and best overall bank for covered bonds (in 2011) (1), number one on the euro bond primary market with French corporate issuers (2), number one in
French High Yield euro corporate primary issues (3) and number eight on the euro bond global market (4). Natixis also progressed in loan syndication in the EMEA region, moving up the rankings from 16th position to 13th position (5).
Cash Equity gained market share despite shrinking margins and lower volumes. Revenues from this business line increased strongly, mainly boosted by a better positioning with UK and US customers.
(2) Dealogic at December 31, 2013: No. 1 bookrunner by number of issues, “All French Corporate Bonds in Euros”.
(3) Dealogic at December 31, 2013: No. 1 bookrunner by number of issues, “All French High Yield Corporate Bonds in Euros”.
(4) IFR at December 31, 2013: “All Bonds in Euros” by number of issues ranking.
(5) Thomson Reuters at December 31, 2013: “bookrunner by volumes of transactions carried out EMEA Bookrunners Loan Syndicates”.
Natixis created the Portfolio Management business line in January 2013 as part of the implementation of the Originateto -Distribute model aimed at optimizing the use of capital and cash resources to provide increasing origination capacity and thus better serve customer interests. The teams are based in Paris, New York and Hong Kong and are responsible for actively managing the credit portfolio with the aim of optimizing balancesheet rotation and use of resources. Several approaches are used: secondary disposals on the market, the implementation of structured solutions and co-origination partnerships. Moreover, in 2013 Portfolio Management worked in coordination with the sales teams to expand and diversify the investor base.
The Americas Platform covers all Wholesale Banking business lines and thus offers its customers a very wide range of investment, fi nancing and advisory products. The platform drew on its long-standing, renowned expertise to continue transforming itself in 2013 in order to place customer relations at the heart of its activity. With some 550 employees based in six countries, the Americas Platform registered a very good performance in 2013 in a buoyant US economic context, which saw GDP growth, a drop in unemployment fi gures and favorable loan conditions. The platform continued to develop its product offering over a wider geographic area and strengthened strategic dialog with customers by gaining leading positions in fi nancing, thus demonstrating the strong value added of Natixis’ teams.
Natixis’ Wholesale Banking division operates in approximately 100 countries within the EMEA region (Europe (excluding France), the Middle East and Africa). The region is served by teams based in Paris and by some 550 employees divided among fi ve branches (London, Frankfurt, Milan, Madrid and Dubai), two subsidiaries (Moscow and Frankfurt) and three representative offi ces (Almaty, Johannesburg and Istanbul). All Wholesale Banking business lines are represented within the platform, with the range of services offered to customers varying by country.
Economic Research provides in-depth expertise combining contextual overviews, economic and fi nancial forecasts, an analysis of the fi xed income, foreign exchange and commodities markets, country assessments and investment strategies based on the economic scenario drawn up by Chief Economist Patrick Artus.
Finally, quantitative research supports the Bank’s fi nancial innovation process and ensures that it remains competitive in today’s fast-changing markets by developing pricing and risk management models, as well as quantitative asset allocation strategies.
The Asset Management business is structured around the Natixis Global Asset Management (NGAM) holding company. Natixis Global Asset Management ensures the consistency of overall asset management operations and also has responsibility for developing a global distribution platform and overseeing the fi nancial and strategic management of roughly 20 specialized asset management companies in Europe, the United States and Asia. All in all, these entities employ more than 3,200 people, including over 1,900 in the United States, and boast strong positions in Europe (mainly France) and the United States, with a growing presence in Asia and the Middle East.
This high level of sales activity was boosted by the strong development of Natixis Global Asset Management’s centralized distribution platform. This platform covers asset management infl ows from the United States, mainly for the retail activity, as well as from Europe, the Middle East, Asia and Australia. As of October 1, 2013, it included distribution teams from Natixis Asset Management. The global platform generated excellent infl ows in 2013, attesting to the value of its increasingly diversifi ed growth model by asset class, asset management company and geographic area. Total assets under management generated by the platform amounted to $232.4 billion in 2013 versus $177.8 billion in 2012. They represented a little over a third of Natixis Global Asset Management’s total assets under management at end-2013.
In the United States, distributed assets under management grew from $120.5 billion to $161.1 billion, up 34% over one year. International assets under management (excluding France and the United States) totaled $70.8 billion, up 24%.
In addition to its strong presence in the US market, in 2013 the platform expanded its international coverage in Asia for major corporate clients and global advisors, and in Europe, mainly in the UK market, where business with institutional clients was brisk and for which a retail market strategy was implemented. NGAM announced a strategy for 2014 involving coverage of several Latin American countries.
PRESENTATION OF NATIXIS1 Natixis’ business lines With offi ces in nearly 20 countries around the world, NGAM consolidated its international distribution around the Durable Portfolio Construction (DPC) platform, an approach that takes into account the volatility of today’s markets as well as the new expectations of fi nancial investors. Its message has a global reach with an array of solutions on an international scale. It also gives us the opportunity to use marketing, public relations and international advertising campaigns to invest in the “Natixis Global Asset Management” brand.
European asset management companies at end-2013 (assets under management in billions of euros): R Natixis Asset Management (€291 billion): Fixed Income, European equities, investment and client solutions, volatility and structured products, global emerging and responsible investing.
R AEW Europe (€18 billion): management of real estate assets, real estate investment trusts (SCPIs) and real estate mutual funds (OPCI).
O Asset Management (€3.1 billion): global macro multi-strategy and international Fixed Income management.
Natixis Asset Management offers proven expertise in the main asset classes and portfolio management styles. It also provides privileged access to the complementary expertise of VEGA Investment Managers, specializing in fund selection and funds of funds management, Dorval Finance in fl exible portfolio management and H
0 Asset Management in global macro alternative investment management from London. In addition, Ossiam, which specializes in strategic ETFs (Exchange Traded Funds), expanded its range with the introduction of new funds listed on the Paris, Frankfurt, London, Milan and Zurich markets in 2013.
AEW Europe is owned in partnership with Caisse des Dépôts, which has a 40% stake. This subsidiary is a European leader in investment advisory services and third party real estate asset management. AEW Europe is present in nine European countries, notably in Paris and London, and managed €18 billion in real estate assets at end-2013 versus €17.4 billion at end-2012. The partnership between AEW Capital Management – in the United States and Asia – and AEW Europe constitutes a global platform occupying the 6th leading position in the world in terms of AuM. AEW Europe experienced growth in both infl ows and transactions in 2013.
They received numerous awards for the performance and specifi c features of their investment funds.
Assets under management for the 15 US subsidiaries totaled $419.4 billion at end-2013, compared to $353 billion in 2012, representing record growth of 18.8%. A strong positive market effect contributed to the growth in assets under management of all of the US asset management companies. In Asia, assets under management rose from €4.3 billion to €5.2 billion.
Net infl ows for the US companies, excluding market effects, reached a very impressive $30.8 billion, a level close to the historic high achieved in 2007. The largest infl ows were recorded by Harris Associates (equity products) with $18 billion, Loomis and Sayles (bond and equity) with $10 billion and Reich and Tang (money market) with $4 billion.
In 2013, the distribution teams were further expanded, posting strong sales performance. They also assisted US asset management companies in developing product sales in the AsiaPacifi c region, Singapore, Taipei, Hong Kong, Japan and Australia.
R Absolute Asia Asset Management ($0.9 billion): Asian equities (excluding Japan), emerging Asian equities.
Natixis provides a wide range of insurance products for retail customers, independent professionals and, to a lesser extent, corporate clients. Pension and life insurance products, which are mainly distributed by the Banque Populaire network, work in synergy with the other Investment Solutions business lines. The personal protection insurance business records consistently strong growth and features a wide variety of solutions distributed by the Banque Populaire and Caisse d’Epargne networks ranging from death benefi t, work cessation and dependency products to payment protection insurance. Lastly, car and home insurance products available to retail customers in the Banque Populaire network are rounded out by a broad offering aimed at the Banque Populaire network’s professional customers.
2013 was particularly rich in legislative and regulatory activity. Nevertheless, this did not destabilize the tax regime for life insurance. Following net outfl ows in 2012, the life insurance market recorded net infl ows in 2013. The average return offered by life insurance contracts has become attractive again compared to the level of interest available on the Livret A and LDD passbook savings accounts.
Growth in the personal protection insurance business remained strong in 2013, with premiums increasing by 14% to €606 million. Payment protection insurance accounted for 66% of personal protection insurance premiums in 2013.
With €5.7 billion in assets under management and 800 active IWMAs, in 2013 Sélection 1818 was ranked number one by Gestion de Fortune magazine (January 14, 2014 – Award ceremony and fund review in 2013) and confi rmed its position as the leading multi-service and multi-product platform on the French market for independent wealth management fi rms. Sélection 1818, a subsidiary of Banque Privée 1818 and Rothschild & Cie Banque, emerged from the April 2011 merger of the 1818 Partenaires and Sélection R platforms. It offers a full range of open-architecture products and services.
In a diffi cult, highly competitive environment, Sélection 1818 collected gross infl ows of almost €800 million, claiming 13% of market fl ows.
Both in France and abroad, business owners and senior executives represent the core target markets of Private Banking teams in charge of direct customers (€5.4 billion in assets under management at December 31, 2013). These teams work regularly with Natixis’ coverage teams. To meet the specifi c expectations of this demanding customer segment, they constantly seek to provide clients with innovative and customized solutions.
Notable achievements in 2013 included the appearance of Banque Privée 1818’s Corporate Advisory team in Décideurs magazine’s annual rankings (November 14, 2013 – Date of the Private Equity Exchange event). The team is referred to as “excellent” in the support it provides management teams in LBOs (management package advisory). Finally, 2013 saw further expansion of the product range, particularly in the areas of structured and real estate products through real estate investment trusts and division of property programs.
Underpinned by this strength and experience, Natixis decided in 2008 to restructure this business and focus on Private Equity structures capable of meeting the needs of external investors. Under Natixis’ Investment Solutions division, Private Equity is a long-term alternative investment solution that the bank offers to its clients.
Funds of funds were launched some 10 years ago and are perfectly suited to the needs and demands of certain investors because they offer a wide variety of underlying assets while limiting risk. This activity covers various strategies in Europe, the United States and Asia and various stages of a company’s life cycle. Investment strategies are varied: primary, secondary and co-investment.
This unique range of products currently draws on three asset management fi rms: Euro-PE: A Swiss asset manager that manages nearly €2.3 billion, Euro-PE joined Natixis’ Private Equity teams in May 2013. It provides expertise in Private Equity and infrastructure investment advisory services. The company provides a primary and secondary fund portfolio selection and management service, as well as direct co-investment in major locations.
Euro PE offers personalized, discretionary or non-discretionary portfolio management and advisory services to both private and institutional clients. The company selects international funds of venture capital, growth capital, buyouts and infrastructure with a strong emphasis on Europe and ethical values of its clients.
Caspian Private Equity: Created in 2008 and based in New York, Caspian Private Equity is an asset management fi rm comprising 13 professionals advised by a Strategic Committee. With almost $1.4 billion under management, Caspian Private Equity’s products are primarily structured around funds investing directly in US small- and mid-caps and investment advisory services (mandates).
These businesses form a core part of the development of the BPCE networks: the Banque Populaire banks, Caisses d’Epargne etc.
Specialized Financing offers retail, professional and corporate customers a range of services designed to optimize their cash management or support their investment projects: factoring, sureties and guarantees, leasing, consumer fi nance, and fi lm and audiovisual fi nancing.
Financial Services combines payment activities (credit transfers, direct debits, electronic payment transactions, etc.), securities account administration and fi nancial market transactions (retail and Private Banking custody), and employee savings (profi tsharing and incentive plans, etc.) and pension schemes (individual and collective pension plans), service vouchers, and collective personal protection insurance.
As the No. 4 player on the market (14.9% market share – source: ASF at December 31, 2013), Natixis Factor posted annual factored turnover of €29.8 billion at December 31, 2013, up 5% yearon -year, i.e. 7,500 new contracts signed with clients from the Groupe BPCE, Natixis and brokerage networks.
CEGC ranks second in the French market for mortgage guarantees for individuals and guaranteed €22.3 billion in loans in 2013 (+44%) in a market driven by loan renegotiations.
CEGC is also present on the business market, with more than 50,000 guarantees issued in 2013, up 16%.
In the persistently sluggish economic climate, new real estate leases decreased 8% to €679 million, whereas new equipment lease (refocused on the Groupe BPCE networks) remained relatively stable at close to €1.6 billion.
With new business of €234 million, Natixis Lease saw a marked increase in renewable energy fi nancing and the volume of transactions organized doubled in one year.
It provides the full range of consumer fi nance expertise for Groupe BPCE banks: design and marketing, network coordination, credit scoring, management and carrying of loans, collections and litigation. Despite an unsupportive consumer fi nancing backdrop during the year, Natixis Financement maintained solid commercial momentum in both revolving credit and repayment loans.
These solid performances allowed Caisses d’Epargne and Banques Populaires to gain market share, highlighting the effectiveness of the model developed by Natixis Financement with the BPCE networks.
The joint venture between Natixis Financement and BNP Paribas Personal Finance to develop a shared IT platform came into effect on January 1, 2013 with the creation of the United Partnership JV.
The employee savings offer tailored to SMEs and professionals, distributed by the Banques Populaire and Caisse d’Epargne networks, delivered another strong performance with close to 12,850 new contracts.
Natixis continued to broaden its virtual service offer in 2013, in line with its policy of continuing innovation to offer employee savers more independence: simulator tools, a virtual advisor, e-services, a natural language voice interactive server and a smartphone application. These services have met with great success.
Payment vouchers, such as Chèques de Table® (meal vouchers) and CESU Domalin® (employment services vouchers), issued by Banques Populaires, Caisses d’Epargne and Natixis posted stable growth and an increase of 9.7% in the total equivalent amount, mainly to mid-caps and local authorities.
In 2013, Natixis prepared the launch of its card-based meal voucher, in preparation for regulatory changes expected in the fi rst four months of 2014.
In 2013, Titres Cadeaux, a joint venture with La Banque Postale, continued its development by expanding the scope of its CA DO Carte multi-brand prepaid gift vouchers. Issues of CA DO Chèque and CA DO Carte came to an equivalent amount of €106 million at end-2013.
Payment fl ows are processed by specialist subsidiary Natixis Paiements. It handles payment transactions (checks, mass and single transactions, electronic banking, etc.) across the entire range of interbank channels, while also offering affi liated services. Natixis Paiements, a unifi ed payments operator for Groupe BPCE, processes payment fl ows for the Banque Populaire banks, the Caisses d’Epargne, major French banking institutions and some 60 other banks and fi nancial establishments.
Natixis’ EuroTitres Department provides custody services for retail and Private Banking and has the leading open custody platform in France.
Natixis serves a diversifi ed client base comprising Groupe BPCE’s banking networks, other banking institutions with or without retail networks, fi nancial companies and Private Banking asset management fi rms.
Despite the decline in transaction volumes affecting fi nancial savings fi rms across the Board, Natixis still manages 4 million securities accounts.
Coface posted revenue of €1.44 billion in 2013, down 3.1% compared to 2012 (-1.6% at constant exchange rates and scope of consolidation). Credit insurance revenue fell by 1.2% in 2013 (at constant exchange rates and scope of consolidation) due to weak customer activity, which had a particularly harmful effect in the fi rst three quarters but which rebounded signifi cantly in the fi nal quarter. In addition, factoring revenue fell by 10.6% between 2012 and 2013, following a decline of 21.8% between 2011 and 2012, which marked the end of the strategic refocusing on more profi table customers.
Between 2011 and 2013, Coface implemented an improvement strategy focused on bolstering these fundamentals and structured around three key issues: laying the groundwork for a self-suffi cient and profi table growth model, enhancing the company’s recognized expertise in its core business, credit insurance, and establishing structured but fl exible governance arrangements conducive to innovation.
Innovation was expressed in an expanded offering for major corporate clients, as well as an offering aimed specifi cally at SMEs, which will be rolled out in 2014.
Finally, to increase the automation of its processes, all business line project owners were combined with the IT functions in a single Group division during the second quarter of 2013, thus completing the centralization arrangements established in 2012. Both functions now report to a member of the Group Management Committee. The management of fi nancial assets has also been consolidated with the support of a single administrative platform under the responsibility of Amundi and Caceis, the sole custodian and administrator. The implementation of this reallocation resulted in the winding-up of the portfolio and the posting to profi t of capital gains in 2013.
Coface has simplifi ed and streamlined the structure of its European credit insurance activities. Since 2013, it has carried out its credit insurance activity within the European Union through a single company incorporated under French law – Compagnie Française d’Assurance pour le Commerce Extérieur – grouping together 21 branches.
In 2013, Coface set up an international network of economists in strategic regions to enhance the quality of its economic publications (“Panoramas” available at www.coface.fr). Five economists based in Hong Kong, Istanbul, Mainz, Sao Paulo and Warsaw provide local knowledge and publish specifi c research on their regions in close association with the Group’s economic research department in Paris.
V Change in governance and transfer of GAPC out of CIB: GAPC is now directly under Executive Management.
GAPC’s fi nal scope thus includes the following proprietary investment activities: structured credit, credit correlation portfolios (since 2010 only the counterparty risk component remained as all market risk had been disposed of), portfolios of complex interest rate and equity derivatives, as well as structured funds. At December 31, 2013, these operations accounted for €9.1 billion in risk-weighted assets, before the effect of the Guarantee (under Basel 3).
The credit asset portfolio was assessed line by line by external advisors at the end of the fi rst half of 2009, using the following methodology: V measurement of potential losses at completion (maturity) of underlying assets, regardless of any hedging on the basis of micro and macroeconomic assumptions comparable to those used by the US authorities as part of their stress testing of US banks;
Although correctly valued, the sensitive credit asset portfolio remains notably exposed to the volatility of these assets with a potential impact on the income statement and capital adequacy ratio of Natixis. In order to deal with this risk, which Groupe BPCE is better equipped to manage than Natixis alone, BPCE and Natixis agreed to put in place a mechanism to protect Natixis against future losses and earnings volatility potentially stemming from this credit asset portfolio, represented by the Guarantee.
The general mechanism behind the Guarantee is based on the establishment of: (i) two Total Return Swap agreements (TRS), one in dollars and the other in euros covering 85% of the net value of the assets recognized in the trading portfolio and risks linked to counterparties not providing collateral. The purpose of these TRS is to transfer 85% of the gains or losses of the accounting units in which the assets are recognized at their fair value through profit or loss. On top of these two TRS, Natixis purchased an option from BPCE (the “Option”) allowing it, should it be exercised, to recover, in 10 years’ time, the capitalized net performance of the portfolios covered by the TRS and to terminate the TRS; (ii) a financial guarantee covering 85% of the nominal value of the assets recognized under IFRS as “Loans and receivables” (L&R) and “Available-for-sale assets” (AFS), as determined at the effective date of the guarantee (i.e. June 30, 2009), less any amortization expensed prior to June 30, 2009. Pursuant to the terms of this financial guarantee, in the event of non-payment confirmed on the scheduled contractual payment date of sums due in respect of any of the assets in the guaranteed portfolio, Natixis will be paid by BPCE from the first euro up to 85% of the amount due. The payment will be made in the currency in which the defaulting asset is denominated. The expiry date of the guarantee granted to Natixis is that of the asset in the guaranteed portfolio with the longest maturity – currently April 28, 2099 – plus nine months (bearing in mind that this date may be brought forward to the date of termination of the guarantee in the event of a change in control at Natixis within the meaning of Article L.233-3 of the French Commercial Code). The expiry date of the financial guarantee is the date from which Natixis is no longer required to pay over to BPCE the sums recovered on assets in the guaranteed portfolio having defaulted. It post-dates the expiry date of the guarantee by 15 years.
