Simplifi ed fi nancial organization chart (at December 31, 2007) 8
Agreements between the bank and members of the Board and executive bodies 58
The Supervisory Board’s comments on the Executive Board’s management report and the 2007 fi nancial statements 179
Preparation and Organization of Tasks undertaken by the Supervisory Board 378
Copies of this document de référence may be obtained free of charge from Natixis, Immeuble Arc de Seine 30 avenue Pierre Mendès France
Profi le Formed from the combination at the end of 2006 of the corporate and investment banking and services activities of Groupe Banque Populaire and Groupe Caisse d’Epargne, Natixis is a key player in the European banking industry. It has a diversifi ed business portfolio with solid expertise, large customer bases and a strong international presence.
interest (1) in the share capital of the Banque Populaire banks and the Caisse d’Epargne banks, as well as an indirect contribution through the sale of Natixis’ products and services at the two networks’ branches, which together make up around 25% of the French retail banking market.
Natixis is one of the top 15 asset management companies worldwide and is also world
– the Group is able to meet the needs of its own corporate and institutional clients as well as the personal banking, small business and SMB customers of Groupe Banque Populaire and
Calédonie), enabling it to consolidate under the equity method 20% of the net income of the Banque
2007 was a troubled year for the banking industry. In an increasingly globalized world, the US subprime crisis was quick to affect all banks and lead to a widespread lack of confi dence and highly unstable fi nancial markets. The crisis left its mark on the whole of the industry, with some of the world’s most powerful banks hitting serious diffi culties that forced them into emergency recapitalizations.
Like other players in the industry, Natixis was not spared these effects. However, although the asset writedowns required at the end of the year reduced annual earnings, our economic fundamentals remain intact. Not only do the new conditions pose no threat to the business model envisaged jointly by
Groupe Banque Populaire and Groupe Caisse d’Epargne when Natixis was created, but they will also ultimately highlight the powers of the new combine. The decision of our two major shareholders to take over the US credit enhancement business at the height of the turmoil, underscored their sense of responsibility and ability to act together in order to further the interests of Natixis and its shareholders. It also highlighted their desire to build a long-term relationship based on trust with the markets, in line with the objectives assigned to Natixis.
The situation in the banking industry is now extremely changeable. Numerous players are going to have to restructure their business portfolios and plenty of changes and regroupings are liable to ensue. Against this backdrop, those banks endowed with strong and distinctive know-how will have the upper hand. Natixis’ powerful client base, recognized business-line expertise and solid capital structure, clearly give us an advantage in this respect.
What conclusions can you draw from this fi rst year? „ A: As you say, Natixis was only recently-created and 2007 was our fi rst full year of business. The fi nancial crisis which got underway in the summer worsened signifi cantly in the fourth quarter. This pattern was clearly visible in Natixis’ accounts.
However, the writedowns we were forced to make on certain asset portfolios at the end of the year meant that our fullyear results were not satisfactory, even though Natixis was proportionately somewhat less affected than many of our rivals.
Detailed analysis demonstrates some solid performances during the year, with most of our business lines making strong progress. The crisis had a very heavy impact, but the effects were concentrated on a very few segments of our Corporate and Investment Banking business. The Group’s overall behavior nevertheless confi rmed our ability to resist a particularly violent shock and underscored the solidity of our chosen business model. Despite the prevailing environment, we managed to execute the bulk of the sizeable integration measures that were planned, and within schedule. The highly solid capital structure sought by our two main shareholders when Natixis was created is also enabling us to negotiate the current turbulence in good conditions. As a result, a distinction clearly needs to be made between an exceptional global fi nancial situation and our underlying performances, which were both encouraging and in line with our expectations. When the time is right, it will also be necessary to examine the extent to which the new accounting standards (IFRS) have shaped external analysts’
“ How do you see prospects for 2008? „ A: The turbulence of the last few months is set to last for at least part of 2008. There will be no immediate return to the highly attractive conditions of 2005 and 2006, for example.
Nonetheless, we are approaching the year with a mixture of confi dence and prudence. Prudence, in the sense that it is still hard to evaluate the economic repercussions of the crisis and especially its possible consequences on medium-sized and large corporations. But confi dence as well, given that Natixis has already amply demonstrated its adaptability and maneuverability in the fi rst few months of the
Group’s existence. Although further efforts are going to be needed, we are headed in the right direction and the strength of commitment of our 24,000 staff worldwide will continue to provide the main momentum for our success in 2008.
2007 Key fi gures 21,959 employees FULL-TIME EQUIVALENT AT DECEMBER 31, 2007
Net income, group share €1,130m ** €2,136m ** €1,727m * Before writedowns on subprimes and monolines.
** Excluding restructuring costs, costs related to the creation of Natixis and extraordinary items.
(e co no m ic c on tri bu tio n)
Factoring * Holding company of the management fi rms: Natixis Asset Management; AEW Capital Partners et AEW Europe; Loomis, Sayles & Company; Harris Associates; Harris Alternatives; Reich and Tang Funds; Westpeak; Vaughan Nelson; Snyder; Caspian; CGM; Hansberger; Reich and Tang Capital Management; Gateway Investment Advisers; Alpha Simplex
Europe – Alicante – Barcelona – Berlin – Bielefeld – Biella – Birmingham – Bratislava – Breda – Brussels – Bucharest – Budapest – Cologne – Dublin – Düsseldorf – Eschborn – Feldkirchen
– Mainz – Milan – Moscow – Munich – Nuremberg – Oslo – Paris – Porto – Prague – Riga – Rome – San-Sebastian – Saint-Petersbourg – Se ville – Sofi a – Stockholm – Stuttgart – Tallinn
– Beyrouth – Bnei-Brak – Casablanca – Canton – Cotonou – Dakar – Douala – Dubai – Hanoi – Hô Chi Minh-City – Hong Kong – Jakarta – Johannesburg – Kuala Lumpur – Labuan – Cairo
Stock market indices SBF 80, SBF 120 and SBF 250 Included in the CAC Next 20 and Euronext 100 indices
NATIXIS SHARES CLOSED ON DECEMBER 31, 2007 AT €13.14, UP 30% FROM END-2005.
1st quarter 133,036,851 2nd quarter 144,413,945 3rd quarter 221,979,202 4th quarter 251,484,996
(b) Based on number of shares outstanding a t end of year.
The following calculations are based on a gross dividend, adjusted for the 10-for-one stock split, including the avoir fi scal tax credit at the 50% rate and reinvested in Natixis shares.
In 2007, Natixis handled all relations with private and institutional investors, financial analysts and rating agencies.
Marchés Financiers). Owing to the quality of the 2006 annual report, it was again one of the eight SBF 120 companies nominated for the annual report “Grand prix” awarded each year by the French fi nancial publication La Vie Financière, in partnership with Les Échos.
Natixis has gradually developed specifi c tools intended for this audience alone: a “Shareholders’ Newsletter” was instituted, complete with a specific graphic charter and focusing on topics of particular interest to individual shareholders
Club could request free passes – brought in over three hundred contracts with existing or potential shareholders.
Exchange. From the qualitative standpoint, the impact surveys conducted at the show by Opinionway showed that the visitors had a very positive opinion of Natixis through its stand and the welcome they received there; a toll-free number open to shareholders (08 00 41 41 41)
played a significant role in informing and guiding shareholders. Open daily from 9 AM to 6 PM, it received an average of 70 calls per day during 2007. It served as a vehicle for certain operations, such as offering free passes to shareholders wishing to attend the Actionaria Trade Show; ■
NATIXIS AND ITS SHAREHOLDERS 1 Shareholder relations the specially-created e-mail address (actionnaires@
Meeting of Natexis Banques Populaires held at the Carrousel du Louvre. The company’s performance was commented on and explained and Natixis’ management responded to questions from the shareholders. The Combined General
Meeting was broadcast live on the Internet. The meeting could also be viewed for one month thereafter on the Internet.
On December 20, 2007, a General Meeting of technical nature was held at Natixis’ headquarters in Charenton. At the meeting, the absorption of Ixis CIB by Natixis was fi naliz ed.
guide), lastly, are gradually being deployed, in both paper and electronic format.
(BALO – ciel.gouv.fr) and the fi nancial press at least 35 days prior to the Meeting date, by calling the toll-free number reserved for shareholders (calls originating in France only) or by visiting the bank’s web site. Copies of the Notice of Meeting and the voting forms can be obtained from the bank or broker that manages their share account.
Shareholders who do not attend the Meeting in person can take part in the vote by: • giving proxy to the Chairman of the Meeting, by returning the signed form of proxy. The Chairman then casts a “Yes” vote on all resolutions presented or approved by the Board of Directors and a “No” vote on all other resolutions; • voting by post, by returning the signed postal voting form after checking the appropriate boxes so as to vote “Yes”, “No” or “Abstain”
POLICIES AND RULES FOR DETERMINING COMPENSATION PAID TO MEMBERS OF THE EXECUTIVE BODIES 53
Banque Fédérale des Banques Populaires Represented by: QUEUILLE Philippe, Deputy Chief Executive Offi cer of Banque Fédérale des Banques Populaires
Caisse Nationale des Caisses d’Epargne Represented by: MERINDOL Nicolas, Chief Executive Offi cer of Caisse Nationale des Caisses d’Epargne
BOLLORÉ Vincent Chairman and Chief Executive Offi cer of Groupe Bolloré
CREQUIT Jean-Claude Chairman of the Executive Board of Caisse d’Epargne Côte d’Azur
JEANNIN Bernard Chief Executive Offi cer of Banque Populaire Bourgogne Franche-Comté
METTLING Bruno Deputy Chief Executive Offi cer of Banque Fédérale des Banques Populaires
PATAULT Didier Chairman of the Executive Board of Caisse d’Epargne des Pays de la Loire
BRIXNER Ulrich Chairman of the Consultative Committee of DZ Bank AG
A number of corporate governance rules relating to the composition and powers of the Supervisory Board and the
MILHAUD Charles Board Meeting of 17.11.2006 2011 Chairman of Supervisory Board
Chairman of the Executive BOARD OF CAISSES D’EPARGNE ÎLE-DE-FRANCE PARIS AND ÎLE-DE-FRANCE OUEST
Deputy Chief Executive Offi cer of BANQUE FÉDÉRALE DES BANQUES POPULAIRES
Caisse Nationale des Caisses d’Epargne ET DE PREVOYANCE represented by Nicolas MERINDOL
GENTILI Stève AGM of 17.11.2006 2011 Member of the Supervisory Board
HENRY Francis AGM of 17.11.2006 2011 Member of the Supervisory Board
JEANNIN Bernard Supervisory Board meeting of 30.05.2007 2011 Member of the Supervisory Board
CORPORATE GOVERNANCE 2 Structure of the executive bodies de La PORTE du THEIL Yvan
NAOURI Jean-Charles AGM of 17.11.2006 2011 Member of the Supervisory Board
PATAULT Didier AGM of 17.11.2006 2011 Member of the Supervisory Board
ZOLADE Robert AGM of 17.11.2006 2011 Member of the Supervisory Board
Chairman of the Consultative Committee OF DZ BANK AG AM PLATZ DER REPUBLIK
Natixis’ Supervisory Board was appointed for a period of six years by the Annual General Meeting of November 17, 2006.
It is composed of eighteen members, in addition to two nonvoting directors.
Board as majority shareholders and legal persons. The other 12 members from the two groups are all individuals and directors of Groupe Banque Populaire and Groupe Caisse d’Epargne.
Veolia Environnement. Robert Zolade is Chairman of the collective catering company, Groupe Elior.
Naouri and Henri Proglio each serve as non-voting director on the Supervisory Board of Caisse Nationale des Caisses d’Epargne, one of Natixis’ two shareholders
Supervisory Board, and the second Vice-Chairman shall be a representative of the other shareholder.
Populaire régionale, Bernard Jeannin, were appointed. Both appointments were ratifi ed at the Annual General Meeting held in December 2007.
The Executive Board may be made up of two to seven members appointed for a period of six years by the Supervisory
The Supervisory Board meeting of February 14, 2008 formally made note of Anthony Orsatelli’s resignation from his duties as member of the Executive Board and decided to appoint
A brief curriculum vitae of each of these individuals, as well as their list of executive positions and directorships in 2007 is provided hereafter.
Chairman of the Board of Directors of Direct 8 (ex-Bolloré Média)
Permanent representative of Bolloré Participations, Member of the Supervisory Board of Compagnie du Cambodge
Permanent representative of Bolloré Participations, Director of Immobilière de la Pépinière
Chairman of the Executive Board of Caisse d’Epargne Îlede -France Ouest
Vice-Chairman of the Supervisory Board of Caisse Nationale des Caisses d’Epargne
Permanent representative of Caisse d’Epargne et de Prévoyance Île-de-France Paris, Member of the Supervisory Board of Efi dis
Chairman and Chief Executive Offi cer of SICAV Ecureuil Dynamique +
Chairman of Réunion des Associés de la SAS Alliance Entreprendre Développement
Member of the Supervisory Board of Caisse Nationale des Caisses d’Epargne
Chairman of the Supervisory Board of ABP – Assurances Banque Populaire
Member of the Executive Board, Chief Executive Offi cer of Natixis
Vice-Chairman of the Supervisory Board de la Banque Internationale de Commerce – bred
Permanent representative of BRED Banque Populaire on the Board of Directors of Banque Internationale de Commerce - BRED
Permanent representative of la Banque Fédérale des Banques Populaires, Member of the Supervisory Board of Natixis
Representative of Banque Fédérale des Banques Populaires on the Board of Directors of BICEC
Representative of Banque Fédérale des Banques Populaires on the Supervisory Board of BPL – Banque pour les Paiements on Line
Chairman of the Steering and Supervisory Board of Caisse d’Epargne et de Prévoyance de Lorraine ChampagneArdennes
Chairman of the Board of Directors of Société locale d’épargne Marne Nord
Member of the Board of Directors of Fédération Bancaire de l’UE (Brussels)
Member of the Board of Directors of Eurizon Financial Group S.p.A. (Turin)
Member of the Supervisory Board of CDC Finance – CDC Ixis (Paris)
Permanent representative of Banque Populaire Bourgogne Franche-Comté, Member of the Supervisory Board of la Banque pour les Paiements onLine
Permanent representative of Natixis, Non-voting director of Banque Fédérale des Banques Populaires
Member of the Supervisory Board of La Compagnie 1818 - Banquiers Privés
Chairman of the Supervisory Board of BPL - Banque pour les Paiements on Line
Permanent representative of Natexis Banques Populaires, Director of Natexis Private Equity
Other position held: Member of Executive Committee of CIBP (Confédération Internationale des Banques Populaires)
Permanent representative of Banque Populaire Val-deFrance, Vice-Chairman of i-BP (Informatique Banques Populaires)
Permanent representative of la Caisse Nationale des Caisses d’Epargne, Member of the Supervisory Board of Natixis
Chief Executive Offi cer and Member of the Executive Board of CNCE
Vice-Chairman of the Board of Directors of Natixis Global Asset Management
Deputy Chief Executive Offi cer of Banque Fédérale des Banques Populaires
Chairman of Board of Directors of Centre National d’Enseignement à Distance (CNED)
Permanent representative of CNCE, Chairman of GCE Courtage (ex GCE Imédia 07)
Permanent representative of CNCE, Director of Banque des Îles Saint-Pierre et Miquelon
Permanent representative of CNCE, Member of the Supervisory Board of Natixis Multimanager
Permanent representative of CNCE, Chairman of GCE Participations, Manager of SNC Participations Ecureuil
Permanent representative of GCE SEM, Member of the Supervisory Board of SOGIMA
Permanent representative of Natixis, Non-voting director on the Supervisory Board of Caisse Nationale des Caisses d’Epargne et de Prévoyance
Permanent representative of CIFG Guaranty, Member of the Supervisory Board of CIFG Europe
Chairman of Natixis Commercial Paper Corp. (formerly -Ixis Commercial Paper Corp.)
Chairman of Natixis Municipal Products Inc. (formerly -Ixis Municipal Products Inc.)
Chairman of the Supervisory Board of Natixis Global Asset Management (formerly -Ixis Asset Management Group)
Chief Executive Offi cer of Caisse d’Epargne et de Prévoyance de Bretagne
Representative of CEPDL, Member of the Supervisory Board of GCE Business Services
Member of the Supervisory Board of Ixis Corporate & Investment Bank
Member of the Supervisory Board of Société des Eaux de Melun
Vice-Chairman of the Board of Directors of la Banque Fédérale des Banques Populaires
Legal Representative of Bercy Présidence, the company that is manager-partner of H.B.I. itself Chairman of Bercy Participations, manager and partner company of Elior (SCA)
Legal Representative of Holding Bercy Management, Chairman of Management Restauration Collective (SAS)
Executive Board of Caisse Nationale des Caisses d’Epargne since 1999. A science graduate, he has spent his whole career with Groupe Caisse d’Epargne. Milhaud is also Chairman of the Supervisory Board of Natixis and of Financière OCEOR,
Offi cer of Informatique Banques Populaires since 2000. He previously held a series of management positions at Groupe
Group, which has over 30,000 employees and is a market leader in the manufacturing, transportation and logistics sectors, as well as energy distribution and media.
Executive Offi cer of Routin SA, which produces and markets beverages from concentrate.
Populaire Bourgogne Franche-Comté since 2002, has held a series of management positions within Groupe Banque
Board of Caisse d’Epargne Côte d’Azur. Having previously worked in the public sector and the banking sector, he has held executive positions within Caisses d’Epargne since 1984.
Stève Gentili, age 58, Chairman of Bred Banque Populaire since 1998, was the manager of a leading food manufacturer until 2004. He is Chairman of the Group agency for cooperation and development (ABPCD) and of Natixis Pramex
Bruno Mettling, age 50, is Deputy Chief Executive Offi cer of
Executive Offi cer and founder of EURIS, the holding company of one of France’s leading retail groups. He began his career as an auditor with the French Treasury before becoming chief of staff at the Ministry of Social Affairs and National Solidarity in 1982 and at the Ministry of the Economy in 1984. He was also manager-partner at Rothschild & Cie Banque from 1987 to 2005.
Chairman and Chief Executive Offi cer of Veolia Environnement and has been Director and Member of the Supervisory Board of several major industrial and fi nancial groups in France.
Provençale et Corse, is manager of a number of industrial companies in the electronic sector and services companies.
Prestiti. He has held various positions of responsibility and subsequently executive management positions within the
Executive Offi cer of Banque Fédérale des Banques Populaires since 1999 and is Executive Chairman of Natixis. Holding a degree in Management and Economics, Mr Dupont was director of a commodities wholesaler for 12 years and then
François Ladam, age 61, an HEC graduate, has spent his entire career with Groupe Banque Populaire as Internal auditor and then Chief Executive Offi cer of two Banque Populaire regional banks. He was Chief Executive Offi cer of Natexis
Crédit Agricole, in France and in the United States. He became responsible for the Natixis’ Finance and Investment Bank in
Board exercises permanent control of the management of the company by the Executive Board.
At any time of the year, it carries out inspections and verifi cations it considers appropriate, and may receive from the Executive Board any documents it deems useful in fulfi lling this responsibility.
At the end of each fi nancial year, in accordance with regulatory deadlines, the Executive Board presents to the Supervisory
Executive Offi cers in accordance with French law and Article 9 of the bylaws, as well as the conditions set out in the shareholders’ agreement as described in paragraph 1.2.2.
The Supervisory Board decides on the draft resolution proposing to the general shareholders’ meeting the designation of the statutory auditors, subject to the conditions required by law.
In order to add to statutory requirements, determine certain terms of its operation and set out the rights and duties of its members, the Supervisory Board has decided to adopt a set of Internal Rules.
