Creation of the Caisse d’Epargne Nord France Europe from the merger of the Caisse d’Epargne du Pas De Calais and the Caisse d’Epargne Des Pays de L’Hainaut.
Ixis CORPORATE & INVESTMENT BANK (4) 0 0 100 100 France
Financing of commercial property FI 100 100 100 100 United States
Financing on secondary market FI 100 100 100 100 United States
NATIXIS ASIA LTD Other fi nancial company FI 100 100 100 100 Hong Kong
Other fi nancial company FI 100 100 100 100 United States * Former name.
NATIXIS CAPITAL MARKETS INC (formerly Ixis Capital Market North America) *
NATIXIS CORPORATE SOLUTIONS (ASIA) Pte Ltd. (formerly Nexgen Financial Solutions (Asia) Pte Ltd. *
NATIXIS CORPORATE SOLUTIONS Ltd. (formerly Nexgen Financial Solutions Ltd. ) *
NATIXIS DERIVATIVES INC (formerly Ixis Derivatives Inc). * Brokerage house FI 100 100 100 100 United States
NATIXIS REAL ESTATE CAPITAL INC (formerly Natixis Real Estate Capital Inc). *
NATIXIS SECURITIES NORTH AMERICA INC (formerly Ixis Securities North America Inc) * Brokerage house FI 100 100 100 100 United States
NEXGEN REINSURANCE Ltd. (formerly NEXGEN RE Ltd.) * Reinsurance FI 100 100 100 100 Ireland
Other fi nancial company FI 93 93 94 94 United States
Arbitrage of asset-backed securities FI 100 100 100 100 United States
Brokerage of precious metals FI 100 100 100 100 Great Britain
NATIXIS ALGERIE (formerly NATEXIS ALGERIE) * Bank FI 100 100 100 100 Algeria
Arbitrage of shares and derivatives FI 100 100 100 100 France
NATIXIS BAIL (formerly NATEXIS BAIL) * Financial leasing FI 100 100 100 100 France
Provision of liquidity to the secondary debt market FI 100 100 100 100 France
NATIXIS Luxembourg (formerly NATEXIS Luxembourg) * Bank FI 100 100 100 100 Luxembourg
International trade operations and promotion FI 100 99 100 99 Canada
PARIS OFFICE FUND (25) Estate agent 0 0 50 50 France
SAS VAL A Investment portfolio holding FI 100 100 100 100 France
International trade operations and promotion FI 100 99 100 99 Morocco * Former name.
NATIXIS PRAMEX INTERNATIONAL - Milan (formerly Natexis Pramex Italia SRL) *
International trade operations and promotion FI 100 95 100 95 Italy
International trade operations and promotion FI 100 99 100 99 Poland
International trade operations and promotion FI 100 99 100 99 Hong Kong
International trade operations and promotion FI 100 99 100 99 Great Britain
International trade operations and promotion FI 100 98 100 98 France
LA COMPAGNIE 1818 – BANQUIERS PRIVES (18) Holding FI 74 74 73 73 France
NATEXIS INVERSIONES SL International investment fund FI 100 52 100 84 Spain
Management of Innovation Mutual Fund FI 100 100 100 100 France
ASAHI NVEST INVESTMENT ADVISORY CO, LTD (35) Distribution EM 49 43 49 42 Japan
HARRIS ALTERNATIVES HOLDING INC (5) Holding FI 89 89 85 85 United States
HARRIS ASSOCIATES SECURITIES, LP (35) Distribution FI 89 89 85 85 United States
NATIXIS GLOBAL ASSOCIATES AUSTRALIA HOLDINGS, LLC (formerly Ixis ASSET MANAGEMENT (AUSTRALIA) HOLDINGS, LLC) * (35) Holding FI 89 89 85 85 Australia
NATIXIS ASSET MANAGEMENT ADVISERS, LP (formerly Ixis ASSET MANAGEMENT ADVISERS, LP) * (35) Distribution FI 89 89 85 85 United States
NATIXIS GLOBAL ASSOCIATES AUSTRALIA LIMITED (formerly Ixis ASSET MANAGEMENT AUSTRALIA LIMITED) (32) * Distribution 0 0 85 85 Australia * Former name.
Ixis ASSET MANAGEMENT SERVICES, INC. (38) Services 0 0 85 85 United States
NATIXIS INVESTMENT SERVICES JAPAN, LTD (formerly Ixis INVESTMENT SERVICES JAPAN, INC.) * (35) Distribution FI 89 89 85 85 Japan
MC MANAGEMENT, LP (35) Holding FI 89 89 85 85 United States * Former name.
NATIXIS ASSET MANAGEMENT PARTICIPATIONS 2 (formerly Ixis ASSET MANAGEMENT PARTICIPATIONS 2) (35) * Holding FI 89 89 85 85 France
NATIXIS GLOBAL ASSET MANAGEMENT CORPORATION (formerly Ixis ASSET MANAGEMENT US CORPORATION) (35) * Holding FI 89 89 85 85 United States
NATIXIS GLOBAL ASSET MANAGEMENT PARTICIPATIONS 3 (formerly Ixis ASSET MANAGEMENT PARTICIPATIONS 3) (35) * Holding FI 89 89 85 85 France
NATIXIS GLOBAL ASSET MANAGEMENT PARTICIPATIONS 4 (formerly Ixis ASSET MANAGEMENT PARTICIPATIONS 4) (35) * Holding FI 89 89 85 85 France
NATIXIS GLOBAL ASSET MANAGEMENT, LLC (formerly Ixis ASSET MANAGEMENT US, LLC) (35) * Holding FI 89 89 85 85 United States * Former name.