On the other hand, Natixis enjoyed a substantial prudential impact, representing a reduction in its risk-weighted assets and its regulatory deductions, resulting in an increase in its Core Tier 1 ratio at December 31, 2013.
Retention of existing governance structures and Committees as regards accounting, fi nancial, risk, asset and liability management (ALM) and other issues: V arrangements regarding ad hoc reporting (regular reporting and reporting of warnings) and specific monitoring of risks related to GAPC assets covered by the Guarantee between the BPCE and Natixis Risk Departments; V arrangements which provide for procedures for obtaining the advice and assessment of the BPCE Risk Department on procedures implemented within Natixis regarding the GAPC assets, also including procedures to access information on the control of system reliability and model validation.
V Where decisions represent for BPCE a financial impact or specific risks as a result of the safeguard mechanism, BPCE’s representatives may request that the CSG examine the issue prior to the decision.
V The CGAC meets at least once every six weeks or may be convened in limited or electronic format depending on asset management needs. GAPC is systematically represented by at least one member of the management (Head of GAPC, CEO GAPC, COO/CEO deputy GAPC).
PRESENTATION OF NATIXIS1 Natixis and its shareholders 1.6 Natixis and its shareholders 1.6.1 KEY SHARE DATA AT DECEMBER 31, 2013
(b) Calculated using the number of shares at December 31 of the year in question.
The average daily volume of Natixis shares traded on the market amounted to around 4.3 million in 2013 versus an average of around 5.7 million in 2012.
The Natixis individual shareholder relations and communication platform has three main access points.
V A toll-free number (from a landline in France: 0 800 41 41 41) available Monday to Friday from 9 a.m. to 6 p.m. (except on public holidays). This number provides access to an interactive voice response system that gives round-the-clock access to the share price. In 2013, almost 19,000 calls were made to this toll-free number, of which 3,100 were to make inquiries and 15,900 to access Natixis’ share price.
V At end-2013, the Natixis Shareholders’ Club had more than 12,500 members.
Shareholders’ Club members are regularly updated on Natixis news. They also receive: R monthly newsletters focusing on Club highlights and company fi nancial news,
R periodic invitations to events relating to our sponsorship policy, which are sent by email.
Members can access a dedicated website (clubdesactionnaires. natixis.com) containing information relating to the Club and its program of activities (interactive Shareholder annual Newsletters, video conferences, chats, economic videos, events related to sponsorship policy, etc.).
Shareholders’ Club members take part in events included in the Program of Activities.
R In 2013, this program included seven events (video conferences and chats) hosted by both external experts (École de la Bourse) and internal experts from Natixis’ and its subsidiaries, covering economic, fi nancial and stock market news,
R Close to 730 Club members took part in these events live, in our auditorium in the 13th arrondissement in Paris and over the Internet. Recordings of these events were then posted online and were viewed by more than 3,000 Club members.
V The CCAN is an advisory body and sounding Board composed of 12 members that represent Natixis’ individual shareholders. These members are themselves individual shareholders chosen through an application process that includes an interview. A third of its members are renewed each year, following a call for applications sent via the usual communications media used to inform shareholders.
V In 2013, the Committee met twice and more specifically discussed the governance of Natixis, in particular its compliance with the AFEP/Medef code to which Natixis refers. This discussion was also an opportunity for members to put questions to one of Natixis’ Independent Directors.
The agenda for the second General Shareholders’ Meeting on July 31, 2013 mainly covered plans to simplify Natixis’ fi nancial structure. Close to 200 shareholders attended. This meeting approved the principle of a special dividend payout.
For the thirteenth consecutive year, Natixis had a stand at the Actionaria trade show on November 22 and 23, 2013 at the Palais des Congrès convention hall in Paris.
The Individual Shareholder Relations team was accompanied by representatives from CACEIS, the Economic Research team and members of the CCAN. Some 400 persons visited Natixis’ stand during the two-day trade show. During this year’s show, Jean Cheval, the Natixis Chief Finance and Risk Offi cer, was interviewed in public by a journalist as part of the “Agora des Présidents” forum for chief executives. Jean Cheval answered questions, in particular on the new “New Frontier” strategic plan, bancassurance and Coface.
Natixis organizes meetings with analysts and institutional investors throughout the year at roadshows or conferences organized by brokers in the main fi nancial marketplaces. In 2013, meetings were held in Paris, London, Frankfurt, Geneva, Zürich, Milan, Boston, New York, Philadelphia, etc.
Natixis’ CSR policy is managed by a Sustainable Development team that reports to the Communication and Sustainable Development division, the Head of which is a member of Natixis’ Executive Committee.
With the support of this network of correspondents, the Sustainable Development team ensures that CSR practices are integrated into Natixis’ businesses and operations. The team is responsible for communicating on the initiatives taken and raising employee awareness on the subject.
2013 Key event Financing of the construction and operation of four solar power plants in Canada
Natixis contributed to the fi nancing of “Northern Solar”, which consists of four photovoltaic solar power plants, with a capacity of 42 MW, located in Ontario. This project’s sponsor is Fiera Axium Infrastructure.
Construction should be completed in the summer of 2014. Once built, these solar power plants will supply up to 50 gigawatt hours (GWh) of electricity per year, which is equivalent to the annual energy demand of 5,000 households in Ontario.
Natixis Energéco, a subsidiary of Natixis Lease, actively supports the renewable energy industry and is one of the leading contributors to the fi nancing of investments in this sector.
The Moulin d’Emanville wind farm, developed by JP Energie Environnement, which is a customer of Caisse d’Epargne Normandie and Caisse d’Epargne Loire-Centre, will begin production in September 2014. The power that it generates should cover 10% of the Eure-et-Loir’s electricity needs. This project represents a total cost of €80 million, 34% of which was fi nanced by Groupe BPCE.
The construction of PV agricultural greenhouses and a ground-based power plant in the vicinity of the Port prison complex in Réunion is a world fi rst given the use of batteries to control the amount of electricity fed into the grid. The project, representing power of 2x9 MW, also has a social aspect, as detainees will participate in the construction works and will receive training eventually leading to a qualifi cation. Financing provided to the Akuo company for this project was co-arranged with Caisse d’Epargne Provence-Alpes-Corse.
The portfolio of “Sofergie” project fi nance and leasing activities arranged by Natixis now represents more than 10,000 MW, which can be broken down as follows: R GEOGRAPHIC BREAKDOWN OF THE RENEWABLE ENERGY PORTFOLIO AS AT 12.31.2013
In the research sector, Wholesale Banking has had a team of analysts dedicated to SRI (Socially Responsible Investment) issues since 2008. This team’s approach is based on two strong beliefs: V factoring in environmental, social and governance (ESG) criteria gives European investors not only a better understanding of a company’s risks, but also access to new opportunities offered by innovative companies in the area of sustainable development; V investors are increasingly sensitive to the environmental, social and ethical impact of their investments in what can sometimes be controversial sectors, and must be advised in their decision-making.
SOCIAL AND ENVIRONMENTAL PERFORMANCE2 Strategic outlines and organization of the sustainable development policy Mirova, which is part of Natixis’ Investment Solutions division, is the entity dedicated to responsible investment. Mirova’s investment philosophy is based on the conviction that the incorporation of sustainable development considerations makes it possible to offer value-creating solutions to investors over the long term, not only due to better risk identifi cation, but above all because of the ability to identify investment opportunities in a changing world.
2013 Key event Environmental and social criteria need to be incorporated into the analysis of public infrastructure projects contracted to the private sector, PPPs (public-private partnerships), BEAs (administrative perpetual leases) and DSPs (public service delegations and concessions). This process needed to be formally defi ned, however. In keeping with this observation, Mirova decided to produce a new ad hoc methodology based on the environmental and social analysis of an existing portfolio, that of the Public-Private Partnership Investment and Development Fund (FIDEPPP).
V Impact investing(1): supporting unlisted companies and structures with a high social and/or environmental impact through targeted investments (support for job creation, international microfinance, etc.).
2013 Key event In October 2013, Natixis Assurances launched a new Horizéo life insurance policy, intended for the Banque Populaire and Crédit Maritime networks and for the regional banks affi liated with Groupe BPCE (Banque Chaix, Banque de Savoie, etc.), encompassing nearly 3,500 branches.
The Horizéo Vert pack allows customers who care about sustainable development issues to invest in fi nancial vehicles that belong to the Socially Responsible Investment (SRI) category. The extra-fi nancial analysis of the UCITS selected for this pack was performed by Mirova, Natixis Asset Management’s dedicated SRI center of expertise.
With a market share of close to 28% (2), Natixis Asset Management remains the French market leader in solidarity investment. Natixis Interépargne, which distributes its funds, is the French market leader in solidarity-based employee savings with a 36% market share (2).
Share of solidarity-based employee savings market (as %) 36 (2) 46.2 52.6
Number of solidarity-based funds with the Finansol label 9 8 10
(3) Source: Natixis Asset Management at 12.31.2013 in open-ended, dedicated and employee saving funds.
AEW Europe, a subsidiary of Natixis Global Asset Management, provides real estate investment advisory services and real estate asset management for third parties. Under the 20102015 sustainable development plan, new environmental criteria have been factored in: V for purchases of new buildings, only buildings with environmental certifications (HQE, BREEAM, LEED or BBC) (1) are chosen; V for the purchase of existing buildings, environmental performance assessments are systematically carried out and are included in the provisional spending budget for environmental improvements; V for the portfolio under management, action plans are being implemented to improve environmental performance, in consultation with tenants.
AEW Europe has conducted energy audit campaigns on building portfolios so that it can prepare a plan for cutting energy consumption by 38% in accordance with the Grenelle law. This is the Greco (Grenelle Compliance) project, which has already been implemented on a portfolio of 50 assets and is underway on Natixis Assurances’ portfolio and a portfolio of 120 buildings. This project received an innovation award in 2013 in competition with 127 other projects.
In October 2013, AEW Europe signed the Grenelle Building Plan, a charter of commitment for commercial buildings.
Purchases of certifi ed/labeled assets (as % of new purchases) 50 10 32
Number and type of assessments on the portfolio of existing assets 100 energy audits 200 DPEs 10 Green Rating audits 75 DPEs 10 Green Rating audits 152 CO 2 audits 96 energy audits 58 Green Rating audits
When raising funds from third-party investors that are sensitive to ESG criteria, investment companies active in the venture or growth capital segments have shared ESG strategies and practices.
Throughout the fund’s lifetime, the fund manager guarantees that the investor will receive enough information to check for compliance with the ESG investment policy and process defi ned beforehand.
It also defi nes a code of conduct for employees, as well as the measures to be taken in the fi ght against terrorist fi nancing, money laundering, corruption and fraud.
Natixis also actively participates in the working Committees of national and European professional associations so that it can contribute to the debate on current regulatory issues and is able to anticipate the impact of the many banking regulation reforms, such as the Financial Regulation Bill, the Dodd Frank Act, CRD IV, Emir, etc.
Natixis’ relationships with its customers are based on strong ethical and behavioral values that include honesty, integrity, transparency, security and prevention.
Every employee must fulfi ll a number of obligations, particularly regarding the declaration of securities accounts and personal transactions and the declaration of gifts and benefi ts received or offered.
These various rules are communicated to new Natixis employees during specifi c training sessions led by the Compliance teams.
Anti-money laundering and terrorist fi nancing efforts (AML-CFT) are a core priority for Natixis and its prevention, monitoring and control system was considerably reinforced in 2013 in Natixis’ entities in France and abroad.
The application of the Principles by the business lines involved in project fi nance has since become fully effective, in all cases where funds are mainly allocated to a clearly identifi ed project. The business sectors in which Natixis is involved and to which the Equator Principles methodology applies are mainly infrastructure, energy (onshore and offshore oil and gas), electricity and renewable energy, mining and metals.
This team has trained the various employees concerned (in the business lines, Risk Department, Compliance Department and other functional departments), totaling more than 150 people across Europe, the Americas and Asia.
This training was focused on E&S risk assessment in respect of the Equator Principles and the underlying International Finance Corporation (IFC) standards, as well as Natixis’ internal processes. The training program, whose fi rst phase was completed at the end of the fi rst quarter of 2012, was continued in the fourth quarter of 2013 so as to include the changes made in the new version of the Equator Principles dated June 2013.
The business lines are responsible for analyzing and following up on the E&S aspects of transactions, which are considered to be an integral part of the overall assessment of risk quality. Every transaction analyzed is categorized (A = high impact, B = medium impact, C = little to no impact) according to the International Finance Corporation (IFC) classifi cation, infl uencing the internal loan approval process (see below).
If deemed necessary, the ESR team informs Wholesale Banking’s senior management of any specifi c E&S issues relating to the transactions.
An E&S appendix must be produced for any new transactions subject to the Equator Principles and submitted for a loan approval decision, to be appended to the loan application, which summarizes the key factors in the project’s assessment. This appendix is prepared by the business line and, in the case of category A and B projects, expanded by the CSR team, which validates or amends the project category and outlines its position on the project and any recommendations.
R BREAKDOWN OF THE PROJECTS ANALYZED (BY NUMBER) BY REGION OF THE WORLD
In order to participate in the discussions following the strategic review of the EPs in February 2011, Natixis actively took part in two task forces as part of the preparation for the EPIII amendment and led a think-tank in 2013.
On its website (1), Coface publishes environmental and social information about the largest projects at least 30 days before a funding decision is made so that all interested parties are informed and have the opportunity to make any comments.
Coface works closely with the parties involved to meet the standards set and mitigate potential impacts in optimum conditions. It also communicates with the general public on these procedures and their application, as well as on current projects where appropriate, while complying with confi dentiality requirements.
2013 Key event A gas fi eld production complex in Australia, guaranteed by Coface in 2013, was classed in category A. This major project presented signifi cant environmental and social issues. International standards have been met, while the adoption of the best techniques available for this type of facility will make it possible to achieve a suitable level of environmental and social protection.
This policy applies to the fi nancing of these companies, to proprietary investment and to third-party asset management by Natixis Asset Management, which has also launched a customer awareness program. It is verifi ed during the decision-making process (e.g. Credit or Investment Committee) applicable to each activity concerned.
The Real Estate and Logistics Department has introduced a global cost approach to its projects and investments allowing it to factor in the environmental impact of its activities. Its environmental impact management scope in 2013 covered Natixis and most of its French subsidiaries. This represents 283,000 m² of operating premises and 17,000 workstations, as well as three data centers (including two in the capacity of operator at BPCE).
The environmental management of buildings encompasses: V the set-up and monitoring of certifications
In addition, the building was made accessible to disabled people and has facilities for people with impaired sight or hearing.
The Real Estate and Logistics Department ensures optimum resource management by closely managing the various resources consumed: energy (electricity, heating and cooling utilities) water and paper.
Following on from the “Green Works Charter”, the “Accessibility Charter” sets rules regarding the usability of facilities and their installation height for all project participants (client, project manager, contractors, etc.). It commits Natixis to go beyond the regulatory requirements in ensuring easier access to its buildings for disabled people.
At the end of 2013, six outfi tted rooms were available in the various buildings.
Based on the calculation of carbon emissions (see section 2.4.3.1), a carbon action plan has been applied since 2011 in accordance with Natixis’ operating effi ciency program. It covers three main areas: V buildings: optimization of the occupation of surface areas and reduction of energy consumption; (1) French standard in accordance with ISO 9001: 2000.
Regular communication raises employees’ awareness of sustainable development to reduce their impact on the environment. In 2013, numerous articles were disseminated through internal communication media (intranet, newsletter, magazine, etc.) and events were organized for Sustainable Development Week and European Waste Reduction Week.
2013 Key event For the ninth year running, Natixis took part in Sustainable Development Week (April 1 to 7, 2013) with the organization of various events: R an “idea tree” to take our sustainable development program further: following a call for projects to all employees, an internal panel selected a dozen initiatives aimed at taking our sustainable development program further. These new initiatives are being gradually implemented, for example with the hibernation of workstations, the roll-out of presence detectors, the installation of power sockets in car parks, etc.; R the “green move” operation at Natixis Assurances: moving the teams provided an opportunity to encourage employees to dispose of out-of-date documents and raise their awareness of a “responsible” attitude towards paper consumption. Thanks to the active participation of all employees, Natixis Assurances donated some of the savings made to “Les Restos du Cœur”, a non-profi t organization that was chosen as the benefi ciary of the operation, enough to pay for nearly 100 daily meals for one month.
The main technical managers within the Real Estate and Logistics Department were also trained in 2013 in Groupe BPCE’s regulatory and environmental charter, which specifi es the regulatory and environmental obligations to be obeyed for each type of outfi tting and improvement operation.
Since 2010, Natixis has followed a “fair purchasing” approach, which is based on the pillars of fair quantity, fair quality, fair price, innovation, sustainable purchasing and social responsibility. 46 projects in keeping with this approach were completed in 2013, such as the reduction and internalization of some printed internal communications documents.
The fi rst phase in the analysis of current conditions measured group companies’ progress in terms of responsible purchasing and identifi ed CSR risks and opportunities by category of purchases.
15 methodology information documents were produced to defi ne the Responsible Purchasing strategy as adapted to certain families of purchases, including project management, vehicles, travel, cleaning services, furniture, security, courier services, temporary work, training, events, promotional items, press and consultancy. These information documents cover the main CSR issues, the priority AgiR drivers, analysis of the expression of needs, the factors included in the calculation of the complete cost over the whole of the life cycle, CSR performance monitoring indicators, the proposal for the consideration of CSR issues in purchasing decisions, the level of CSR maturity and feedback inside and outside the group.
In 2013, the purchasing department continued its contribution to the Natixis action plan for disabled people with increased use of disability-friendly companies. It now applies to numerous sectors: archiving, mail management, printing, invoice control, dinner trays and catering for evening events, garden maintenance, the manufacture of promotional items, etc.
Share of the amounts managed by the purchasing department that incorporate social and environmental criteria (as %) 51 98 95
Number of suppliers surveyed in the sustainable development survey 30 30 15
Mobility, which is a key priority in conditions of limited external recruitment, developed signifi cantly with more than 1,000 transfers over the year, thanks to an incentive policy and greater managerial involvement.
Targeted measures have given staff the means to better manage their careers (reinforcing of the job exchange, new JUMP portal for benchmark and gateway jobs, etc.) and helped managers to better fulfi ll their role (creation of the information portal N@ tmanager, managerial development, facilitation of managerial circles, etc.)
At the same time, the training, payroll and reporting administrative management departments continued to expand their scope of activity in France by using shared tools and processes.
There has been further progress in terms of diversity, particularly in the areas of equal opportunities and disability, as shown by the many initiatives to promote gender equality and the change in the overall percentage of disabled staff.
V In the field, Natixis has supported Plan France since 2005, an association that implements prevention programs in Cameroon, Burkina Faso and Togo. In 2013, the bank continued to support an anti-malaria program led by Plan France targeting 18,000 children and 4,000 pregnant women in 52 villages in Togo.
V Since 2005 , Natixis has also supported the research program of the Institut Pasteur, including studies on the resistance of parasites to anti-malaria drugs. In 2012 and 2013, the bank funded a study led by Dr. Odile Puijalon, in collaboration with the Institut Pasteur in Cambodia, on the resistance of the Plasmodium falciparum parasite to the latest generation of artemisinin-based therapy.
According to WHO (World Health Organization) estimates, the number of deaths due to cancer is expected to reach 13.1 million worldwide by 2030, versus 7.6 million in 2008. In France, the number of new cancer cases has almost doubled in 25 years, but at the same time the risk of dying from cancer has fallen by 25% (source: Institut national de veille sanitaire – InVS).