Therefore, independent members of the Supervisory Board may not: be an employee or corporate offi cer of the company or the group, an employee or director of a shareholder with control of the company alone or in concert, in accordance with Article L. 233-3 of the French Commercial Code, or a consolidated company, and has not served in such a capacity during the last fi ve years,
CORPORATE GOVERNANCE2 Role and rules of operation of the executive bodies be a corporate offi cer of a company in which the company directly or indirectly holds a directorship or in which an employee designated as such or a corporate offi cer of the company holds a directorship, be a major customer, supplier, corporate banker or investment banker of the company or the group, or for whom the company accounts for a signifi cant proportion of its business, have a close family connection with a director of the company or the group, have been an auditor of the company or one of the group’s companies in the last fi ve years, have been a director of the company or one of the group’s companies in the last fi ve years, be a member of the company’s S upervisory Board for more than 12 years, receive or have received additional material compensation from the company or the group other than directors’ fees.
Supervisory Board represents a shareholder of the company holding more than 10% of share capital or voting rights directly or indirectly, the Board, on the basis of a report from the Compensation C ommittee, shall verify the member’s independence, taking account of the composition of the company’s share capital and the existence of any potential confl icts of interest.
Board is discussed by the Compensation C ommittee, which prepares a report on the subject; T he Ethics and Compliance Charter for Supervisory
Board members: The internal rules state that each Board member shall devote due time and attention to fulfi lling his or her duties and regularly attend meetings of the Board and Committee or
Board member shall ensure under all circumstances that he or she acts in the business interests of Natixis and endeavor to defend and promote Natixis’ values.
Members of the Supervisory Board and Committees, as well as any person attending meetings of the Board and its Committees, must abide by a general confi dentiality agreement concerning matters discussed at such meetings, as well as any information that is confi dential or presented as such by the Chairman or Chairman of the Executive Board.
Code. Members shall also inform the company of the number of shares held as at December 31 of each year and during any fi nancial transactions, in order to allow for this information to be passed on by the company.
In accordance with regulations, the Executive Board may decide to sub-delegate the power granted to it in application of this rule.
E valuation of the Supervisory Board: At least once a year, one item on the agenda shall concern the evaluation of the operations of the Board, which is included in the company’s annual report; ■
Board meeting on November 17, 2006, appointed the following directors to the Audit Committee: Nicolas Mérindol and Jean-
rule n° 2001-01 of June 26, 2001, concerning the internal control of credit institutions and investment fi rms, amending
CRBF rule n° 97-02 of February 21, 1997, as amended by rule n° 2004-02 of January 15, 2004; it examines the company and consolidated annual and interim fi nancial statements, as well as the company’s draft budgets at least one week before they are presented to the
it gives an opinion on the procedures implemented by the company to ensure compliance with regulations, as well as the monitoring and control of risks; to this effect, it receives reports from the risk Committees of the company and its main subsidiaries, as well as reporting on risks, notably operational, market or counterparty risks, carried out under the diligence of the company’s Executive Board; it gives an opinion on the appointment and dismissal of the head of Internal Audit; it monitors the implementation of actions based on the conclusions of assignments by the Internal Audit department and the Banking Commission; for this purpose, it may receive reports from the Internal Audit department and the Banking
June, end-September and end-December; consolidated budgets and the fi nancial statements of the main subsidiaries, as well as any related documents provided to the supervisory Board or, if applicable, the risk management committee of the main subsidiaries.
The Audit Committee may submit to the Supervisory Board any proposals to carry out an audit, notably concerning the fi nancial statements of the company and its subsidiaries.
Fédérale des Banques Populaires on the Supervisory Board, was appointed to replace him, Member of the Compensation
the level and terms of compensation paid to members of the Executive Board, including fringe benefi ts, pensions and personal risk insurance, as well as stock options; rules for the allocation of directors’ fees to members of the
During Year 2007, the Supervisory Board held seven meetings, with a participation rate of 85% of its members over the whole of the year.
In accordance with banking regulations, the Board became familiar with the reports drawn up on the enforcement conditions of internal controls and on risk measurement and monitoring. The Board was also provided with the Chairman’s report on the conditions under which Board meetings are to be planned and organized.
As regards business monitoring, the Board was provided with the company’s draft budget for fi nancial year 2007, as well as the company and consolidated accounts approved by the
As such, the Boa rd was required, in particular, to give its opinion, prior to implementation and in accordance with the shareholders’ agreements and bylaws, on a number of restructuring measures between subsidiaries: within the Asset Management division, with a series of share transfer transactions and mergers between eight companies; within the Services division, in particular in the fi eld of consumer loans and the “securities” business, etc.; ■
Naturally, the Board’s work stood out this year for the special attention it paid, from the end of the First Half, and even more so throughout the Second Half, to analyzing the situation brought about by the international fi nancial crisis.
Committee on the topics of direct or indirect exposure to the risks brought about by the subprime loans, conduits and SPVs and, more generally speaking, the fi nancial impact of the crisis for Natixis. In addition, within this setting, and in response to the requirements set out by the ratings agencies for institutions operating in credit enhancement, the Board was required to give its opinion, in December 2007, on the disposal of subsidiary CIFG.
The Executive Board’s meetings were chaired by its Chairman or, in his absence, by the Chief Executive Offi cer. The members of the Executive Board, without exception, attended all of the meetings. Representatives from the business lines or divisions were called in, as required, to deliver presentations on various development projects to the Executive Board. Likewise, the Executive Board asked the managers from the Support functions – Finance, Human Resources, Controls, etc. – to join in the Executive Board’s debates on subjects relevant to their divisions.
Over the course of the sessions, the Executive Board regularly reviewed the company’s business development and performance trends. It paid special attention to managing the fi nancial crisis, which had become acute during the year.
In this regard, it set out the guidelines that ultimately made it possible to rein in the effects of the subprime crisis and monitored their implementation. It worked to identify and limit
The Executive Board approved the new organization principles for certain divisions or business lines, fi rst and foremost
The Executive Board moreover strived to coordinate relations between Natixis and its two main shareholders, through the governance bodies that had been planned upon Natixis’
creation. It also worked to give concrete form to the operational agreements enabling the deployment of Natixis’ offers across the networks of both Groupe Caisse d’Epargne and Groupe
Natixis’ Audit Committee met nine times during Fiscal Year 2007. The participation rate was near 82% over the whole of the year.
In light of ongoing events, the Committee’s attention naturally focused, in the Second Half, on the potential risks arising for
The Compensation Committee met in January of 2008 to decide upon the variable pay to be allotted to the Company’s leaders for Fiscal Year 2007, in light of the forecasted results for the fi scal year.
I n accordance with the terms of the shareholder agreement, it also gave an opinion on the appointment of new members to the company’s Executive Board as nominated by the
CORPORATE GOVERNANCE 2 Policies and rules for determining compensation paid to members of the executive bodies
Policies and rules for determining compensation paid to members of the executive bodies
February 14, 2008, the following decisions regarding director compensation: Compensation paid to Members of the Supervisory Board
The total compensation budget is €500,000 for a Board comprising 18 members and two non-voting directors and two Committees each of six members.
Members of specialized Committees : Audit Committee: Chairman: €12,500 for each joint Chairman
Compensation Committee members: fi xed portion: €3,000, variable portion: €1,000 per meeting, for up to two meetings.
The decisions made are based on three main principles: clarity, transparency and exemplarity; equality between Executive Board members (paying particular attention to ensuring that compensation is consistent with the rest of the market); new individual compensation levels in line with previous levels.
Bonus of the Executive Board members will combine a portion relating to Natixis’ performance (80%) and a portion relating to individual performance (20%). The calculation basis combines one or two quantitative criteria based on operating income, with a target (projected income) and a maximum level (higher than expected income) corresponding to the maximum bonus.
In addition, the Chairman may receive a bonus representing 120% of this salary if performance targets are reached, up to a maximum of €630,000 if the company achieves 150% or more of its targets.
The Chief Executive Offi cer’s salary of €600,000 a year is 80% of the market median. In addition, the Chief Executive
Offi cer may receive a bonus representing 120% of this salary if performance targets are reached, up to a maximum of €1,080,000 if the company achieves 150% or more of its targets.
The Compensation Committee and the Supervisory Board have set the Chief Executive Offi cer’s variable compensation at €300,000 for Year 2007.
Salary of €450,000; plus a bonus of 100% of salary if performance targets are reached, up to a maximum of €675,000 if the company achieves 150% or more of its targets.
The Compensation Committee and the Supervisory Board have set François Ladam’s variable compensation at €225 000 for
Board, has given rise to the following: 190,000 options for the Chairman for service to Natixis and 70 000 options for service to Banque Fédérale des Banques
Should an executive be dismissed prior to the expiration of his term, except in the event of professional misconduct, the group will pay an indemnity equal to one year’s compensation plus 1/12 of annual compensation for every year of service with the Natixis Group or one of the two shareholding groups.
The amount of the indemnity is limited to a maximum of 42/12 of annual compensation.
Supervisory Board of February 14, 2008, said commitments will be examined in 2008 by the Compensation Committee and approved by the Supervisory Board in compliance with regulations.
CREQUIT Member of SB 20,000 10,000 0 30,000 de LA PORTE du THEIL Member of SB 20,000 10,000 10,800 40,800
TOTAL 3,607,204 (1) Not included €500,000 paid in 2007 for fi nancial year 2006.
(2) Paid in 2008 for 2007, following a B oard decision in February 2008, upon proposal from the Compensation Committee, in light of estimated results for 2007.
CREQUIT Member of SB 0 0 0 de LA PORTE du THEIL Member of SB 11,040 7,022 18,062
COMPENSATION RECEIVED BY MEMBERS OF THE EXECUTIVE BODIES OF NATIXIS IN COMPANIES CONTROLLING NATIXIS, FOR YEAR 2007
In accordance with regulations, a list of the functions exercised by the executive directors of Natexis can be found in this document. The brief summary of their curriculum vitae shows that they all have recognized business expertise, in particular through their positions as executives of banks or large industrial companies or as former bank executives.
The bank also reports, in accordance with EU regulations, that there are no agreements between members of the Board,
Senior Management or the Executive Board and the bank that could grant advantages to them at the termination of such an agreement and that might by their nature compromise their independence or interfere with their decisions.
Natixis’ Management and Supervisory Board members include employees of the two shareholder groups (Groupe Banque
The bank’s fi nancial statements are audited by three independent accounting fi rms. Their terms will expire with the
Annual General Meeting called to approve the 2009 fi nancial statements, as concerns Deloitte & Associés and Salustro
Audit, certifi cation, examination of individual and consolidated fi nancial statements 3,914 3,759 61% 49% 2,737 2,655 65% 94% 2,270 601 99% 75%
Fully and proportionally consolidated subsidia ries and branches 1 039 1 212 16% 16% 1,298 58 31% 2% 20 10 1% 1%
(1) In 2006, fees paid to auditors and members of their networks were not accounted for in the proportionally consolidated subsidiaries as the amount was immaterial.
The substitute auditors are: BEAS, 7-9, Villa Houssay – 92200 Neuilly-sur-Seine;■
Consumer fi nance – targeting major-player status in france and Europe 77
Natixis Corporate and Investment Bank (CIB) provides world-class solutions for corporations, institutional investors, insurers and banks. The array of products and services embraces loans, structured fi nancing and capital market, fl ow and leasing products, together with securitization, advisory services, fi nancial engineering and research.
CIB synergizes the expertise of all Natixis businesses to develop innovative, bespoke solutions. The global network of over 120 offi ces is leveraged to build close-knit relations geared to satisfying local clients’ needs as closely as possible.
One of the highlights of 2007 was the legal merger of Natixis-Ixis CIB on December 31, 2007, following the physical re-grouping of most personnel during the fi rst half of the year. By pooling their respective know-how, the newly-assembled teams generated higherthan -expected revenue synergies despite diffi cult fi nancial market conditions.
December 2007 also saw Natixis announce a reorganization plan for CIB which involves structuring business on three major divisions
(Coverage, Markets, Debt & Finance), two regional platforms (USA and Asia) and more highly-concentrated support functions
Trade Finance: No. 7 in the Africa-Middle East Area (source: Dealogic/Trade Finance Magazine)
The main components are as follows: a Coverage division, which will take the lead on customer relations worldwide. It will also manage vanilla fi nancing, fl ow products, leasing and M&A fi nancing; a Markets division, which will be built around two core businesses, namely Equities and Commodities, and Fixed Income (trading and distribution) including treasury; a Debt & Finance division, which will house Structured
Within the Corporate and Investment Bank, the Coverage division manages conventional fi nancing activities (including leasing) and fl ow and cash management products. The division maintains close-knit relations with almost all major corporations and institutions and is well-entrenched in the medium-to-large French company segment.
Coverage also coordinates marketing and sales activity at client level across all business lines. The focus is on controlling risk and optimizing global profi tability from client relationships over the long term. Coverage offers the full spectrum of Natixis services and businesses, including CIB, asset management, private equity and private banking, banking, fi nancial & information services and receivables management.
The marketing and sales approach is organized around client types – Corporates and Investment Funds, Institutions and
Lease took steps to round out its core wind farm fi nancing activities (over €100 million of production in 2007), by positioning in the promising photovoltaic investment market.
The cash management business is operating in increasingly competitive conditions, that are being exacerbated by the prospect of SEPA (the Single Euro Payments Area) and technological changes (Swiftnet, etc.). Natixis managed to maintain its position during the year (bid success rate of approximately 60%), underpinned by growing expertise in bank/company communication processes, together with efforts to develop new products and services (such as transaction security) and high-quality claims handling. ISO
certifi cation 9001 was renewed at the end of 2007 for fl ow management, documentary credits and issued guarantees, as well as for the cash management product and service design process.
The International arm supports foreign corporate and institutional clients, and has direct responsibility for traditional fi nance, correspondent banking and international trade fi nance.
The Global Trade Services (GTS) subsidiary offers a range of products to meet the fi nancing and payment securitization needs generated by international contracts, particularly demand for “cross border” fi nancing. GTS’s international contracts are based on a variety of underlyings including raw materials, capital equipment and services, turnkey projects, and investments involving export credit agencies. The rapid growth in mandates obtained during the year refl ected
Russia, China, Vietnam, Turkey, Pakistan, and Algeria. In the international arena, new teams were set up in Panama, Beijing,
In the fi nancial institutions segment, Natixis confi rmed its positioning as bookrunner in syndicated credit operations, notably in India, Russia and Turkey. In Europe, Natixis bolstered relations with fi nancial institutions, especially in Italy and London. The US business continued to expand on more structured transactions such as back-up liquidity lines, fronting and secured fi nancing for private equity funds.
No. 4 MLA (Mandated Lead Arranger) in terms of number of syndicated loans in France and no. 12 in the EMEA
zone (source: Dealogic Loanware); No. 4 bookrunner for LBO fi nance in France in value terms (source: Dealogic Loanware); No. 4 MLA in real-estate fi nance in Europe in value terms (source: Dealogic Loanware); No. 8 MLA in project fi nance in the EMEA zone and no. 14 worldwide (source: PFI); No. 6 aviation fi nance arranger worldwide (source: Airfinance Journal – December 2007); 17 Deals of the Year such as Duferco, Sterling
Natixis’ transaction positioning, in line with objectives. The teams formed by the merger synergized their know-how to obtain mandates outside Europe.
Middle East Airport Deal of the Year for the fi nancing of the
In the Acquisition and LBO Finance segment, tighter access to liquidity in the second half of the year failed to prevent us strengthening our position as arranger in the domestic market, via the Phares B&B Village, Pasteur Cerba, Loxam, and Courtepaille deals. We also expanded internationally, especially in Asia (Myclin).
Bookrunner and Agent in major pre-fi nancing type facilities, or to support consolidation in the metals and energy industries, e.g. Natixis led several export pre-fi nancings on behalf of Ghana
Yakutugol, base borrowings for Duferco SA and Cormin, and reserve fi nance-based lending on behalf of Sterling Energy.
Real Estate consolidated its pivotal market position both in terms of investments (through the Natixis Immo Development subsidiary) and fi nancing. A total of 13 mandates were obtained for market transactions in Italy (Rinascente’s refi nancing) Germany (Alstria) and France (Altarea/Cogedim,
The Aviation Financing specialist, Natixis Transport Finance, increased its scope of activity during the year, especially in
Ltd – the fi rst renminbi-denominated shipping fi nance deal arranged by a foreign bank – and Xylas in Greece).
These activities all benefi ted from Natixis’ strong innovative skills and Financial Engineering’s multi-disciplinary structuring capabilities. Financial Engineering also boosted business by fi nancing the acquisition of minority stakes in large listed companies.
Syndicated Lending put up stiff resistance to the credit crunch and turned in a similar performance to the previous year, by garnering 148 MLA mandates in the EMEA zone, of which 49 were as bookrunner. These results testifi ed to the benefi ts of its strategy of supporting other business lines, both in product and geographical development terms.
Finally, in the Debt Solutions area, Structuring and Solutions successfully created an innovative refi nancing vehicle (Horizon
In 2007, we reinforced our positions on plain vanilla products, and further expanded our structured-product offering. Natixis ranks in the Top 10 players in interest-rate derivatives in
Europe. Business held up well in very harsh market conditions in the second half of the year. The momentum came primarily from structured interest-rate products, followed by plain vanilla products, the primary market and forex products. We are also a major player on foreign exchange markets in Europe and
The strength of our positioning refl ects the confi dence that Natixis commands with issuers in this business. Air
We are also honing our expertise with a view to meeting the special requirements of European insurers and fi nancial institutions. During the year, more than 40 clients mandated
Bearing witness to the successful creation of Natixis, some of the market’s most prestigious issuers – agencies and supranationals like CADES and the European Investment Bank
Natixis rose to number two worldwide in the jumbo covered bond market (source: IFR/Thomson Financial) and leadmanaged almost one in two deals in Europe. Management is currently anticipating forthcoming changes and opportunities by positioning on new markets like Finland, Canada, Italy and Portugal. Natixis can also offer strong deal-structuring expertise in the covered bond market, one notable example being the assistance provided to new entrants like the Banques
Natixis is taking steps to strengthen global coverage, particularly by establishing origination teams in New York for US and Canadian clients, and in Hong Kong for Asian customers. These initiatives have already started to pay off, with the fi rst American mandate already obtained from Royal
French equity research teams were ranked in the top three in their sectors on 25 occasions, with 19 of these positions representing progress relative to 2006 (source: Thomson Extel
(energy, healthcare and media) and for technical analysis (over 140 companies covered). This progress was evident in the success of Natexis Bleichroeder’s fi rst conference, Hidden
Two of its analysts were also ranked in the annual Institutional
In 2007, Natixis and Lazard-Natixis doubled their combined share of the French market to 8.5% in terms of total amount, while ranking third for number of deals (compared to eighth in 2006) and fi fth for volume (source: Bloomberg –
In the USA, Natixis Bleichroeder strengthened and diversifi ed its position in the corporate fi nance segment.
Bank’s global franchise in the energy industry. It participated in several major equity capital market deals that strengthened its position as an advisor to companies seeking to raise capital on the market. Natixis Bleichroder also broadened its expertise outside of the traditional energy exploration-production sector by participating in two operations involving alternative energy sources.
The New York-based fi rm also branched out into the healthcare industry and participated in three deals in 2007, including an initial public offering for Biodel. It also stands to benefi t from a sizeable deal pipeline in 2008; two of these transactions were already executed during the fi rst months of the year, in spite of deteriorating market conditions.
All in all, by harnessing the support of the Paris, New York and
Substantial investments were made to equip Natixis with the capacity to manage high-volume transaction fl ows in real time, both on plain vanilla and exotic products.
Further progress was also achieved in expanding Asian arbitrage and derivative business in Tokyo and Hong Kong.
Natixis Finance tapped into the buoyant M&A market by executing advisory mandates on behalf of some high-profi le corporations. Advisory mandates were executed on behalf of: Entrepose Contracting for its acquisition of Amec Spie Capag
Glon Group; lastly, the management of Ceva Santé Animale for its second LBO.