NATIXIS GLOBAL ASSOCIATES LUXEMBOURG (formerly Ixis ASSET MANAGEMENT GLOBAL ASSOCIATES, S.A.) (35) * Distribution FI 89 89 85 85 Luxembourg
NATIXIS GLOBAL ASSOCIATES, INC (formerly Ixis ASSET MANAGEMENT ASSOCIATES, INC.) (35) * Distribution FI 89 89 85 85 United States
REICH & TANG DISTRIBUTORS, INC. (35) Distribution FI 89 89 85 85 United States
Distribution of mutual funds FI 100 100 100 100 Great Britain
CIA DE SEGUROS DE CREDITOS COFACE CHILE SA (formerly COFACE CHILI SA) (25) *
Information provision and management of receivables 0 0 100 100 Great Britain
Information provision and management of receivables 0 0 100 75 Bulgaria
COFACE CREDIT MANAGEMENT NORTH AMERICA (formerly Coface Credit Management Services) *
Information provision and management of receivables FI 100 100 100 100 Germany
COFACE HOLDING SAS (12) Holding FI 100 100 0 0 France
Information provision and management of receivables 0 0 100 75 Hungary
Information provision and management of receivables 0 0 0 0 Germany
Information provision and management of receivables FI 100 100 100 100
COFACE NORTH AMERICA HOLDING COMPANY Holding FI 100 100 100 100 United States
Information provision and management of receivables 0 0 100 100 Poland * Former name.
COFACE SERVICE SUISSE (formerly -Cofacerating.ch) (25) * Holding 0 0 100 100 Switzerland
COFACE SERVICIOS COSTA RICA (formerly VERITAS DE CENTRO AMERICA) (25) *
Information provision and management of receivables 0 0 100 100 Brazil
Information provision and management of receivables FI 100 100 100 100 Spain
Information provision and management of receivables 0 0 100 100 Mexico * Former name.
Information provision and management of receivables 0 0 100 75 Slovakia
Information provision and management of receivables 0 0 100 75 Slovenia
COFACE UK HOLDINGS (formerly London Bridge Finance Group) * Holding FI 100 100 100 100 Great Britain
Insurance investment mutual fund FI 100 100 0 0 France * Former name.
KOMPASS POLAND (25) Marketing and other services 0 0 100 100 Poland
Information provision and management of receivables 0 0 70 70 Turkey
Marketing and other services 0 0 100 100 United States * Former name.
BROOKE SECURITIES HOLDINGS INC (63) Holding PI 50 50 0 0 United States
Trustee bank for mutual funds PI 50 50 50 50 France
CACEIS FASTNET AMERICAN ADMINISTRATION (62) Holding PI 50 50 0 0 France * Former name.
ASSURANCES BANQUE POPULAIRE VIE Life insurance FI 100 100 100 100 France
NATIXIS FINANCEMENT (formerly CEFI) * Consumer credit FI 67 67 67 67 France
NATIXIS CONSUMER FINANCE (65) Consumer credit FI 100 100 0 0 France
Management of employee savings accounts FI 100 100 100 100 France
NATIXIS LIFE (formerly NATEXIS LIFE) * (52) Life insurance FI 100 100 100 99 Luxembourg
CIFG GUARANTY ASSURANCES NORTH AMERICA (49) Insurance 0 0 100 100 United States
MOGADOR LTD (24) (49) Financial services NA NA NA NA Jersey
Issue of preferential shares FI 100 0 100 0 United States
“Sale option” structure for country credit risk FI 100 100 100 100 Great Britain
COFACE IRELAND - SUCC (COFACE SA) Insurance FI 100 100 100 100 Ireland
COFACE UK - SUCC (COFACE SA) Insurance FI 100 100 100 100 Great Britain * Former name.
COFACE PORTUGAL - SUCC (COFACE SA) Insurance FI 100 100 100 100 Portugal
COFACE IBERICA -SUCC (COFACE SA) Insurance FI 100 100 100 100 Spain
COFACE SWITZERLAND - SUCC (COFACE SA) Insurance FI 100 100 100 100 Switzerland
COFACE NEDERLAND - SUCC (COFACE KREDIT) Insurance FI 100 100 100 100
COFACE FINANCES PAYSBAS - SUCC COFACE FINANZ F actoring FI 100 100 100 100
COFACE ARGENTINA SUCC (COFACE SA) Insurance FI 100 100 100 100 Argentina
COFACE CHILE -SUCC (COFACE SA) (12) Insurance FI 100 100 0 0 Chile
COFACE HUNGARY (formerly ÖKVC FIÓKTELEPE) - SUCC (COFACE AUSTRIA) Insurance FI 100 100 100 100 Hungary
COFACE POLAND (formerly ÖKVC POLAND) - SUCC (COFACE AUSTRIA) Insurance FI 100 100 100 100 Poland
COFACE ROMANIA INSURANCE -SUCC (COFACE AUSTRIA) (12) Insurance FI 100 100 0 0 Romania
COFACE CZECH INSURANCE -SUCC (COFACE AUSTRIA) (12) Insurance FI 100 100 0 0
COFACE SINGAPOR -SUCC (COFACE SA) Insurance FI 100 100 100 100 Singapore
COFACE HONG KONG -SUCC (COFACE SA) Insurance FI 100 100 100 100 Hong Kong
NATIXIS NEW YORK Financial institution FI 100 100 100 100 United States
NATIXIS LONDRES Financial institution FI 100 100 100 100 Great Britain
BANQUE POPULAIRE DES PYRENEES ORIENTALES DE L’AUDE ET DE L’ARIEGE (55)
Activity extension EM 20 20 20 20 France * Former name.
Non-fi nancial / Property institution EM 20 20 20 20 France
Credit institution / Surety company EM 20 20 20 20 France
(2) Creation of a common subsidiary by Natixis Luxembourg Investissements and Crédit Agricole SA each holding 50% of the capital.