In 2011, Natixis made a 5-year commitment to the Gustave Roussy Institute, the leading cancer prevention center in Europe. The Gustave Roussy Institute has always closely combined therapeutic care with basic and clinical research, giving it globally recognized expertise in the fi eld of oncological therapeutic innovation.
Natixis is supporting the institute’s research program on personalized cancer treatment and more specifi cally fi nancing three research teams working on cancer proliferation mechanisms: V the first, led by Dr. Jean-Luc Perfettini, on “Cell death and senescence (1)”, selected at the end of 2012; V the second, led by Dr. Fanny Jaulin, on “Epithelial morphogenesis and colon cancer”, selected in April 2013; V the third, led by Dr. Mehdi Khaled, on “Melanoma and tumor invasion”, selected in June 2013.
SOCIAL AND ENVIRONMENTAL PERFORMANCE2 Strategic outlines and organization of the sustainable development policy Natixis’ partnership with the Gustave Roussy Institute will in this way step up cancer research and probably save several years spent defi ning new treatments.
In 2013, Natixis was a partner in the event “Roulons pour le côlon” organized by the Gustave Roussy Institute on July 7. This event was designed to raise public awareness of colon cancer.
Since 2010, Natixis Asset Management has been a partner of the “La Mie de Pain” association, which works to assist homeless or very vulnerable people, offering them an emergency reception service (food and shelter) and help with social and professional reinsertion.
The social and environmental information for 2013 is based on the following standards: V the social and environmental information set out in Article 225 of the Grenelle 2 law, which governs reporting structure; V the GRI 4 framework (1).
The prospect of gradually broadening the scope to international entities will be examined depending on the relevance of indicators for social and environmental regulations and the ability of different entities to implement monitoring tools.
Natixis and its worldwide subsidiaries excluding fi nancial investments (refer to Note 16 in Chapter [5] “Financial data”) 15,395
Natixis did not record any environmental provisions or guarantees in 2013.
Considering the business sector, the professional diseases are not signifi cant and are not the subject to a specifi c follow-up.
The Company’s headcount fell overall by 517 FTEs, of which 426 FTEs for Financial Investments, whose restructuring continued in 2013. The changes by division, which were mixed, are as follows: V Wholesale Banking and GAPC (Workout Portfolio Management): continued fall in headcount (-97 FTEs), mainly in France, following the restructuring of its activities; V Specialized Financial Services (SFS): stable headcount (-4 FTEs); V Investment Solutions (+67 FTEs): increase in Asset Management’s headcount abroad; V Support functions: reduction in headcount (-57 FTEs).
Geographic area 2: Europe (excluding France) (as %) 13.3 15.1 15.9
The compensation policy is designed to: V provide incentive and be competitive in order to attract, retain and motivate employees, while maintaining the Company’s financial balance; V be fair to ensure a fair reward for individual contributions while bearing in mind the particularities of the business lines; V comply with current market regulations and directives in the financial sector.
There are several stages of approval in the decision-making process, starting with the subsidiaries, business lines and business divisions, then Natixis’ Human Resources Department and General Management, and fi nally Natixis’ Board of Directors on the recommendation of the Appointments and Compensation Committee.
Overall compensation includes: V fixed compensation that rewards the skills and expertise expected of an employee in a given position and factors in external practices and internal grades. This is reviewed annually, both collectively, through mandatory annual negotiations, and individually, in accordance with the framework set by Natixis’ General Management. This individual review takes place simultaneously with the process of determining variable compensation; V variable compensation takes into account the employee’s annual performance and external practices. Individual variable compensation is awarded as part of an overall annual process defined by the Human Resources Department and approved by the General Management Committee. The proposals made by the managers in conjunction with the Human Resources teams follow an approval procedure, which, for the highest salaries, require the approval of the Board of Directors after review by the Appointments and Compensation Committee. This process guarantees the consistency and fairness of the proposals and their compliance with the current policy and market practices, bearing in mind financial constraints; V collective compensation (employee savings plan), which gives employees a stake in the performance of Natixis and the companies of which it is composed: It is based on: R a single mandatory profi t-sharing agreement, a collective pension plan and an employee savings plan for the consolidated Natixis scope in France; R voluntary profi t-sharing agreements at the level of each entity.
The compensation is supplemented by additional employee benefi ts, particularly in countries that don’t have universal healthcare coverage, and benefi ts in kind (such as a company car) awarded to specifi c groups.
SOCIAL AND ENVIRONMENTAL PERFORMANCE2 Labor information Compensation surveys are conducted each year by specialized fi rms in order to measure the relevance and coherence of the overall compensation policy by business line and as a whole.
In 2013, Natixis launched its fi rst capital increase reserved for its employees (see the inset below) and paid a profi t-sharing top-up to consolidated Natixis France’s employees to give them a stake in the success of its New Deal strategic plan.
Key event In 2013, Natixis gave all of its employees in France and abroad the opportunity to become Natixis shareholders under preferential terms. Named Mauve 2013, the goal of this operation was to give employees a stake in Natixis’ development and strengthen their support for its long-term strategy. More than 13,000 employees in six countries and 41 entities were given the chance to participate in Mauve 2013.
Around 34% of the employees subscribed for the capital increase for a total amount of €23.6 million, representing 8.4 million shares. Mauve is a new addition to Natixis’ employment framework, supplementing the Natixis employee savings plan system. The goal is for this initiative to continue over the long term.
Variable compensation of Natixis’ material risk takers whose activities have a signifi cant impact on Natixis’ risk profi le
The details of the 2013 compensation policy for this category of employees, along with the associated quantitative data, will be published in a special report, which will be available on the Natixis website before the General Shareholders’ Meeting of May 20, 2014.
Voluntary employee profi t-sharing (in millions of euros)* 99.7 97.8 67.7
The agreement relating to union and collective bargaining rights within the consolidated Natixis France scope, signed in 2010 by Management and the majority of the representative union organizations, gave the consolidated Natixis France scope union coordinators, who are the Management’s preferred points of contact in organizing industrial relations, and a consolidated negotiated bargaining body. These allow the negotiation of collective bargaining agreements on issues of common interest, which are uniformly applicable to all employees in France, in line with Groupe BPCE’s labor relations policy.
The consolidated Natixis Committee, consisting of the elected representatives of the companies that make up Natixis, allows Management to inform the management and union bodies about the Company’s strategy and performance.
Any suffi ciently large Natixis subsidiary also has its own local employee representative bodies.
Amendment to the agreement on the Natixis employee savings plan allowing a capital increase for employees 02.19.2013 2013 profi t-sharing agreement 06.28.2013
Agreement on the professional integration and retention of employees with disabilities 11.06.2013 2014 salary agreement 12.20.2013
The collective bargaining negotiations carried out within the consolidated Natixis France scope in 2013 resulted in the adopting of uniform measures gradually creating a Groupwide employment framework.
In addition to the global agreements, many agreements were entered into within each of Natixis’ French companies.
2013 Key event A three-year employment agreement was signed on September 13, 2013 for the Consolidated Natixis France scope so as to keep up, over the long term, with changes in skills and jobs according to the business lines’ needs.
This agreement covers four main areas: the procedures for informing/consulting management and union bodies; internal mobility and career management mechanisms; commitments to promote the professional integration of young people and retain older employees; mechanisms for the internal and external mentoring of employees.
This agreement therefore aims to offer greater visibility on projected employment changes; promote mobility, focus training on adapting skills, reinforce the career management mechanisms and manage the age pyramid.
In 2013, Natixis S.A.’s Committee for Hygiene, Safety and Working Conditions (CHSCT) for the Paris location, continued to work closely with each of its sub-Committees responsible for ensuring the application of rules on health & safety and working conditions at each of their respective sites (Charenton, Lumière, Austerlitz, Bourse). This delegation allowed the Committee’s plenary sessions to focus on matters of general interest.
The agreement on the prevention of stress and psychosocial risks, in force since 2010, is based on: V the existence of a Committee for Hygiene, Safety and Working Conditions (CHSCT); V the continuation of the Stress Observatory questionnaire instigated in early 2009; V the provision of free psychological support by telephone; V a special training offer for managers.
The Stress Observatory allows every employee to answer a questionnaire when they go for their regular medical checkup and then discuss the results with the Company physician. From a company-wide standpoint, the observatory is used to maintain a statistical database for the measurement of the global stress level within the Company and its development over time, based on organizational and geographic criteria, the results of which are presented each year to the CHSCT.
The services of the CHSCT’s “Moving” Committee were also used in 2013. This Committee examines site plans and may issue remarks or ask for changes in the plans, with the aim of improving employees’ physical working conditions.
(a) Frequency rate: (number of accidents with leave/hours worked) x 1,000,000, source INSEE.
In 2013, Natixis’ employees in France received more than 240,000 hours of training.
To give employees a better grasp of the fi nancial environment and business lines and a better understanding of their activity’s key indicators, Natixis has expanded its e-learning offer on the fundamentals of economics and banking through new modules on the capital markets.
Two new training courses dedicated to the business lines operated by Natixis and Groupe BPCE have also been introduced to improve knowledge of the Company’s areas of expertise.
As part of the employment agreement, in September 2013 Natixis signed a generation contract that provides for the introduction of new measures for older employees, which include the volunteering of skills to associations to begin the transition between professional and personal life for employees over 58 and the tutoring of young people to transfer knowledge. Several conferences on retirement were organized over the year. Employees who wish to do so may also benefi t from individual retirement interviews.
Given these encouraging results, a new agreement was negotiated and agreed by the Management in December 2013 for the 2014-2016 period. It will allow the continued development of initiatives in favor of employees with disabilities.
To ease their professional integration, more than 200 adaptive measures have been adopted, including the creation of disabilityfriendly rooms and access to a videoconferencing platform.
More than 1,400 employees also took part in workshops organized for Disabled Persons Employment Week, marking a 30% rise in the number of participants versus 2012. Natixis welcomed 10 people with disabilities as part of the “Un jour, un métier en action” operation and a “Management et Handicap” guide was produced, intended to combat preconceptions about disability and give advice to managers.
Over the term of the agreement, 430 employees participated in disability training courses, including 160 managers.
Percentage of women in the workforce (as %) 50.8 51.1 51.2
Percentage of women granted individual pay increases (a) (as %) 54.4 55.1 50.8
Percentage of women in the part-time workforce (as %) 91.0 90.1 90.6
(b) The overall ratio includes service contracts with disability-friendly companies. Estimated data (value range) at 02.12.2014.
They are followed within the framework of Natixis’ responsible purchasing policy: supplier contracts and the rules and principles established by the purchasing department (calls for tenders, supplier sustainable development charter, contracts) contain clauses governing compliance with human rights by suppliers and their subcontractors.
The 2013 reporting scope consists of Natixis and its subsidiaries in mainland France and the French overseas departments, excluding data centers, covering 341,389 (1) m2 and 19,339 workstations.
The plastic recovered will be used to produce new products such as pencil pots, watering cans and waste paper baskets. In this way, by recycling pens Natixis is able to reduce its waste production and limit its consumption of materials and energy.
Measures have been taken to optimize water consumption, which has been falling for the past three years. These include continuous monitoring of the systems to detect any leaks, fi tting of pressure relief devices and installation of rain gauges to stop automatic sprinklers while it is raining and the raising of employee awareness.
The largest item of raw material consumption at Natixis is paper (white and colored paper, desktop publishing, envelopes, internal and external printouts, etc.). Most of the paper used has sustainable forest management certifi cation (FSC (1) and PEFC (2) labels) and some are made from recycled fi bers.
Everyday consumption by employees (paper reams, letterhead paper) is steadily falling (see table below).
Several of Natixis’ business lines have taken steps to optimize or reduce paper consumption on behalf of customers: V Natixis Intertitres is the first player on the payment voucher market to use 100% recycled paper to print its Chèque de Table® restaurant vouchers. Since 2013, the shipping boxes and the documents accompanying Chèque de Table® vouchers have also been 100% recycled; V several years ago, the Global Transaction Banking business line, within Wholesale Banking, voluntarily switched to electronic client orders and related reporting; V in the Employee Savings Plan business line, Natixis Interépargne encourages account-holders to opt for electronic option newsletters and statements.
Ahead of the 2013 General Meeting, information was sent to shareholder employees to persuade them to opt for the notice of meeting in electronic format, resulting in a 12% fall in printed notices between 2012 and 2013.
An archive digitization service has been set up within the Real Estate and Logistics Department, improving archive security and providing access to information in real time, without printing out the documents.
In 2013, measures were taken on various sites, where most of the individual printers were removed and recycled (more than 1,000 printers have been taken out of service since 2012).
Energy consumption: electricity, heating and cooling utilities in offi ce buildings - excluding data centers (in MWh) 73,200 78,902 87,672
Total energy consumption of buildings and data centers 82,679 88,836 138,298
Energy consumption per workstation (in MWh) excluding data centers 3.79 3.89 7.44
Total fuel consumption of buildings and data centers (in m3) 12 20 60
(1) The fall in the data centers’ consumption between 2011 and 2012 is due to a change in Natixis’ scope: the Vega and Sirius data centers were sold at the start of 2012 to the BPCE subsidiary dedicated to pooled management of the group’s data center infrastructure.
A carbon action plan was produced in 2011 and brought into line with Natixis’ operating effi ciency program (see section 2.1.2.2).
A company-wide travel plan has been in place since 2008, with a series of measures promoting the use of public and low-impact transport, or carpooling: V employees are encouraged to use the public transport near to sites, with a public transport pass reimbursement rate of 60%; V the bank jointly funds a public bus route that connects Paris to Charenton-le-Pont, serving five of its sites. When the Nouveau Bercy site was opened, the bus service’s frequency was increased with the support of the STIF and the Mairie de Charenton-le-Pont. A private shuttle also connects five sites in this town to public transport; V bike stands have been installed (214 bike stands at 13 sites at the end of 2013) and employees regularly use the Vélib’ bikes provided by the Mairie de Paris; V parking spaces with recharging sockets for electric vehicles have been gradually introduced (at the end of 2013, there were 35 spaces at 13 Natixis sites).
2013 Key event In 2012, Natixis Intertitres (in conjunction with other companies, such as AXA, Banque Populaire Occitane, etc.) signed up to the inter-company travel plan (PDIE) in the “Héliopôle” business park near Toulouse.
In 2013, the car fl eet team within the Real Estate and Logistics department (DIL) took over management of the car fl eet of some Natixis Lease’s entities. Its management scope at the end of 2013 covered 536 vehicles.
A new car policy has been in place since 2012. It defi nes rules incorporating new reductions of CO
Average CO2 emission rate of the Company fl eet of Natixis S.A. (in g of CO2 /km) 124 131 141
Average CO2 emission rate of the Company fl eet of Natixis S.A. and its subsidiaries, excluding Coface and Kompass (in g of CO2/km) 119 128 139
2013 Key event The statistics provided by the travel agency, which include a calculation of carbon emissions, are now used to produce a quarterly customized business travel dashboard for each of the consolidated Natixis entities.
Natixis is the corporate, investment and fi nancial services arm of Groupe BPCE. Its activities are entirely dedicated to providing fi nancial advice and support to its business customers and contribute to the social and economic advancement of the countries where Natixis operates.
V General Shareholders’ Meetings V Meetings and newsletters (specifi c process for individual shareholders)
Employees V Employees of Natixis S.A. and its subsidiaries V Staff representatives and unions
V Supporting chairs V Contributions to the school curriculum V Student tutoring V Receiving interns, including co-op students
This requirement is recalled in the supplier relationship charter and is subject to specifi c clauses in contracts.
Our work was performed by a team of around ten people over a period of around six weeks between December 2013 and March 2014. We called upon our CSR experts to help us perform this work.
For the CSR Information that we considered to be most material (2): V at the level of the consolidating entity, we consulted the documentary sources, and held meetings in order to corroborate the qualitative information (organization, policies and initiatives), implemented analytical procedures on the quantitative information, checked, the calculation and consolidation of the data on the basis of spot checks, and ascertained that they were coherent and consistent with the other information provided in the Management Report; V at the level of a sample of entities representative of the CSR reporting scope that we selected (3) on the basis of their activities, their contribution, their operating location and a risk assessment, we held meetings in order to ascertain the correct application of the procedures, and performed detailed tests on the basis of samples, which consisted in checking the calculations performed and cross-checking the data with the supporting documents. The sample selected in this way accounted for 52% of the Group’s workforce, for between 22% and 48% of the quantitative environmental information, and for 100% of the quantitative societal information.
Qualitative social indicators: Employment agreement, Review of the disability agreement at the end of 2013.
Quantitative environmental indicators: Electricity consumption, Heating and cooling (steam and chilled water) consumption, and Greenhouse Gas Emissions (scopes 1 and 2).
(3) Social and environmental information: Natixis France; Corporate information: Natixis Asset Management, Wholesale Banking.
Florence Didier-Noaro José-Luis Garcia Emmanuelle Rigaudias Emmanuel Dooseman Philippe Arnaud Jean-François Dandé
This section is an extract from the Chairman of the Board’s report on the Board’s composition, the preparation and organization of its work on the internal control and risk management procedures implemented by Natixis including information regarding the mandates of corporate offi cers and their compensation.
R SUMMARY TABLE OF COMPLIANCE WITH AFEP/MEDEF CORPORATE GOVERNANCE CODE: IMPLEMENTATION OF THE “APPLY OR EXPLAIN” RULE
In accordance with the “apply or explain” rule provided for in Article L.225-37 of the French Commercial Code and addressed in Article 25.1 of the AFEP/Medef Code, Natixis believes that its practices comply with the recommendations of the AFEP/Medef Code. However, certain recommendations were ruled out for the reasons given in the table below: Directors’ term of office (Article 14 of the Code) "The term of office of directors defined in the bylaws may not exceed four years.""
The term of offi ce of Natixis directors is currently set at six years (and not four years as recommended by the AFEP/Medef Code). This term of offi ce meets Natixis’ legal and statutory requirements as well as the rules in force applicable to all of Groupe BPCE. The term of offi ce of members of the Steering and Supervisory Boards of the Caisses d’Epargne and of directors of the Banque Populaire banks and of BPCE is six years. Given that the Natixis Board of Directors partially includes joint representation of the Caisses d’Epargne and the Banque Populaire banks (indirect shareholders), the term of offi ce of Natixis directors was based on that of the term in force at these institutions. However, Natixis, together with BPCE, is considering reducing the term of its directors to four years.
Audit Committee (Article 16.1 of the Code) "At least two-thirds of the Audit Committee members must be independent...""
Two-thirds of the Natixis Audit Committee are not independent members, as recommended by the AFEP/Medef Code, in order to represent the different components of the Company’s main shareholders (members from the Caisses d’Epargne and the Banque Populaire banks, in addition to a representative of BPCE). The Committee is chaired by an independent director.
Committee in charge of selecting or appointing directors Committee in charge of compensation (Articles 17.1 and 18.1 of the Code) "It […] must be predominantly comprised of independent directors.”
The number of independent directors on the Natixis Appointments and Compensation Committee is not greater than half the total number of members, as recommended by the AFEP/Medef Corporate Code. It has an egalitarian composition (50% independent, 50% nonindependent ) and the Committee is chaired by an independent director.