Natixis also provided sector-specifi c advisory services to corporate clients in the infrastructure, utilities and real estate fields during the year. The Bank advised Altaréa on its acquisition of Cogedim, acted as co-presenting bank on the Eurotunnel share swap, advised Casino on the sale of 255 mini-markets and supermarkets, and was also mandated by Eiffage to advise it on its bid defense.
Natixis Alternative Investments launched 15 new funds on the Sixtina platform and a fund of funds specialized in raw materials (Xanthos) during 2007.
2007 also witnessed the ramp-up of the Pentelia Fund, which is the fi rst diversifi ed fund focusing on life and other insurance risks.
Natixis commands a strong reputation on the European and American securitization market, both on underlying instruments based on corporate receivables and on fi nancial assets originating from the market or from fi nancial institutions’
We specialize on high value-added structures and operate across the full spectrum of products including
RMBS (Residential Mortgage Backed Securities). In addition to an integrated origination, structuring, trading and marketing platform, we also offer warehousing capacity for clients seeking to divest exposure.
Performance in the US commercial real-estate fi nancing business was affected by the deterioration of the credit markets during the second half of the year. Natixis nevertheless originated over 200 loans for real estate purchasing and
In the local government fi nance fi eld, Natixis was active across the full spectrum of debt products, including bonds, derivatives, structured fi nancing solutions and portfolio protection contracts. These lines fared pretty well overall in 2007, even though some were hampered by tough market conditions.
The momentum in the fi nancial asset securitization fi eld continued in the fi rst half of the year, whether for CMBS deals
(over €4 billion worth of transactions in Italy and Spain with our priority targets, the regional banks) or insurance risk deals
Commercial loan securitizations for European corporate clients continued throughout the year. Despite the tough conditions,
It assists in the Bank’s technology watch activities and ensures that the latest fi nancial engineering developments are incorporated into products.
The C redit S trategy and A nalysis teams combine quantitative and fundamental approaches which result in complete and independent analyses of over 100 private euro-zone bond issuers. A range of publications offers clients the best opportunities available on the market at any given time.
Asset Management delivers global, personalized investment solutions in the form of funds, dedicated products and mandates on all asset classes (money market, bonds, equities, real estate, alternative and diversifi ed). An original divisional architecture – based on a global distribution platform serviced by multi-specialist asset managers – ensures a high degree of competitiveness. Under the aegis of the Natixis Global Asset Management holding company, the division continued to expand during the year on all world markets and across the full spectrum of clients, be they institutions, large corporates, intermediaries or retail customers. 2007 also featured extensive efforts to merge and reorganize French asset management fi rms as part of the creation of Natixis.
Asset Management’s federal-type organization comprises the Natixis Global Asset Management holding company –
This organizational model, which covers all asset classes and management styles, is designed to leverage the specifi c expertise of each asset management fi rm to the full, while ensuring the benefi ts of a global distribution network. It adapts to all client types, i.e. institutional and corporate, insurers, banks, retail and private-banking clients.
Following the strong asset intake in 2006, 2007 was a much more uneven year. After a very good fi rst six months, the second half was disrupted by fi nancial market volatility and the diffi culties that emerged on dynamic money market products, especially in France. US business nevertheless remained buoyant throughout the year. Assets under management reached €591 billion, with Europe accounting for €392 billion, the USA €198 billion ($291 billion) and the Asia-Pacifi c region the remainder. Net banking income advanced 15% to
Asset Management’s real estate segment was also reorganized, with NAMI (Natixis Asset Management Immobilier) becoming a subsidiary of AEW Europe, a real-estate asset manager with offi ces in 10 European countries, but concentrated in Paris and London. This combine manages more than €17 billion in real estate assets. Reorganization in this area was completed by Caisse des Dé pô ts – a long-time partner and top-level real estate investor – taking a 40% equity stake in AEW Europe.
The European asset managers now have access to a comprehensive offering spanning all traditional asset classes, i.e. money market, fi xed income, equities and real estate, and high value-added specialties such as CDOs, SRI products
Middle East sales, and by Global Associates’various European sales forces, which cover Austria, Scandinavia, Benelux,
Gestion d’actifs event, the Agefi fi nancial daily ranked the Ecureuil Harmony fund fi rst in the Diversifi ed Three-
Year Euro category and the Natixis AMA RIM Equities fund second in the Asian Equities Excluding Japan category.
AEW Europe also won the Euro-property-IPD award for its management of the Fonciere Ecureuil fund in the
Total assets under management at the dozen US subsidiaries reached $291 billion (€198 billion) at the end of 2007. Net new money jumped 34% to a record $32 billion, with 34% of the increase generated by Natixis Global Associates. This new money was heavily concentrated on Loomis Sayles and Harris
Alternatives funds, although almost all asset management fi rms recorded growth.
These fi rms distribute products to North American institutional clients directly. In the retail segment, they enjoy the support of Natixis Global Associates, which distributes products, provides advisory and structuring capabilities, and also offers related services that can be tailored according to differences in markets and distribution channels.
November 2007. Loomis Sayles fund managers, Dan Fuss and Kathleen Gaffney, were placed second in Morningstar’s
Loomis Sayles Bond funds on its list of 25 best- performing investment funds in the USA.
Loomis Sayles (€88.2 billion in AuM): wide range of equity funds (growth, core, value) and fi xed income
(high-yield core); Harris Associates (€44.6 billion): US and international value equity management; Reich & Tang Funds (€10.4 billion): money market; AEW Capital Management (€9.9 billion): real-estate asset management; Hansberger Global Investments (€8.5 billion): international equity management; Harris Alternatives (€8.9 billion): alternative multimanagement; Vaughan Nelson (€5.6 billions): value equity and investment grade fi xed-income management; Capital Growth Management (50%-owned, €7.2 billion): equity management; Natixis Caspian Capital Management (51%-owned, €3.9 billion): alternative management focused on US
and emerging-market bond arbitrage; Reich & Tang Capital Management (€2.2 billion): small and mid-cap American equities, core and high-yield international bonds; Westpeak (€2.2 billion): index and quantitative management; Snyder (€1.7 billion): small and mid-cap American value equities; Absolute Asia Management (€1.2 billion): Asian
Equity (NPE). NPE is currently recognized as one of France’s market leaders in private equity for SMBs, with a portfolio of over 600 investments and assets under management of €3.6 billion in 2007.
With €17 billion assets under management at end of 2007 and over 500 employees, Natixis’ private banking business holds a position of choice both in France with Banque Privée
– and abroad with Natixis Private Banking International and its offi ces in Luxembourg, Switzerland and the United Kingdom.
Banque Privée Saint- Dominique specializes in wealth management and focuses solely on high-net-worth individuals, business owners and company executives.
Banque Privée Saint- Dominique also offers a broad range of fi nancial management services, through products managed by its own teams as well as structured products or selected investments from the top management fi rms in the various fi nancial centers.
Created in 2005, Compagnie 1818 – Banquiers Privés – , focuses exclusively on major private banking customers. It is made up of specialists in wealth management and top-level experts in legal and tax issues to devise tailor-made solutions covering areas such as fi nancial management, structured products and dedicated funds. Modern and innovative, it has three main business lines: wealth management for its own customer base, with a broad and open offering so as to offer the best products and the best managers, including fi nancing; private asset management to support subsidiaries of the
Palatine, Financière Océor, Crédit Foncier); asset management for independent fi nancial advisors approved by Centre Français du Patrimoine.
The Bank also provides for its clients private and corporate fi nancing services (acquisition fi nancing or liability guarantee).
Four of these businesses – Insurance, Sureties and Financial Guarantees, Consumer Finance and Employee Benefi ts Planning – focus on designing products that are marketed through distribution networks.
Two other businesses – Payments and Securities Services – round out the offering by providing payment and transaction processing services.
All these services are tailored to satisfy the needs of specifi c client types (i.e. retail, professional, corporate and institutional) and are based on two core principles. Systems and processing are industrialized and pooled so as to provide effi cient and competitive solutions for the distribution networks. And, as a major player in France, Natixis also focuses on integrated and open systems that respond to the needs of the European market.
In the upcoming years, the division will strive to bolster its position within the Caisses d’Epargne and Banques Populaires networks, while also seeking to enlarge the customer base beyond the two Groups. Further efforts are being made to enhance operational effi ciency.
No. 1 employee savings manager in France; No. 1 in guarantee insurance in France; No. 10 in institutional custody services worldwide (via
CACEIS); No. 2 in retail custody services in France; No. 3 electronic banking operator in France; No. 4 non-life bancassurer in France.
In the life insurance segment, Natixis Assurances confi rmed the excellent results achieved in 2006 with assets close to €31 billion. The dynamism of the distribution network and the commercial success of the new products and services launched in 2006 combined to increase gross intake to €4.5 billion.
The number of multi-risk non-work-related accident policies grew regularly to exceed 110,000 at year-end.
The p rovident insurance activity also benefi ted from the launch of the borrower-insurance offering in several Banques
Further growth in fi re, accident and miscellaneous risks 2007 was a transitional year for fi re, accident and miscellaneous risks insurance which continued to operate in highly competitive conditions, particularly at the pricing level.
Gross issuance amounted to 150,000 policies and lifted the number of policies in the portfolio to nearly 690,000.
Caisses d’Epargne, recorded an increase of 3% compared to 2006: 198,000 new contracts were signed, bringing the total number of Teoz accounts to nearly 755,000. Outstanding credit grew 9% to reach €799 million.
A highlight of 2007 was the successful launch of the Créodis credit card, developed for the Banques Populaires. After being launched by three Banques Populaires as a pilot scheme in October, Créodis had garnered nearly 10,000 contracts representing more than €7 million of credit by year-end. This encouraging beginning provides an excellent platform to roll out Créodis on a general basis in 2008.
Natixis Financement is seeking to achieve major-player status in the consumer fi nance business by supporting the expansion of the Caisse d’Epargne and Banque Populaire networks in
France and abroad, and by developing a policy of external partnerships.
A platform of expertise provides solutions to the fi nancing needs of individuals, companies and local government.
Natixis Garanties is France’s second-largest provider of guarantees for real-estate loans to individuals. It examined
ACTIVITIES 3 Services 124,000 cases and recorded a 10% increase in earned premiums in 2007.
In the real estate market, our completion guarantee for housebuilders (based on France’s Law of 1990) provided coverage on more than 22,500 homes. We hold a 27% share of the market and rank as co-leader in this profession.
We are also the second-largest provider of professional guarantees for realtors and real estate administrators in France
Natixis Garanties stands out for its innovative use of new technologies in a business sector that is highly attached to paper and where the signed document is authoritative. This innovative strategy involves electronic transmission of dossiers to banking partners, online agreement to surety bonds and entry of guarantee requests via internet.
“ Zero paper, zero delay „ A variety of websites have been developed to capitalize on new technology-related opportunities: www.saccef.fr was specially developed for banks and provides direct access to the follow-up of surety-bond requests from the branch network and the back offi ce.
Automatic processing of electronically-transmitted dossiers is also used to enhance productivity and provide faster responses to real-estate loan requests from individual clients. In 2007, 60% of the production originating from the Caisses d’Epargne was processed electronically.
Likewise, self-employed clients like shopkeepers and trades people can obtain surety bonds in 7 minutes, without any need to send paper and for investment loans below €80,000.
deveniragentimmobilier.fr provides a new way of communicating with future realtors and introducing them to the advantages of
Employee Benefi ts Planning delivers a comprehensive range of products that assist companies and professionals in implementing their remuneration and employee benefi t policies. The range embraces employee savings products
In the group life insurance segment, Natixis succeeded in developing business with large French companies during the year. The high point involved the signature of a retirement contract, with a company employing 150,000.
After the launches of pre-fi nanced employment vouchers in 2005 and CADO Chèque gift vouchers in 2006, Natixis
Intertitres further enhanced its range of complementary payment products in 2007, by creating two new special restaurant vouchers, the Chèque de Table du Bénévole and the Chèque de Table du Volontaire. These new vouchers are designed to encourage charity and voluntary work and allow non-profi t making associations to offer their voluntary workers a simple means of paying for their meals during assignments.
The range covers the exchange of all transactions in national and international bulk-processing systems, including transactions for large monetary amounts.
Natixis Paiements’ role includes acting as technical operator for the Banque Populaire network. All in all, it handled 3.6 billion of transactions exchanged through the SIT remote interbank clearing system and large-amount transactions exchanged via the CRI interbank settlement center.
A highlight of 2008 will be the activation of the SEPA (Single
Natixis aims to consolidate its existing strength in France before eventually becoming a major European player in the payment processing and e-cash segments.
(with about 25% of the market) and is the largest provider of outsourced retail custody services.
Natixis plans for 2008 to include reorganizing the retail custody business and working to build a future single platform. This vast project will turn Natixis into a frontline player in the retail custody business in three years time.
Natixis offers a wide range of post-market fi nancial services to asset managers, institutions and corporate clients in France and abroad: Depositary banking and account keeping/custody in France,
Luxembourg, Germany and Ireland; Onshore and offshore fund management in Europe and
With €2,492 billion of assets under custody at year-end 2007, CACEIS and Natixis consolidated their position as one of the world’s leading global custodians. Likewise, with nearly €1,100 billion of assets under administration, CACEIS
and Natixis Investor Servicing rank fi rst in the European fund administration segment.
The business information segment allows companies to assess the fi nancial situation of their partners and their ability to honor their commitments (solvency information) and to identify commercial opportunities (marketing information).
Revenues increased 7% in 2007 €450bn of receivables insured €40bn of receivables fi nanced
Business I nformation grew 16.2% during the year, thanks especially to the March 2007 acquisition of Kompass France and Belgium (and their subsidiaries). Activity was extended to four new countries in 2007, namely Switzerland, Serbia,
Credit I nsurance (domestic and export) grew revenues by 3.9% compared to 2006, and two new countries, Romania and Morocco, are now ready to offer this service. Export credit insurance revenues increased 9.1% on the back of steady exports from Germany and Austria, a dynamic Asian market and healthy business in Italy. Domestic credit insurance revenues rose by a more modest 3.8%. Operating income was assisted by an excellent claims ratio of 49%, the same level as in 2006.
(where Coface Finanz is now market leader), the network was extended from 8 countries in 2006 to 16 at the end of 2007.
Receivables Management. The strategic plan launched in 2005 is geared to attaining world market leadership by 2015.
Assessment Institution) by the French Banking Commission for its work as a rating agency in France, a decision that underlined the proven quality of Coface’s @rating credit scoring service. This status guarantees the fi nancial institutions that use @rating that 1/ ratings are objective (results are reliable and monitored), 2/ the rating process is independent (it is not subject to any political and/or economic pressure), 3/ credit scores are broadly accessible (the score is sold for a modest sum on internet by Coface Services), 4/ the rating methodology is both transparent and credible and 5/ appropriate human resources are employed to produce the rating.
Coface’s worldwide @rating system is a unique insurable company rating system offering global coverage.
January 2008 – refl ects the quality of the overall business environment.
Coface teamed up in 2006 with Europe’s largest provide of credit management services, Creditreform of Germany, in order to launch EASY NUMBER, a system for searching and identifying companies around the world. By assigning a unique and universal number to all companies, the two partners will create the fi rst open system, with 50 million companies referenced starting as early as 2008. EASY NUMBER facilitates and secures company data management for multinationals.
Caisse d’Epargne – which give it access to a large retail banking customer base.
Natixis’s two main shareholders – Groupe Banque Populaire and Groupe Caisse d’Epargne – are mutual banking organizations that occupy leading positions in the French banking sector.
The Groupe Caisse d’Epargne also includes a body known as the Fédération Nationale des Caisses d’Epargne, which is an institution for coordination and concertation among
The two groups have a highly complementary customer base: in the personal customer market, with a very large customer base for the Caisse d’Epargne network and robust growth for the Banque Populaire network; small businesses, in which Groupe Banque Populaire is market No. 2; SMBs, in which Groupe Banque Populaire is the leading principal bank; public housing, in which Groupe Caisse d’Epargne is the leading bank and also No. 1 bank for real estate professionals.
ACTIVITIES 3 Major contribution from retail banking commercial ties: the Banque Populaire and Caisse d’Epargne banks are also direct clients of Natixis and recognized as a customer segment in their own right.
The personal banking market, with over 7,500 advisors, constitutes a major area of growth, as confi rmed by steady increase in the number of personal banking customers and rising market share in both lending and savings activities.
The enlargement of the personal banking customer base has been accompanied by a review of the product offering, with new products such as the Balancéo life insurance policy, personal risk insurance with a long-term care insurance product and electronic banking with the launch of two new cards and the increase of the e-carte bleue.
Group’s existing customers, ensuring the loyalty of whom is still a priority.
The Banque Populaire was awarded First prize for long-term client relations.
Groupe Banque Populaire has established itself as a key player in the corporate clients market. Its diverse expertise and the professionalism of its teams enable it to support its clients – whether small, medium-sized or large companies – in all stages of their development.
Banque Populaire offers a broad range of banking products and services in areas as diverse as payments processing, structured and specialist fi nance, employee benefi ts planning and international or fi nancial management. In addition to this global approach to clients’ needs, the Group offers a local presence, guaranteeing reactivity and understanding of companies’ specifi c needs. It has a structure dedicated to this customer group, based on the Banque Populaire business banking branches and regional departments of Natixis.
(Source: SOFRES – 2007), the Group has confi rmed its leading position with companies.
Several Caisses d’Epargne mergers have taken place or are in progress, to set up powerful regional banks. Their number has gone from 29 in 2006 to 21 at December 31, 2007. This fi gure should move to 17 during 2008.
With 27 million customers, Caisse d’Epargne has the largest customer base in France.
In 2007, Caisse d’Epargne continued with a certain number of projects to optimize their network and their sales methods: branch opening and renovation, the Fréquence Client program intended to improve their marketing and sales methods, reference systems for reception and productivity, etc.
It has also continued with the roll-out of mobile banking services via wap, Imode and SMS. Caisse d’Epargne have joined the Payez mobile operation to test a new no-contact payment service via mobile telephones.
The historical business of Caisse d’Epargne, the collection of savings, has reached a very high level. After an exceptional year in 2006, 2007 was marked by a slowdown in life-insurance collection, which nevertheless reached a surplus of €4.6 billion.
In 2007, interest-bearing current accounts continued to boost sales of service packages and win new customers. The S’miles customer loyalty program, launched in 2006, for which Caisse d’Epargne is the exclusive banking partner, had 3.2 million clients at the end of 2007. Caisse d’Epargne has confi rmed its position as the leading issuer of Visa cards and as secondlargest issuer for all card brands.
As a bank for young people, Caisse d’Epargne is continuing to develop innovative new products and services specifi cally designed for this customer group: Livret A Kipouss, the fi rst pre-paid and rechargeable bank card for adolescents.
As the second-largest real-estate bank, the range of services offered by Caisses d’Epargne has been enhanced. Nearly a quarter of the overall production is now provided through key infl uencers. The year has been particularly active in consumer credit, both in the production of personal loans and in the number of Teoz revolving credit cards sold.
Ecureuil Assurances IARD, had a dynamic year 2007, marked by the successful deployment of complementary health insurance in the Caisses d’Epargne network.
February 2007 and has issued €43 million in these vouchers on behalf of 1,500 companies.
Caisse d’Epargne is also a partner of choice for small retailers, craftsmen and self-employed professionals, both on a professional and a private basis. Interest-bearing current accounts and the launch of a new GPRS e-cash payment terminal have boosted the number of people holding bank accounts. A new line of employee save-as-you-earn schemes has been implemented with Natixis Interépargne.
As a specialist bank for regional development, it offers local authorities, hospitals, social housing organizations, real estate professionals and local businesses a broad range of products and services to fi nance their projects, simplify their management and maximize their investments.
Caisse d’Epargne supports regional companies from their founding to their transfer, with a complete range of fi nancing and services, as well as solutions using its own capital from its regional and national investment funds. Caisse d’Epargne has used the know-how of Natixis, Natixis Factor and Natixis
In a context of sustained public investment, Caisse d’Epargne has maintained its positions. This development is supported by the successful synergy between the different companies of the Group (CNCE, Caisses d’Epargne, Crédit Foncier) and
Caisse d’Epargne Group, has taken a leading position in the high-potential market for public/private partnerships.