(6) Creation of 7 new “JP MORGAN” trusts during the 3rd quarter 2007.
(7) Created in 2007, holding company for operational subsidiaries created in Malta.
(9) Deconsolidation of MUNICIPAL Tender Option Bonds business on January 1, 2007 (28 SARATOGA TRUSTS).
(11) Created as part of Natixis North America’s Real Estate Property Program.
(17) First consolidation of Opéra Sentier SAS acquired on June 24, 2005.
(19) Transfer of all assets and liabilities on June 30, 2007 to the Centre Français du Patrimoine.
(21) Resulting from the merger of Caisse d’Epargne de Centre-Val de Loire and Val de France Orléannais occurring in November 2007.
(29) Resulting from the merger of Caisse d’Epargne de Lorraine and the Caisse d’Epargne Champagne-Ardenne occurring in November 2007.
(36) Effect of sale of 40% of securities of Ixis AEW EUROPE SA to CDC.
(40) Resulting from the merger of Socami Haute Savoie and Socami Savoisienne.
(43) Acquisition of minority interests bringing the capital from 21% to 88%.
(45) Acquisition of 40% of the minority interests of SOCAMAB by NATIXIS GARANTIES – 2007.
(47) Merger of SGPC - Société de Gestion Provençale et Corse with the BP Provençale et Corse at the end of the second quarter 2007.
(52) Repurchase of a fraction of minority interests for holding at 100%.
(53) Contribution of Foncier Assurances securities by Natixis to Natixis Assurances.
(56) Contribution of NAMI securities by NGAM to AEW Europe SA.
(57) Acquisition of minority interests bringing the capital from 69% to 89% (including 4% earnings-per-share increase effect).
(59) Deconsolidation following the transfer of the management of investments to COFACE SA.
(61) Repurchase of 23% of the minority interests of CACEIS FASNET France in CAAM by CACEIS SAS.
(64) Creation of the holding company Ecrinvest 11 following the contribution by Natixis of shareholding in Natixis Financement.
Amortization, depreciation and impairment of property, plant and equipment and intangible assets (88) (66) (154) (164)
Including: - Attributable to equity holders of the parent 2,100 1,101 - Attributable to minority interests 104 119
6.1 – Exposure to “Subprime” r isk on Natixis b alance s heet as at December 31,2007
Natixis is directly and indirectly exposed to “subprime” risk: Direct exposure
Natixis’ only direct exposure to subprime lending is its portfolio of loans pending securitization. This portfolio is classifi ed as belonging to the category of fi nancial assets at fair value through profi t or loss.
This portfolio’s exposure as at December 31, 2007 is as follows: (in € millions)
Exposure consists of the following: RMBS and ABS CDO portfolios held by Natixis Capital Market North America, Natixis and Natixis’ New York branch. Depending on the entity in question, these assets are classifi ed as belonging to the category of either assets at fair value through profi t or loss or assets available for sale: Exposure as at Dec. 31, 2007
Assets at fair value through profi t or loss 2,523 1,491 (625)
For ABS CDOs, the nominal value is equal to the nominal value of CDO tranches containing subprime assets, and the subprime component is equal to the nominal value of the tranche weighted by the proportion of subprime assets in the CDO.
“midprime” segment; the criterion for including assets in this category is the FICO credit score (FICO>660).
In the case of securitization holdings excluding subprime exposure for which it has not been possible to identify a price, these have been valued using valuation models: correlation model (for CSOs); structural scoring model (for ABS CDOs and CLOs) defi ning the level of risk for each entity based on discriminating criteria calibrated using observable data at December 31, 2007.
Transactions entered into with credit enhancers in the form of credit default swaps (CDSs) have been written down to take into account the impact of the crisis on the credit quality of these counterparties. A €271 million credit risk allowance has been applied to the valuation of these instruments. In addition, a collective depreciation charge of €175 million has been recorded.
6.4 – Reanalysis of the consolidation of s ecuritization SPEs to which financial s upport has been given
6.5 – Collective provisions taking into account the deterioration of certain sectors directly affected by the financial c risis
As at December 31,2007, collective provisions had been raised to cover the following counterparty risks, whose effects are set out under “Cost of risk” in the income statement: Residential real estate sector in the US, Great Britain and
An SIV (Structured Investment Vehicle) is an organisation which makes highly leveraged investments in highly-rated medium or long term assets. To refi nance themselves, SIVs issue commercial paper or medium or long-term notes. Since these issues are rated by rating agencies, SIVs must comply with liquidity ratios and are required to adhere to thresholds linked to the valuation of their portfolios. If these thresholds are reached or exceeded, they must proceed to liquidate their assets. As at December 31, 2007, taking into account the observed trend in net asset values of SIV shares held by Natixis, and the resulting risk of liquidation, a €17 million impairment charge was recorded against these shares in the category “Loans and advances”.
Financial data 6.7 – Recognition of depreciation on shares of syndicated loans intended for s ale
Items of exposure for which the theoretical syndication date had expired as at December 31, 2007 have been individually analyzed in order to ensure that the results take into account any market discount observed at the balance sheet date. The resulting change in value has been allocated to “Gains and losses on assets available for sale”.