Member Main role in the Company (3) Main role outside the Company
Chairman of the Board of Directors First appointed: CSM of 04.30.2009 (Chairman of the Board: Board Meeting of 04.30.2009) Term expires: 2015 AGM (b)
Director Permanent representative: Mr. Daniel Karyotis Date of birth: 02.09.1961 First appointed: Co-opted by the Board on 08.25.2009 and ratifi ed at the CSM of 05.27.2010 Term expires: 2015 AGM (b)
Member of BPCE Management Board Chief Finance, Risk and Operations Offi cer 50, avenue Pierre Mendès France 75201 Paris Cedex 13
Christel Bories * Date of birth: 05.20.1964 Nationality: French Natixis shares held: 5,000
Director First appointed: Co-opted by the Board on 02.22.2011 and ratifi ed at the CSM of 05.26.2011 Term expires: 2015 AGM (b)
Deputy Chief Executive Offi cer of IPSEN 65, quai Georges Gorse 92100 Boulogne-Billancourt
Thierry Cahn Date of birth: 09.25.1956 Nationality: French Natixis shares held: 1,000
Director First appointed: Co-opted by the Board on 01.28.2013 and ratifi ed at the CSM of 05.21.2013 Term expires: 2015 AGM (b)
Alain Condaminas Date of birth: 04.06.1957 Nationality: French Natixis shares held: 1,000
Member, Appointments and Compensation Committee First appointed: Board Meeting of 05.29.2012 Term expires: 2018 AGM (c)
Member, Audit Committee First appointed: Board Meeting of 04.01.2010 Term expires: 2015 AGM (b)
Chairman, Strategic Committee First appointed: Board Meeting of 05.11.2011 Term expires: 2015 AGM (b)
Chief Financial and Administrative Offi cer, JCDecaux S.A. Zone Industrielle Saint Appoline 78378 Plaisir Cedex
CORPORATE GOVERNANCE3 Structure of the corporate and executive bodies Member Main role in the Company (3) Main role outside the Company
Chairman of the Board of Directors of Banque Populaire Bourgogne Franche Comté 5, avenue de Bourgogne BP63 21802 Quétigny Cedex
Member, Audit Committee First appointed: Board Meeting of 05.29.2012 Term expires: 2018 AGM (c)
Stéphanie Paix Date of birth: 03.16.1965 Nationality: French Natixis shares held: 1,093
Member, Audit Committee First appointed: Board Meeting of 11.14.2012 Term expires: 2018 AGM (c)
Chairman, Management Board, Caisse d’Epargne Rhône-Alpes 42, bd Eugène Deruelle BP 3276 69404 Lyon Cedex 03
Chairman, Management Board, Caisse d’Epargne Ile de France 26-28 rue Neuve Tolbiac 75013 Paris
Vice-Chairman of the Steering and Supervisory Board of Caisse d’Epargne Île-de-France 57 rue du Général de Gaulle 95880 Enghien-les-Bains
Director First appointed: OGM of 07.31.2013 Term expires: 2019 AGM (d)
(1) Michel Grass was co-opted as Director to replace Mr. Stève Gentili who resigned on February 18, 2014.
(a) A brief résumé of each of Natixis’ corporate offi cers as well as a list of the offi ces held in 2013 and in previous years appears in section 3.2.4.
(a) A list of the offi ces held by the Chief Executive Offi cer in 2013 and in previous years appears in section 3.2.4.
R MEMBERS OF THE EXECUTIVE COMMITTEE (COMEX) AT MARCH 1, 2014
François Riahi Wholesale Banking / FSM – Asia - Pacifi c
Member of the Board of Le Cercle de l’Industrie (until 05.13.2013)
Member of: Le Cercle de l’Industrie (Association of the Chairmen of the leading French industrial companies) Senior Vice President of: Rio Tinto Member of the Executive Committee of: Rio Tinto Alcan Member of the Executive Committee of: the EAA (European Aluminium Association) Chairman of: the EAA (European Aluminium Association) (until January 2009)
Member of: BPCE Supervisory Board Chairman of the Board of Directors of: Banque Populaire d’Alsace Member of the Supervisory Board of: Banque Palatine
Member of: BPCE Supervisory Board Chairman of the Board of Directors of: Banque Populaire d’Alsace Member of the Board of: Banque Fédérale des Banques Populaires Member of the Supervisory Board of: Foncia Groupe
CORPORATE GOVERNANCE3 Structure of the corporate and executive bodies Alain Condaminas (born April 6, 1957). Alain Condaminas has been Chief Executive Offi cer of Banque Populaire Occitane since 2006 and a member of the Supervisory Board of BPCE. Holding a degree in Economic Sciences and a DESS in Banking and Financial Techniques, Alain Condaminas joined the Banque Populaire Group in 1984. In 1992, he began working at Banque Populaire Toulouse-Pyrénées as Head of Production, supervising the Human Resources Department, and subsequently as Head of Operations. In 2001, he became Chief Executive Offi cer of Banque Populaire Quercy-Agenais. In 2003, he oversaw the merger with Banque Populaire du Tarne et de l’Aveyron, followed by another with Banque Populaire Toulouse-Pyrénées that formed the existing Banque Populaire Occitane. Key advisory skills: expertise in Human Resources issues and business transformation, extensive knowledge of banking risks.
Chief Executive Officer of Banque Populaire Occitane Member of: the BPCE Supervisory Board Chairman of: Fondation d’entreprise BP Occitane Member of the Board of: Natixis (1), Natixis Asset Management Permanent Representative of BP Occitane, Vice-Chairman of the Board of Directors of: CELAD S.A. (2)
Non-voting member of the BPCE Supervisory Board Chief Executive Officer of Banque Populaire Occitane Member of the Board of: Natixis Asset Management, Natixis Interépargne Permanent Representative of BP Occitane, Vice-Chairman of the Board of Directors of: CELAD S.A. Permanent Representative of BP Occitane, Member of the Board of: i-BP, IRDI Permanent Representative of BP Occitane, member of the Supervisory Board of: SOTEL, ABP IARD Permanent Representative of BP Occitane, Managing Partner of: SNC Immocarso
Non-voting member of the BPCE Supervisory Board Chief Executive Officer of Banque Populaire Occitane Chairman of: GIE Carso Matériel Member of the Board of: Natixis Asset Management, Natixis Securities, Société Marseillaise de Crédit (SMC) Permanent Representative of BP Occitane, Vice-Chairman of the Board of Directors of: CELAD S.A. Permanent Representative of BP Occitane, Member of the Board of: i-BP, IRDI Permanent Representative of BP Occitane, member of the Supervisory Board of: SOTEL, ABP IARD, Latecoere Permanent Representative of BP Occitane, Managing Partner of: SNC Immocarso
Member of the Management Board - Chief Financial & Administrative Officer of: JCDecaux Member of the Board of: Média Aéroports de Paris (SAS), JCDecaux Bolloré Holding (SAS), BPIfrance Participations (since 07.12.2013), BPIfrance Investissement (since 07.12.2013) Member of the Supervisory Board of: Médiakiosk (SAS)
Member of the Management Board - Chief Financial & Administrative Officer of: JCDecaux Member of the Board of: Média Aéroports de Paris (SAS), JCDecaux Bolloré Holding (SAS) Member of the Supervisory Board of: Médiakiosk (SAS)
Member of the Management Board - Chief Financial & Administrative Officer of: JCDecaux Member of the Board of: Média Aéroports de Paris (SAS) (since 09.07.2011), JCDecaux Bolloré Holding (SAS) (since May 2011) Member of the Supervisory Board of: Médiakiosk (SAS) (since 11.30.2011)
CORPORATE GOVERNANCE3 Structure of the corporate and executive bodies Stève Gentili (born June 5, 1949). Stève Gentili has been Chairman of BRED Banque Populaire since 1998. He has also been Chairman of the BPCE Supervisory Board since January 2014. With a degree in IT, management and economics and a degree from the Collège des sciences sociales et économiques, Stève Gentili began his career working for a cabinet minister and at the Ministry of Economics and Finance. Until 2004, he managed a major agri-food company. Key advisory skills: expertise in international affairs and business strategy.
Member of the Board of: Natixis (1), Natixis Pramex International Milan, Natixis Algérie, BCI Mer Rouge, Thales (2), Bercy Gestion Finances+ (2) , Promepar Gestion, BRED Cofi lease, Prépar Iard, Veolia (2), BICEC, BCI (Banque Commerciale Internationale) Member of the Supervisory Board of: Prépar-Vie
Chairman of the Board of Directors of: BRED Banque Populaire, Natixis Pramex International, SPIG, Natixis Institutions Jour Chairman of the Supervisory Board of: Banque Internationale de Commerce-BRED (Bic-BRED) Chairman of: BRED Gestion, Cofi bred, Agence Banque Populaire pour la Coopération et le Développement, Bureau International-Forum Francophone des Affaires Vice-Chairman of the Board of Directors of: BP Participations (until 05.14.2009) Member of the Board of: Coface, Natixis Algeria, Natixis Pramex International Milan, Société Marseillaise de Crédit, Thales, BGF+, Promépar Gestion, BRED Cofi lease, Prépar IARD Member of the Supervisory Board of: Prépar-Vie Representative of BRED Banque Populaire on the Board of Directors of: BICEC, BCI (Banque Commerciale Internationale)
Chairman of: Fédération Hospitalisation Privée Bourgogne Franche Comté, Commission Economique Hospitalisation privée (until 2012) Vice-Chairman of: Fédération nationale des Banques Populaires (since 2012) Chairman of the Board of Directors of: Banque Populaire Bourgogne Franche Comté Member of the Board of: Fédération hospitalisation Privée (until 2012), SA CAHPP (until 2012), NGAM (since 02.14.2012) Managing Partner of: SARL 2G Judge: with the Commercial Court of Sens Associate Member: Chamber of Commerce and Industry of Yonne Secretary of: the Conference of Banque Populaire Chairmen
Chairman and Chief Executive Officer of: SAS Polyclinique du Val de Saône (until 2011), SAS Clinique Paul Picquet (until 2011) Chairman of: Fédération Hospitalisation Privée Bourgogne Franche Comté, Commission Economique Hospitalisation privée Chief Executive Officer of: SAS Avenir Santé (until 2011), SAS Clinique Paul Picquet (until 2011) Chairman of the Board of Directors of: Banque Populaire Bourgogne Franche Comté Member of the Board of: Fédération hospitalisation Privée, SA CAHPP Managing Partner of: SARL 2G Judge: with the Commercial Court of Sens Secretary of: the Conference of Banque Populaire Chairmen (since 2011)
Chairman and Chief Executive Officer of: SAS Polyclinique du Val de Saône, SAS Clinique Paul Picquet Chairman of: Fédération Hospitalisation Privée Bourgogne Franche Comté, Commission Economique Hospitalisation privée Chief Executive Officer of: SAS Avenir Santé, SAS Clinique Paul Picquet Chairman of the Board of Directors of: Banque Populaire Bourgogne Franche Comté (since 2010) Member of the Board of: Banque Populaire de Bourgogne Franche Comté (until 2010), Fédération hospitalisation Privée, SA CAHPP Managing Partner of: SARL 2G Judge: with the Commercial Court of Sens
Chairman and Chief Executive Officer of: SAS Polyclinique du Val de Saône, SAS Clinique Paul Picquet Chairman of: Fédération Hospitalisation Privée Bourgogne Franche Comté, Commission Economique Hospitalisation privée Chief Executive Officer of: SAS Avenir Santé, SAS Clinique Paul Picquet Member of the Board of: Banque Populaire de Bourgogne Franche Comté, Fédération hospitalisation Privée, SA CAHPP Managing Partner of: SARL 2G Judge: with the Commercial Court of Sens (since 2009)
Chief Executive Officer of Banque Populaire Massif Central Member of the Supervisory Board and Audit and Risks Committee of: BPCE Member of the Board of: Natixis (1), Crédit Foncier, BPI France Financement (2) (formerly OSEO) Member of the Audit Committee of: Natixis (1)
Chief Executive Officer of: Natixis Factor (until 01.10.2011) Chief Executive Officer of: Banque Populaire du Massif Central Member of the Board of: Cie Européenne de Garanties et Cautions (since 10.27.2011), OSEO SA Member of the Supervisory Board of: Foncia Groupe (until 07.26.2011) Permanent representative of Banque Populaire Massif Central, Chairman of: Sociétariat BPMC SAS Permanent representative of Banque Populaire Massif Central, Member of the Board of: Association des BP pour la Création d’Entreprise, IBP S.A. Permanent Representative of Banque Populaire Massif Central, M ember of the Committee of: Banques d’Auvergne
Daniel Karyotis (born February 9, 1961). Daniel Karyotis has been Chief Finance, Risk and Operations Offi cer and a member of the Management Board of BPCE since December 1, 2012. With a degree from the Institut d’Études Politiques in Paris and the Centre de perfectionnement à l’analyse fi nancière and a postgraduate degree in fi nancial and economic analysis, Daniel Karyotis began his career with Société Générale on the fi nancial markets. From there, he moved to Standard & Poor’s and the banking sector, then joined Caisse d’Epargne Champagne-Ardenne (Ceca) where he held different management positions between 1992 and 1997. A member of the Management Board and Chief Executive Offi cer of Caisse d’Epargne du Pas-de-Calais from 1998 to 2001, he was appointed Chairman of the Management Board of CECA in January 2002. In February 2007, he became Chairman of the Management Board of Banque Palatine. In addition, Daniel Karyotis is a member of the Société Française des Analystes Financiers (Sfaf – French Society of Financial Analysts).
Member of the BPCE Management Board – Finance, Risk and Operations (since 12.01.2012) Member of the Board of: Coface S.A. (since 11.21.2012) Permanent Representative of BPCE, member of the Board of Directors of: Natixis (1) (since 01.28.2013), Crédit Foncier (since 12.11.2012)
Chairman of the Management Board of Banque Palatine Chairman of the Supervisory Board of: Palatine Asset Management Member of the Board of: Coface, Acxior Corporate Finance Permanent representative of Banque Palatine, member of the Supervisory Board of: GCE Capital Permanent representative of Banque Palatine, member of the Board of Directors of: OCBF (2), Palatine Etoile 9
Chairman of the Management Board of Banque Palatine Chairman of the Supervisory Board of: Palatine Asset Management Vice-Chairman of the Board of Directors of: Eurosic Member of the Board of: Coface Permanent representative of Banque Palatine, member of the Supervisory Board of: GCE Capital Permanent representative of Banque Palatine, member of the Board of Directors of: OCBF (2)
Chairman of the Management Board of Banque Palatine Chairman of: Trade Exploitation Chairman of the Supervisory Board of: Palatine Asset Management Vice-Chairman of the Board of Directors of: Eurosic Member of the Board of: Coface, Natixis Epargne Financière, Natixis Epargne Financière Services Permanent representative of Banque Palatine, member of the Supervisory Board of: GCE Capital Permanent representative of Banque Palatine, member of the Board of Directors of: OCBF (2)
CORPORATE GOVERNANCE3 Structure of the corporate and executive bodies Laurent Mignon (born December 28, 1963). Laurent Mignon has been Chief Executive Offi cer of Natixis since May 14, 2009, and a member of BPCE’s Management Board since August 6, 2013. A graduate of HEC and the Stanford Executive Program, Laurent Mignon worked for more than 10 years in various positions at Banque Indosuez, from the trading fl oor to corporate banking. In 1996, he joined Schroeders Bank in London, then AGF in 1997 as Chief Financial Offi cer. He was appointed to the Executive Committee in 1998, then became Deputy CEO in charge of Banque AGF, AGF Asset Management and AGF Immobilier in 2002. He became CEO in charge of the Life and Financial Services and Credit Insurance divisions in 2003 and Chairman of the Executive Committee in 2006. From September 2007 to May 2009, he was associate Manager at Oddo et Cie alongside Philippe Oddo.
Member of the Board of: Natixis Global Asset Management (until 09.01.2010 then Chairman of the Board of Directors), Coface (until 10.15.2010 then permanent representative of Natixis on the Board of Directors), Sequana(1) (2), Arkema (1) (2), Lazard Ltd (1) (2)
CORPORATE GOVERNANCE3 Structure of the corporate and executive bodies Stéphanie Paix (born March 16, 1965). Stéphanie Paix has been Chairman of the Management Board of Caisse d’Epargne Rhône-Alpes since end-2011. A graduate of the IEP de Paris with a DESS in corporate tax law from the Université Paris Dauphine, Ms. Paix has been with Groupe BPCE since 1988. Inspector and Head of Inspections at Banque Fédérale des Banques Populaires (1988-1994), she joined the Banque Populaire Rives de Paris as Regional Director and then Director of Production and Organization (1994-2002). In 2002, she joined Natexis Banques Populaires, where she was Director of Operations Management and then Director of Cash Management and Operations (2002-2005). In 2006, she became Chief Executive Offi cer of Natixis Factor, then Chief Executive Offi cer of Banque Populaire Atlantique (2008-2011). Key advisory skills: extensive knowledge of retail banking and business fi nancing; bank audits.
Chairman of the Management Board of Caisse d’Epargne Rhône-Alpes Chairman of: Agence Lucie (2)
Chairman of the Supervisory Board of: Rhône Alpes PME Gestion (2)
Chief Executive Officer of: Banque Populaire Atlantique (until 01.30.2012) Member of the Board of: Natixis Algérie (until 10.05.2012), Natixis Assurances (until 02.06.2012), BPCE Achats (until 03.15.2012) Co-Manager of: Atlantique Plus (until 01.24.2012) Representative of BPCE, member of the Board of Directors of: Compagnie des Alpes (2) (from 03.05.2012 to 10.18.2012) Representative of Banque Populaire Atlantique, Chairman of: Ouest Croissance (until 01.30.2012), Ludovic de Besse (until 01.30.2012) Representative of Banque Populaire Atlantique, member of the Board of Directors of: C3B Immobilier (until 01.01.2012), i-BP (until 01.30.2012) Portzamparc (until 01.30.2012), Association des BP pour la Création d’Entreprise (until 01.31.2012) Representative of Banque Populaire Atlantique, member of the Supervisory Board of: Atlantique Mur Régions (until
Chairman of the Management Board of: Caisse d’Epargne Rhône Alpes (since 12.05.2011) Chief Executive Officer of Banque Populaire Atlantique Chairman of: Agence Lucie (since 04.06.2011) Member of the Board of: Crédit Foncier (until 12.31.2011), Natixis Algérie, Natixis Assurances, BPCE Achats, Fédération Nationale des Banques Populaires Co-Manager of: Atlantique Plus (since 01.28.2011) Representative of Banque Populaire Atlantique, Chairman of: Ouest Croissance, Ludovic de Besse Representative of Banque Populaire Atlantique, member of the Board of Directors of: C3B Immobilier, i-BP Portzamparc, Association des BP pour la Création d’Entreprise Representative of Banque Populaire Atlantique, member of the Supervisory Board of: Atlantique Mur Régions, Ouest Croissance Gestion Representative of Banque Populaire Atlantique, ex-officio member of: Crédit Maritime Atlantique Representative of Banque Populaire Atlantique, Treasurer of: Comité des Banques de Pays de la Loire FBF Representative of Ouest Croissance, member of the Board of Directors of: Banque Populaire Développement Representative of CE Rhône Alpes, member of the Supervisory Board of: GCE Technologies (since 12.31.2011) Representative of the Fédération Nationale des Banques Populaires, Chairman of: Association Française de la Micro-Finance
Chief Executive Officer of: Banque Populaire Atlantique Member of the Board of: Crédit Foncier (since 04.26.2010), Natixis Algérie, Natixis Assurances (since 09.29.2010), BPCE Achats (since 06.15.2010) Representative of Banque Populaire Atlantique, Chairman of: Ouest Croissance, Ludovic de Besse Representative of Banque Populaire Atlantique, member of the Board of Directors of: C3B Immobilier, i-BP, Natixis Assurances (until 09.30.2010), Portzamparc, Association des BP pour la Création d’Entreprise Representative of Banque Populaire Atlantique, member of the Supervisory Board of: Atlantique Mur Régions, Ouest Croissance Gestion Representative of Banque Populaire Atlantique, ex-officio member of: Crédit Maritime Atlantique Representative of Banque Populaire Atlantique, Treasurer of: Comité des Banques de Pays de la Loire FBF Representative of Ouest Croissance, member of the Board of Directors of: Banque Populaire Développement Representative of the Fédération Nationale des Banques Populaires, Chairman of: Association Française de la Micro-Finance
Chief Executive Officer of: Banque Populaire Atlantique Member of the Board of: Natixis Algérie, Fédération Nationale des Banques Populaires Representative of Banque Populaire Atlantique, Chairman of: SAS Ludovic de Besse, Representative of Banque Populaire Atlantique, member of the Board of Directors of: i-BP, Natixis Assurances, Portzamparc, Association des BP pour la Création d’Entreprise Representative of Banque Populaire Atlantique, member of the Supervisory Board of: Atlantique Mur Régions, Ouest Croissance Gestion Representative of Banque Populaire Atlantique, ex-officio member of: Crédit Maritime Atlantique Representative of Banque Populaire Atlantique, Treasurer of: Comité des Banques de Pays de la Loire FBF
CORPORATE GOVERNANCE3 Structure of the corporate and executive bodies Didier Patault (born February 22, 1961). Chairman of the Management Board of Caisse d’Epargne Île-de-France since May 2013. Didier Patault is also a member of the BPCE Supervisory Board. A graduate of the École Polytechnique and the École Nationale de la Statistique et de l’Administration Économique (ENSAE), Didier Patault, after starting out at Caisse des Dépôts et Consignations, has been with Groupe BPCE since 1992. After holding various fi nancial and sales positions at Caisse d’Epargne des Pays du Hainaut (1992-1999), in 1999 he joined Caisse Nationale des Caisses d’Epargne as Director of Group Development on the local economic markets of the CNCE. In 2000, he was appointed Chairman of the Management Board of Caisse d’Epargne des Pays du Hainaut, and then Chairman of the Management Board of Caisse d’Epargne des Pays de la Loire (2004-2008), and fi nally Chairman of the Management Board of Caisse d’Epargne Bretagne-Pays de Loire (2008-2013). Key advisory skills: extensive knowledge of public sector authorities and regional economic development, expertise in management and fi nancial analysis.