ServicePublicPlus, which allows users to pay on-line for municipal services. They also offer the pre-fi nanced universal service-employment voucher in cooperation with Accor
Caisse d’Epargne is the leading private bank in the sector, managing over one-third of cash assets and private debt of social housing enterprises (ESH) and the HLM agencies, whose construction programs are fi nanced primarily by funds from Livret A passbook accounts.
Caisse d’Epargne is a leading partner of social economy and solidarity projects. More than one association in four are customers of the bank. Nearly 20% of the sector’s bank fi nancing is provided by Caisse d’Epargne, the No. 1 social economy lender.
Solutions are provided for all types of needs in the social economy, such as capital fi nancing operations for mutual companies, creation or restructuring of social and health institutions, renovation of private teaching establishments, etc.
2007 featured intense activity in the human resources fi eld, particularly in terms of labor relations. The focus was on facilitating the operational and legal merger of numerous business lines within the Group and assisting employees in adapting to the ensuing changes. The work undertaken should help develop a real common culture overlaying the diverse origins of the Group’s constituent companies.
The fi rst half of the year was largely devoted to presenting employee representative bodies with the proposed new organizations for entities due to be concerned by mergers of their activities and personnel. This information and consultation process mainly concerned the Asset Management and
Corporate and Investment Banking businesses, and especially the creations of Natixis Asset Management and Natixis
Natixis SA and Ixis CIB on December 21, an Economic and
All in all, this initial work enabled the Group to anticipate and settle many human resources issues even before the mergers became effective.
July 2007. The agreement increased the lowest salaries within most of the Group’s entities, and left scope for the subsidiaries to complement these measures through their own mandatory annual negotiations.
Natixis’ incentive plan agreement was amended for the 2007 and 2008 fi nancial years. The amended agreement applied to the Natixis SA-Ixis CIB Economic and Social Unit, as well as to three subsidiaries and concerned more than 6,750 employees. 60% of the sum for distribution was allocated according to salary and 40% according to the benefi ciary’s period of presence during the fi nancial year in question.
(employee savings scheme) and indirect remuneration (pension contributions, social protection, meals/catering, etc.).
Resources teams responsible for remuneration, social benefi ts and salary policies. This initiative was aimed at ensuring fair and consistent employee remuneration, by establishing individual and overall remuneration policies in line with the external market.
Equity and Private Banking continued to expand by recruiting several high-level specialists. Lastly, as regards functional departments, Natixis strengthened its control functions in the areas of risks, audit and compliance, all with a view to dealing with the new issues and regulatory constraints arising from the creation of the new structure.
May 2007 specifi ed management’s commitments in this area, as well as the measures and resources dedicated to guaranteeing the employment of all staff involved in merger operations. A jobs/training task force was created, with the purpose of assisting employees changing posts as a result of the merger. This involved providing follow-up until employees effectively assumed their new positions and ensuring their seamless integration into their new surroundings.
The Bourse de l’emploi, Natixis’ fi rst cross-company humanresources tool, which can be consulted by all employees via the “HR Contacts” intranet facility, was gradually extended to cover almost all subsidiaries. Job vacancies, which quadrupled during the year, were relayed via an internal network of video screens and by Human Resources’ new informational bulletin,
In addition, Natixis’ close relationships with the two shareholder groups have widened potential employment opportunities to
As part of this pro-mobility approach, initiatives were also taken in the business lines, one example being the “MOVE”
In the training arena, 2007 featured efforts to strengthen links with the business lines, together with measures geared to delivering a high-quality service and the reinforcement of the partnership between human resources managers and line managers. In order to accompany changes within the Group, further measures were taken to organize human resources teams by division.
Based on solid existing infrastructure both at Natixis and at Ixis CIB, an offer of 350 training actions has been made available to employees online via the «HR Contacts» internet facility. It covers support for cross-company projects, the need to respond adequately to the expectations of business lines and takes into account individual requests.
In order to better respond to the requirements of the new
Group, e.g. information bulletins, brochures, induction packs, electronic distribution, web, etc. By allowing easy identifi cation of the sender, the new visual identity helps improve Natixis’
Human Resources implemented a fl exible system designed to facilitate organizational changes. As part of this initiative, business lines and departments benefi ted from the services of specialist change management consultants. Human
Resources arranged enhanced training initiatives in the area of change management for line managers and awarenessraising sessions for employees, all on an individual businessline basis.
The communication mechanism instigated when Natixis was created was consolidated during the year. Throughout the year, “ The Natixis Newsletter” , was distributed electronically in both French and English, with a view to providing information on all events related to organizational changes, appointments and the signature of labor agreements. Access to the video newspaper, “ Zoom sur” , was improved by installing a large number of extra screens on various sites, particularly in the provinces. The weekly newsletter “ Natixis Infos” newsletter, which is also distributed electronically in French and English, provided information concerning the whole of Natixis, while each business line distributes its own “ Infos Métiers” letter.
In order to support the different business lines in achieving the Group’s objectives, Human Resources must respond to four major strategic challenges. The fi rst involves furthering the Group’s development by creating a common corporate culture, establishing standard remuneration policies, increasing mobility and managing talent. The second aims to strengthen performance by managing resources (both people and skills), assisting with reorganization and controlling salary costs. The third entails helping employees to adapt to changes in the size of the Group, particularly by supporting line managers confronted with new challenges related to, say, the size of teams or multiculturalism. The fourth and fi nal strategic challenge involves facilitating internationalization by assisting business lines to grow in international markets and by reinforcing international mobility.
A number of key action areas were identifi ed in 2007. These concern the need to manage remuneration policies, anticipate changes in jobs and skills, attract and retain talent, and provide support to managers. They should result in concrete measures from the second quarter of 2008.
Human Resources will also be working on other important subjects in 2008, again with a view to creating a common platform throughout the Group, while respecting the identities and specifi cs of particular business lines. Subjects include the management of seniors (who are now required by retirement legislation to work longer than their predecessors), professional equality, provident insurance and social protection.
The MOVE mobility-enhancement operation was launched within the Receivables Management division during the year. MOVE involves a collegiate approach to recruitment, according to which candidates for managerial-status positions are not only interviewed by managers of the recruiting department, but also by managers of those departments where they could subsequently move. This approach lays the groundwork for an internal transfer every three years during the fi rst nine years of the applicant’s career, as provided for in the employment contract. In another facet of MOVE, a job mart was created for employees expressing a wish to change jobs. This facility was initially available to young managers, before being extended to more senior executives. Job changes within the framework of MOVE are also accompanied by pay rises. Managers are heavily involved in this approach, which is geared to enabling staff to take a proactive approach to their own career mobility. MOVE’s initial success in 2007 will see it renewed and extended to the main European entities in 2008.
(i.e. without the France/International distinction and in line with the practice followed in the 2006 shelf-registration document).
This initiative represents an innovation in the French banking sector, bearing in mind that only a few large corporations having taken advantage of the laws of 2004 and 2006 giving them the right to assign free shares to their employees. All in all, 6.6 million shares representing 0.54% of Natixis’ capital were allocated to the program, which applies equally to employees of the Banque Populaire, Caisse d’Epargne and
Functional departments and others 2,028 2,118 +90 * In full-time equivalents at period-end.
The end of 2005 saw Natexis Banques Populaires launch the summary system development plan (SDSS) with a view to overhauling summary reporting systems and more specifi cally with the aim of: improving the consistency of summary reports by making the accounting system the Bank’s only source of reference data; complying with regulatory requirements; meeting the management needs of the Bank and the various businesses; developing the architecture blueprint and rationalizing the information system.
2007 saw completion of the work required to roll out the new Matisse tool for the Natixis parent company and four subsidiaries. Matisse represents a key part of the project to overhaul summary reporting systems, based on two components: Matisse GL, the Group’s new general and analytical accounting tool; Matisse EPM, the reference input database for the Group’s summary reporting systems.
Matisse was launched at the beginning of 2008, via a secure
In 2008, we will execute the following steps: integrate the metropolitan Ixis parent company fl ows that cover the complete parent company accounting scope; ■
Basle II, management control and risk reporting purposes, based on the Group’s full consolidation scope; migrate key business line applications to this platform; Completion of these steps will mean that all the application components required for producing quality summary accounting information (transversal repositories, general and analytical accounting tool, reference database with accountingreconciled management data, input platform of business line information) will be in place by the end of 2008.
The fi rst information system convergence work carried out in 2006 focused on processing related to the regulatory obligations resulting from the creation of Natixis, the rollout of the new brand, and the creation of transitional infrastructure solutions to facilitate the merger operations.
Management. More specifi cally, this involves: standardizing and monitoring decision-making bodies
* CESI Natixis: CESI Natixis is the highest-level IT governance body within the Natixis Group and is responsible for setting the outline of IT system strategies. On behalf of the Board, it selects projects previously identifi ed within the CESI divisional governance body.
(placements and investments) was carried out on January 2, 2008. The accounting applications were amended in order to make it possible to produce one single set of parent company fi nancial statements.
Ixis’s BIC was replaced with NATX and the Ixis CIB applications were adapted in order to display Natixis’ legal statements (email addresses, internet sites, publications, printouts, etc.). The
HR applications (payroll, time management) were amended to incorporate staff from Ixis CIB.
Several transversal projects were undertaken to interconnect the main repositories for the merged entities, and more specifi cally the counterparty repositories.
In the Asset Management fi eld, a unifi ed accounting infocenter was rolled out as of July in order to provide a complete vision of the various activities. Inter-application connections were then built up, pending the mutualization of operational systems, which is scheduled for 2008.
In November, the GCE Factoring application was switched over to the Natixis Factorem information system.
Sustainable development is an integral part of all Natixis businesses. Engaged with the national and international organizations that are involved in sustainable development, the bank is among the leaders in the fi nancing of renewable energy and managing funds dedicated to the fi ght against global warming. It ranks fi rst on the French market for socially responsible and supportive investment.
Populaires and Caisses d’Epargne g roups, who have been signatories of the United Nations Global Compact since 2003, Natixis signed the Global Compact in its own right in
July 2007. The sustainable development policies of the bank support the 10 principles of the Global Pact, in the areas of human rights, labor and environmental standards and the fi ght against corruption.
At the national level, Natixis is a member of the Observatory on Corporate Social Responsibility (ORSE) and the IMS-
Eurozone”, which includes the 120 listed companies in the eurozone with the best social and environmental performances.
++ the Company is ranked as a leading performer in its sector
+ the Company is ranked as an active performer in its sector
= the Company is ranked as an average performer in its sector - the Company is ranked as a below average performer in its sector -- the Company is ranked as a poor performer in its sector
Taking the requirements and opportunities of the carbon market into account
Energy Strategies” Chair at the School of Mines in Paris, along with the following companies: EDF, KEOLIS, SAFRAN, SUEZ
The plan to create a “New Energy Strategies” Chair resulted from the conviction that the energy stakes are going to lead companies, the economy and society to make deep changes.
As for the wind power produced in France which was estimated at approximately 2,500 MW at the end of 2007, Energeco had 587 MW installed (the remaining 327 MW is under construction)
In addition to fi nancing the wind industry (21 farms), in 2007 Natixis Lease funded other types of renewable electricity production (hydraulic, biomass, photovoltaic and landfi ll biogas: €101.6 million in wind energy for 186.68 MW
Through its Project Finance Department, Natixis has greatly increased its fi nancing of renewable energy with 17 fi nancing operations during the 2007 fi scal year (compared to 14 in 2006). The projects – 13 in the wind industry and 4 in solar
From the beginning, Natixis has arranged solar parks and has thus become the reference bank for thermo solar technology in Spain.
Natixis arranges the fi nancing of two new thermo solar plants in Andalusia
The European Carbon Fund (ECF), launched in 2005 with the support of major European fi nancial i nstitutions, contributes to the fi ght against global warming through the funding of projects leading to a reduction in the emissions of greenhouse gases
market, and considering the growing interest among investors in sustainable development, in 2007 Natixis Environment and
Natixis Environnement et Infrastructures receives an award for “Carbon deal of the year”
In terms of guarantees managed on behalf of the State, Coface has been doing environmental and social evaluations of credit insurance projects, which must comply with international standards. To provide access to this information to all parties involved, transparency procedures are available on the Coface internet site (www.coface.fr) with a list of potential projects before they are guaranteed (availability of impact study), and of projects of more than €10 million already guaranteed (with environmental advice).
Natixis Asset Management was one of the fi rst asset management companies to develop expertise in Solidarity and
Socially Responsible Investment in France. Today this specialty is represented by 39 funds (open, dedicated and employee savings) covering all classes of assets (equities, bonds, money market, diversifi ed) and managed using different approaches
On December 31, 2007, Natixis Asset Management had total outstandings in SRI and solidarity-based investment of €4.2 billion (6), or more than 23% growth in one year. The Company is now a recognized leader in these markets: No. 1 in the management of SRI in France, according to the quarterly ratings of Novethic (7) ; No. 1 in solidarity-based management in France, with 49.2% market share, according to the 2007 issue of Baromètre des Finances Solidaires, published by Finansol (8), La Croix and Ipsos.
Natixis Interépargne is also the leader in SRI employee savings, according to the 2007 yearly activity report of the
Management are leaders on the French market in solidarity-based employee savings with a 58.6%
Considering SRI as a major aspect of its growth, Natixis Asset
Credit, composed of three complementary teams sharing common subjects around different dimensions of risk: “Governance Research”: in addition to exercising its voting rights and grading listed companies, this team is looking at governance related to bonds; “SRI Research”: this team assembles thematic expertise around issues of the environment and society with a constant concern for anticipating change that is in line with the Natixis
(5) Socially Responsible Investment (SRI): SRI brings together all the policies which integrate extra-fi nancial criteria associated with sustainable development into placement decisions and portfolio management. Different approaches may be taken: sustainable development funds, ethical funds, solidarity-based funds.
(7) Novethic: Center for Research and Expertise on SRI and Sustainable Development.
This Offi ce of Extra-Financial and Credit Research works closely with managers who are specialized in SRI, within each management division (equities, bonds, money market, diversifi ed).
In terms of our offerings, the RSI range of products includes two additional funds added since January 2007, both with a thematic approach to management: one, Natixis H
Développement and Solidarity-based FCPR dedicated to the management of Natixis FCPE are all recognized by
Solidaire, managed by Natixis Asset Management, was also the fi rst employee savings fund approved by Finansol.
d’Investissement France Active. 4,271 people, including 2,260 in diffi culty, have found a job thanks to this funding.
The solidarity-based FCPR, dedicated to the management of employee savings, supports a variety of projects mainly benefi ting solidarity housing, fair trade, micro credit or North-
Savings Week, organized by Finansol (8) in November 2007 in the greater Paris area. The goal of this event was to better acquaint the public with the advantages and mechanisms of solidarity-based savings, and to let them see concrete projects that are supported thanks to this type of investment: integration into the workplace and job creation, solidarity-based housing, renewable energy… At this event, Natixis Asset Management and
Efforts continued to keep all of the various units of Natixis from being used for money laundering and the fi nancing of terrorism, as well as to ensure that embargos are respected. Employees in the Financial Security Department of the Compliance
Division work actively, both upstream (establishing standards, advising, training) and downstream (monitoring, validation)
These procedures include a monitoring system based essentially on knowing the client, detecting operations that are atypical or at fi rst sight suspicious, and the obligation to notify the offi ce of fi nancial information of the country of residence and all other competent authorities of the suspicious activity.
The transaction monitoring tool that helps to detect fi nancial fl ows that are suspicious in terms of the anti-money laundering regulations was used many times in 2007 and this has led to its being extended to include the majority of operations.
Deploying this tool to the French subsidiaries is currently being studied.
(8) Finansol: “Collectif de représentation du secteur des finances solidaires” (Group representing the solidarity-based fi nancing sector).(8) Finansol: “Collectif de représentation du secteur des finances solidaires” (Group representing the solidarity-based fi nancing sector).
Given the scale of its facilities and its 24,000 employees, the operation of Natixis has a signifi cant impact on its environment in terms of the consumption of resources, the management of its wastes or associated carbon emissions. Since 2004, an internal management policy on the environment has been established to control this impact.
club which aims to make the general public aware of the effects of greenhouse gases on climate change, Natixis has been involving its employees in this policy and encourages them, mainly through its “gestes verts” intranet site, to adopt key behaviours that lead to reduced energy, paper and fuel consumption, or optimizing the management of waste.
The Logistics’ Department plays a role in managing the bank’s direct impact on the environment by establishing a voluntarist policy of controlling energy use in buildings. By resorting to modern and effi cient operating systems, allocations of energy are established each year with the goal of reducing consumption; the central buildings are then monitored monthly.
Collection points for used batteries have been installed in the largest buildings. The collected batteries are delivered to an outside service provider who is responsible for processing and recycling them. As a result, in 2007 more than 800kg of batteries were collected from the offi ces and employees of the bank.
Natixis decided to hand over the management of its end-of life computer and offi ce automation equipment and materials to the APR2 Company, which specializes in the handling of
Management of Electric and Electronic Waste: Responding to an Environmental and Social Goal
Natixis has chosen to entrust its WEEE to APR2, a company tasked with removing the computer and automated offi ce equipment, processing the toxic elements and recycling those parts that can be recovered (plastics, metals) in accordance with regulations on protecting the environment. It provides a guarantee of confi dentiality by destroying the hard disks that could contain sensitive information. As an appropriately equipped and organized company employing the disabled, it provides Natixis with the opportunity of contributing to their integration into society and fulfi lling its obligation to employ handicapped workers.
The carbon report produced by Natixis in 2006 showed that travel by its employees was creating a signifi cant impact.
capitale” network of companies introducing CTP projects to the Greater Paris Area.
For more than three years, the bank has been co-fi nancing a public bus line which serves its sites in Charenton le Pont.
In line with the move to our new sites in the 12th and 13th arrondissements, employees have been encouraged to use public transportation near the sites, and a shuttle system linking the different offi ces has been organized.
Brussels ). In support of this policy, the Purchasing Department has signed rail contracts which allow us to reduce air travel to certain destinations.
emissions associated with our fl eet of automobiles are also being monitored: hybrid vehicles or other fuel effi cient cars have been identifi ed by the team in charge of the Natixis fl eet and they are gradually replacing the older vehicles.
Finally, in November 2007 Natixis, with the support of ADEME, set up an intranet ride-share site. This site helps employees share their vehicle for travel from home to work or between offi ces, based on an integrated geographic system which links supply with demand.
The site was launched on October 16, 2007. By the end of 2007, the results were: 880 registrations in the Paris Region; 156 announcements posted since the program began; 23 Natixis sites represented.
Purchasing Department has strengthened its efforts to incorporate sustainable development criteria into most of its bid invitations.
Company, and the program for registering and monitoring purchases was revised to allow follow-up on how sustainable development criteria are applied case by case.
In terms of labo r standards, Natixis incorporated nondiscrimination criteria in contracts signed with temporary work agencies.
The gradual increase in the standards required of suppliers, in line with the changes in the offi cial reference labels and changes in the supplier products are all part of the policy aimed at constant improvement and raising the awareness of our suppliers.
The recent rating by Vigeo made specifi c mention of the work done by Natixis in 2007 in human resource management, facilitating the legal and operational alignment of the different business lines in the Group and supporting employees in the necessary adaptation to changes in the Company.
A great deal of work was done in 2007 in the area of labor relations (see Chapter on Human Resources), during which
As regards the position of women, their representation in management at p arent c ompany level is gradually changing 2007) and the percentage of promotions involving women should improve the situation (56.4% in 2004, 59.1% in 2005, 57.3% in 2006, 54.8% in 2007) (9). Concerning the group nation-wide, the representation of women in management rose from 39.7% at December 31, 2006 to 40.5% at December 31, 2007, and the percentage of promotions grew from 56.7% at
Natixis established a policy of integrating handicapped workers, using a study carried out with the assistance of Agefi ph which then led to the preparation of an action plan.