Since 1993, Natixis has held a very small minority share in German bank IKB, amounting to 2.5% of its capital. The business relationship between the two companies is essentially focused on fi nancing medium to large German companies. It does not concern, either directly or indirectly, IKB’s fi nancing and investment activities on the European and American property markets. The German bank’s fi nancial diffi culties linked to the “subprime” crisis have led Natixis to record a €15.8 million impairment charge against the IKB securities it holds. These securities appear in the balance sheet within the category of fi nancial assets available for sale, for a net amount of €13.6 million.
was therefore removed from the consolidation scope at that date. The transfer of CIFG securities to the Caisse Nationale des Caisses d’Epargne and Banque Fédérale des Banques
6.9 – Impact of valuation of i ssuer spread on Natixis’ issues at fair v alue
Valuation of the issuer spread on Natixis’ issues classifi ed as instruments optionally valued at fair value through profi t or loss had a €34 million positive impact on income as at
Upon their initial recognition, fi nancial assets and liabilities are measured at fair value, corresponding to their acquisition price at that date. Their subsequent accounting treatment depends on their balance sheet classifi cation. In accordance with the provisions of IAS 39, securities held and loans granted are classifi ed in one of the following four categories of fi nancial assets: Financial assets at fair value through profit or loss
Securities included in this category fall into one of the following three situations: hybrid instruments that contain one or more signifi cant and separable embedded derivative features; ■
Financial data instruments belonging to a group of fi nancial assets valued and managed at fair value; instruments that present an inconsistency in accounting treatment with a related fi nancial liability.
Upon their initial recognition, fi nancial assets held to maturity are measured at fair value including transaction costs. After initial recognition, they are measured at amortized cost using the effective interest rate method. They are tested for impairment at each reporting date and, where necessary, an impairment loss recognized in income under cost of risk. Transactions intended to hedge interest rate risk on these securities are not allowed under IFRS standards.
Loans and advances are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market, other than those designated as at fair value through profi t or loss or available for sale. This excludes assets for which the holder cannot recover the majority of his initial investment for reasons other than impairment of the loan; which should be classifi ed as available for sale. The vast majority of loans granted by Natixis are classifi ed in this category. Loans and advances also include the fair value of the hedged components of assets classifi ed in this category (fair value hedges).
A gain or loss arising from a change in the fair value of an available-for-sale fi nancial asset that is not part of a hedging relationship is recognized directly in “unrealized or deferred gains or losses”. Accrued or earned income is recognized directly in income using the effective interest method under
The following constitute indications of impairment: for debt instruments: default on payment of interest or principal, conciliation, alert or judicial settlement proceedings, bankruptcy of the counterparty, and any other indicator suggesting a material deterioration in the counterparty’s fi nancial situation, such as for example termination losses revealed using a discounted recoverable cash fl ow projection model or stress tests; ■
Financial data for equity instruments (excluding investments): securities which have accumulated unrealised capital losses for more than six months, or unrealised capital losses of more than 20% as at the balance sheet date, or other indications that the entity will not be able to recover all or part of its initial investment; for investments: unrealised capital losses of more than 20%
account publication dates) are frozen in income and cannot be reversed until the securities are sold.
IAS 17 gives fi ve examples of situations that individually or in combination would normally lead to a lease being classifi ed as a fi nance lease: the lease transfers ownership of the asset to the lessee by the end of the lease term; the lessee has the option to purchase the asset at a price that is expected to be suffi ciently below the fair value at the date the option becomes exercisable for it to be reasonable certain, at the inception of the lease, that the option will be exercised; the lease term covers the majority of the useful life of the asset; at the inception of the lease, the present value of the minimum lease payments amounts to at least substantially all of the fair value of the leased asset; ■
the leased assets are of such a specialized nature that only the lessee can use them without major modifi cations.
Finance income is recognized based on a pattern refl ecting a constant period rate of return on the net investment in the fi nance lease, using the interest rate implicit in the lease. The rate of return implicit in the lease is the discount rate at which: the aggregate present value of minimum lease payments receivable by the lessor; plus the unguaranteed residual value, is equal to the initial value of the asset (i.e. fair value at the inception of the lease, plus any direct initial costs comprising expenses incurred specifi cally by the lessor to set up the lease).
Property, plant & equipment used in the business under fi nance leases is restated for consolidation purposes as assets recorded under “Property, plant & equipment” where material.
At the inception of the lease term, it is recognized at the lower of fair value and the aggregate present value of minimum lease payments, with a corresponding entry under debt on the liabilities side of the balance sheet.
Within the fi rst risk group (personal customers and small businesses), loans in default under the terms of Basel II are recognised as impaired, in accordance with their pre-dispute status.
Where a group of fi nancial assets is found to be impaired, the impairment loss is calculated on the basis of expected losses on exposure included in the group, in accordance with the provisions of Basel II.
Since risk measurement under the terms of Basel II is based on likelihood of default within one year, the calculation of expected losses is adjusted to take into account the likelihood of default over the full remaining term of the loans in question.
The impairment charge is recorded under balance sheet assets as a correction against the line where the impaired asset was originally shown, such that the asset is then shown at its net value. Impairment charges and releases are recorded in the income statement under impairment charges and other credit provisions.
After initial recognition, changes in fair value are recorded in the income statement under “Net gains and losses on fi nancial instruments at fair value through profi t or loss”. Interest accrued on such instruments is also recorded in this line at the same time as changes in value.
An embedded derivative is a component which is part of a host contract and which modifi es some or all of the cash fl ows of that contract by linking them to an interest rate, security price, exchange rate or other index.
Where the composite instrument (i.e. the host contract and the derivative taken together) is not valued at fair value through profi t or loss, the embedded derivative is separated from its host contract if it meets the criteria for a derivative and its economic characteristics and associated risks are not closely related to those of the host contract.
IAS 39 recognizes three types of hedge accounting relationship between derivatives and hedged items: cash fl ow hedges, fair value hedges and hedging of net investments denominated in foreign currency.
Derivative fi nancial instruments designated as hedges are those which meet the conditions required by IAS 39 at inception and throughout the term of the hedging relationship, particularly with respect to documentation of an effective relationship between hedging instruments and the hedged item, both prospectively and retrospectively. Hedging relationships are presumed to be effective where the ratio between actual changes in the value of the hedging instrument and the hedged item is between
Cash fl ow hedging is used to principally to hedge future cash fl ows from an existing or anticipated transaction.