Chairman of the Management Board of Caisse d’Epargne Ile de France (since 04.25.2013) Chairman of the Supervisory Board of: Banque BCP (since 06.17.2013) Member of the Supervisory Board of: BPCE Member of the Supervisory Board of: GCE Capital Member of the Board of: Natixis (1), Natixis Cofi ciné, CE Holding Promotion Member of the Board (as a qualified person) of: Paris Habitat – OPH (since 10.17.2013) Permanent representative of CEIDF, member of the Board of Directors of: Habitat en Région (since 04.25.2013), Immobilière 3F (since 05.14.2013), FNCE (since 04.25.2013) Permanent Representative of CEIDF, member of the Supervisory Board of: IT-CE (since 05.24.2013)
Chairman of the Management Board of: Caisse d’Epargne et de Prévoyance de Bretagne Pays de Loire (CEBPL) Member of the Supervisory Board of: BPCE Chairman and Chief Executive Officer of: SODERO Chairman of the Board of Directors of: SODERO Participations, S.A. des Marches de l’Ouest (SAMO) Chairman of the Supervisory Board of: SODERO Gestion, BATIROC Bretagne – Pays de Loire Member of the Supervisory Board of: GCE Capital Member of the Board of: Natixis (1), Compagnie de Financement Foncier – SCF, Natixis Cofi ciné, Mancelle d’Habitation, CE Holding Promotion Permanent Representative of CEBPL, member of the Board of Directors of: Pays de la Loire Développement, SEMITAN, Nantes Atlantique Place Financière (NAPF), FNCE Permanent Representative of CEBPL, member of the Supervisory Board of: IT-CE
Member of the Supervisory Board of: BPCE Member of the Board of: Natixis (1)
Chairman of the Management Board of: Caisse d’Epargne et de Prévoyance de Bretagne Pays de Loire Chairman and Chief Executive Officer of: SODERO Chairman of the Board of Directors of: SODERO Participations, SA des Marchés de l’Ouest (SAMO), Mancelle d’Habitation (until 11.17.2010) Chairman of the Supervisory Board of: SODERO Gestion, BATIROC Bretagne – Pays de Loire Member of the Supervisory Board of: GCE Capital Member of the Board of: CE Participations (until 08.05.2010), Natixis Global Asset Management (until 09.01.2010), Compagnie de Financement Foncier – SCF, Natixis Cofi ciné (since 10.19.2010), Mancelle d’Habitation (since 11.17.2010), CE Holding Promotion (since 06.30.2010) Permanent representative of CEBPL, member of the Board of Directors of: Pays de la Loire Développement, SEMITAN, NAPF, FNCE Permanent representative of CEBPL, member of the Supervisory Board of: GCE Business Services, GCE Technologies
Chairman of the Management Board of: Caisse d’Epargne et de Prévoyance de Bretagne Pays de Loire Chairman and Chief Executive Officer of: SODERO Chairman of the Supervisory Board of: SODERO Gestion, BATIROC Bretagne – Pays de Loire Chairman of the Board of Directors of: SODERO Participations, Mancelle d’Habitation, S.A. des Marches de l’Ouest (SAMO) Member of the Supervisory Board of: GCE Capital, Caisse Nationale des Caisses d’Epargne (from 05.28.2009 to 07.31.2009) Member of the Board of: CE Participations, Natixis Global Asset Management, Compagnie de Financement Foncier SCF, Fédération Nationale des Caisses d’Epargne Permanent representative of CEBPL, member of the Board of Directors of: Pays de la Loire Développement, SEMITAN, NAPF Permanent representative of CEBPL, member of the Supervisory Board of: GCE Business Services, GCE Technologies Permanent representative of Sodero Participations: Chairman of the Supervisory Board of Grand Ouest Gestion (until 12.31.2009)
CORPORATE GOVERNANCE3 Structure of the corporate and executive bodies François Pérol (born November 6, 1963). François Pérol has been Chairman of the BPCE Management Board and Chairman of the Natixis Board of Directors since 2009. He is a graduate of HEC and the Institut d’Études Politiques de Paris. After graduating from ENA, François Pérol started his career at the Inspection Générale des Finances (French General Inspectorate of Finance). He held various positions at the Ministry of the Economy and Finance, beginning with the Treasury Department (1994-2002), and then on the Cabinet of Ministers of Francis Mer and Nicolas Sarkozy (2002-2004). He then left the administration to join Rothschild & Cie Banque as Managing Partner from 2005 to 2007. He was appointed Deputy Secretary General to the President of the Republic from 2007 to 2009. Key advisory skills: expertise in strategy for banking and fi nancial institutions, and in the French and international economic and fi nancial environment.
Permanent Representative of BPCE, Managing Partner of: SCI Ponant plus Permanent representative of BPCE Maroc, member of the Board of Directors of: Banque Centrale Populaire
Chairman of the Management Board of: BPCE Chairman of the Board of Directors of: Natixis (1), Crédit Foncier Chairman of: CE Holding Promotion, Groupement Européen des Caisses d’Epargne Member of the Board of: CNP Assurances (1), Sopassure, Natixis (1), Crédit Foncier, Musée d’Orsay (2)
Chairman of the Management Board of: BPCE Chairman of the Board of Directors of: Natixis (1), BPCE IOM, Crédit Foncier de France, Fondation des Caisses d’Epargne pour la Solidarité (until 03.09.2011) Chairman of: CE Holding Promotion, Fédération Bancaire Française (until 09.01.2011) Chairman of the Supervisory Board of: Foncia Groupe (until July 2011) Vice-Chairman of the Board of Directors of: Crédit Immobilier et Hôtelier (Morocco) Member of the Board of: Natixis (1), BPCE IOM, BP Participations, Crédit Foncier , CNP Assurances (1), Sopassure, Crédit Immobilier et Hotelier-CIH (Morocco), Musée d’Orsay (2)
Permanent Representative of BPCE, Managing Partner of: SNC Bankeo, SCI Ponant Plus Member of the Executive Committee of: Fédération Bancaire Française (2)
Chairman of the Management Board of: BPCE (since 07.31.2009), Caisse Nationale des Caisses d’Epargne – CNCE (until 07.31.2009) Chief Executive Officer of: BP Participations (since 02.26.2009), CE Participations (since 07.31.2009) Chairman of the Board of Directors of: Natixis (1) (since 04.30.2009), Financière Océor (since 07.15.2009) Chairman of the Supervisory Board of: Foncia Groupe (since 09.10.2009) Vice-Chairman of the Executive Committee of: Fédération Bancaire Française (since 07.08.2009) Member of the Board of: BP Participations, CE Participations (since 07.31.2009), CNP Assurances (since 04.21.2009), Sopassure (since 03.23.2009), Crédit Immobilier et Hotelier-CIH (Morocco) (since 05.28.2009)
Member of the Board of: Dassault Aviation (1), EDF International SAS, EDF Energies Nouvelles Member of: the High Commission for Transparency and Information on Safety in Nuclear Facilities, the National Commission for Sectors of Vital Importance, the Committee for Atomic Energy INTERNATIONAL Chairman of the Board of Directors of: Edison Vice-Chairman of: Association EURELECTRIC (Belgium) (since 06.03.2013) Member of the Board of: FCC (1) Espagne, Edison, South Stream Transport BV Chairman of: EDF Energy Holdings Ltd
FRANCE Member of the Board of: CNP Assurances (1) (until 07.25.2013) INTERNATIONAL Member of the Board of: South Stream Transport AG (until 06.30.2013)
CORPORATE GOVERNANCE3 Structure of the corporate and executive bodies Henri Proglio (continued)
FRANCE Member of the Supervisory Board (until 04.30.2009) and member of the Board of Directors of: Natixis (1)
Member of the Board of: BPCE Assurances, Syndicat des Transports d’Ile-de-France (STIF) (2), Agence Foncière et Technique de la Région Parisienne (AFTRP) (2), Institut des Relations Internationales et Stratégiques (IRIS) (2)
Vice-Chairman of the Steering and Supervisory Board of Caisse d’Epargne Île-de-France Chairman of: Société d’Économie Mixte d’Aménagement du Val d’Oise (SEMAVO) (2), Institut de Formation des Animateurs de Collectivités (IFAC – Local Supervisors’ Training Institute) for France and Val d’Oise (nonprofi t organizations) (2)
Vice-Chairman of the Steering and Supervisory Board of Caisse d’Epargne Île-de-France Member of the Board of: BPCE Assurances, Syndicat des Transports d’Ile-de-France (STIF) (2), Agence Foncière et Technique de la Région Parisienne (AFTRP) (2), Institut des Relations Internationales et Stratégiques (IRIS) (2)
Chairman of: lnstitut de Formation des Animateurs de Collectivités (IFAC) for France and Val d’Oise (nonprofi t organizations) (2), Société d’Économie Mixte d’Aménagement du Val d’Oise (SEMAVO) (2)
Chairman of: Institut de Formation des Animateurs de Collectivités(IFAC) for France and Val d’Oise (non -profi t organizations) (2)
Member of the Supervisory Board of: Ediradio SA (RTL/RTL2/FUN RADIO) Member of the Board and Vice-Chairman of the Compensation Committee of: Astremedia (formerly Antena3) (1)(2)
Volunteer member of the Board of the endowment fund RAISE (since 11.22.2013) Other positions held in Groupe M6: Chairman of: the Groupe M6 corporate foundation Member of the Board of: Association Football Club des Girondins de Bordeaux, Permanent Representative of M6 Publicité, member of the Board of Directors of: Home Shopping Service SA, M6 Diffusion SA Permanent representative of Home Shopping Service, member of the Board of Directors of: MisterGooddeal SA, Permanent Representative of Métropole Télévision, member of the Board of Directors of: SASP Football Club des Girondins de Bordeaux, Société Nouvelle de Distribution SA Permanent representative of Métropole Télévision, Chairman of: M6 Publicité SA – Immobilière M6 SAS – M6 Toulouse SAS – M6 Bordeaux SAS – M6 Interactions SAS – M6 Web SAS – M6 Foot SAS Permanent representative of Métropole Télévision, Member of the Shareholders’ Committee of: Multi 4 SAS Permanent representative of Métropole Télévision, Managing Partner of: SCI 107 av Charles de Gaulle
Chairman of the Steering and Supervisory Board of Caisse d’Epargne Languedoc-Roussillon (CELR) Chairman of the Board of Directors of: SLE Vallée des Gardons Member of the Supervisory Board and Audit and Risks Committee of: BPCE Member of the Board of: Natixis (1), CE Holding Promotion, Clinique Bonnefon (2), Pierre et Lise Immobilier (2), Fédération Nationale des Caisses d’Epargne (FNCE) Managing Partner of: SCI Les Trois Cyprès (2), SCI Les Amandiers (2)
Vice-Chairman of the Supervisory Board of: Banque Palatine (until 02.15.2013) Member of the Supervisory Board of: Banque Palatine (until 02.15.2013)
Following the merger of Banque Fédérale des Banques Populaires (BFBP) and Caisse Nationale des Caisses d’Epargne (CNCE) that resulted in the creation of BPCE, Natixis has been partly owned by BPCE since August 1, 2009. As of December 31, 2013, BPCE held a 71.84% stake in Natixis.
As indicated above, Natixis’ Board of Directors had 15 members as of March 1, 2014. The members are divided up as follows: V two members from BPCE, namely Mr. Pérol and BPCE; V four members from the Banque Populaire banks, namely Ms. Halberstadt and Messrs. Cahn, Condaminas and Grass; V four members from the Caisses d’Epargne, namely Ms. Paix and Messrs. Patault, Sueur and Valentin; V five independent members, namely Ms. Bories, Ms. Debroux and Messrs. Oppetit, Proglio and de Tavernost.
Ms. Christel Bories is Deputy Chief Executive Offi cer of IPSEN, an international pharmaceutical group that is a leader in the treatment of debilitating illnesses. Ms. Laurence Debroux is Chief Financial and Administrative Offi cer of the JCDecaux S.A. group, the world’s second largest outdoor advertising group and inventor of the “street furniture” concept. Mr. Bernard Oppetit is Chairman of Centaurus Capital, which he founded. Mr. Henri Proglio is Chairman and Chief Executive Offi cer of EDF. Mr. Nicolas de Tavernost is Chairman of the Management Board of Groupe M6, which holds leading positions in the media.
Based on this review, it determined that Natixis is not the “reference banker” for the companies in which its independent directors exercise their executive duties or corporate offi ces, i.e. IPSEN, JCDecaux, EDF, Centraurus Capital and M6.
The term “reference banker” refers to the bank that is used for all the company’s banking needs.
Natixis maintains conventional business relationships with each of these companies, as it does with other fi nancial institutions as well.
Has no close family ties with a corporate offi cer OK OK OK OK OK
The term of offi ce of members of the Steering and Supervisory Boards of the Caisses d’Epargne and of directors of the Banque Populaire banks and of BPCE is six years.
To follow the recommendation of the AFEP/Medef Code that terms of offi ce be staggered in such a way as to avoid grouped re-appointments and promote the balanced re-appointment of Directors, Natixis instituted an action plan in 2012. Thus, the terms of offi ce of four Directors will be staggered compared to those of the other members.
In accordance with Article 9 of the Natixis bylaws, each director must own at least one hundred forty (140) Company shares during their term of offi ce. Furthermore, in accordance with the recommendations of the AFEP/Medef Code and the provisions of Article 3 of the Compliance Charter for members of the Board of Directors (see 3.3.1.2 – C), the Directors own at least onethousand (1,000) shares in the Company.
In accordance with the law and the bylaws, the Board of Directors: V defines the strategy governing the Company’s activities and oversees its implementation. Within the limits of the Company’s corporate purpose and the powers expressly granted by law or its bylaws to the General Shareholders’ Meetings, the Board concerns itself with all matters affecting the Company’s performance and governs by virtue of its deliberations. The Board of Directors shall perform the inspections and verifications it deems appropriate; V defines the Company’s Senior Management policy, with the caveat that the Board may only deliberate on this matter when it features on the agenda sent out at least 15 days prior to the Board Meeting and when at least two-thirds of the directors are present or represented; V may appoint a Chief Executive Officer from among the directors or otherwise, whom it may dismiss at any time; V may, at the proposal of the Chief Executive Officer, appoint one to five individuals as Deputy Chief Executive Officers whose role is to assist the Chief Executive Officer; V convenes all General Shareholders’ Meetings, sets the agenda and oversees the execution of all decisions taken; V may, at the proposal of the Chairman, decide to set up its own Committees to deliberate on those issues submitted for examination by the Board itself or its Chairman. It determines the structure and powers of these Committees, which conduct their activities under its responsibility.
Among these Internal Rules, which were last amended on December 12, 2012, particular attention should be drawn to the following provisions: V circumstances requiring the Board of Directors’ prior authorization: R the extension of Natixis’ activities to a new core business not currently exercised by the Company,
R any asset transfers, mergers or demergers in which Natixis is involved; V criteria used to qualify members of the Board of Directors as “independent”: An independent director is a person who has no ties with the management, Company or Group of a nature liable to compromise their freedom of judgment or create a confl ict of interest with the management, Company or Group.
R or for which Natixis or the Group represents a signifi cant portion of such person’s business,
R have a close family relationship with a corporate offi cer of Natixis or the Group,
R have been an auditor of Natixis or a Group company during the last fi ve years,
R have been a member of Natixis’ Board of Directors for more than 12 years,
In addition, with respect to the assessment of the Board of Directors’ work, the Internal Rules specify that, at least once a year, an agenda item will be devoted to evaluating the Board’s operation, an account of which will be included in Natixis’ annual report (for 2013, see point 3.3.1.4 – Assessment of the Board’s work in 2013).
Minutes of Board Meetings are prepared and sent to Natixis’ directors.
Before assuming offi ce, every one of Natixis’ directors must ensure that he is familiar with the general or specifi c obligations incumbent upon him, such as those resulting from laws or regulations, bylaws, Internal Rules and this Charter, as well as any other binding texts.
All directors must devote suffi cient time and attention to the performance of their duties and regularly attend the meetings of the Board and Committee(s) of which they are a member, as well as the General Shareholders’ Meeting. As such, they must ensure that with the number and commitment level of their directorships, they are available when required, especially if they also hold executive positions.
It is recommended that each director hold at least 1000 Natixis shares. He has six months to acquire the 140 shares stipulated by the articles of incorporation and another 12 months to bring his holding to 1,000 shares.
A director contributes to the collegiality and effi ciency of the work of the Board and specialized Committees. He makes recommendations that he feels will improve the Board’s operating procedures, specifi cally during the Board’s periodic evaluation.
Per article 621–1 of the General Regulations of the Autorités des Marchés Autorités (AMF - French Financial Markets Authority): “Inside information is any information of a precise nature that has not been made public, relating directly or indirectly to one or more issuers of fi nancial instruments, or to one of more fi nancial instruments, and which, if it were made public, would be likely to have a signifi cant effect on the prices of the relevant fi nancial instruments or on the prices of related fi nancial instruments.”
For any action on Natixis shares and related fi nancial instruments, the director undertakes to strictly observe and respect the provisions regarding transactions involving Natixis shares set out in the Natixis compliance manual. He is informed of these provisions in the appendix to the notifi cation letter on his status as permanent insider.
In particular, the director agrees not to perform any transaction during the periods known as “negative windows,” which begin 30 calendar days before the publication dates of the quarterly, half-year and annual results and ending on the publication date of these fi nancial statements.
The director strives to preserve his independence in judgment, decision and action in all circumstances. He refuses to be infl uenced by any element foreign to the corporate interest of Natixis, which it is his mission to defend.