Department of Human Resources, set up handicap awareness sessions aimed at changing the way disabled persons are seen and integrating them into the Company with appropriate organization and policies. These sessions concerned fi rst and foremost the staff at Human Resources, company doctors, nurses, social workers, as well as members of the CHSCT, i.e. some one hundred persons.
Raising the awareness of Human Resources employees and managers will continue in 2008, the goal being to gradually extend these initiatives to all employees.
Additionally, the Group either established or consolidated relations with associations that facilitate relations between companies and disabled workers (Hanploi, Tremplin, AFIJ,
Collaboration with the adaptive sector has led to the signing of a contract with a company that employs the handicapped for processing end-of-life waste electrical and electronic equipment.
Natixis has decided to associate its employees in the broadest possible way in our sustainable development policies. In addition to regular communication through our internal channels (newspaper, intranet) and adding more content to our “gestes verts” website, our employees have benefi ted from more specifi c awareness sessions. For example, a presentation on the bank’s sustainable development policy is integrated into the fi rst day’s orientation for new employees, and a training module for “generalists” in sustainable development is included in the catalogue of courses offered to all employees. Finally, the Natixis sustainable development policy has been presented on several occasions during training meetings.
Patronage is a vehicle for the Company to open itself to civil society by supporting projects that are outside its traditional fi eld of business. In a context of dialogue and exchange, it offers an opportunity for mutual enrichment, encouraging the Company to integrate into its social, cultural or natural environment.
Additionally, the bank, assisted by its subsidiaries, funds awareness programs and the distribution of treated mosquito nets aimed at protecting populations affected in endemic areas. Projects undertaken since 2005 with the NGOs Plan
France and Les Enfants de L’Aïr were continued in 2007 in
Benin on malaria in infants. Project RU 010 “Mother and Infant
French Coalition against Malaria, a network led and coordinated by Friends of the Global Fund Europe, which is composed of approximately twenty organizations in the public and private sector and includes research groups, NGOs, corporations, international organizations and governmental bodies.
(Yesterday’s Heritage, Today’s Treasures), Natixis has demonstrated over the past fi ve years its strong and consistent commitment to developing, studying and passing on the hidden works of the national heritage.
Tenture d’Artémise. This royal wall covering, a gift of Henry IV
Tenture d’Artémise was shown in its entirety for the fi rst time in 350 years when the Galerie des Gobelins was reopened to the public in May 2007.
Cinémathèque. At the same time, Natixis supported the recovery of a unique collection of the fi rst animated fi lms (18921948 ) preserved at the National Centre of Cinematography by the French Film Archives. The public was able to discover these treasures during the retrospective entitled “From the
Finally, Natixis funded a program to restore the most prestigious recordings of the Orchestre de Paris and make them available free of charge on the Orchestra’s internet site. This patronage coincides with the 40th anniversary of the Orchestre de Paris and 180 years of existence for the Société des Concerts du
Strong growth in solidarity based loans: First place on French SRI market and solidarity-based saving.
Continue and develop work on fraud prevention 79% of personnel at p arent c ompany and over 60% of personnel in subsidiaries (excepting Coface) trained in the fi ght against money laundering.
Deployment of the behavio ral analysis program for the fi rst batch of activities.
Implemented fi ltering tool regarding obligations in fi ght against fi nancing of terrorism and respecting embargos at all Natixis international entities.
Continue implementing fi ltering tool as per obligations to combat fi nancing of terrorism and respect of embargos at all Natixis international entities.
Optimize our environmental management system in the construction and operation of our buildings.
Include energy costs of purchased materials in comparisons of total costs.
New team dedicated to managing diversity, and particularly hiring people with disabilities. Formalize analysis and bank’s policy on hiring disabled workers.
The indicators used are those defi ned in the NRE Act of
France and other countries – relate to Natixis p arent c ompany and its French subsidiaries.
The total number of employees was 21,959 full time equivalents (FTEs) at December 31, 2007.
More than one third of employees (35.1%) employees work outside France.
The proportion of managers has been increasing regularly for many years. They represent 67.1% (65.5% in 2007) and close to 72% within the Parent Company (see table below).
The group has continued with its active hiring policy in 2007.
The total number of new hires during the year in France was 1,907, including 1,315 permanent and 592 fi xed-term contracts.
The diversity of the group’s business lines and its international activities are refl ected by the diversity of new employees in terms of cultures and experience (see section on “Targeted hires”). Within the p arent c ompany, more than 40 nationalities are represented.
The number of new hires at the p arent c ompany has grown rapidly in the last fi ve years. The fi gures below include employees hired from subsidiaries (130 in 2007). The number of hires of permanent contracts in 2007 nevertheless remains close to the 2006 number.
The number of junior employees (under 26 years old) continues to grow accounting for 32.1% of new hires compared to 24.6% in 2005 and 26.6% in 2006. Young employees are often recruited after a long-term internship or international work experience with the bank.
Inter-company mobility within the group totaled 293 in 2007 with more than 80% of managers.
Departures for all reasons and types of contracts, excluding inter-company mobility, totaled 1,653 in 2007.
Overtime in France decreased compared to 2006 and totaled 40,049 hours, representing 24.9 FTEs on an annual basis.
Overtime in the parent company totaled 17,812 hours, representing 11.1 FTEs.
The Law of August 21, 2007 for employment and purchasing power called “loi TEPA” allows employees who work overtime to benefi t under certain conditions of a tax exemption and a reduction of employee contributions.
Temporary employees: temporary employees represented 4% of total French employees at December 31, 2007, representing a monthly average of 567 FTEs.
■ In the p arent c ompany, the monthly average was 241 FTEs, representing 3.8% of average p arent c ompany number of employees at December 31, 2007.
■ Other: over one hundred civil servants seconded by the government work for the Group in France, mainly at Natixis p arent c ompany and AEW Europe.
As defi ned by French labor laws, not applicable to Natixis.
Twelve collective bargaining agreements cover the various business lines exercised by Natixis and its subsidiaries in
As a result, there are specifi c provisions depending on the sector, in particular with regard to working time.
In the p arent c ompany, the statutory workweek is 35 hours averaged over one year. The actual workweek is 38 hours and employees are therefore granted additional days off in lieu.
Management-level employees who work on a number-of-days basis rather than an hourly basis work 209 days, including the additional work day stipulated under the June 30, 2004 act for the protection of elderly and disabled people (loi sur la solidarité
Employees have the option of working part-time on the basis of 50%, 60%, 70%, 80% or 90% of the full-time schedule.
In the p arent c ompany, an amendment to the work-time management plan (compte épargne-temps) was signed in 2006, allowing employees to save up all their extra days off plus six days of their paid leave in the year, while maintaining the option of being paid fi ve days a year.
The new online leave and absence management tool available to employees and managers set up in 2006 has been extended to a number of subsidiaries in 2007. New features have been added for more fl uid information. It concerns today more than 8,000 employees.
sick leave and 2.1% maternity leave. The percentages at the p arent c ompany are 5.3%, 2.6% and 2.0%, respectively.
The fi rst wage settlement part of the compulsory annual labor negotiations was signed in July 2007. As a result, the more modest wages in most group entities were increased. In certain case s, these provisions were completed by the subsidiaries as part of their individual annual labor negotiations.
During the fi rst quarter, Natixis launched a process to assess individual compensation and raises based on the employee’s performance targets.
Average gross annual compensation for permanent employees on a full-time equivalent basis (fi xed and variable components excluding profi t-sharing, incentive plans and employer’s matching contributions to the employee savings plan) was €69,016 for the Group in France.
In November, a scrip issue of 60 Natixis shares was made in an egalitarian manner and by name, to the employees of the Natixis
Committees were held in 2007 and a total of 94 agreements or amendments to agreements were signed within the Group in France, bearing witness to intense activity in management/
Bleichroeder and Ixis Securities to create Natixis Securities, the merger between Natixis Factor and GCE Affacturage, and the merger between Natixis SA and Ixis CIB.
In the context of the merger between Natixis SA and Ixis CIB, and without waiting for the legal merger of the two companies on December 21, an Economic and Social Unit (ESU) was constituted in June between Natixis SA and Ixis CIB by agreement signed with all union organizations.
After this ESU was set up, elections were held and personnelrepresentative authorities common to the two companies were put in place in July.
Compliance, were presented to the unions, to come into force during the 1st quarter 2008. The charter on the use of IT, digital and technological resources, also appended to the internal
Since the creation of Natixis, information has been provided to all of the Group’s employees by a communication system based on different media: electronic letter, intranet and video screens.
A space on Natixis’ intranet is open to each of the six union organizations to facilitate the broadcasting of their internal communications. Also, the intranet site belonging to the central employee-representative committee has been made available to all employees in the various entities. It can also be reached from outside the company.
Natixis SA and Ixis CIB, new personnel-representative authorities common to both entities have been chosen. Their terms of offi ce run for two years. Representatives of four new
Recommendations have been made to the Management and an action plan will be put in place in 2008. Communication is planned to inform employees of the commission’s role, its resources, and how ti refer to it. An intranet site dedicated to the HSWCC, managed by the HSWCC and paid for by the
The “Moving in” commission groups the Management, the social partners (two representatives per union, plus the secretary and the assistant secretary of the HSWCC), and the occupational health physicians. It is in charge of optimizing the conditions under which employees set up their new working environments as a result of team redeployments following the new organizations.
management, medical department and health-insurance company have implemented prevention measures and have contributed fi nancially to measures designed to wean people off tobacco, relaying the measures taken by the Social
As is the practice every year, an infl uenza vaccination campaign in the workplace took place in the Fall.
In the parent company, as in many subsidiaries, the emphasis in 2007 was on the development of seminars for managers at different levels (senior management and middle management), with increased importance attached to inter-personal managerial skills.
Training in 2007 represented 4.72% of the p arent c ompany’s total payroll and 3.30% of the French payroll compared to a minimum legal requirement of 1.6%.
Natixis and its subsidiaries each year. The catalog lists all categories of training: professional training (computers, languages, regulations, etc.), specifi c training paths
At December 31, 2007, women represented 50.9% of the total French workforce.
Hires: The number of women hired in France was 945, or 49.6% of new hires. The percentage at the parent company was 41.5%.
Working time: women accounted for 92.8% of part-time employees (91.5% in 2007).
Proportion of women in management-level positions 2003 2004 2005 2006 2007
Proportion of women among promoted employees: Among all French employees, women received 59.7% of all promotions in 2007. This percentage is higher than the total proportion of women employees. At Parent Company, the percentage was 54.8%, also higher than the proportion of women employees.
Proportion of individual pay raises granted to women 2005 2006 2007
At parent company, the training effort for women is signifi cantly higher than their percentage among employees.
The parent company has 57 handicapped workers, 28% have manager status and 42% of whom are women.
As it is concerned to manage diversity, the parent company in 2006 made one of its employees responsible for developing an action plan to encourage the employment of handicapped workers.
In 2007, the Disabled Employment Task force carried out awareness-raising actions aimed mainly at human-resources employees involved in HR management, training, and the integration of trainees and temporary staff; occupational health physicians, social workers and nursing staff were also associated with these actions, as were members of the
Specifi cally aimed at HR Managers, training sessions on the recruitment of disabled workers were organized. Similar initiatives were undertaken in the subsidiaries, particularly aimed at managers.
Also, in order to facilitate access to internal information for workers suffering from motor, visual or auditory disabilities, the overhaul of the human-resources intranet in 2006 was done in compliance with international rules on the accessibility of web tools.
The same concern was shown by the company in 2007 when its new Internet site was put on line. Accessible to disabled persons with the help of specifi c measures, the site has just received AccessiWeb certifi cation at the Bronze level, thus making Natixis the fi rst bank to obtain this certifi cation.
Also, in order to facilitate personnel traveling from one site to another and the organization of meetings, a centralized and uniform payment system has been generally applied in the 9 company and inter-company restaurants in Paris region. This allows the Group’s employees to use the various restaurants and to pay a single price for the same service. Natixis pays between 35% and 75% of the price of meals, according to the employees’ remuneration.
In 2007, many employees took part in the Telethon socialsolidarity operation. The donations made on this occasion were topped up to double their amount by the Management.
Secondly, Natixis’s health-insurance plan is managed by joint representation between the Management and representatives of members. One of the founding principles of this healthinsurance plan is inter-generational solidarity between active and retired employees.
METHODS EMPLOYED BY THE COMPANY TO ACCOUNT FOR THE IMPACT OF ITS ACTIVITIES ON EMPLOYMENT AND REGIONAL DEVELOPMENT
Mathematics department of the Paris Ecole Centrale, or by establishing new partnerships, such as the one recently concluded with the University of Dauphine’s department providing the specialised postgraduate diploma in wealth management. In this capacity, 1,326 Schools trainees were received in 2007 in many fi elds of activity of the bank and its subsidiaries in France.
In France, 301 young people were thus received for workbased learning.
In total, Natixis and its subsidiaries received 1,715 young people during the year, namely more than 12% of the average 2007 workforce.
The company ensures that its sub-contractors observe the legal requirements regarding management of their personnel.
The Purchasing department includes conditions, such as respect of human rights and non-discrimination, in all bid invitations for service contracts.
The contracts contain a clause committing to compliance with the Universal Declaration on the Rights of Man and the United
Nations Convention on the rights of the child, as well as the conventions of the International Labor Organization, of which
France is a member, the themes of which are covered in the standard SA*8 000 (Social Accountability).
Natixis contributes to local development outside France through its international operations. Over 7,700 people work in offi ces, branches and subsidiaries abroad. Nearly all of them are hired locally. There are very few expatriates in the
Performance indicators: The indicators used are those defi ned in the NRE Act of
Consumption of materials mainly comprises paper consumption, which decreased in 2007 despite the growth in the number of employees and the Group’s business activity. Based on the number of workstations, consumption decreased 31%.
Water consumption totaled 142,172 cubic meters. There was a decrease of overall consumption and per workstation.
totaled over 138,000 MWh. It increased overall due to the extended scope. It nevertheless decreased per workstation.
The bank’s energy and fl uid consumption is managed by the Logistics department. Its policy is to minimize the direct environmental imagreements of the bank’s operations, while maintaining high-quality working conditions for employees.
The environmental quality of buildings is also taken into account right from the design stage. Natixis has initiated a building construction and operations improvement policy. The Antares project, Natixis’ future Data Center, located in Val d’Europe in the Paris metropolitan area, is a perfect example of this policy. From the outset, fi nancial, architectural and technical aspects were fully planned from a long-term perspective.
For the time being, Natixis does not use renewable energy sources.
Electrical and electronic waste approx. 30 t 39.7 t (not including mobile phones)
As of the last quarter of 2007, Collection, transportation and treatment of by an approved
The bank’s offi ces are mainly in towns and do not have a signifi cant, direct imagreement on the natural environment.
Nevertheless, preventive measures are taken to avoid any accidental water or air pollution. For example, sensitive installations are regularly maintained and premises containing potential pollutants are sealed.
These agencies place a strong emphasis on the Company’s environmental strategy.
In 2007, the Company spent €82,000 (excl. VAT) on environmental protection. In 2006, €936,000 (excl. VAT)
AMOUNT OF ENVIRONMENTAL FINES PAID DURING THE PERIOD FOLLOWING COURT RULINGS AND ACTION TAKEN TO REPAIR ENVIRONMENTAL DAMAGE (EN 28)
In 2005, the bank embarked on campaigns to inform and train employees about everyday behaviors that help minimize the Company’s imagreement on the environment
INFORMATION ON THE TARGETS ASSIGNED TO FOREIGN SUBSIDIARIES WITH REGARD TO POINTS 1 TO 6 ABOVE
Introduction of the Basel II reform (International Capital Adequacy Ratio) 171
Information on the parent company and proposed distribution of net income 177
Consolidated statement of change in shareholders’ equity (from January 1, 2006 to December 31, 2007) 184
Natixis operates in an environment that presents inherent risks, some of which it cannot control. However, these are not the only risks to which Natixis is exposed. The risks set out below, as well as other risks that have not yet been identifi ed or which are considered immaterial by Natixis, may have a material adverse impact on its operations, fi nancial position and/or results.
These two shareholders are therefore in a position to exert signifi cant infl uence in the election of Natixis’ directors and offi cers and other corporate actions that require shareholder approval. Pursuant to a shareholders’ agreement signed between the two groups on November 17, 2006, BFBP and
CNCE have also agreed to coordinate the voting of their shares with respect to certain actions, in particular with respect to the election of members of the Supervisory B oard and of the Executive B oard. Any coordinated action between BFBP
and CNCE will further limit the ability of other shareholders to infl uence the corporate governance of Natixis.
BFBP and CNCE are both required to ensure the compliance of the entire Groupe Banque Populaire and Groupe Caisse d’Epargne, respectively, with applicable French banking regulations in areas such as capital adequacy and risk management. As a result, BFBP and CNCE have been granted signifi cant approval rights over important aspects of the risk management policies of Natixis (which is part of both
In addition, the shareholders’ agreement provides that certain decisions deemed essential such as the purchase or sale of an interest or the creation of a joint venture by Natixis or one of its subsidiaries in an amount exceeding €150 million require the approval of both BFBP and CNCE as well as the
Supervisory B oard of Natixis. In the event of a disagreement, the shareholders’ agreement provides mechanisms for the resolution of the issue at the senior management level, but it does not contain a mechanism for defi nitively resolving the disagreement. In the event of deadlock, the Executive B oard may be unable to obtain Supervisory B oard or shareholder approval to proceed with planned actions. Natixis’ business may therefore be subject to signifi cant disruptions in the event that BFBP and CNCE are unable to resolve any differences concerning Natixis’ development.
BFBP and CNCE, respectively, have certain coordination and control powers under French banking laws and regulations).
Natixis has a signifi cant infl uence with respect to Banques
Populaires and Caisses d’Epargne as a result of certain rights granted to it under agreements relating to the combination transactions (in particular, rights with respect to representation in or the right to be consulted on certain decisions of the governance bodies or Committees of BFBP and CNCE, audit and inspection rights and rights to receive information), but these rights do not include voting rights in shareholders’
general meetings and are not equivalent to the powers of a central body. As a result, the ability of Natixis to guide the future development of the two groups in which it holds a substantial interest is limited.
Under the terms of the agreements relating to the combination transactions, Natixis is prohibited from selling all or part of its 20% equity interests in Banques Populaires or Caisses d’Epargne without the prior consent of the board of directors of Banque Populaire concerned or CNCE, respectively. While a bank whose board refuses to approve such a sale will be required to repurchase the relevant equity interests, the price will be based on the proportionate share of the net assets of the bank represented by the equity interests, taking into account the valuation method used to determine the initial price paid by Natixis for those interests, and thus may be different from the price that Natixis would have obtained from the proposed purchaser. In addition, the mere existence of the approval right might make it diffi cult for Natixis to sell its equity interests.
As part of the shareholders’ agreement signed on November 17, 2006, Natixis’ two principal shareholders, BFBP and CNCE, have generally agreed not to compete with the activities of
Natixis in France or abroad. However, this agreement not to compete contains certain exceptions, in particular for activities conducted by either BFBP or CNCE and their subsidiaries at the time the agreement was signed, and that were not contributed to Natixis as part of the combination transactions. In particular, these exceptions include life and property insurance, areas in which the Caisses d’Epargne offer their customers products of
Natixis may fi nd itself competing directly or indirectly with the services provided by one or both of its principal shareholders.
Credit risk also arises in connection with the credit insurance and factoring businesses of Natixis, although the risk relates to the credit of the counterparty’s customers, rather than the counterparty itself.