Natixis uses plain vanilla interest rate swaps borrowing fi xed rates to fi x future variable-rateborrowing costs and private or public issues.
Natixis uses plain vanilla interest rate swaps lending fi xed rates to fi x future variable-rate borrowing costs.
Cash fl ow hedges are mainly used by Natixis for structural hedging of Natixis’ parent company’s interest rate risk.
Documentation of structural hedging of Natixis’ parent company’s interest rate risk is based on the implementation of variable future cash fl ows covering all transactions staggered over time.
Natixis uses plain vanilla interest rate swaps lending fi xed rates to protect itself against unfavorable changes in the interest rates on its fi xed rate borrowings and issues. It uses plain vanilla interest rate swaps borrowing fi xed rates to protect itself against unfavorable changes in the interest rates on its fi xed rate loans and securities.
The prospective test is used to check that the fi nancial characteristics of the hedged item and the hedging instrument used are the same. The test consists of checking that the characteristics of hedging derivatives and hedged instruments are more or less identical (value date, maturity date, notional amount, fi xed rate, payment frequency).
(synthetic instruments representing assets and liabilities to be hedged at the risk-free rate). The ratio of their respective changes should be between 80% and 125%.
This type of hedging follows the same accounting rules as those applicable to cash fl ow hedges. The effective portion
Monetary assets and liabilities (including bonds and other fi xed income instruments) denominated in foreign currency are translated into euros at the spot rate prevailing on the reporting date. Exchange rate gains and losses are recognized in income, and directly in equity in the case of derivatives designated as cash fl ow hedges.
The fair value of a fi nancial asset or liability at fair value through profi t and loss is the amount that can be obtained in an arm’s length transaction between knowledgeable, willing parties.
(discounted future cash fl ows, Black and Scholes model, interpolation techniques) and on the basis of directly observable parameters.
Under IAS 39, gains should be recognized after initial recognition only if they are generated by a change in a factor taken into account by market observers in price setting, i.e.
Investment properties, which are shown on the balance sheet in a separate line from other property, plant and equipment, are properties which are held with the aim of generating rental income rather than for operating purposes.
Internally-generated computer software is measured at the total cost of development, including related hardware costs, service costs and personnel costs directly attributable to the production and preparation of the software. Expenses incurred during the development phase are only recognized as intangible assets if they meet the conditions required by
Fair value is obtained using a multi-criteria approach based on capitalization of rents at the market rate and a comparison with the trading market.
Purchased software is amortized on a straight-line basis over its estimated useful life, which in most cases is less than fi ve years. Internally generated software is amortised over its estimated useful life, which may not exceed fi fteen years.
Other intangible assets primarily comprise: purchased goodwill with an indefi nite useful life, which is not amortized, but tested for impairment at least annually; value in the Coface portfolio, which is amortized over the term of the contract (eight to ten years for France).
The charge to depreciation or amortization is recognized in the consolidated income statement under the heading
The impairment tests carried out at December 31, 2007 did not result in the recognition of any impairment of intangible assets.
These include fi nancial liabilities held for trading (including derivative fi nancial instruments) and those designated as at fair value upon their initial recognition in line with the option available under IAS 39 and described in more detail in the
A fi nancial liability is derecognised when it is settled, discharged or cancelled or expires.
Securities bought are not recognized but a receivable on the assignee representing the funds provided is recognized.
The main provisions for employee benefi ts concern: supplementary banking pensions; end-of-career awards and allowances; early retirement benefi ts and supplementary pension benefi ts; “CATS” early retirement plan benefi ts; employer’s contributions to private health insurance companies in respect of retirees and early retirees; long service awards.
The change in liabilities recognized in income for the period therefore corresponds: incremental benefi t entitlements (expenses); benefi ts paid out during the period; interest cost on the opening liability (expenses); expected return on plan assets; amortization of actuarial gains and losses outside the corridor.
Natixis and certain consolidated entities have put in place for some of their employees compensation and benefi t plans based on their own shares. Payments are made either by directly remitting shares or via cash settlement.
A plan set up in 2004 relates to investment certifi cates issued by Natixis Asset Management S.A. and Natixis Global Asset
A plan was set up by Natixis Multimanager (formerly Ixis Private
Natixis (parent company) and Coface have enabled their employees to participate in stock option plans at a discounted price. These transactions give rise to recognition of personnel costs and a corresponding entry in equity when the plan is set up. The cost of these plans is measured as the difference, on the purchase date, between the fair value of the shares purchased taking account of the lock-up period, and the price paid by employees. The total expense recognized on the plans set up in 2006 came to less than €100,000.
On 12 November 2007, Natixis’ Executive Board allocated 60 registered Natixis bonus shares to each employee in the
Bonus share allocation plans are aimed at employees in France with at least three months’ service as at the allocation date who hold an employment contract with one of the following: Natixis; Banque Fédérale des Banques Populaires; Caisse Nationale des Caisses d’Epargne; a credit institution affi liated to one or other of these central groupings; an entity in which 50% or more of the capital is directly or indirectly, exclusively or jointly held by Natixis, one of the above central groupings or an affi liated credit institution.
French 2006 law on the fi nancing of employee profi t-sharing and share ownership. It was authorized at Natixis’ Extraordinary
As at the allocation date, each eligible employee had the right to receive 60 shares within two years, subject to continued employment. The two year vesting period allowed for by law started on this date. Employees do not own the shares during this period. They have a non-transferable right to an allocation of shares until the end of the vesting period, but do not have any associated voting rights or dividend rights; November 12, 2009: shares are acquired subject to continued employment, and the two-year conservation period begins.