Directors must refrain from acting in confl ict of interest with Natixis or the companies it controls. Specifi cally, when there is a planned transaction in which a director or non-voting director is directly or indirectly involved (e.g. when a director is affi liated: with the partner bank or the supplier’s fi nancing bank, or the partner bank or fi nancing bank of a Natixis competitor for the transaction in question), the director or non-voting director in question must inform the Chairman of the Board of Directors as soon as he has knowledge of such a plan, and inform him that he is directly or indirectly interested and in what capacity. The
As and when required, the Chief Finance and Risk Offi cer, Corporate Secretary or one or more business-line heads were invited to provide further information on subjects raised in meetings. The Works Council representatives also attended the meetings.
CORPORATE GOVERNANCE3 Role and operating rules of the corporate bodies In accordance with current regulations, the Board approved related party agreements prior to their signing. It also reviewed all related party agreements that have been authorized by the Board over previous fi nancial years, which continued to have an impact during the period (see Statutory Auditors’ special report in Chapter 5 “Financial Data” for more detailed information on related party agreements).
For the 2013 fi scal year, Natixis again used the services of an outside fi rm.
The main aims of the assessment were to: 1. take stock of the organization, running and composition of the Board; 2. ensure that the main questions are correctly prepared and the topics discussed; 3. assess the relationship between members of the Board and Senior Management; 4. evaluate the work of the specialized Committees; 5. measure the general performance of the Board.
Natixis decided to initiate a training program for its Board members as of the 2012 fi scal year. This training is divided into two parts: V a training program aimed at new Board members joining the Company. This half-day training session is particularly aimed at presenting Natixis (its business lines, governance and organization), outlining the main items of the income statement and components of the risk management policy, and heightening Board members’ awareness of regulatory aspects and their responsibilities; V an ongoing training program for existing Board members that is composed of various modules, particularly on Natixis’ different business lines, the financial markets, the accounting and financial regulations for credit institutions, as well as on issues concerning compliance with internal audits and the responsibilities of Board members.
During 2013, the Audit Committee comprised fi ve members: As of March 1, 2014, these members were: Mr. Oppetit, Chairman, Ms. Debroux, Ms. Halberstadt, Ms. Paix and Mr. Karyotis.
V Changes made to the Board of Directors in 2013: R on January 28, 2013, the Board of Directors appointed Mr. Karyotis as a member of the Audit Committee.
The Audit Committee has the following responsibilities: V it assists the Board of Directors in preparing the financial statements and the Company’s management report. Within this context, it monitors the quality of the information issued to shareholders and, more generally, it performs the duties set out by banking regulations; V it examines the parent company and consolidated annual and interim financial statements as well as the Company’s budget projections and financial documents distributed when the financial statements are approved; V it monitors the independence of the Statutory Auditors, gives its opinion on their selection or the renewal of their appointment and examines their schedule of audits, the results of their audits and their recommendations as well as any actions taken on the basis of these recommendations; V it gives an opinion on the procedures implemented by the Company to ensure compliance with regulations, and monitors the efficacy of internal control and risk management systems; V it gives opinions on the appointment or dismissal of the Head of Internal Audit; V it monitors the implementation of actions based on the conclusions of assignments undertaken by Internal Audit and the Autorité de Contrôle Prudentiel et de Résolution (ACPR). For this purpose, it may receive reports from Internal Audit and the ACPR in relation to the Company and its subsidiaries; V it approves the Company’s annual internal audit, including audits of subsidiaries, with this program being presented to the Committee at least one week prior to its approval; V it gives its opinion on the report presented to it on an annual basis regarding commercial relations between the Company or one or more of its subsidiaries and all or some of the entities forming Groupe BPCE.
Minutes of the Audit Committee Meetings are prepared by the secretary of the Board of Directors. These minutes are given to the members of the Audit Committee (a written summary of the Audit Committee’s work is also sent to directors). The Board of Directors is made aware of the Audit Committee’s work so that it can make fully informed decisions.
The Natixis Audit Committee met fi ve times in 2013. The attendance rate was 96% for the year as a whole, compared with 86% in 2012.
At least three days before a Committee meeting, each director received a fi le via a secure website containing the items on the agenda in order to be able to review and analyze the topics addressed.
CORPORATE GOVERNANCE3 Role and operating rules of the corporate bodies In order to enable it to audit risks, the Audit Committee was provided a copy at each of its meetings of the consolidated monthly risk monitoring report.
In 2013, the Committee’s duties focused on the following items in particular: V the review of the monthly risk monitoring report; V market and credit liquidity and risks; V the review of reports on internal control processes and procedure (Article 42 of CRBF Regulation 97-02) and risk measurement and monitoring (Article 43 of CRBF Regulation 97-02); V the contribution to market indexes; V the Internal Audit Charter; V the draft Chairman’s report on the Work of the Board and on Internal Control in 2012; non-compliance risk; business continuity; outsourced essential services; V non-compliance risk, business continuity, essential outsourced services; V the proposed audit plan for 2014; V monitoring of the implementation of Internal Audit recommendations; V the 2014 annual budget; and
The Appointments and Compensation Committee is made up of six members: Ms. Bories, Chairman, and Messrs. Condaminas, Patault, Proglio, Sueur and de Tavernost (since August 6, 2013).
V on January 28, 2013, the Board of Directors appointed Christel Bories as Chairman of the Appointments and Compensation Committee, replacing Vincent Bolloré who stepped down; V on August 6, 2013, the Board of Directors appointed Nicolas de Tavernost as a Member of the Appointments and Compensation Committee.
Since the fi nal quarter of 2009, the Committee has also been responsible for an annual review of Natixis’ compensation policy, in particular for Material Risk Takers, and for checking, on the basis of a Senior Management report, that said policy complies with Chapter IV, Section VI of CRBF Regulation 97-02 and is in line with the provisions set out by the Financial Stability Board and the professional standards to which the Company adheres.
As part of the selection process, the Board may interview prospective candidates during one of their meetings.
Qualifi cation as an Independent Director is discussed by the Appointments and Compensation Committee, which prepares a report for the Board of Directors. Each year, based on this report and before the publication of the annual report, the Board of Directors reviews the situation of each of its members based on independence criteria set out in Article 2.3.2 of the Board of Directors’ internal rules. Furthermore, members are considered to be independent when their position as a member of the Appointments and Compensation Committee does not constitute a confl ict of interest with the company in question (in particular, they are not employees of the company in question).
The Strategic Committee has been chaired by Laurence Debroux, an independent director, since its inception.
The Chief Executive Offi cer subsequently set up a Senior Management Committee that he chairs, made up of the heads of Natixis’ three core businesses (Wholesale Banking, Investment Solutions, Specialized Financial Services), and support functions.
Following Natixis’ conversion into a French société anonyme with a Board of Directors, a Management Board was set up in early May 2009 in order to examine and validate the Company’s main decisions and steer its management. Barring exceptions, it met weekly under the Chairmanship of the CEO.
The Senior Management Committee also continued several projects aimed at optimizing and restructuring Natixis business lines. In the Investment Solutions division for example, the Committee approved the reorganization of Asset Management sales forces in France and the fi nalization of Mirova; in the SFS division, it supervised the continuation of convergence projects in consumer fi nance and payments, and initiated dematerialization projects in service vouchers. Finally, it redefi ned the operational models of certain Wholesale Banking business lines (cash equity, research, GTB) and improved ongoing processes. It also continued to reduce the GAPC (workout portfolio management) assets and the development of sales cooperation agreements with the networks.
CORPORATE GOVERNANCE3 Role and operating rules of the corporate bodies 3.3.4.3 Conditions for admission
Pursuant to Article R.225-85 of the French Commercial Code, those shareholders that are able to prove their status with the accounting recognition of their shares (pursuant to paragraph seven of Article L.228-1 of the French Commercial Code) in their name or in the name of an intermediary acting on their behalf, either in the registered share accounts held by the Company or in the bearer share accounts held by their authorized intermediaries, no later than three working days before the date of the meeting (by midnight Paris local time hereinafter referred to as D-3), may attend the meetings.
In line with the provisions of Article 25 of the bylaws, each member of the Shareholders’ Meeting is entitled to the same number of votes as the shares he owns or represents.
The AFEP/Medef Code is available for consultation at the Company’s head offi ce and on the Natixis website.
3.4.1 COMPENSATION AND BENEFITS OF ANY KIND FOR MEMBERS OF THE BOARD OF DIRECTORS
3.4.1.2 Compensation and benefi ts of any kind for members of the Board of Directors
Note that the overall annual budget for director’s fees to be allocated to members of the Board of Directors is €500,000 (see 38th resolution of the Combined General Shareholders’ Meeting of April 30, 2009).
As of January 1, 2013, directors’ fees are subject to total withholding tax of 36.5%.
CORPORATE GOVERNANCE3 Policies and rules for determining compensation 3.4.2 COMPENSATION AND BENEFITS
In accordance with applicable “Professional standards concerning the governance and variable compensations of employees whose professional activities have a signifi cant impact on the company’s risk profi le” and with the provisions of Regulation 9702 of February 21, 1997, concerning the internal control of credit institutions and investment fi rms, as amended by the Decree of December 13, 2010, the variable compensation of Laurent Mignon will be paid as follows: V 36% of this variable compensation will be paid in 2014, 50% of which will be indexed to Natixis shares; V 64% of this variable compensation will be deferred for three years, 50% of which will be indexed to Natixis shares.
For fi scal year 2013, Laurent Mignon had use of a company car with a gross value of €5,180 and received payment of a €2,940 family allowance in accordance with the plan in force at Natixis.
V With regard to the non-compete agreement for Laurent Mignon, the Board of Directors, on the advice of the Appointments and Compensation Committee, authorized during its meeting of February 19, 2014, the establishment of such an agreement in the event he ceases to perform his duties as Chief Executive Officer. This agreement will be subject to a shareholder vote at the Ordinary General Shareholders’ Meeting of May 20, 2014 (see fifth resolution).
Moreover, the members of the Board of Directors do not benefi t from severance payments for their duties at Natixis.
R TABLE 1 Summary of the compensation, stock options and shares granted to each executive corporate officer 2013 fi scal year 2012 fi scal year
Value of performance shares granted during the fi scal year €350 (b) n/a
Fixed compensation for corporate duties €800,000 (a) €800,000 (a) €802,830 €802,830
(b) This amount includes the payment of deferred variable compensation in respect of previous fi scal years.
Member of the Natixis Appointments and Compensation Committee 10,000 11,000 6,000 6,000
In respect of BPCE and its subsidiaries 32,500 34,500 31,000 13,800
In respect of BPCE and its subsidiaries 0 17,000 17 ,000 17 ,000
In respect of BPCE and its subsidiaries 9,300 12,300 12,900 2,400
Benefi ts in kind in respect of BPCE (14) 5,292 5,292 5,256 5,256
Member of the Natixis Appointments and Compensation Committee 8,000 9,000 6,000 6,000
Member of the Natixis Appointments and Compensation Committee 4,000 4,000 N/A N/A
(7) Variable compensation for fi scal year 2012, calculated on a prorata basis, fully paid in cash in 2013.
(8) No multi-year variable compensation or free shares awarded over fi scal year 2013.
(12) Variable compensation for fi scal year 2012, or €225,028 (40%) paid in cash in 2013, and the balance deferred (60%) over three years in equal shares of €112,514. The fi nal allocated amount in 2014 will be €102,950 (after application of an index ratio).
(13) Amount paid in 2012 for the variable compensation for fi scal year 2011, or €213,675, and for the deferred portion for fi scal year 2010, or €244,851.
Performance shares granted by the AGM during the period to each executive corporate offi cer by the issuer and by all Group companies
(a) The shares will be non-transferable for the duration of the CEO’s term of offi ce.
R TABLE 8 Group (Natixis, BPCE, Caisse d’Epargne, Banque Populaire) - Record of purchase or subscription options granted
Number of exercisable options, including those exercisable by: 14,103,277 4,846,798 1) Natixis Directors in 2013: 376,530 73,150
Cumulative number of outstanding subscription options at end of period 14,103,277 4,846,798 * Due to the special dividend 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 by 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.
Subscription or purchase options granted to the top ten non-executive employees and options exercised by them
Payments or benefi ts due, or likely to be due, as a result of the termination or change of function (1) Payments in relation to a non-compete clause (1)
In accordance with EU regulations, it is hereby stipulated that there are no service agreements binding members of the Board of Directors or Senior Management to the Company that could confer benefi ts according to the terms of such an agreement and that might by their nature compromise the independence of members or interfere with their decision-making.
CORPORATE GOVERNANCE3 Chairman’s report on internal control procedures 3.6 Chairman’s report on internal control procedures
Natixis was formed from the merger of the Corporate and Investment Banking operations and services of the Banque Populaire banks and Caisses d’Epargne in 2006, continuing in 2007 with Ixis CIB’s absorption into Natixis. Following a subsequent merger between Banque Fédérale des Banques Populaires and Caisse Nationale des Caisses d’Epargne in 2009, Natixis’ core shareholder is now BPCE. For further details about Natixis’ history, please refer to Chapter 1, “Presentation of Natixis”.
Natixis’ internal control system complies with the principles on which the Comité des établissements de crédit et des entreprises d’investissement (CECEI – France’s Credit Institution and Investment Firms Commission) issued its approval to Natixis as well as the governance rules defi ned within Groupe BPCE. This system is also consistent with the legal and regulatory framework applicable to Natixis and which is notably set out in amended CRBF Regulation 97-02 (the “CRBF Reguation”). In particular, this regulation provides for the implementation of an internal control system on a consolidated basis and which comprises arrangements to ensure: V permanent control regarding the compliance, security and validation of transactions, as well as compliance with other requirements related to monitoring risks of any nature resulting from transactions; V periodic checks in the form of investigations and audits implemented centrally and, if necessary, locally, and which concern the compliance of transactions, compliance with procedures and the effectiveness of permanent control mechanisms.
In reference to its regulatory requirements, to commitments made to the CECEI and to the governance framework established within Groupe BPCE, Natixis has structured its internal control system around a periodic control department that performs audits, together with entities responsible for ongoing testing of transaction compliance and security as well as overseeing the effectiveness of Natixis’ risk management and monitoring mechanisms.
Many external standards apply due to the diversity of businesses in which Natixis operates. The main standards are as follows: V as a credit institution, Natixis is governed by the provisions of the French Monetary and Financial Code (which encompasses the provisions of the French Banking Act of January 24, 1984, and the French Financial Activity Modernization Act of July 2, 1996) and more specifically, it is subject to the specific banking guidelines resulting from the CRBF Regulation relating to internal control; V as a provider of investment services, Natixis is subject to the provisions set out by the Autorité des Marchés Financiers (AMF), and especially the code of good conduct concerning market intervention and customer relations; V Natixis complies with the terms of the best practices published by professional associations whenever the regulator recommends or enforces their application (for example, the code of ethics and compliance for Financial Analysts, made mandatory by the AMF); V Natixis applies anti-money laundering and terrorist financing regulations, under the control of the Autorité de Contrôle Prudentiel et de Résolution; V regarding its foreign branches and subsidiaries, Natixis applies the Group’s organization standards and also the regulations defined by the regulators in the markets in which Natixis has offices (in particular, the Financial Services Authority in the United Kingdom, the Bundesanstalt für Finanzdienstleistungsaufsicht/BAFIN in Germany, the Banca Centrale in Italy, the Financial Supervisory Authority in Japan, the Federal Reserve, the National Association of Securities Dealers and the Securities and Exchange Commission in the United States, the Hong Kong Monetary Authority in Hong Kong, the Commission de Surveillance du Secteur Financier in Luxembourg, the Irish Financial Services Regulatory Authority in Ireland), in cases where the operations exercised locally are subject to these regulations;
Permanent and periodic controls introduced by Natixis are organized from the fi rst operational or functional level up to the highest level. They are structured according to three principles: V Natixis separates its risk-taking and control functions, as well as the different levels of control. This separation results in: R a distinction between front- and back-offi ce functions,
Although responsibility for fi rst-level internal control lies fi rstly with operational or functional departments, second-level permanent controls and periodic controls are carried out by independent central functional departments.
CORPORATE GOVERNANCE3 Chairman’s report on internal control procedures 3.6.3 CONTROL SYSTEM PARTICIPANTS
These controls are carried out by operational or functional departments under managerial supervision. These departments are responsible for: V checking transaction processing procedures are adhered to and compliant; V justifying account balances for active accounts relating to the transactions they execute.
The Corporate Secretary is responsible for the second-level permanent control system, which is carried out by two main participants: the Compliance Department (including IT Systems Security) and the Risk Department.
R defi ne standards and methods for assessing compliance, control and reporting risks. These standards are devised in order to ensure market integrity and the primacy of customer interest, and to prevent confl icts of interest (including independence in third-party account management) as well as to counter money laundering and terrorist fi nancing,
R issue a written compliance opinion regarding all new activities, structures, processes, products and transactions, as well as signifi cant changes to existing products.This opinion is accompanied by the right of blockage or appeal, under the New Product Committees framework set up within Natixis’ business lines and its subsidiaries, or centrally for products common to several business lines,
R contribute to employee training in conjunction with the Human Resources Department,
R oversee the consistency and effectiveness of permanent controls for compliance risk.
The Compliance Department reports to the Corporate Secretary and functions independently of operational departments. The Corporate Secretary is responsible for permanent control, as defi ned in rule 97-02.
For business lines operated by the registered offi ce, Compliance managers report directly and hierarchically to Natixis’ Chief Compliance Offi cer.
To defi ne these rules, ensure that they are fully known to all Natixis employees, and ensure that they apply them, the Compliance department uses a company-wide “Conduct/Ethics/ Training” function, rolled out to each core business and each business line, including all subsidiaries, by the Compliance managers.
The main objectives of 2013 involved: V strengthening the conflicts of interest and transaction confidentiality management system. In particular, 2013 saw the development of the software tool Odeon, which replaced Confidence and improved on its functionalities. The application was rolled out in December. Similarly, procedures governing these matters were overhauled and special training initiatives (e-learning and presentations) were developed; noncompliance risk mapping: 2013 was the second year of the risk mapping exercise covering 50 Consolidated Natixis entities. Risk situations were inventoried and classified by intensity. This year, the exercise identifies 124 risk situations that must be monitored closely across the scope of Consolidated Natixis (4.8% of total risk situations identified). Actions plans were defined for each situation; V employee training in non-compliance risks: the e-learning library was significantly expanded and now offers 18 modules. 19,000 training initiatives were recorded, covering ethics, anti-money laundering efforts and fraud. Presentations were also offered in addition to these training initiatives. They were attended by 10,200 employees in 2013.
The purpose of the Financial Security Department (SECFIN), which reports to Compliance management, is to organize the mechanism to combat money laundering, terrorist fi nancing and fraud at Natixis and its subsidiaries. In addition to this standing supervisory task, SECFIN may directly spearhead special efforts on behalf of some business lines.
The “First-Level Internal Control” Project, launched in late 2010, was designed to manage and strengthen the fi rst-level control system used by the business lines. This project, which applies to the consolidated Natixis scope, is being phased in by entity or business line. The project has been rolled out in 29 entities and is in the process of being rolled out in 6 entities. As of December 31, 2013, an estimated three-fourths of the project’s scope was covered. 6,330 level-one controls (type 1.1 and 1.2) were recorded and as of December 31, 2013, 664 type 1.2 controls were covered by monthly reports. Over the month of November, 90% received a “good” or “satisfactory” rating.
The Compliance Department may perform three types of controls: V controls based on indicators arising from first-level controls; V controls based on warnings issued by automated control systems, especially under the framework of anti-money laundering and market abuse detection plans; V controls through checks on accounting documents and, if appropriate, on-site checks, so as to ensure that automated controls are relevant. They can also be used to check the application of more qualitative rules (knowledge and classification of the customer, application of Chinese walls, management of conflicts of interest, etc.).