Market risk arises in trading portfolios and in non-trading portfolios. In non-trading portfolios, it encompasses: the risk associated with asset and liability management, which is the risk to earnings arising from asset and liability mismatches in the banking book or in the insurance business. This risk is driven primarily by interest rate risk; the risk associated with investment activities, which is directly connected to changes in the value of invested assets within securities portfolios; the risk associated with certain other activities, such as real estate, which is indirectly affected by changes in the value of negotiable assets held in the normal course of business.
Insurance risk. Insurance risk is the risk to earnings due to mismatches between expected and actual claims.
As a global fi nancial services provider, Natixis’ businesses are materially affected by conditions in the fi nancial markets and economic conditions generally in France, in Europe and elsewhere around the world. Adverse changes in market or economic conditions could create a challenging operating environment for fi nancial services companies. In particular, such adverse changes could result from increases in interest rates or commodities prices (including oil), adverse geopolitical events (such as natural disasters, acts of terrorism and military confl icts), or a deterioration in credit market conditions (as discussed below).
Adverse economic conditions could reduce credit demand by corporate borrowers or increase the rate of defaults by
Primary and secondary debt market conditions and deteriorating economic conditions could have a material adverse impact on Natixis’ earnings and fi nancial condition
The activities, earnings and fi nancial condition of Natixis have been affected, and could in the future be affected (particularly in the short-term), by the signifi cant and unprecedented disruptions currently being experienced in the primary and secondary debt markets, and by deteriorating overall economic conditions. The primary impacts of these conditions on Natixis are the following: Current conditions in the debt markets include reduced liquidity and increased credit risk premiums for certain market participants. These conditions, which increase the cost and reduce the availability of debt, may continue or worsen in the future. Natixis’ cost of debt is also dependent on its maintaining high investment-grade credit ratings.
Since Natixis is highly dependent on the availability of credit to fi nance its operations, disruptions in the debt markets or a reduction in its credit ratings, could have an adverse impact on its earnings and fi nancial condition, particularly in the short term. In addition, Natixis depends on the international debt markets to maintain its capital ratios (through the issuance of subordinated debt and hybrid capital securities), and disruptions in these markets may render the issuance of these securities costly or, in an extreme case, might make it impossible to issue such securities on reasonable terms, thereby affecting the capital ratios of Natixis and its ability to expand its business.
The secondary debt markets are also currently experiencing signifi cant disruptions resulting from reduced investor demand for loans and debt-backed securities (known as
CDOs) and increased investor yield requirements for those loans and securities. During 2007, higher interest rates, falling property prices and a signifi cant increase in the number of subprime mortgages originated in 2005 and 2006 contributed to dramatic increases in mortgage delinquencies and defaults in the United States. These conditions have also affected other markets as fi nancial institutions have sold other assets to meet liquidity requirements. These conditions have affected and may continue to affect the activities of Natixis in a number of ways, including reducing the availability of securitization markets to fi nance new loan production (including in lucrative areas such as structured
FINANCIAL DATA 6 Risk factors fi nancing), reducing opportunities for the capital markets divisions of Natixis to earn commissions from structuring new securitization transactions, reducing performance-based fees in asset management businesses and essentially halting
LBO market activity. The disruptions in the secondary debt market may also require Natixis to retain a larger portion of loans and CDOs than it would in other environments. While
Natixis’ only direct exposure to subprimes is its loans pending securitization portfolio, whose value amounts to €201 million as of December 31, 2007.
In 2007, due to indirect exposure to subprimes, Natixis recorded provisions of €949 million to cover losses in the value of RMBS and ABS CDOs held by it. The amount of writedowns due to U.S. monoline exposures amounted to €409 million in 2007.
In addition, Natixis recorded a loss of €369 million after tax in 2007 on the sale of its former subsidiary CIFG, a monoline credit enhancement provider, to BFBP and CNCE. See the
The net banking income of Caisses d’Epargne may be affected by changes to the rules governing the Livret A, a regulated savings account currently distributed by Caisses d’Epargne and La Banque Postale
A substantial increase in new provisions or a shortfall in the level of previously recorded provisions could adversely affect Natixis’ results of operations and fi nancial condition
In connection with its lending activities, Natixis periodically establishes provisions for loan losses, which are recorded in its income statement under cost of risk. Natixis’ overall level of provisions is based upon its assessment of prior loss experience, the volume and type of lending being conducted, industry standards, past due loans, economic conditions and other factors related to the recoverability of various loans.
Natixis’ ability to attract and retain qualifi ed employees is critical to the success of its business and failure to do so may materially affect its performance
To the extent that Natixis owns assets, or has net long positions, in any of those markets, a downturn in those markets could result in losses due to a decline in the value of its net long positions. Conversely, to the extent that Natixis has sold assets that it does not own, or has net short positions, in any of those markets, an upturn in those markets could expose it to losses as it attempts to cover its net short positions by acquiring assets in a rising market. Natixis may from time to time have a trading strategy of holding a long position in one asset and a short position in another, from which it expects to earn net revenues based on changes in the relative value of the two assets. If, however, the relative value of the two assets changes in a direction or manner that Natixis did not anticipate or against which it is not hedged, Natixis might realize a loss on those paired positions. Such losses, if signifi cant, could adversely affect Natixis’ results of operations and fi nancial condition.
The amount of net interest income earned by Natixis during any given period signifi cantly affects its overall net banking income and profi tability for that period. Interest rates are highly sensitive to many factors beyond Natixis’ control. Changes in market interest rates could affect the interest rates charged on interest-earning assets differently than the interest rates paid on interest-bearing liabilities. Any adverse change in the yield curve could cause a decline in Natixis’ net interest income from lending activities. In addition, increases in the interest rates at which short-term funding is available and maturity mismatches may adversely affect Natixis’ profi tability. Increasing or high interest rates and/or widening credit spreads, especially if such changes occur rapidly, may create a less favorable environment for certain of Natixis’ businesses.
An interruption in or a breach of Natixis’ information systems, or those of third parties, may result in lost business and other losses
As with most other banks, Natixis relies heavily on communications and information systems to conduct its business, as its activities require it to process a large number of increasingly complex transactions. Any failure or interruption or breach in security of these systems could result in failures or interruptions in customer relationship management, general ledger, deposit, trading and/or loan organization systems.
Unforeseen events like severe natural disasters, pandemics, terrorist attacks or other states of emergency can lead to an abrupt interruption of Natixis’ operations and, to the extent not covered by insurance, can cause substantial losses. Such losses can relate to property, fi nancial assets, trading positions and key employees. Such unforeseen events may additionally disrupt Natixis’ infrastructure, or that of third parties with which it conducts business, and can also lead to additional costs
As a multinational banking group involved in complex and large-scale cross-border transactions, Natixis is subject to tax legislation in a number of countries. Natixis structures its business globally in order to optimize its effective tax rate.
Natixis also endeavors to structure the fi nancial products sold to its clients in a tax-effi cient manner. The structures of Natixis’
There can be no assurance that the tax authorities will not seek to challenge such interpretations, in which case Natixis could become subject to tax claims.
Natixis fails to identify or anticipate. Natixis’ risk management techniques and strategies may also not effectively limit its risk exposure in all market patterns. These techniques and strategies may not be effective against certain risks, particularly those that Natixis has not previously identifi ed or anticipated. Some of Natixis’ qualitative tools and metrics for managing risk are based upon its use of observed historical market behavior. Natixis applies statistical and other tools to these observations to arrive at quantifi cations of its risk exposures. These tools and metrics may fail to predict future risk exposures. These risk exposures could, for example, arise from factors Natixis did not anticipate or correctly evaluate in its statistical models. This would limit Natixis’ ability to manage its risks. Natixis’ losses could therefore be signifi cantly greater than the historical measures indicate. In addition, Natixis’
In addition, while no material issue has been identifi ed to date, the risk management systems are subject to the risk of operational failure, including fraud. See “Risk Management’’
for a more detailed discussion of the policies, procedures and methods Natixis uses to identify, monitor and manage its risks.
In the context of its risk management policies Natixis enters into transactions to hedge its exposure to exchange rate risk.
Various issues may give rise to reputational risk and cause harm to Natixis and its business prospects. These issues include inappropriately dealing with potential confl icts of interest; legal and regulatory requirements; ethical issues; money laundering laws; information security policies and sales and trading practices. Failure to address these issues appropriately could also give rise to additional legal risk to Natixis, which could increase the number of litigation claims and the amount of damages asserted against Natixis, or subject Natixis to regulatory sanctions. (See “Legal Risks” in the management report.)
FINANCIAL DATA 6 2007 Management r eport 2007 Management r eport
central bank led to a sharp rise in default rates on loans granted to the weakest borrowers (16.3% in Q3 2007 for subprime loans). The underlying instruments housing these assets then started to experience diffi culties, particularly securitization products. A serious confi dence crisis then emerged on the fi nancial markets, as shown most clearly by the sharp rise in three-month interbank rates at the end of the year (nearly 100 bps higher than base rates).
The dollar’s depreciation represents another consequence of the US real estate crisis. After losing 4.3% in 2006, the effective dollar exchange rate (as calculated by the Federal
(euro, Sterling, yen, yuan, etc.). The most symbolic case was the more-than 10% fall against the euro.
East Asia, Eastern Europe and Latin America) continued to grow particularly fast. As such, world growth approached
France fared disappointingly compared to its European neighbo rs. Growth stood at 1.8%. Highly volatile consumer confi dence prompted households to stabilize spending and signifi cantly increase savings rates. Corporate investment rose, although much less so than in Germany.
Natixis’ net banking income amounted to €6.043 billion in 2007, down 17% on December 31, 2006.
The direct negative impact of the crisis represented €1.220 billion in net banking income for 2007 and can be broken down as follows: €949 million in writedowns linked to direct and indirect subprime exposure; €271 million in writedowns linked to exposure on monoline insurers.
The impact of the crisis was limited to certain Corporate and Investment Banking segments, i.e. Principal Finance and Securitization, Proprietary Management and, to a much lesser extent, Capital Markets. In contrast, fi nancing activities posted robust growth of 21% which included a 32% increase on structured fi nancing.
US asset management companies and recorded close to €25 billion in net new money over the year. Net banking income climbed 21% at constant exchange rates, boosted by a high level of performance-related commissions on alternative and real estate funds; 2007 was a very busy year for all Services activities and featured a 13% increase in net banking income, good organic growth on all business lines, and a strengthening of business relations with shareholder networks; ■
The decline in the US dollar dented the accounts by a hefty €124 million in 2007. On the other hand, changes in the scope of consolidation had a positive impact on net banking income. On a constant exchange rate and structure basis, the decline in net banking income was limited to 15%.
Underlying operating expenses (excluding restructuring costs) totalled €5.141 billion, with the rate of growth slowing substantially to 4%: Payroll costs totalled €3.051 billion, virtually unchanged from 2006: Fixed payroll costs (excluding performance-related pay, profi t-sharing and incentive schemes) rose 9%. Headcount increased by 960 full-time equivalents (FTEs) (+4.5%)
The cost of profi t-sharing and incentive schemes was considerably lower than for 2006, in line with the change in earnings.
On the whole, performance-related pay elements were stable relative to 2006, with an increase in the Asset
Underlying gross operating income totalled €902 million, down 61% on 2006.
The cost of risk totalled €244 million, of which €55 million for individual risks and €190 million for collective provisions, with the latter including €138 million of provisions for exposure to monoline insurers.
The Caisses Epargne and Banques Populaires networks contributed a combined €642 million to the “Income from associates” line in 2007, down 1% compared with 2006.
Although the two networks recorded sustained and identical growth in their net earnings (+12%), two negative technical elements (drop in accretion gains and consolidation restatement on AFS capital gains) limited their contribution to Natixis’ earnings over 2007.
Income before tax was down 55% to €1.333 billion. The tax charge was a very low €91 million, refl ecting the fact that the bulk of pre-tax earnings originated from low-taxed entities and profi t sources.
Income from non-operating items was negative to the tune of €29 million in 2007. This fi gure included: a €369 million net expense from discontinued activities, including the sale of CIFG; €234 million of restructuring income (net of tax), including €178 million in capital gains linked to restructuring in the
All in all, writedowns linked to direct and indirect subprime exposure came to €949 million in 2007, with a further €271 million of writedowns linked to monoline insurer exposure
(€1.088 billion), fell 13% compared with 2006. This change was due to the reduction in performance-related pay and more specifi cally to the downturn in business during the year.
The number of full-time equivalent employees in the Corporate and Investment Banking division rose by 334 to 6,645 at yearend. The international workforce rose to 2,404 and accounted for the entire increase, while French staffi ng levels remained stable at 4,241 FTEs.
After factoring in €222.5 million in cost of risk and €192.1 million in tax income, Corporate and Investment Banking showed a net loss (group share) of €177.3 million, versus a €947.5 million profi t in 2006.
After-tax profitability, measured in terms of the return on average normative allocated capital, was therefore negative in 2007. However, Financing business lines posted a 14% ROE
International business represented 52% of net banking income at end-December 2007, versus 49.8% at end-
Structured Finance fared well in 2007, despite the substantial impact from the credit crisis.
Net banking income rose by 32% to €836.3 million, despite €41 million of provisions on the syndication portfolio.
June following the outbreak of the liquidity crisis in the USA
Commodities also made progress, buoyed by transactions concerning Metals Producers and Energy Producers, and by rising commodity prices (crude oil, metals and agricultural commodities).
Commercial Real Estate revenues rose signifi cantly compared with 2006, despite a slight slowdown in new transaction execution, which itself refl ected prudent origination in light of high market prices.
The Project Finance market was only moderately affected by the liquidity and confi dence problems during the year. The market stayed active throughout 2007 with the result that
Natixis as the number 1 MLA in Europe (4th worldwide) for renewable energy project fi nancing.
Results from Aviation Finance were also up, with the industry remaining very buoyant despite margins narrowing for the best signatures.
Shipping revenues also grew signifi cantly. All assets, regardless of their date of commissioning, continued to increase in value compared to historical averages, buoyed by unremitting worldwide demand. Almost 60% of the business line’s deal fl ow resulted in arranger mandates. The Offshore market grew as the team capitalized on the experience built up over the previous year and more. The offi ces in Greece,
Nonetheless, client business remained buoyant throughout the year and particularly during the second half.
The US crisis and subsequent tensions generated a strong aversion to all forms of bond credit (affecting both primary and secondary offerings) and a real liquidity crisis. The impact of cash costs and movements in the Eonia-Euribor curve also signifi cantly impacted results. Financials and covered bonds were hardest hit, with a knock-on effect on short-term paper. Corporate issues returned to very broad spreads and thus widened the spread between securities and CDS, with the result that fi nal clients positioned on these new issues and abandoned the secondary market.
There was also a slowdown in commodities business related to the need to rebuild Natixis Commodity Markets’ teams.
Despite a signifi cant slowdown in the last quarter – particularly in primary equity markets – strong performances in the fi rst three quarters enabled the Equity Cash business line to report growth on 2006 fi gures.
FINANCIAL DATA 6 2007 Management r eport from Strategic Derivatives, which accounted for 75% of
The impact on indirect subprime exposure came to €548 million for 2007. The synthetic CDO/CLO activity (ABS
Exposure to monoline insurers also necessitated provisioning to refl ect the impact of the crisis on the quality of these insurers’ loans. This provisioning of designated risks (MBIA,
Principal Finance and Securitization NBI also suffered from harsh market conditions (wider credit spreads and high volatility) during 2007.
NBI for Proprietary Management and miscellaneous activities was negative to the tune of €324.4 million for 2007.
At the same time, widening spreads plus the liquidity crisis hit all classes of spreadbook assets and generated additional losses in the second half.
Asset Management activities across Europe: in the fi rst half of the year, all of the former Natexis’ assets
minority stake from 15.42% to 11.34%; the fourth quarter featured restructuring of the real-estate fund management business throughout Europe. The Natixis
Effects of the fi nancial crisis on assets exposed to credit risk
The Asset Management division only felt the impact of the fi nancial crisis on European business. The Company acted as partial counterparty for €0.4bn of buybacks on dynamic cash mutual funds managed by Natixis Asset Management (NAM).
Management (NGAM) continued to acquire asset management companies in the USA, with deals including the purchases of Alpha Simplex and a 30% stake in Percipio Capital
Assets under management amounted to €590.5 billion at the end of 2007, up 1.2% on the year-earlier fi gure of €583.2 billion.
This increase in assets under management was broken down as follows: net new money of €24.4 billion. New money at the end of
Despite the slide in the dollar, net banking income rose by 14% or by €213 million to reach €1.710 billion. At constant dollar rates, net banking income grew by 21%. This robust revenue growth stemmed from: a 10% increase in the average portfolio compared to 2006; a 69% increase in performance-related commission.
2007 featured excellent performances by US alternative investment funds and signifi cant performance-related commission on real estate funds; a €46 million negative impact arising from use of the balance sheet to address the fi nancial crisis on the creditrelated asset market; a €103 million negative currency effect linked to the weaker dollar and which dented growth in NBI by almost 7 points.
All in all, net income from Asset Management amounted to €259.5 million, a 2% decrease on a reported basis, but a 5%
Services enjoyed a very busy 2007, which featured robust organic growth in all business lines, further investment in industrial platforms, the conclusion of partnership operations and signifi cant acquisitions.
Although France’s retail banking market slowed down somewhat in 2007, Services consolidated existing business relationships with the Banque Populaire and Caisse d’Epargne networks to develop synergies and maintain a good rate of growth.
Net banking income from Services advanced by 13% or €149 million to reach €1.299 billion. The main growth drivers were Securities Services (which benefi ted from revenue growth at CACEIS), Insurance (fuelled by life insurance) and
Gross operating income consequently jumped 25% or €97 million to reach €480 million, while the cost-income ratio dropped by 4 points to 63%.
However, it still fared satisfactorily relative to the situation in the life insurance market.
Provident insurance revenues increased 19% to €204 million. The momentum came from further efforts to equip Banques Populaires customers with pure insurance and dependency insurance products, and to sell borrowers’
Consumer Finance maintained strong business momentum during the year. This was evident on both the revolving credit and personal segments, thanks to sustained efforts by the
Revolving credit recorded good overall growth. The main driver was the Caisse d’Epargne’s TEOZ product, while the
The combined effect of growth in these two activities lifted net banking income from Consumer Finance by 15% or €11 million to €83 million at year-end 2007.
Employee benefi ts planning maintained solid business momentum. Further growth was achieved in the very small,
Banques Populaires, while the offering was also successfully launched to the Caisses d’Epargne.
Natixis Interépargne maintained its market leadership in employee savings plans, with the number of client companies rising by 15% to almost 35,000, and assets under management expanding by 10% or €1.7 billion to reach €18.5 billion.
The Service Vouchers business continued to grow, with the number of vouchers issued and reimbursed increasing by 8% to €56 million and by 7% to €54 million, respectively.
Payments posted unchanged net banking income of €162 million for 2007.
The Electronic Banking business continued to expand, supported by the rise in the number of cards and clearing transactions.
The Checks and Payment Systems business also grew slightly. This progress was due to the fi nancial margin holding up extremely well in the fi nal quarter, while business volume continued to trend down (stability in national cheque recovery and gradual use of the new STEP 2/TIPA
Guarantees and Sureties 2007 turnover (written premiums) amounted to €171 million, down 12% compared to the €194 million in 2006. The main culprit was the decline in written premiums from retail customers, following the price cuts introduced on July 1, 2006. However, robust business levels in 2007 limited the impact of this reform.
or €31.5 million compared to the previous year. This strong growth was primarily fuelled by: a 10% or €10.9 million increase in earned premiums.
FINANCIAL DATA 6 2007 Management r eport entire duration of policies, premiums earned from retail customers were only very partially affected by the decline in turnover; a drop in claims expenditure net of reinsurance, due to exceptional provisioning of €24.2 million in 2006.
Operating expenses rose 14% or €20.3 million to reach €167.3 million.
All in all, net income improved by 7% or €16.4 million to reach €245.5 million during the year.
Investments continued at a sustained rate and reached almost €615 million at year-end 2007 (versus €603 million in 2006), including €327 million of proprietary investment. Further funds were also raised.