At the start of this period, each eligible employee still in employment receives his or her shares, which are placed in a nominee account or investment fund for a further mandatory two-year conservation period. Employees therefore become the owners of their shares at the start of this period. They have the right to receive dividends but cannot sell their shares; November 14, 2011: shares become available.
All treasury shares held by Natixis are deducted from equity regardless of their purpose. Any gains or losses recognized in the individual fi nancial statements in respect of the sale, valuation or impairment of treasury shares held as trading securities or available-for-sale securities are eliminated in the consolidated fi nancial statements through equity.
Fees and commissions for ongoing services, such as guarantee fees or management fees, are deferred over the period during which the service is provided.
Fees and commissions that form an integral part of the effective yield of an instrument, such as commitment fees or loan set-up fees, are recognized as an adjustment to the effective interest rate over the term of the loan. They are therefore treated as interest income.
The tax charge for the year comprises: tax payable by the various French companies at the standard rate of 34.43% and by foreign companies and branches at the local rate; deferred taxes arising from timing differences between the book value and tax value of balance sheet assets and liabilities in individual company accounts, or from differences between accounting standards applicable to local accounts and the IFRS accounts, as well as specifi c consolidation restatements calculated using the liability method.
Deferred income tax assets and liabilities are set off at the level of each tax entity. The tax entity may either be a single entity or a group of entities that have elected for group tax relief.
Natixis does not recognize net deferred tax assets unless it is reasonably certain that they will be used to offset a future tax charge. Accordingly, the effect of tax losses is not recognized if the tax entity has incurred losses in the previous two years, as it is presumed that the future tax benefi t will not be recovered.
Natixis guarantees the capital and/or returns of shares in certain mutual funds. These guarantees are executed solely in the event that the net asset value of each of the shares in the fund at maturity date is higher than the guaranteed net asset value. According to the terms of IAS 39, these guarantees may be treated as derivative instruments.
The majority of Natixis loans are variable-rate loans, and their fair value is determined on the basis of discounted future cash fl ows. The discount rate applied for a given loan is the rate that
Borrowings and debt securities at fi xed rates are discounted on the basis of the value of market fi xed rates at the balance sheet date for a debt with the same residual maturity. Where fl uctuations in the issuer spread are not material, the valuation does not take this effect into account.
The capitalization rate applied to the property depends on a number of factors such as location, quality and type of building, use, ownership structure, quality of lessees and characteristics of leases, interest rates and competition in the real estate market.
Average number of shares for calculating earnings per share 1,219,395,341 570,477,101
Average number of treasury shares in circulation over the period 1,298,047 14,493,127
Number of potential dilutive shares resulting from stock option plans 5,446,385 6,808,166
Financial data 7.23 - Use of estimates in preparing the financial statements
In preparing its fi nancial statements, Natixis is required to make assumptions and carry out estimates in certain areas based on available information that is likely to require expert judgment.
These assumptions and estimates constitute sources of uncertainty which may affect the calculation of income and expenses in the income statement, the valuation of balance sheet assets and liabilities and/or certain items shown in the notes to the fi nancial statements.
Accounting estimates which require assumptions to be made are mainly used to measure the items set out below.
with its value in use. Value in use is calculated by discounting annual free cash fl ows out to infi nity. The use of this method involves the following: estimating future cash fl ows. Natixis has based these estimates on forecasts included in its business units’
Natixis has also made use of expert judgment to refi ne this segmentation.
Natixis calls on independent actuaries to calculate its principal employee benefi ts. The discount rates, future salary growth rates and rates of return on plan assets used are based on observed market rates as at the balance sheet date (e.g.
When applied to long-term liabilities, these rates introduce an uncertainty factor into valuations.
A provision is raised where it is likely that an outfl ow of resources embodying economic benefi ts will be required to settle an obligation arising from a past event, and where the amount of the obligation can be reliably estimated. In order to calculate this amount, management is required to assess the probability of the risk occurring. Future cash fl ows are discounted where the impact of so doing is material.
At December 31, 2007, assets at fair value through profi t and loss comprised primarily securities and derivative instruments.
Variable income securities valued on a listed market (listed securities) or using another valuation method (unlisted securities valued on the basis of price-earnings ratio or discounted cash fl ows) break down as follows: 8.1.1.1 Variable-income securities at fair value through profit and loss
Securities desgnated as at fair value through profi t and loss 1,049 3,545 4,594 including Capital Investment Securities 39 1,438 1,477
Exposure to credit risk is represented by the fair value of Loans and advances designated at fair value through profi t and loss shown on the balance sheet. Purchases of credit derivatives
■ covering exposure to credit risk for Loans and advances are indicated for the amount of their fair value recognized on the balance sheet. Variations in fair value are calculated over the period and in aggregate from the date of fi rst recognition of the advance or loan.
Variation in fair value of loans or receivables attributable to credit risk
Loans and advances with customers 1,537 8,979 0 0 2 2 0 0
Book value of instruments designated at fair value because of accounting imbalance with related instruments.
Financial liabilities at fair value through profi t and loss comprised primarily derivatives not used as hedging instruments.
Instruments designated as at fair value 8.1.2.1 and 8.1.2.2 59,946 49,596 8.1.2.1 Financial liabilities designated as at fair value and credit risk
The book value of fi nancial liabilities designated at fair value through profi t and loss corresponds to the fair value of these instruments recorded on the balance sheet. The amount
■ contractually due upon maturity of loans represents the amount of capital remaining due on the date of closure, increased by accrued interest not yet due. For securities debts, it is the repayment value.
The use of fair value on option to avoid accounting imbalance represents almost all liabilities evaluated at fair value by result.