Over the year, 3,513 second-level controls were performed on the consolidated Natixis scope via the software tool SCAN. The results of these controls were satisfactory for the most part; there were nevertheless some points raised on KYC quality, market transaction reporting, management of information confi dentiality and identifi cation of confl icts of interest.
These persons include: V the Head of ITSS and the Head of BCP who report to Natixis’ subsidiaries or business lines and are in charge of locally applying operational security and business continuity policies according to the context in the relevant sector; V local representatives within the business lines and subsidiaries (notably Business Continuity Plan representatives and application security representatives). They are responsible for locally deploying policies related to their activity and delivering advice and assistance on the subject; V representatives within IT project management teams responsible for implementing and maintaining security mechanisms.
New operating policies for information systems security in line with BPCE objectives came into force in 2012.
The ITSS-BC risk mapping exercise was conducted for the third time in 2013. This exercise systematically is not automatically included in the annual cycle for setting security goals (security orientation plan) as closely as possible to business line and regulatory requirements. ITSS-BC initiatives are now part of a three-year blueprint.
A program combatting information leaks (encryption of portable workstations, protection of information published on the Internet, protection of removable storage media, etc.) has been approved by the Senior Management Committee. Its roll-out is mostly complete. The remaining points will be completed in 2014.
The incorporation of security requirements has been reinforced in the management of business line IT projects. The “Security Criticality Checklist,” which stipulates the security requirements for the business lines, must be systematically used before launching projects. The information system security document, which defi nes the IT Division’s response to these requirements, has been established.
An alert management tool was rolled out across the entire consolidation scope in 2013, along with a geo-referencing tool used to locate the homes of Natixis employees with respect to major crises.
First-level controls were conducted across the entire consolidation scope and ITSS-BC continued to roll out its multi-year second-level control plan. In 2013 the controls focused on an entity in the SFS division (Natixis Lease), an entity in the Wholesale Banking division (UK), three entities in the Investment Solutions division (Natixis Asset Management, Natixis Bank and Natixis Assurances) and three support functions (Information Systems Security division, Communication and Sustainable Development division, Compliance and Permanent Control division).
Third-level control – or periodic control – is the responsibility of the Internal Audit Department.
The Internal Audit Department conducts audit assignments across the whole of Natixis (parent company, subsidiaries and branches) and covers all classes of risk arising from the various business activities carried out. It has full and unrestricted access to all information, confi dential or otherwise. Its fi eld of investigation encompasses all of Natixis’ operational activities (including GAPC workout portfolio management activities), its functional departments – notably including entities in charge of permanent control assignments – and its outsourced activities. In all business lines, it carries out in-depth analyses of operations, as well as the front-to-back processes by which operations are carried out. These analyses lead to an assessment of existing control points in processes audited as well as an assessment of risks arising from the relevant activities. They lead to recommendations to strengthen the comprehensiveness and robustness of the mechanisms for controlling or managing the risks audited. These recommendations are ranked by order of priority.
The Internal Audit Department reports are sent to Natixis’ Senior Management as well as to the audited units. In addition, Groupe BPCE’s General Inspection receives a copy of all internal audit reports issued by Natixis’ Internal Audit Department, in accordance with the provisions approved by the CECEI in its decision of November 15, 2007, as well as those set out in the charter of Groupe BPCE’s General Inspection.
Natixis’ annual and multi-year audit plans are approved by its Chief Executive Offi cer and by BPCE’s General Inspection. The Annual Audit Plan is examined by the Audit Committee. In 2013, the Internal Audit Department conducted audit assignments on all risk classes to which Natixis’ activities are exposed. It devoted a fairly signifi cant share of its resources to assignments of a regulatory nature, as part of the Basel 2 and Solvency 2 certifi cation process undertaken by Natixis, as well as assignments conducted in Natixis subsidiaries pursuant to audit agreements entered into with them.
The Control Functions Coordination Committee (“CFCC”) is chaired by the Natixis Chief Executive Offi cer, or his substitute the Corporate Secretary, and comprises the Chief Financial Offi cer, and the heads of Risk, Compliance and Internal Audit. The head of Compliance acts as the Committee’s secretary.
It may also meet with operational managers when necessary. Five CFCC meetings were held in 2013.
Consistent with the organization of Groupe BPCE, the secondlevel permanent control mechanism is organized under the authority of the Compliance function and the Risk function, in accordance with their respective powers. These two functions oversee the proper functioning of the chain of fi rst- and secondlevel controls.
CORPORATE GOVERNANCE3 Chairman’s report on internal control procedures Natixis’ highest-level risk governance authority is the Global Risk Committee, which defi nes the key elements of risk policy, analyzes the main risks and validates the main risk standards and methods implemented.
In accordance with Articles 17 ter and 38 of Regulation 97-02 as amended, alert procedures for serious incidents were introduced with alert thresholds set by type of risk. In 2013, the alert system was used three times: following the placement on the Level 3 Watchlist of an operation in which Natixis holds outstandings of more than €150 million and two regulatory VaR backtesting exceptions exceeding 20%. The requisite information was transmitted to the Risk Management Committee and Autorité de Contrôle Prudentiel et de Résolution.
The Risk Department is responsible for analyzing counterparty credit risk. It conducts this counter-analysis using a formalized credit fi le for each counterparty and benefi ciary group, including all information relevant and useful for decision-making purposes: V information regarding the client, its business and its environment; V ratings allocated by rating agencies, sector analysis, country risk and sovereign risk analyses, etc.; V internal data regarding commitments, collateral and guarantees; V a summary of all of the credit risks incurred by Natixis and the effects of the proposed transactions on profitability and regulatory ratios.
Credit decisions are made either through limit authorizations granted jointly to business lines and certain members of the Risk Department (“workfl ow” process) or by the relevant Credit Committees, using counter-analysis. These mandates are set out formally and granted individually by the Chief Executive Offi cer or by any person whom he authorizes to that end. They are sized according to the counterparty’s category and internal credit rating, and the nature and duration of the commitment. Furthermore, these authorizations can be exercised only when the commitment of interest satisfi es the different criteria set out in the risk policy of each business line.
Credit risk management requires a risk rating, an LGD and commitment or transaction monitoring procedures in accordance with Title II of the CRBF Regulation and the French ministerial order of February 20, 2007.
The Natixis Watch List and Provisions Committee meets once a quarter and covers all the Bank’s business lines. It reviews all doubtful loans under watch that may give rise to provisions or adjustments to existing provisions, and decides on the amount of provisioning necessary.
Natixis’ Market Risk Committee meets twice a month and is chaired by the Chief Executive Offi cer or his duly appointed delegate, a member of the Senior Management Committee. The Committee Chairman is the only person authorized to rule on all the cases presented.
The various measurements of market risk used by Natixis are VaR, stressed VaR (SVaR), IRC (Incremental Risk Charge), overall and specifi c stress tests, qualitative and quantitative operational limits, and loss alerts.
Natixis uses VaR, stressed VaR and IRC to calculate capital requirements for market risks over acceptable periods.
The structural balance sheet risks of Natixis are managed and monitored on a consolidated basis under the authority of the Asset/Liability Management Committee (the “ALM Committee”). This Committee is chaired by the Chief Executive Offi cer, and includes members of the Senior Management Committee in charge of Wholesale Banking’s Finance and Risks and Market
The ALM Committee’s monitoring scope includes: V Natixis’ entire scope of consolidation for liquidity risk, excluding insurance subsidiaries that do not present intrinsic liquidity risks and which are monitored and managed in respect of ALM risks; V Natixis’ entire consolidation scope for structural foreign exchange risk; V the banking portfolios of Natixis and its credit subsidiaries for overall interest rate risk.
Natixis’ ALM is based on the following organization: V the Financial Management division proposes ALM standards to the ALM Committee and executes the Committee’s decisions; V Natixis’ contribution to the single treasury and central bank collateral management pool since 2011 is aimed at refinancing all business lines in accordance with the established rules and limits, and executing the decisions of the ALM Committee delegated by the Financial Management division; V Natixis’ Market Risk Department is in charge of monitoring ALM limits. It also performs second-level controls of ALM indicators generated by the Financial Management division and level-three controls of the indicators established by the liquidity management team.
The mechanism is managed by Natixis’ Operational Risk Committee, a specialized body overseeing operational risks policy. It is the operational extension of the executive body and, as such, possesses its full decision-making power for issues
In order to perfect its overall data collection system, in 2013 Natixis rolled out a new consolidation module used to consolidate the necessary items for the calculation of regulatory capital requirements, and continued the process begun in 2009 aimed at reducing publication times.
The fact that most subsidiaries have their own management and control functions means that internal control procedures are decentralized and are tailored to the organization of each of the consolidated entities, relying on a multi-tier accounting control process: V a first-level control where permanent and local controls in operational business lines are integrated into the operating process and formalized in clearly-defined control programs; V an intermediate level overseen by each entity’s financial or accounting departments where independent controls of operating processes are performed to ensure the reliability and exhaustive nature of the financial statements; V a final level of control carried out by the Internal Audit Department as part of its regular audits.
Permanent and periodic controls particularly involve conducting and monitoring: V accuracy and veracity checks, such as the management/ financial accounts reconciliation procedures (balance sheet and income statement), clearing of suspense items, and more generally the justification of all accounts; V consistency checks through analytical review; V checks for compliance with accounting rules regarding the correct allocation of income and expenses; V correct processing of specific transactions in line with the relevant principles; V adjustment of anomalies identified at the time of these controls as well as the corresponding analyses and documentation.
The organization of the Accounting and Regulatory Controls function is based on: V accounting or regulatory production teams, within the business lines or centralized within the Accounting and Ratios Department, that handle all work related to the correct entry of transactions and the implementation of day-to-day controls; V first-level controls under the hierarchical and/or functional authority of the Accounting and Ratios Department including all monthly and quarterly controls that make the accounts more reliable; V independent second-level controls under the hierarchical authority of the Accounting and Ratios Department and the functional authority of the Compliance Department. The Regulatory and Accounting Review Department, aside from managing the system, also performs its own controls, including reviewing first-level controls.
The 2013 fi scal year was dedicated to: V keeping a tighter timetable for publishing the financial statements; V maintaining the previously defined control system based on: R real-time control processes that are decentralized within the business lines and centralized period-end controls,
R continuing to streamline IT systems used by the control system,
V enhancing controls, particularly via a one-off control plan during interim periods; V continuing to roll out control programs for regulatory and prudential reports;
CORPORATE GOVERNANCE3 Chairman’s report on internal control procedures V furthering actions to coordinate the Review Department’s supervision of the Natixis subsidiaries by setting up periodic reviews aimed at supporting the subsidiaries and helping them define control principles and methods that are consistent across their scope; V continuing to roll out the new financial management application.
In addition to the control procedures followed by the fi nancial departments responsible for preparing individual or consolidated accounts, the quality of accounting controls is verifi ed by: V ad hoc audit assignments conducted by BPCE’s General Inspection and Natixis’ Internal Audit Department; V audits required by the Autorité de Contrôle Prudentiel et de Résolution (ACPR) in its role as banking regulator; audits conducted by Statutory Auditors; V this work is carried out by three firms working in a uniform manner each quarter on most of the entities falling within Natixis’ scope of consolidation and whose opinions rely, in particular, on compliance with Natixis policies and the effectiveness of local internal control procedures.
Statutory Auditors’ report on the report of the Chairman of the Board of Directors 3.7 Statutory Auditors’ report on the report of the Chairman of the Board of Directors
It is the Chairman’s responsibility to prepare, and submit to the Board of Directors for approval, a report on the internal control and risk management procedures implemented by the Company and containing the other disclosures required by Article L. 22537 of the French Commercial Code, particularly in terms of corporate governance.
4.1. RISK FACTORS 133 4.1.1 Risks related to the macroeconomic environment and the fi nancial crisis 133 4.1.2 Risks related to the links with BPCE 134 4.1.3 Risks relating to natixis’ operations and the banking sector 135 4.1.4 Other risks 135 4.2 PILLAR III 139 4.2.1 Basel 2 regulatory framework 139 4.2.2 Prudential consolidation scope 139 4.2.3 Solvency ratio 139 4.2.4 Composition of capital 140 4.2.5 Risk management 144
Risk management 4.3 OVERALL INTEREST RATE, LIQUIDITY, STRUCTURAL FOREIGN EXCHANGE RISKS 171 4.3.2 Balance sheet risk management 171 4.4 INSURABLE RISKS 174 4.5 LEGAL RISKS 175 4.5.1 Legal and regulatory issues and constraints 175 4.5.2 Legal and arbitration procedures 176 4.5.3 Situation of dependency 179 4.6 INSURANCE RISKS 180 4.7 SENSITIVE EXPOSURES IN ACCORDANCE WITH THE RECOMMENDATIONS OF THE FINANCIAL STABILITY FORUM 185
V 4.2.5.3 Credit risks* (only for data mentioned as certified) 145
V 4.2.5.4 Market risks* (only for data mentioned as certified) 161
This chapter addresses the kind of risk factors to which Natixis may be exposed, their scale and the impact that these risks could have on the results and assets of Natixis, as well as the systems implemented to manage them.
In addition to the general risks related to the macroeconomic environment or to the links with BPCE, the following risks are discussed: R credit risk (including country risk): risk of loss related to counterparty bankruptcy leading to its inability to honor its contractual obligations to Natixis; R market risk: risk of loss related to any fl uctuation in market parameters (interest rates, foreign exchange rates, commodities prices, etc.); R operational risk: risk of loss resulting primarily from the inadequacies or failure of the processes, systems or people responsible for processing transactions; R structural balance sheet risk: risk of loss related to fl uctuations in interest rates (overall interest-rate risk) or foreign exchange rates, or the risk of lacking the resources needed to meet commitments (liquidity risk).
4.1. Risk factors 4.1.1 RISKS RELATED TO THE MACROECONOMIC ENVIRONMENT AND THE FINANCIAL CRISIS
Adverse market or economic conditions and increased regulatory requirements may cause a decrease in the net revenues, profi tability and fi nancial position of Natixis
Natixis’ risk management policies and procedures are subject to the approval and control of BPCE
Since the inception of BPCE, Natixis’ medium-to-long-term funding requirements have been met by Groupe BPCE through BPCE S.A. In the event market conditions deteriorate in the future, BPCE, which obtains fi nancing on the international debt markets, among other sources, may have diffi culty issuing debt instruments under reasonable terms and conditions.
In a fragile global economic environment and with weak visibility on fi nancial markets, Natixis’ risk profi le remains on the whole limited and targeted in terms of credit and market risks as well as liquidity risks.
CREDIT RISK (FOR FURTHER DETAILS, PLEASE REFER TO SECTION [4.2.5.3] OF CHAPTER [4] AND SECTION [3.6.4] OF CHAPTER [3]).
MARKET RISK (FOR FURTHER DETAILS, PLEASE REFER TO SECTIONS [4.2.5.4] AND [3.6.4]).
OPERATIONAL RISKS (FOR FURTHER DETAILS, PLEASE REFER TO SECTIONS [4.2.5.5] AND [3.6.4]).
RISK MANAGEMENT4 Risk factors Future events may differ from those refl ected in the assumptions used by management in the preparation of Natixis’ fi nancial statements, which may cause unexpected losses in the future
Pursuant to the IFRS standards and interpretations currently in force, Natixis is required to use certain estimates in the preparation of its fi nancial statements, including accounting estimates to determine provisions relating to loans and doubtful debts, provisions relating to possible litigation, and the fair value of certain assets and liabilities. If the values used for these items by Natixis should prove to be signifi cantly inaccurate, particularly in the event of signifi cant and/or unexpected market trends, or if the methods by which they are determined should be changed under future IFRS standards or interpretations, Natixis may be exposed to unexpected losses.
A market downturn is liable to cause a decline in the volume of transactions that Natixis executes for its customers and as a market maker, leading in turn to a decline in its net revenues from these operations. In addition, as management fees that Natixis charges its customers are in many cases based on the value or performance of the portfolios, any market downturn that reduces the value of these portfolios or increases the amount of redemptions would reduce the revenues Natixis receives from its Asset Management and Private Banking businesses.
Natixis’ risk management policies and procedures may not be effective in limiting its exposure to all types of market environments or all types of risk, including risks that Natixis has not been able to identify or anticipate. Furthermore, the risk management procedures and policies used by Natixis cannot guarantee risk reductions in all market confi gurations. These procedures may not be effective against certain risks, particularly those that Natixis has not previously identifi ed or anticipated. Some of Natixis’ qualitative tools and metrics used to manage risk are based on its use of observed historical market behavior. Natixis uses tools to analyze these observations, notably statistically, to quantify its risk exposure. The tools and metrics used may provide erroneous conclusions as to future risk exposures, notably because of factors that Natixis has not anticipated or correctly assessed in its statistical models, or because of unexpected and unprecedented market trends. This would limit Natixis’ ability to manage its risks. The losses borne by Natixis could prove to be signifi cantly greater than those forecast in light of historical averages. In addition, Natixis’ quantitative models do not incorporate all risks. Certain risks are subject to a more qualitative analysis that could prove insuffi cient and thus expose it to signifi cant and unanticipated losses. In addition, while no material issue has been identifi ed to date, the risk management systems are subject to the risk of operational failure, including fraud. (Please refer to section [4.2.5.5] “Risk management” for a more detailed presentation of the policies, procedures and methods used by Natixis to identify, monitor and manage its risks).
RISK MANAGEMENT4 Risk factors The fi nancial soundness and behavior of other fi nancial institutions and market participants could have an adverse impact on Natixis
Pillar II establishes a process of prudential supervision that complements and strengthens Pillar I.
It consists of: V analysis by the bank of all of its risks, including those already covered by Pillar I; V calculation by the bank of the amount of economic capital it needs to cover these risks; V comparison by the banking supervisor of its own analysis of the bank’s risk profile with the analysis conducted by the bank, to inform its choice of prudential measures, which may take the form of capital requirements exceeding the minimum requirements or any other appropriate technique.
Macroeconomic stress scenarios are also regularly simulated across the portfolio to examine their effects on the Bank’s capital adequacy.
Natixis is subject to consolidated regulatory reporting to the Autorité de Contrôle Prudentiel et de Résolution (ACPR). To this end, Pillar III disclosures are prepared on a consolidated basis.
The entity EDF Investment group is proportionally consolidated in accordance with the level of economic interest, i.e. 4.5%.
RISK MANAGEMENT4 Pillar III the “regulatory capital requirements applicable to banks and investment companies”. It was amended by the French decree dated November 23, 2011 transposing the CRD3 Directive, which introduced new provisions (Basel 2.5) for calculating requirements in respect of market risk and securitization.
The European CRD4 Directive and the European CRR Regulation were published in the Offi cial Journal of the European Union on June 26, 2013. These texts integrate into European law the international Basel 3 reform (December 2010) which sets out, in particular, new bank solvency and liquidity risk supervision requirements: V the directive (CRD4) covers the existing framework governing access to banking activities and practice of banking operations, the definition of competent authorities, the scope of prudential supervision, etc. It also covers new areas, specifically with regards to capital buffers, remunerations and transparency. This directive will be transposed into French law; V the regulation (CRR) covers matters pertaining to capital, liquidity, the leverage ratio, large exposures and counterparty credit risks: this single rule book applies directly to member state institutions.
R the Advanced IRB approach, for which banks use all their internal risk component estimates: probability of default, loss given default, exposure at default and maturity.
Regulatory capital is determined in accordance with CRBF Regulation No. 90-02 of February 23, 1990 relating to capital and is therefore divided into three categories: Tier 1 capital, Tier 2 capital and Tier 3 capital. Deductions are made from these categories relative to consolidated prudential data, which in the case of capital are identical to consolidated accounting data.