Compagnie 1818 had an excellent year in 2007 and lifted net banking income by 44% to €73.6 million. Assets under management benefi ted from healthy business levels and rose 11% to €1.1 billion.
European resident clients. Similar synergies already existed in Private Banking between Banque Privée Saint- Dominique
Natixis Factor (which consolidated Natixis Factor’s number 3 position in factoring in France), and the creation of Coface
Kompass France and Kompass Belgium in the fi rst quarter strengthened its position on the company information market and accelerated the rollout of the company information offering worldwide.
Gross operating income rose 10% or €23 million to €258.5 million.
The economic and fi nancial downturn, particularly in the credit markets, together with the uncertainties as to the future of the credit enhancement sector and the lack of a common dynamic with the rest of the Group’s business, led Natixis to withdraw from this business line in the second half of 2007.
On December 20, 2007, the Natixis Supervisory Board approved the transfer of virtually all of CIFG’s shares to
Populaires (BFBP). The shares were split equally between the two shareholders and transferred for the token amount
■ of US$2. The transfer was legally completed on January 31, 2008.
As a result of this transaction, the value of Natixis’ stake in
The Banques Populaires and Caisses d’Epargne networks contributed €642 million to the “Contribution from associates” line in 2007, down by 1% compared to the €651 million in 2006.
Although the Caisses d’Epargne and the Banques Populaires networks both grew net income by a healthy 12% in 2007, two negative technical factors (reduction in accretion profi t and restatement for consolidation purposes of AFS portfolio capital gains) limited their contribution to Natixis’ bottom line.
The Banques Populaires network continued to expand in 2007 and opened 60 new branches. The loan book grew by 13%
Net banking income rose 5% to €5.839 billion. This increase included 4.3% growth in commission income. Excluding the effective of home-purchase savings products, net banking income rose by 3.7%.
Operating expenses progressed by 4% to €3.658 billion, with the cost/ income ratio easing by 0.7 point to 62.6%.
Headcount inched up by 0.2%, while the number of branches grew 2.2% to 2,938.
The cost of risk increased 38% or €108 million to reach €388 million.
Pre-tax income advanced by 5% or €85 million to €1.864 billion. This fi gure factors in €63 million of gains on fi xed assets, including a €49 million capital gain on Crédit
All in all, the Banques Populaires posted net income of €1.340 billion for 2007, an increase of 12% or €140 million on 2006.
The Caisses d’Epargne maintained healthy activity levels throughout 2007. The loan book and the savings portfolio increased by 8% and 4%, respectively.
Net banking income rose 3.4% to €6.435 billion. Excluding home-purchase savings products, the increase was 1.9%.
Headcount and the number of branches both inched up by 0.5% to reach 37,150 and 4,352, respectively.
All in all, the Caisses d’Epargne posted net income of €1.595 billion for 2007, an increase of 12% or €172 million relative to 2006. This rate of growth matched that of the
Collective provisions rose sharply during the year, mainly due to recognition of a general prudential provision designed to cover risks on transactions with monoline insurers, prompted by the ongoing fi nancial crisis (€138 million impact).
Banque Populaire and Groupe Caisse d’Epargne’s corporate governance principles. The system comes under the supervision of the Natixis Executive Board and is built around three tiers of coordinated control: internal control carried out by the operational or functional departments, under the supervision of their line management.
Group, including: distinction between front- and back-offi ce functions, the existence of fi rst-tier controls at an operational level; distinction between periodic and permanent controls; control units within the Natixis Group organized on a worldwide basis so as to ensure the consistency of internal procedures; ■
The decision was taken during the year to restructure the second-tier internal control system around two departments instead of three as previously. As a result, the Control department no longer exists as such, its functions and resources having been transferred to the Compliance, Risk and Internal Audit departments.
risks are consolidated and monitored on a consolidated basis by the central institutions, relies on the three permanent confederal Committees set up at the end of 2006: the Standards and Methods Committee, which is mainly responsible for issuing (or validating in the event of delegation), common standards concerning the general organization of risk management, risk assessment methods and risk reporting; the Risk Information Systems Committee, which handles project management issues concerning risk information systems shared by the two core shareholder groups and
FINANCIAL DATA 6 2007 Management r eport a corporate secretary function in charge of managing human and budgetary resources and logistics for the entire risk system.
It also proposes principles and rules to the Executive Board concerning the following subjects: risk acceptance procedures; delegations; risk assessment; risk monitoring.
Lastly, it reports regularly on its work, analyses and fi ndings to
By virtue of this system, Natixis received permission from the French banking commission to use the IRB Foundation approach to calculate regulatory capital requirements for credit risk purposes from January 2008, for a defi ned perimeter of portfolios and entities.
The principles for identifying credit risk hedging instruments comply with the recommendations of the Basel Committee agreements. The decision on whether or not the riskattenuating effects of a guarantee make it eligible to be taken into account for risk exposure calculations is determined by ad hoc procedures. Checkpoints are posted throughout the process and cover transaction approval, monitoring of credit risk exposure and calculation of the resulting capital requirements.
Likewise, guarantors are examined, rated and monitored in the same way as debtors.
Natixis’ balance sheet but they carry the counterparty risk of credit default sellers (generally OECD banks). These transactions are subject to the same decision-making and monitoring procedures as those applying to all derivatives.
Day-to-day monitoring is carried out by the business lines and the middle-offi ce for fi nancings and by the Risk department for second-tier control.
the management of diffi cult cases when needed and recovers debts in the event of legal proceedings.
A Group Provisions Committee organized by the Financial department meets once a quarter. It is chaired by the Chief
Special Affairs and Disputes department and the heads of the business lines concerned. The Committee bases its work on the examinations carried out by the Counterparty Watch
List Committee, with the same case analysis materials being presented at the meeting.
For the latter, objective impairment indicators are sought using analysis and close monitoring of business sectors and countries. An objective impairment indicator usually comprises a combination of microeconomic or macroeconomic indicators specifi c to the sector or country concerned. If necessary, an expert is called upon to fi ne-tune the result obtained.
Natixis Group’s fi nancial assets. This exposure is determined without taking into account guarantees, collateral, credit default swaps, collateral on over-the-counter forward fi nancial instruments, the effect of master set-off agreements and other forms of credit enhancement. It corresponds to the net accounting value of the fi nancial assets recorded in the balance sheet, net of any impairment made (specifi c or collective).
Four different breakdowns are presented, i.e. in terms of sector, geographic location, internal rating and Basel II portfolio.
B REAKDOWN OF ASSETS UNDER MANAGEMENT BY INTERNAL RATING CATEGORY (EXCLUDING SECURITIZ ATION SEGMENT)
Chairman has sole decision-making power, following an open debate between the parties involved. He/she may be represented by a third party in case of unavailability.
The operational unit is in charge of day-to-day control of market risks and is split into fi ve teams each of which controls risk for one of the main front-offi ces (Credit, Interest Rates and Interest Rate Derivatives, Equities and Equity Derivatives,
They also prepare risk measurement methodologies that are appropriate for their respective business lines.
The transversal unit is in charge of all consolidated reports presented to management (Executive Board and front-offi ce management) and for the implementation of standards and procedures common to all entities (subsidiaries and branches)
The market risk situation and any changes in this area are presented weekly to the Chairman of the Executive Board and monthly to the Market Risk Committee.
Natixis controls its capital markets risk via a methodology for measuring the market risks incurred by the Group’s various entities.
VaR limits set by the regulator, Natixis’ Risk Department produces the VaR for Natixis’ consolidated scope, with the transactions that originated in the ex-Natexis Banques
All limit overruns (operational and loss-alert limits) are notifi ed in line with procedure. Loss-alert overruns may lead to a management decision concerning the position in question (closure, hedging, maintaining, etc.).
The principal standard indicators used are: an indicator of sensitivity to a 1 bp variation in interest rates (overall and regional indicator, by currency and/or maturity), a trend-risk indicator, an exchange-rate risk indicator,
an equity-market exposure indicator, an indicator of sensitivity to variations of +/-1% in implied volatility in equity, forex, interest-rate and infl ation markets
(these indicators are overall, by maturity and by strike), an indicator of variations in delta relative to variations in underlyings (equity, interest rate or forex), an indicator of sensitivity to variations in government bond/
swap spreads, an indicator of sensitivity to variations in issuer spreads, an indicator of inter-currency spreads, an indicator of sensitivity to infl ation (1bp variation), a measurement of discontinuity risk, indicators of sensitivity to variations in correlation, an indicator of sensitivity to recovery and to jump-todefault,
3 – S tress tests are also employed to measure the losses potentially sustained by portfolios in extreme market circumstances. These circumstances are developed from market scenarios based on historical studies (economic scenarios) and from hypothetical, specifi c or adverse scenarios for each portfolio or on an overall basis.
Natixis’ entire stress test mechanism was reviewed during the year. All stress tests are calculated in the Bank’s VaR
calculation tool, Scénarisk: adverse stress tests entail “stressing” the different market parameters showing signifi cant sensitivity. The stresses are applied singly (or by consistent group of parameters)
and give information on potential variations in P&L, activity by activity, historical stress tests involve reproducing groups of variations in market parameters observed during previous periods of crisis, over a short time horizon, in order to provide ex-post simulation of the orders of magnitude of variations in recorded P&L. Although these stress scenarios have no predictive power, they allow a judgment to be made of exposure to known scenarios. Seven historical stress scenarios were defi ned, theoretical stress scenarios, also called “overall stress”
In an extension of the approach used to measure and manage market risk, Natixis has asked the French
at €14.9 million. The maximum observed level of €22.2 million was within the limit of €35 million granted to Natixis by the
April 19, 2007, once the target systems had been connected to Ixis Corporate & Investment Bank’s VaR calculation tool.
Backtesting can be used to check that the number of times results variations exceed potential losses (represented by
Stress Test 4: Increase in credit spreads – assumption of an increase in credit spreads: impact: -€302 million.
defi nes the main approach toward structural balance sheet risks. It meets once a quarter, is chaired by the Chief
Executive Offi cer and comprises members of the Corporate and Investment Bank, the Financial department and the Risk department. The Committee’s remit is to: monitor changes in the balance sheet and in off-balance sheet items; defi ne the rules for internal refi nancing of activities; validate overall policy in the areas of refi nancing, managing non-operational exchange-rate risk and reinvesting available shareholders’ equity; approve the assumptions and conventions chosen for preparing indicators and stress scenarios; ■
FINANCIAL DATA 6 2007 Management r eport validate the overall limits applying to indicators of structural balance-sheet risk and procedures for managing liquidity crises.
The ALM Committee’s scope of responsibility covers the banking portfolio for head offi ce, branches and subsidiaries carrying signifi cant structural risks for the balance sheet. In compliance with the tripartite convergence plan for monitoring structural balance-sheet risks taken in the context of the double affi liation mechanism, the supporting documentation and reports of each Committee meeting are sent to Natixis’ central institutions to allow consolidated monitoring of Natixis’s ALM
risks at their level. During the target phase of this convergence plan, which will start at the end of 2008, Natixis’ ALM system will be interfaced with those of the central institutions.
Natixis’ overall interest-rate risk is essentially linear and mainly results from mismatching positions concerning transactions with contractual maturities. Concerning the parent company perimeter, this mismatching is centralized via the use of internal supporting contracts within the Treasury Department, which is delegated responsibility for operational management by the ALM Committee. Other than monitoring the sensitivity of the economic value of portfolios by yield curve points and by currency, this management is bounded by 99% 1-day VaR
(1) Sum of sub-limits on VaR by section, excluding diversifi cation effect.
Because of the specifi cs of their activities, certain subsidiary credit institutions have had the management of their interest-
■ rate risk delegated to their own ALM Committee or Treasury
Committee has not yet formally approved the limits set by the subsidiaries.
The overall refi nancing requirements of Natixis, of its subsidiaries and of the Banques Populaires in the short, medium and long-term over a large number of currencies, are managed operationally by the Treasury department, which operates out of head offi ce and the New York and Singapore branches. This centralization continuously optimizes the cost of liquidity to the benefi t of the entire Group. It also facilitates an issuance policy based on the continuous search for maximum diversifi cation in the placement of Natixis’s debt, both in terms of instruments and geographical zone.
As a corporate and investment bank, Natixis’s liquidity risk mainly results from mismatching positions concerning transactions with contractual maturities. Within the parent company perimeter, this mismatching is centralized by the
Natixis’ risk, and the consolidated perimeter. These indicators are produced periodically by the Financial department and examined during ALM Committee meetings.
(1) The mismatching ratios are defi ned for each class of maturity, such as the ratio of residual resources by residual uses.(1) The mismatching ratios are defi ned for each class of maturity, such as the ratio of residual resources by residual uses.
The Treasury function’s management of liquidity mismatching risk on its own banking portfolio is bounded by minimum mismatching ratios (2) validated by the ALM Committee. These minimum ratios, which were renewed in 2007, are: (2) According to these limits, 25% of banking portfolio assets with residual maturity of fi ve years or more must be refi nanced by liabilities with more than fi ve years remaining to maturity.
(2) According to these limits, 25% of banking portfolio assets with residual maturity of fi ve years or more must be refi nanced by liabilities with more than fi ve years remaining to maturity.
Class of maturity 6 months 7 months 8 months 9 months 10 months 11 months
This risk is essentially concentrated on the US dollar and includes: exchange-rate risks related to net investments abroad in currencies other than the euro; risks related to income and expenditure in currencies other than the euro.
Regarding the fi rst category of risks, the ALM Committee has approved continued use of the practice of refi nancing long-term assets via the purchase of foreign currency. The aim of this is to immunize the Bank’s solvency ratio, bearing in mind that certain risk-weighted exposures are denominated in currencies other than the euro. This policy would be modifi ed in the event that the sensitivity of the tier one ratio to variations in the euro/dollar exchange rate widened, in particular if an overly large portion of the Group’s equity capital was denominated in dollars.
Concerning the second category of risks, the ALM Committee has formally instructed that a portion of budgeted gross operating income due to be earned in dollars is hedged by advance sales of the dollar aginst the euro, with the corresponding repurchases to be made as and when earnings are effectively formed in dollars. This hedging is geared to neutralizing an adverse variation in the average EUR/dollar rate over the year in relation to the average budgeted rate.
The system for measuring, controlling and managing operational risks is based on consistent rules, standards and methods and is therefore shared by all of Natixis’ business lines.
Natixis’ Group Risks Committee, as well as by the central institutions; a strong operational risk culture within all business lines; effective internal reporting and the existence of an emergency plan and a business continuity plan.
Before Natixis was created in November 2006, much work had already been done in the various constituent entities to implement a system for measuring, controlling and managing operational risk.
After Natixis was created, these various systems were harmonized and a mechanism complying with the standard method was put in place.
The next step for the Natixis Group is to become eligible for the Advanced Measurement Approach (AMA), the aim being to turn the existing system for measuring, controlling and managing operational risk into a real management tool.
At the end of 2007, Operational Risk was organiz ed into fi ve units each covering a particular business line or activity, i.e. marketing, fi nancing, services, instruments and asset management. A sixth unit – Receivables Management – was created later. This mechanism ensures the whole of the group is covered by a matrix-type organization structured around the two themes of activity and location.
FINANCIAL DATA 6 2007 Management r eport preparing risk maps: this process is conducted “in parts” (i.e. for each business line). Once completed and validated, this map should facilitate monitoring of environment variables and the implementation of action plans throughout the whole of the Natixis Group; producing reports: “operational” reports are produced at individual businessline level in order to facilitate decision-making by the business lines’ operational risk Committees; reports consolidated at Group level and geared to managing the Bank’s transversal risks.
Natixis currently calculates its regulatory capital requirements using the standard method.
As part of the switch to the AMA method, Natixis is developing an internal model based on a probabilistic approach which will ultimately enable it to calculate a distribution function for cumulative losses.
Natixis uses two types of hedging for the overall management of interest-rate and liquidity risk with regard to the IFRS
Natixis uses fi xed-rate vanilla swaps for ledning purposes in order to fi x future fl ows on variable-rate loans (commercial loans, interbank loans, loans to subsidiaries and branches).
For cash-fl ow hedging, Natixis essentially uses derivatives for hedging variations in income or expenses related to variablerate assets and liabilities.
Given the specifi cs of Natixis’ balance sheet (absence of behavioural option, no need to include early redemptions because they give rise to fi nancial compensation), this hedging is justifi ed by the use of future variable-fl ow payment schedules as for all of our scheduled operations.
Charts indicating the periods covered by justifi cation of cash-fl ow hedging (all currencies converted to euros)■
Natixis uses fi xed-rate vanilla loan swaps to protect against adverse interest-rate movements.
The retrospective test checks the effectiveness or otherwise of the hedging in place on the various period-end dates.
On each period-end date, the ex-coupon marked-to-market variations of hedging derivatives are compared to those of the assets/liabilities revalued for the hedged risk. The relationship of their respective variations must be between 80% and 125%.
Marked-to-market variations for derivatives are booked to profi t/loss (effective and ineffective part).
The main risks analyzed concern internal and external fraud, reduction in the value of property, liability risk (the company’s civil operating liability and professional liability, and also the civil liability of directors and corporate offi cers), damage to operational assets (buildings and contents, hardware and computerized data) as well as the loss of banking business following such damage.
The fi rst half of 2007 was used to group together the main insurance policies, these having previously been purchased by individual companies prior to the formation of Natixis.
risks and consequent loss of banking business) on January 1, 2008. These risks were still insured separately on January 1, 2007 (coverage acquired for reconstruction and/or replacement value for the most part, with a ceiling of €175 million per claim fi xed for the old Natexis Banque Populaires perimeter).
Since July 1, 2007 therefore, all of the Group’s companies have enjoyed guarantees: from a “combined” Overall Banking (Securities & Fraud), operational & professional civil liability insurance program providing coverage of up to €125 million per claim and/or year of insurance; from a directors/corporate offi cers civil liability insurance program providng coverage of up to €100 million per claim and/or year of insurance.
July 1, 2007, were reduced from €7.7 million (cumulated) to €5.2 million for a full year.
Natixis has no dependency with regard to any patent or licence, or to any industrial, commercial or fi nancial supply contract.
District Court for the Northern District of Illinois. The plaintiffs alleged that Harris Associates L.P. billed services to these three funds at an excessively high rate in light of applicable regulations. These proceedings are among numerous legal claims initiated in recent years against investment advisors.
March 20, 2007. Both parties fi led written arguments and appeared before the Court of Appeal on September 10, 2007.
At present, no provisions have been set aside in relation to these proceedings.
There is no other current governmental, legal or arbitrational procedure liable to have a signifi cant impact on Natixis’
As Natixis Assurances essentially markets savings products, the main risks resulting from insurance policies are of a fi nancial nature: The risk of no longer being able to meet the minimum contractual rate of return in the event of a decline in interest rates
To deal with this risk, life insurance unit, ABP Vie, has only marketed policies without guaranteed minimum rates of return for the last few years. 78% of policies have no guaranteed minimum rate and of those that have, the average guaranteed minimum rate is 0.83%.
Risk of policy surrenders in the event of an increase in interest rates
The sensitivity of net equity to variations in interest rates is lessened by the classifi cation of about €7 billion of fi xedincome securities in the held-to-maturity category.
Concerning securities in other categories, the sensitivity analysis carried out at end-2007 showed that a 1-point increase in bond rates has a -€31 million or 3.5% impact on net equity (after taking into account the variation attributable to policyholders and taxation).
This process entails setting allocation ranges for each type of asset.
Natixis Insurance also reinsures 100% of the minimum guaranteed return on unit-linked policies.
Counterparty risk is monitored and managed in compliance with standards and Natixis’ internal limits, as determined by the Credit Risk Committee, as well as with the regulatory constraints imposed on insurance companies. As a result, 95% of the fi xed-income portfolio is invested in securities with ratings exceeding A-.