Derivative fi nancial instruments designated as hedges are those that meet the conditions required by IAS 39 at inception and throughout the term of the hedging relationship, particularly with respect to documentation of an effective relationship between the hedging instrument and the hedged item, both prospectively and retrospectively. Hedging relationships are presumed to be effective when the ratio of actual changes in the value of the hedging instrument and the hedged item is between 80% and 125%.
Cash fl ow hedging is principally used by Natixis as a structural hedge of parent company Natixis’ interest-rate risk. Fair value hedging is used to hedge changes in the fair value of fi xedincome instruments individually and as a structural hedge of
The table breaks down the item “fi nancial assets available for sale” by type of instrument (loans outstanding, fi xed-income securities, variable-income securities). It gives the gross value before depreciation, the depreciation, and the net value after depreciation. Assets available for sale are subject to a depreciation test on each publishable closure date (namely at a quarterly rhythm). When there is objective indication of depreciation and a reduction in fair value has previously been recognized in shareholder’s equity, the aggregate loss is exited from shareholder’s equity and recognized in profi t/loss.
At December 31, 2007, the fair value of loans and advances to banks, calculated in accordance with the methods set out in Note 7, amounted to €113,136 million compared to €114,906 million at December 31, 2006.
The hedging rate of non-performing loans to banks stood at 60% compared with 66% at December 31, 2006.
Note 7, amounted to €112,896 million compared with €91,772 million at December 31, 2006.
The hedging rate of non-performing loans to customers stood at 61% compared with 60% at December 31, 2006.
At December 31, 2007, the fair value of securities held tol maturity, calculated in accordance with the methods set out in Note 7, amounted to €6,682 million compared with €7,514 million at December 31, 2006.
The following shows the book value of securities and government paper given as part of reverse repos. These instruments are shown on the consolidated balance sheet under the various accounting classifi cations that they came under at the time of their initial recognition.
Loans and advances 2,605 890 8.6.2 Financial assets received as guarantees and that may be transferred or re-given as guarantees
Natixis has no signifi cant amounts of fi nancial assets received as guarantees under fi nancial guarantee contracts having a right of reusability that is exercisable in the absence of default by the owner of the guarantee.
Transfers of assets without derecognition (total or partial) are transfers that do not meet the derecognition conditions set in paragraphs 15 to 37 of the IAS 39 standard. These transfers are essentially carried out as part of synthetic securitisation operations.
With the exception of assets given under repurchase agreements, which are the subject of a specifi c note
IAS 39 standard and which would not have been wholly or partially derecognized because Natixis would keep control of these assets or almost all the benefi ts and risks attached to these assets.
This table, by category of fi nancial instrument, gives an analysis of the age of fi nancial assets which are overdue upon the date of closure but are not depreciated.
Overdue assets are those in payment arrears (meaning instalments of capital or interest not paid), but which have not yet been the subject of depreciation.
What are known as “technical” delinquencies, meaning those related to incidents occurring in the collection circuit, and without any relationship to the counterparty’s fi nancial situation, are not included.
Amounts unpaid for less than 90 days represent 62% of the total.
The IAS 39 standard establishes a hierarchy in the means of determining fair value: the best representation of fair value is the price quoted on an active market. A market is considered as active if the prices are easily and regularly available from a stock market, a broker, a negotiator, a price-evaluation service or a regulatory agency and these prices represent real transactions regularly occurring in the market; failing this, their fair value must be determined using evaluation techniques. These techniques include the use of recent transactions, the reference to the fair value of a substantially identical instrument, the method of updating cash fl ows, share-valuation models and any evaluation technique commonly used by players in the market.
When an evaluation model is applied, it must make maximum use of data from the market. In the case of certain structured
Including: deferred tax assets 939 523 deferred tax liabilities (325) (501)
(1) The sources of deferred taxes giving rise to deferred tax assets are given a positive sign, while those giving rise to tax liabilities are shown with a negative sign.
(2) Including collective provisions and provisions for impact of discounting specifi c provisions.
Deferred income and accrued charges insurance companies 8.8.3.2 291 392 8.8.1 Other miscellaneous assets and liabilities 8.8.1.1 Other assets
The table represents the deferred margin on the fi rst day for instruments valued using evaluation techniques making use of nonobservable parameters or models not recognized by the market: at the beginning of the period, at the end of the period, and variations during the period.
(2) The other variations concern the passage of two non-observable activities to “observable”. The fi rst is relative to products processed as part of currency exchange-rate arbitrage and the second concerns CO2 emission rights.
(3) The margin remaining to be redeemed is placed under the activities of the Natixis parent company.
Cash deposits received from reinsurers 13 15 8.9 - Property, plant & equipment, intangible assets, investment property 8.9.1 Changes in non-current assets over the year
Financial data 8.10 - Assets obtained by taking possession of guarantees
The table lists the assets obtained by taking possession of guarantees: the type and the book value of the assets (securities, buildings, etc.), obtained and booked following takeover of guarantees or by mobilising other forms of raising credit (for example, a contract of guarantee).
Deposits from banks and customer deposits are presented by nature, taking into account twhether they are demand or time deposits.
At December 31, 2007, the fair value of deposits from banks was €138,333 million against €141,435 million at December 31, 2006.
These debt securities are initially recognized at fair value, which is the issue price less transaction costs, and then stated at amortized cost, using the effective interest rate method to defer issuance costs over the lifetime of the securities.
At December 31, 2007, the fair value of debt securities in issu was €65,530 million compared to €54,215 million at December 31, 2006.
The reserve for deferred profi t-sharing represents the portion of investment income attributable to policyholders, but not yet paid out. These reserves are due to be paid out within eight years.