V Share capital; V Reserves, including revaluation reserves, and unrealized or deferred gains or losses.
Minority interests include shares of minority interests in stakes held by Natixis.
Restatements, o/w: V Reclassifi cation of hybrids and fair value fi ltering (1.4) (1.8) 0.4
Core Tier 1 capital totaled €11.9 billion at December 31, 2013, down €1.7 billion over the year.
Core Tier 1 capital includes a provision for the payout of 2013 cash dividends of €0.5 billion (i.e. €0.16 per share). It also covered the loss of minority interests following the deconsolidation of BP Développement (-€0.5 billion) as well as the increased deduction in respect of positive equity-method differences for the insurance subsidiaries (-€0.5 billion). These unfavorable effects were partially offset by the elimination of certain prudential restatements on CCIs (+€0.6 billion) in connection with the disposal and the reduction of deducted securitizations (+€0.1 billion). The other prudential restatements and deductions did not vary signifi cantly.
The main reason for the reduction in Tier 1 capital, other than the above items, was the redemption of DSNs for -€0.3 billion.
Risk-weighted assets amounted to €101.2 billion after the guarantee granted by BPCE (€2.9 billion, down €3.7 billion compared to December 31, 2012), and fell by €24.5 billion over the year.
Excluding the impact of the sale of CCIs, the decrease in credit risks (-€8.0 billion) over the year was primarily due to the following factors: V a decrease in outstandings (-€5.4 billion) due in large part to an exposure reduction strategy and the decrease in the prudential value of investments in insurance companies; V refinement of methodologies applied to incorporate guarantees received, (-€1.9 billion); V the deconsolidation of BP Développement (-€1 billion).
Risk-weighted assets under Basel 2.5 for Natixis’ main business lines can be broken down as follows: (in billions of euros) Division
The Core Tier 1 ratio rose from 10.9% at December 31, 2012 to 11.8% at December 31, 2013, while the Tier 1 ratio came to 13.2% at December 31, 2013 versus 12.3% at December 31, 2012.
Capital requirements under Basel 2.5 can be broken down by type of risk approach and Basel asset class: (in millions of euros) 12.31.2013 12.31.2012
Regulatory capital requirements for credit risk, counterparty risk and dilution risk 6,072 8,029
Based on our understanding of the CRR-CRD4 rules as published on June 26, 2013 (including the Danish compromise for eligible entities - without phase-in except deferred tax assets on tax loss carryforwards), the following changes in Core Equity Tier 1 (CET1) and Basel 3 risk-weighted assets were recorded during the fi scal year: (in billions of euros)
The main factors behind these changes are identical to those identifi ed on the corresponding indicators established under Basel 2.5 (see above).
Consequently, Basel 3 Core Equity Tier 1 rose from 9.2% at December 31, 2012 (pro forma of the disposal of CCIs) to 10.4% at December 31, 2013.
Economic capital requirements are calculated to cover four risk areas: credit, market (trading, ALM, investment portfolios, Private Equity, etc.) operational and business.
The regulation governing liquidity risk took effect on June 30, 2010 (French decree dated May 5, 2009). The liquidity ratio is designed to ensure that liquid assets with maturities of less than one month are greater than or equal to liabilities falling due within the same period. It is defi ned as the ratio between cash/ cash-equivalents and liabilities falling due in less than one month.
The control system is structured into global functions integrated into those defi ned by BPCE.
The Risk Department recommends risk policies consistent with those of Groupe BPCE to Senior Management for approval.
The mechanism is based on: V internal rating methodologies specific to the various Basel asset classes and consistent with Natixis’ risk profile; V an IT system used for managing the successive stages of the rating process, from initiation of the process to validation and logging of the complete process; V procedures and controls that place internal ratings at the heart of the risk-management system, from transaction origination to ex-post analysis of defaulting counterparties and the losses incurred on the relevant loans; V periodic reviews of rating methodologies, the method of calculating LGD and underlying risk parameters.
With respect to country risk, the system is based on sovereign ratings and country ratings which cap ratings that can be given to non-sovereign counterparties. These ratings are reviewed annually, or more often if necessary.
Since September 30, 2010 Natixis has used internal rating methods specifi c to the different asset classes approved by the Autorité de Contrôle Prudentiel et de résolution (ACPR - French Prudential Supervisory Authority), and that use the advanced internal ratings-based method (IRBA) to rate corporate, sovereign, banking, specialized lending and some categories of consumer fi nance exposures.
The principles used for identifying, measuring and managing credit risk hedging instruments are determined by the recommendations of the Basel Committee accord. The decision on whether a guarantee’s risk-reducing effects make it eligible to be included in risk-exposure calculations is made on a case-bycase basis. Checkpoints are provided for throughout the process. They cover the approval of the transaction, the monitoring of credit risk exposure and the calculation of the resulting capital requirements (predominantly calculated according to IRBA since September 30, 2010).
Periodic reviews of sector-based risk policies help to ensure that the risk budgets allocated by the Global Risk Committee chaired by the Chief Executive Offi cer are observed.
The monthly Limit Breach Committee analyzes breaches of predefi ned limits using specifi c indicators (number, total, duration, business lines concerned, etc.), examines signifi cant breaches and monitors their correction.
Wholesale Banking risks are monitored by the Restructuring and Special Affairs Department (DRAS), which intervenes in diffi cult cases where necessary. The Litigation Department handles collections of loans in litigation.
It draws on a structure of preparatory Committees that are jointly steered by the Risk Department and each of the bank’s business lines.
Natixis also sets aside provisions to cover country risk and sector risk (see Note 5.3 to the consolidated financial statements presented in section [5.2] Consolidated financial statements). These provisions are created on the basis of: V ratings for loans to private individuals and professionals; V sector risk; V geographic risk for other counterparties (corporate entities, sovereigns, etc.).
Exposure at risk by category of exposure and average exposure at risk over the period
Other exposure recorded in the corporate entities category 121,404 92,738 90,445 88,417
SMEs recorded in the corporate entities category 6,263 5,887 5,988 6,039
Other exposure recorded in the retail customer category 12,529 2,920 2,925 2,982
(a) Average exposure at risk represents the average of the four quarter-end fi gures (these data are not audited).
Other exposure recorded in the corporate entities category 13.4% 7.6% 3.9% 4.1% 29.1% 29.0%
Banks and investment fi rms 28.3% 6.8% 2.6% 1.6% 39.2% 35.5%
SMEs recorded in the retail customer category 0.5% 0.0% 0.0% 0.0% 0.5% 0.5%
RISK MANAGEMENT4 Pillar III Breakdown of exposure at risk by business sector
Other exposure recorded in the corporate entities category 23,817 17,748 10,273 27,761 13,140 92,738 88,417
Central administrations and central banks 43,144 1,614 623 1,527 4,367 51,276 44,088
Other exposure recorded in the retail customer category 247 2,033 50 216 374 2,920 2,982
SMEs recorded in the retail customer category 396 58 147 817 487 1,905 1,841
RISK MANAGEMENT4 Pillar III Exposure at risk by category of exposure and by approach as at December 31, 2013
The following table shows the breakdown of exposure at risk by internal rating (S&P equivalent) for asset classes measured using the IRB approach, after excluding: V exposure to equities (calculated using a simple weighting approach); V pool-based exposure (acquired portfolios); V securitization positions; V generic counterparties.
(a) After reclassifi cation of US and FR central bank exposures from AA- to AA+ for better alignment with the external ratings of these banks (change to notional allocation principle: Level 1 internal rating, or an S&P equivalent ranging from AAA to AA- with an allocation to AA-).
The tables also present average loss given default (LGD’s) and average risk weighting.
RISK MANAGEMENT4 Pillar III Presentation of Natixis Financement outstandings according to the IRBA retail method.
R IMPACT OF RISK-REDUCTION TECHNIQUES ON DERIVATIVES OTHER THAN CREDIT DERIVATIVES (DATA AS AT DECEMBER 31, 2013)
RISK MANAGEMENT4 Pillar III R EXPOSURES COVERED BY OTHER COLLATERAL BY CATEGORY OF EXPOSURE AS AT DECEMBER 31, 2013
Other exposure recorded in the retail customer category 186 - 186 240
Tangible collateral comprises real estate or real-estate mortgages in accordance with Articles 166.2 and 183.1 of the French decree of February 20, 2007.
Other physical collateral is defi ned as tangible collateral other than securities, fi nancial instruments, real estate or loans.
(b) Please note that the amount of capital required for securitisations weighted at 1,250% in the CA template is expressed after deduction of provisions.
(in millions of euros) at 12.31.2013 Exposure at risk Risk weighted assets Regulatory capital requirements
R PRESENTATION OF TRADING BOOK SECURITIZATION POSITIONS (INCLUDING SECURITIZATION POSITIONS DEDUCTED FROM CAPITAL)
In accordance with the recommendations of France’s Lagarde report, the Risk Department also ensures adherence to the limit notifi cation procedure. This procedure ensures that each trader sends email confi rmation that they belong to the desk where they are authorized to trade and that they respect their allocated limits.
VaR is calculated and monitored daily for all the Group’s trading portfolios. A VaR limit is set at an overall level and for each business.
Specific stress tests are also calculated daily in the management tools for all portfolios and are governed by limits. They are set on the basis of the same severity standard and are aimed at identifying the main loss areas by portfolio.
All market stress test mechanisms (including liquidity stress tests) are defi ned by the Risk Department, which is responsible for defi ning principles, methodology and calibration and scenario choices. The market stress test Committee, which is co-chaired by the Head of Risks and the Head of Global Markets, is responsible for the operational implementation of stress tests and meets on a monthly basis. The Committee validates work to be carried out, its workload and determines the annual IT budget.
These models may be subject to backtesting and monitoring in terms of quality and solidity to ensure that the applied risk parameters correspond to the value ranges projected upon their validation.
BPCE guarantees most of the workout portfolio management assets in Paris and New York. Nevertheless, the Market Risk Department continues to manage risks on all transactions on a standardized and exhaustive basis, whether these transactions are guaranteed or not by BPCE. A VaR, overall stress tests, as well as a SVaR and IRC that take into account the effects of this guarantee are produced on a daily basis.
The VaR’s decrease over the course of the year is indicative of a gradual reduction of exposures (continued disposal of positions in GAPC), and lower market volatility.
R OVERALL NATIXIS VAR INCLUDING THE BPCE GUARANTEE – TRADING PORTFOLIO (1 DAY VAR 99%)
The 4.8.2013 exception was linked to the updated valuation of the collateral provided by certain counterparties, under the two-curve calculation method. This exception was related to the calculation method and exceeded the VaR level by more than 20%.
Overall stress test levels were down compared to 2012, averaging -€29.5 million at December 31, 2013.
R REGULATORY CAPITAL REQUIREMENTS Regulatory capital requirements as at December 31, 2013, were as follows: (in millions of euros) Type and nature of risk
The Insurance Department, which reports to the Legal Department in the Corporate Secretariat, is tasked with analyzing insurable operational risks and taking out appropriate insurance coverage against them (see section [4.4] for further information). Insurance policies bought from leading insurers provide coverage for potentially signifi cant consequences resulting from fraud, embezzlement and theft, operating losses or the implication of Natixis’ civil liability or that of its subsidiaries or the employees for which it is responsible.
RISK MANAGEMENT4 Pillar III The procedures for monitoring and managing these risks are described in this very section.
The department’s role is to maintain and actively improve the system that identifi es, monitors, controls and reduces the level of operational risk within all of Natixis’ entities. Its main tasks are defi ning methodologies, monitoring and reporting on operational risks, collecting and reporting incidents and building a risk culture within the Company. Measures to raise awareness among bank employees were taken and training courses organized by the Operational Risk Department during 2013.
The Operational Risk Department is divided into two control units, one covering risks specifi c to Natixis’ business lines and activities, and the other dealing with the overall risks to which the Company is exposed (loss of access to premises or information systems, or the availability of employees). The Business Line Risk division is divided into: V Wholesale Banking: covers capital markets activities and workout portfolio management assets (GAPC) as well as financing operations; V Investment Solutions: covers Private Banking activities, Natixis Assurances, Private Equity as well as Natixis Global Asset Management; V Specialized Financial Services: covers subsidiaries Natixis Paiements, Natixis Interépargne, Natixis Intertitres, Cie Européenne de Garanties et Cautions, Natixis EuroTitres, Natixis Financement, Natixis Lease, Retail Services and Natixis Factor.
Within the business lines this system is complemented by a network of Operational Risk Offi cers responsible for reporting any incidents to the Operational Risk Department, and for providing operational risk data: indicators, progress on action plans, etc.
Losses are listed from the very fi rst euro and as they are incurred. A single defi nition of “serious incident” is used throughout the Company. All serious incidents are immediately declared. A departmental investigation is then conducted, and a report detailing the facts and recommended action plans is drawn up. The Operational Risk Committees decide on the necessary action plans.
The control mechanism is consistent with the standard method, as defi ned by banking regulations, applied to all of Natixis’ Operational divisions.
For 2013, the breakdown of exposure to actual risks which refl ects Natixis’ business lines is presented below.
R DIVISIONAL BREAKDOWN OF EXPOSURE AT RISK ON THE EQUITY ASSET CLASS
Financial assets at fair value through profi t and loss (other than trading) 2,535.9 2,575.7 39.8 40.1 (0.3)
R TOTAL AMOUNT OF DIVESTMENT GAINS OR LOSSES FOR THE PERIOD UNDER REVIEW
Financial assets at fair value through profi t and loss (other than trading) (81)
Prudential restatement of unrealized gains or losses on available-for-sale equity instruments (94)
The ALM Committee’s monitoring scope includes: V the banking portfolios of Natixis S.A. and its credit subsidiaries for overall interest rate risk; V Natixis’ entire scope of consolidation for liquidity risk, excluding insurance subsidiaries that do not present intrinsic liquidity risks and which are monitored and managed separately in respect of ALM risks; V Natixis’ entire consolidation scope for structural foreign exchange risk.
Natixis’ overall interest rate risk is minor in respect to the volumes of the positions managed, and does not warrant any special comments. The regulatory “shock” resulting from the application of Basel 2 standards (+200 bp instantaneous variation in the yield curves) at December 31, 2013, would result in a change in the portfolio’s absolute value of €17 million (calculations carried out on interest rate yield curves excluding the bank’s liquidity spread).
(1) Excluding those related to banking portfolios for capital markets activities that are presented to the Market Risk Committee and approved by it.
In line with its LCR management, Natixis has adjusted the management of its refi nancing needs to cover liquidity consumption, which has led the bank, in particular, to: V adopt stricter liquidity gap limits, leading to an extension of its liabilities; V continue to diversify its sources of financing, in particular through a cash management offer aimed at corporate customers; V implement a strategy to replace excess liquidity captured through the management of the LCR.
Other fi nancial liabilities at fair value through profi t and loss 51 13 10 8 9 47 137
The overall structural foreign exchange risk management policy, set out by the ALM Committee, thus aims to: V only purchase currency for strategic net investments with sustainable holding periods; net investments in non-strategic currencies are therefore refinanced by loans; V maintain structural foreign exchange positions within the set limits in order to protect the Core Tier 1 ratio from exchange rate fluctuations against the euro due to weighted currency risks (in particular the US dollar).
V The main risks analyzed are: R internal or external fraud; R drop in the value of securities; R liability risk (civil operating and professional liability, as well as managers’ and executive corporate offi cers’ civil liability); and
R damage to operating assets (buildings and contents, IT hardware and data), as well as loss of banking business due to such damage.
Natixis and its subsidiaries benefit from the guarantees provided by the “combined” Banker’s Blanket Bond (securities and fraud) and Company Civil Liability policies providing coverage of €148 million per claim per insurance year, of which €65 million are pooled with Groupe BPCE.
V “Civil Operating Liability” coverage is provided by the civil operating liability group insurance plan taken out by BPCE S.A., which came into effect on January 1, 2013, for up to €75 million per claim; V “Management Civil Liability” coverage is provided by the managers’ and executive corporate officers’ civil liability group insurance plan taken out by BPCE S.A., which came into effect on January 1, 2013, for up to €200 million per claim per insurance year; V Coverage for the buildings housing Natixis’ operations in France, their contents, IT risks and the resulting loss of banking business is provided by the “All Risks & Resulting Loss of Banking Business” group insurance policy taken out and renewed by BPCE S.A., which came into effect on January 1, 2013 (reconstruction and/or replacement cost, capped at €250 million per claim); V Coverage for intangible computer damage (damage to data without physical damage to the hardware containing it) and resulting loss of banking business is provided by the “Intangible Computer Damage/Loss of Banking Business” group insurance policy taken out and renewed by BPCE S.A., which came into effect on January 1, 2013, for coverage of up to €65 million per claim and per year.
Legal risks 4.5 Legal risks 4.5.1 LEGAL AND REGULATORY ISSUES AND CONSTRAINTS
Such changes could include, but are not limited to, the following: V monetary, interest rate and other policies of central banks and regulatory authorities; V general changes in government or regulatory policies liable to significantly influence investor decisions, in particular in markets where Natixis operates; V general changes in regulatory requirements, notably prudential rules relating to the regulatory capital adequacy framework, such as the modifications being made to the regulations implementing Basel 3, Solvency 2, Dodd-Franck Act and EMIR requirements; V changes in rules and procedures relating to internal controls; V changes in the competitive environment and prices; V changes in financial reporting rules; V expropriation, nationalization, price controls, exchange controls, confiscation of assets and changes in legislation relating to foreign ownership rights; and
RISK MANAGEMENT4 Legal risks Natixis’ profi tability and business outlook could be adversely affected by reputational and legal risk
The fi nancial consequences, assessed at December 31, 2013, of litigation deemed likely to, or which has in the recent past had a material impact on Natixis’ fi nancial situation and/or that of Natixis and its consolidated subsidiaries as a whole, their profi tability or their business, have been included in Natixis’ consolidated fi nancial statements.
The most signifi cant disputes are described below. Their inclusion in the list does not indicate that they will necessarily have an impact on Natixis and/or its consolidated subsidiaries. The other disputes are deemed not liable to have a material impact on Natixis’ fi nancial situation or profi tability and/or that of Natixis and its consolidated subsidiaries as a whole, or have not reached a stage where it can be determined whether they will have such an impact.
On February 27, 2007, the judge accepted all aspects of the Harris Associates L.P. motion and rejected the motion of the plaintiffs. The plaintiffs appealed against this decision on March 20, 2007. Both parties fi led written arguments and appeared before the Court of Appeals on September 10, 2007.
On June 2, 2008, the plaintiffs requested a rehearing of the appeal by the entire Court of Appeals. On August 8, 2008, the Court of Appeals rejected the plaintiffs’ request for a review of their appeal.
On March 9, 2009, the Supreme Court decided to hear the case. Hearings took place on November 2, 2009.
Since March 13, 2008, Natixis and Natixis Funding have been named among the defendants in multiple class-action lawsuits fi led by and on behalf of certain state, county and municipal bond issuers in the US federal courts in New York, Washington D.C. and California. The plaintiffs allege that providers and brokers of municipal derivatives conspired to fi x prices, rig bids and allocate
Legal risks customers between 1992 and the present time. The various plaintiffs have also named more than 30 other US and European banks and brokers as defendants. Some plaintiffs seek to certify a class of all state, local and municipal government entities, independent government agencies and private entities that purchased municipal derivatives from the defendants or through brokers from 1992 to the present, and to recover damages that result from the alleged anticompetitive activities. Most of the federal cases have been regrouped before the United States District Court for the Southern District of New York under the caption “Municipal Derivatives Antitrust Litigation.”