The annual reinsurance plan seeks to diversify reinsurers and to ensure Natixis only deals with parties having a high-quality rating. No reinsurance treaty is concluded or renewed with non-investment grade parties. In practice, the rating of the
The nature of insured risks combined with reinsurance coverage does not induce any particular exposure to concentration of insurance risks.
By virtue of its activities, Coface is exposed to two main types of risk. The fi rst is the technical risk constituted by the risk of losses on Coface’s portfolio of insurance policies. The second is the fi nancial risk related to the risk of loss arising from adverse movements in interest rates, exchange rates or the market value of securities or real-estate investments.
the Large Risks Committee, which sets the maximum outstanding risk accepted by Coface on the Group’s 400 largest risks (outstandings greater than €80 million and severity greater than €25 million) and allocates ceilings by emerging country; a corporate and country risk rating system; a statistical mechanism for evaluating “severities” (maximum losses that may be recorded in case of loss) by debtor, group of debtors or emerging country.
In the context of the fi nancial crisis, vulnerable risks were listed on the basis of Coface ratings and proposals from underwriting centres for specifi c risks such as highly-leveraged buyouts. All signifi cant risks rated 3, 2 and less (equivalent to BB- in Standard & Poors rating system) are subject to centralized monitoring both for inventory and monthly fl ows.
For frequency risks, populations at risk will be identifi ed via a scoring procedure while more restrictive quotation matrices are to be implemented.
Coface maintains a diversifi ed credit risk portfolio, in order to minimize the risk that a default by a debtor, a slowdown in a particular sector of activity or an adverse event in a given country might exert a disproportionate impact on its overall claims expense. Furthermore, the fact that the great majority of Coface’s risks are short-term allows it to reduce the risk covered for a debtor or a group of debtors relatively quickly after recognizing a decrease in their solvency.
Pillar 1 revamps minimum regulatory capital requirements via the introduction of a prudential ratio that is geared to providing a more accurate refl ection of banking risks (market risks, credit risks and operational risks) and their economic reality.
June 2006, transposes the new Basel agreement into European law. The French text of February 20, 2007, transposes the
Efforts were made to raise the awareness of Natixis staff, via various training and communication initiatives.
Compliance in order to ensure continued compliance with minimum operational requirements.
This transversal operational risk structure is now active across most of the Bank. Business-line Operational Risk
This approach will enable Natixis to apply the standard method for operational risks in 2008. The next stage for the Natixis Group is to become eligible to use advanced methods and thereby convert the mechanism for measuring, controlling and managing operational risks into a fully-fl edged management tool.
More specifi cally, this mechanism relies on: a set of internal counterparty rating methodologies developed by Natixis. Rating engines enable all of the
Bank’s counterparties to be rated and a default probability to be associated with each rating; an engine for calculating risk-weighted assets, regulatory capital requirements and losses anticipated across the entire scope of the Natixis Group. This engine calculates risk-weighted assets and regulatory capital requirements linked to credit risk on an industrial scale, using the Basel
Commission in January 2008 to use the foundation internalratings based method to calculate regulatory capital requirements.
Natixis plans to move over to the IRB Advanced method in 2008.
For market risk, Natixis uses its VaR internal model to calculate regulatory capital requirements.
As for internal capital, economic capital requirements were calculated in 2007 throughout the Natixis Group. Efforts are under way to refi ne the current system.
The calculation process is managed by the Finance department and relies in particular on the Group’s existing risk measurement tools.
Economic capital requirements may be compared not only to regulatory capital requirements, but also to the equity capital that would be available to the Group to cover its funding needs in the event of a crisis (measured from an economic perspective, by analogy with the economic measurement of risks).
was primarily linked to growth in capital markets and fi nancing business, which affected activities recognized at fair value on the balance sheet and customer loans.
(€168.6 billion) and instruments recognized under the fair value option (€28.9 billion).
– amounted to €85.40 billion, an increase of €13.4 billion compared with December 31, 2006. This increase was fuelled by strong growth in fi nancing business both in France and abroad in 2007.
Activities excluding securities delivered under repurchase agreements were mainly refi nanced via an increase in liabilities at fair value through profi t and loss (€28.5 billion) and by debt securities, which rose by €11.3 billion to €65.5 billion.
Financial assets at fair value through profi t and loss and hedging derivatives 198.1 177.5
Financial liabilities at fair value through profi t and loss and hedging instruments 163.3 133.8
December 31, 2007, registered share capital amounted to €1,955,268,310.40, divided into 1,222,042,694, shares each with a par value of €1.60.
Natixis’ issuance of €0.750 billion of deeply-subordinated notes in October 2007 and a €0.7 billion reduction in the Tier 2 capital shortfall. This reduction stemmed from the launch of €1.8 billion of subordinated issues in 2007, which were partially offset by redemptions and a negative dollar effect on previous issues (€0.4 billion) and by a net increase in repurchases on the market aimed at ensuring issue liquidity (€0.2 billion). Earnings for 2007, after prudent estimation of the amount distributed, offset movements in other core capital items.
This €16.2 billion increase was linked to growth in bank lending, while market risks remained stable.
As a result of these trends, the international capital adequacy ratio stood at 10.3%, and the tier one ratio at 10.3%. This was a slight decrease compared with December 31, 2006, but Natixis’ capital structure was left intact, despite the growth in business.
The ratio of liquid assets to liabilities falling due within one month must therefore be higher than 100%. It stood at 194%
In line with banking regulations, no single exposure may exceed 25% of regulatory capital and the cumulative total of individual exposures in excess of 10% of regulatory capital may not exceed eight times regulatory capital.
In the subordinated debt market, a €500 million 10-year issue was followed by a €1 billion 10-year benchmark-type issue in
Finally, like all extendible note issuers, we were subjected to the exercise of the non-extension clause. As a result, the outstanding extendible notes are due to mature in
As in previous years, most of our medium and long-term refi nancing was covered by the private placement of a large number of EMTN issues.
One half of issuance was in the form of structured issues placed mainly in Asia. Apart from the period of tension and low demand in the summer, these private issues were placed in a balanced way across each quarter.
Following the Natixis/Ixis Corporate & Investment Bank merger in 2007, all issue programs for Natixis and its vehicles were reviewed and adapted to match the size of the new combine.
(i) Senior debt issuance programs: The EMTN programs of Natixis (formerly Natixis Banques
There is a cross-default clause restricted to the issuer, the trigger threshold of which was increased from €30 to €50 million (in line with the EMTN program of Ixis Corporate & Investment
(ii) Non-program senior debt issuance: International bond issues in 2007 outside EMTN programs contained a negative pledge and a cross-default clause similar to that of the issuer in question.
Accordingly, the principal and interest on the Notes (which constitute obligations) constitute direct, unconditional, unsecured, undated and deeply subordinated obligations of the Issuer and rank and will rank pari passu among themselves and with all other present and future Deeply
Subordinated Obligations and Support Agreement Claims but shall be subordinated to the present and future prêts participatifs granted to the Issuer and present and future titres participatifs issued by the Issuer, Ordinarily
The Group wished to complete virtually all of the legal and operational mergers by year-end, i.e. within a tight schedule, given the regulatory, legal, tax and operational constraints involved. This objective was met in full: the French asset management, equity brokerage, insurance and factoring businesses were merged at the end of the fi rst half of 2007; corporate and investment banking activities and consumer fi nance activities were each merged in the second half of 2007.
NATIXIS ISSUES (ALL CURRENCIES ROUNDED UP/DOWN IN € MILLIONS, OTHER THAN EXTENDIBLE NOTES IN $ MILLIONS)
Natixis’ Asset Management division, which was created by merging entities derived from Ixis Asset Management Group and Natexis Asset Management, fi nalized the key principles of its new legal organization on June 29, 2007 in accordance with the planned schedule (note that these changes took effect retroactively for accounting and tax purposes on January 1, 2007).
Natexis Bleichroeder SA and Ixis Midcaps transferred their activities to Ixis Securities, which took the new name Natixis
Natixis Assurances also purchased the outstanding 13% of the capital of Natixis Life Luxembourg, previously owned by
Affacturage, the former Banque Palatine subsidiary. The activities of GCE Affacturage were taken over and integrated into Natixis Factor.
Following consultation with personnel representatives and authorization from the CECEI (France’s fi nancial institutions regulator), I xis Corporate & Investment Bank’s merger into
December 31, 2007 for legal purposes and to January 1, 2007 for accounting purposes.
The merger generated a purely technical negative value adjustment for Natixis, which represented the difference between the posted acquisition value and the net book value of I xis Corporate & Investment Bank. This adjustment was recognized as goodwill in the Natixis parent company accounts.
December 28, 2007; The name of the FMSB – which has hitherto carried out custody activities for HVB – will be changed to CACEIS
Bank Deutschland GmbH as of February 1, 2008. A total of 550 employees will work out of its registered offi ce in
On February 14, 2008, Natixis published a press release, the terms of which were as follows: changes to the Executive Board: Under the suggestion of
Charles Milhaud, Chairman of Groupe Caisse d’Epargne and of Philippe Dupont, Executive Chairman of Groupe
Management business. Graduated from HEC and ENA, 57 years old, Jean-Pascal Beaufret has held several top positions within the Ministry of Finance, and in banking and industry, including that of Financial Director at Alcatel-
Crédit Agricole in France and the United States, before joining Natixis in August 2007; with the successful integration of Ixis CIB and Natixis,
Anthony Orsatelli has decided to leave the Group to pursue other interests.
With these latest changes in the executive management team, Natixis benefi ts from stable management, capable of bringing the company a few steps ahead and more suited to an increasingly demanding environment.
January 1, 2007. The movements described below were established by comparing 2007 fi gures with 2006 proforma data.
fall in net interest income, a €44 million or 9% fall in net fee income and an increase of €431 million or 66% in income from variable-income securities.
Gross operating income declined by 98% to €24 million. The cost-income ratio worked out to 98.8%.
Net gains and losses on fi xed assets were negative to the tune of €453 million.
for this period. However, should a public offer for all of Natixis’
At the end of the stability period, there shall be a reciprocal right of preemption between BFBP and CNCE for their respective interests in Natixis’ share capital. This right of preemption is applicable even in the event of a public offer.
Finally, BFBP and CNCE have agreed, under the terms of the shareholders’ agreement, to act in concert to exercise the voting rights held in Natixis in respect of certain decisions, in particular concerning the appointment of Supervisory Board and Executive Board members.
(CCIs) issued by the Banques Populaires and Caisses d’Epargne regional banks.
Under the terms of the protocol agreement between Natixis and Groupe Banque Populaire, if BFBP and CNCE cease to exercise joint control of Natixis, the Banque Populaire regional banks would be able to buy back the cooperative investment certifi cates held by Natixis representing 20% of their share capital.
cease to exercise joint control of Natixis, CNCE or the Caisses d’Epargne regional banks would be able to buy back the cooperative investment certifi cates held by Natixis representing 20% of their share capital.
FINANCIAL DATA 6 The Supervisory Board’s c omments on the Executive Board’s management r eport and the 2007 fi nancial s tatements
The Board has regularly obtained information about the business and activities of the Company and the Group in accordance with legal and statutory requirements. As part of its supervisory role, it carried out the checks and controls it deemed necessary.
The Board has examined the 2007 fi nancial statements presented to it by the Executive Board and examined its report on the activities of the Company and the Group over the year.
The Supervisory Board has taken note of the parent company and consolidated fi nancial statements as presented in this report.
Subject to the terms of the resolutions submitted for your approval, you are asked to approve the parent company and consolidated fi nancial statements for 2007, as well as the allocation of income for the year.
We would like to thank members of staff and the Executive Board for their work throughout the year.
GICs”) and the interest payment the bond issuers claim they would have been entitled to if not for the alleged antitrust misconduct. These class action lawsuits were brought under certain federal antitrust laws that allow for judgments awarding treble damages and attorneys fees under certain circumstances. One group of plaintiffs has petitioned the Joint
Memorandum, neither Natixis nor Natixis Funding has been formally served with complaints in any of the class action lawsuits. It is possible that, unknown to the Natixis entities, additional complaints have been fi led but not served.
These private damages claims arise out of investigations that were performed or are currently being performed by the U.S.
Commission (“SEC”). Although the IRS investigation has been settled without admission of guilt or liability by Natixis Funding or Natixis, the DOJ investigations encompass a signifi cant part of Natixis Funding’s Muni GIC transactions since 1998.
Several other bank and underwriter defendants have received letters from the DOJ naming those entities as targets of the investigation. Target letters are not formal accusations but indicate that the DOJ has singled out the recipient to be of particular interest in the ongoing investigation. Although one employee of Natixis Funding received a target letter, neither
On March 28, 2008 Natixis published the following release on its website: “Switch to Basel II standards: Natixis strengthens its capital structure
Natixis’ tier one ratio of 8.3% as at December 31, 2007 (under
With a view to continuing this expansion and responding to the new prudential rules now applicable under the Basel II
Natixis’ two key shareholders – Caisse Nationale des Caisses d’Epargne (CNCE) and Banque Fédérale des Banques
This advance, which may amount to up to €1.5 billion in total and will be repaid as and when the planned issues take place, will be paid at par by CNCE and BFBP. It will enable Natixis to attain a tier one ratio of around 8.5% (under Basel II standards)
as from the end of March 2008, in line with the objectives communicated to the market when Natixis was created.”
Revaluation differences on portfolios hedged against interest rate risk 0 0
Revaluation differences on portfolios hedged against interest rate risk 125 34
Deferred income and accrued charges and other liabilities 8.8 22,618 18,836
Net gains or losses on fi nancial instruments at fair value through profi t and loss 9.3 1,148 865
Amortization, depreciation and impairment of property, plant and equipment and intangible assets (164) (97)
Net income after tax from discontinued operations or those in the process of disposal 9.11 (369) 0
Net income for the period 1,221 999 including: - Attributable to equity holders of the parent 1,101 943 - Attributable to minority interests 119 56
CONSOLIDATED STATEMENT OF CHANGE IN SHAREHOLDERS’ EQUITY (FROM JANUARY 1, 2006 TO DECEMBER 31, 2007)
Equity at January 31, 2007 - EU IFRS after appropriation 1,955 12,163 (110)
(4) Includes changes in fair value of derivative fi nancial instruments designated as cash fl ow hedges.
Related to exchange differences Changes in fair value of fi nancial instruments
= Total non-cash items included in income before tax and other adjustments 7,863 3,359
+/- Decrease/(increase) in other fi nancial assets or liabilities 9,349 6,434
Total net cash provided/(used) by fi nancing activities (C) 9,847 (305)
Cash, central banks, post offi ces (assets & liabilities) (445) (335)
(*) For reference, the business combination carried out on November 17, 2006 with the Groupe Caisse d’Epargne involved the following legal operations: – the contribution by Caisse Nationale des Caisses d’Epargne (CNCE) of some of its subsidiaries and equity interests in the corporate and investment banking and services businesses, as well as part of the cooperative investment certifi cates (Caisse d’Epargne CCIs) issued since 2004 by each Caisse d’Epargne et de Prévoyance (with the exception of the Caisse de Martinique and Caisse de Nouvelle Calédonie), representing 20% of their capital; – the contribution to Natexis Banques Populaires by SNC Champion, the vehicle formed by the Banque Fédérale des Banques Populaires (BFBP) and the
Banques Populaires, of the remainder of the Caisses d’Epargne CCIs not contributed by CNCE and that SNC Champion had previously acquired from
CNCE. CNCE and SNC Champion also contributed the share capital of Ixis Corporate and Investment Bank (Ixis CIB) and of Ixis Asset Management
Consideration for these asset contributions was provided in the form of specially issued Natixis shares: – Natixis subscribed for 20% of each Banque Populaire bank’s capital in the form of a reserved issue of cooperative certifi cates of investment (the
“Banques Populaires CCIs”) fi nanced by debt; – Natixis acquired 66% of the share capital of Novacrédit (consumer fi nance) held by the Banque Populaire banks.
Upon completion of the transactions described above, CNCE and BFBP (through SNC Champion) placed some of the Natixis shares received in consideration for the aforementioned asset contributions on the market, leading to an increase in Natixis’ free fl oat, while strictly maintaining equality between the respective ownership interests held by BFBP (direct and indirect) and CNCE in the entity. At the balance sheet date of December 31, 2007,
Natixis’ free fl oat represented 25.83% of the share capital, with the Groupe Banque Populaire and the Caisse d’Epargne Group each holding a 34.45%
NOTE 13 - PAYROLL COSTS, NUMBER OF EMPLOYEES, COMPENSATION AND EMPLOYEE BENEFITS 295
The main legal business combination operations carried out over 2007 were as follows: Merger of the equity brokerage c ompanies
Natixis’ Corporate and Investment Banking division fi naliz ed the implementation of the organiz ation for its equity brokerage activities with the merger of Natixis Bleichroeder, Ixis Midcaps and Ixis Securities. On a legal level, Natixis Bleichroeder SA and
Ixis Private Capital Management have been consolidated within Natixis Multimanager, the multi-management specialist.
Management sold to “Caisse des Dépôts” a 40% stake in Ixis AEW Europe, Europe’s leading real estate asset management and investment consultancy, creating a genuine partnership between the two structures.
The merger of Ixis CIB represents a major step for the
December 20, 2007, and is effective from an accounting and tax perspective retroactively at January 1, 2007, and from a legal perspective at December 31, 2007. The consolidation of the workforce was carried out for the Corporate and Investment
the Markets division, which will group together two areas of expertise: Equities and Commodities on the one hand, and
Furthermore, various restructuring operations have been carried out within the factoring business (merger of GCE
Assurances). The consumer credit sector has seen the creation of Natixis Consumer and Finance.
Management” organisation. This new division will group the architecture, operations and support activities together for
The second half of 2007 was marked by the fi nancial crisis triggered by the deterioration in the residential real estate sector in the US. In the fi rst phase of the crisis, the market for assets backed with subprime American mortgages became illiquid, then in the second phase, the crisis spread, affecting liquidity on all debt securitisation-based products (including those for which the quality of underlyings has been maintained), as well as the deterioration on the interbank market.
The fi nancial statements presented by way of comparison are those published by Natixis in the 2006 registration document fi led with the French securities regulator (Autorité des Marchés
European regulation 809/2004 relative to the information contained in the prospectuses, the fi nancial statements for the year ended December 31, 2005 and published in the 2005 reference document that was fi led with the AMF on March 23, 2006 are incorporated by reference into this registration document.
and their interpretations as adopted by the European Union and applicable on the same date.
In light of the standards and amendments applicable for the fi rst time at January 1, 2007, further information has been presented in the notes to the fi nancial statements: IFRS 7 “Financial instruments: disclosures” has replaced
IAS 30 “Disclosures in the fi nancial statements of banks and similar fi nancial institutions” and the disclosures section of
as of January 1, 2007. This standard applies exclusively to the presentation aspects for fi nancial instruments and will therefore not have any impact on Natixis’ earnings or equity. It improves the fi nancial communication on fi nancial instruments used up until then. More specifi cally, the following notes have been introduced on the balance sheet: Note 8.1.1.2 – Loans and advances at fair value and credit risk,
Note 8.1.1.3 – Conditions for classifi cation of fi nancial assets designated as at fair value,
Note 8.1.2.1 – Financial liabilities designated as at fair value and credit risk,
Note 8.6.2 – Financial assets received as guarantees and that may be transferred or re-given as guarantees,
“Financial reporting in hyperinfl ationary economies” and applies to entities that identify for the fi rst time the existence of hyperinfl ation in respect of an accounting period. The application of this interpretation has not had any material impact on the Group’s consolidated fi nancial statements; Interpretation IFRIC 8 covers transactions whose payment is based on company shares and on which it is not possible to expressly identify all or part of the goods or services received.
If the company cannot determine the fair value of services in a reliable way, then it must determine the value in relation to the fair value of the equity capital instruments awarded in return. The application of IFRIC 8 for Natixis stock option plans has not had any signifi cant impact on Natixis’ fi nancial statements; ■