Financial data 8.15 - Provisions and amortization 8.15.1 Summary of provisions
Provisions for non-performing loans 750 173 (78) (103) (6) 3 4 743
Durable amortization of fi nancial assets available for sale (1) 255 291 (50) (12) (9) 40 516
Provision for employee benefi ts 272 59 (52) (1) 3 5 286
Provisions for current income taxes 178 112 (16) (21) (4) 2 (9) 242
(1) In 2007, the amounts for durable amortization of fi nancial assets available for sale are presented in the summary table of provisions.
Subordinated debt differs from advances and bonds issued in that it will be repaid only after all the senior and unsecured creditors, but before the repayment of participating loans and securities and super-subordinated notes. It is valued at amortized cost.
This table does not include super-subordinated bonds, preferred shares, mutual guarantee deposits and accrued interest payable.
The issue of the redeemable subordinated loans concerned a tranche of €40 million issued by the Banque Fédérale des Banques Populaires
(2) repayments: at maturity: the repayments redeemable subordinated loans concern the tranches for March 1995, October 1995, December 1995, December 1996 and March 1997 issued with the Banque Fédérale des Banques Populaires in French francs, that is, with an equivalent value of €91 million; in advance: the repayment of Subordinated Repayable Loans by Natixis concerns a tranche from June 2002 for €300 million.
The instruments for which the fair value is determined according to an evaluation technique that is not supported by market data are those for which the initial margin has been deferred and those for which the initial margin has not been deferred only because of the absence of impact on valuation of the non-observable criterion, as well as those for which the margin would have been deferred if these instruments had been evaluated on the balance sheet at their fair value.
Financial liabilities at amortized cost – Due to banks 138,333 138,234 138,333 138,333
Debt in the form of securities issued 65,530 65,530 32,587 32,943 32,943
Central banks and post offi ces 4 (33) (29) 4 (39) (34)
Fees and commissions that form an integral part of the effective yield of an instrument such as commitment fees or loan set-up fees are recognized as an adjustment to the effective interest rate over the estimated term of the loan. Under EU IFRS, these fees and commission are recognized as interest income rather than fees and commission.
Financial data 9.3 - Gains or losses on financial assets and liabilities at fair value through profit and loss
Net gains on fi nancial assets and liabilities excluding hedging instruments 1,137 921
Net gains on other fi nancial assets and liabilities designated as at fair value (1,971) 325
Revaluation of the hedged items (122) 36 9.4 - Gains and losses on available-forsale financial assets
Net gains or losses on available-for-sale fi nancial assets principally comprise gains or losses on sale and impairment losses on variable-income securities.
Net charge to/reversal of insurance companies’ technical reserves 0 (1,764) (1,764) 0 (1,519) (1,519)
Other insurance income and expense 9.5.2 5,590 (3,759) 1,831 5,267 (3,255) 2,012
Other related income and expenses 9.5.3 711 (346) 365 500 (157) 343 9.5.1 Finance leases
Gains or losses on sale 20 (131) (111) 8 (15) (7)
Other related income and expenses 130 (99) 31 124 (108) 16 9.5.2 Other insurance income and expense
Operating expenses comprise mainly payroll costs, including wages and salaries net of rebilled expenses (see 12.1), social security charges and employee benefi ts (see 12.3) such as pensions (defi ned benefi t plans) and share-based payments
“Write-offs of individual receivables” includes securities classifi ed as “Loans and advances”.
Collective provisions for performing loans (360) 170 (190) (203) 164 (39)
Capital gains on disposals of property, plant and equipment and intangible assets during 2007 include €292 million arising on the sale of offi ces in the rue Saint-Dominique.
Financial data 9.10 - Reconciliation of the tax charge in the financial statements and the theoretical tax charge
(2) In 2007 other items include €52 million of extraordinary income in the USA, €17 million of income relative to writing off previous losses and €33 million of active deferred taxation, restated conservatively.
9.11 - Net income from discontinued operations or activities undergoing disposal
Income statement for discontinued operations (in € millions) Dec. 31, 2007 Dec. 31, 2006
Natixis’ segment reporting is based on two levels of analysis: by business segment (primary segment reporting); by region (secondary segment reporting).
Executive Board and Supervisory Board constitute the basis of identifi cation of sectors.
The CIB business line houses all the fi nancing and capital markets activities focused on a clientele of large companies, banks and fi nancial institutions, local authorities, and the retail banking networks of the two core shareholders. It has a highly integrated sales force responsible for marketing Natixis products and developing sales of all products to its customers, and particularly products provided by the business line, which include: fi nancing products: working capital fi nance (overdrafts, spot credits, discounting, credit lines, guarantees and bail bonds, documentary credits), fi nancing for equipment, assets acquisitions, projects and international trade; capital market products: fi xed-income, equity, credit and currency derivatives, brokerage and arbitrage, commodities and securitization; cash management and payment services: payment systems,
EDI, authorizations management, checks, transfers, cash management; advisory services: design and implementation of innovative fi nancial solutions for corporate and institutional customers,
This business line encompasses: the private equity business, which provides expansion
(corporate fi nance for mature companies), buy-in and buyout (LBOs), venture capital (young and innovative companies)
They span advisory services, portfolio management and mutual fund investment management.
This business line groups together a number of service businesses dedicated primarily to the Caisses d’Epargne and Banques Populaires networks, and to the other Natixis business lines: securities – securities back-offi ce services: custody (account administration, back-offi ce outsourcing, depository control), fund administration and accounting, issuer services, order receipt and transmission, offi ce services; payments – systems and infrastructure: electronic banking, issuance and collection of high-volume electronic transfers, check processing; insurance: life insurance, non-life insurance, personal risk insurance; employee benefi ts planning (a comprehensive offering to assist companies with their employee benefi ts planning), marketing and management of employee savings accounts, fund administration and accounting; collective life, service vouchers; consumer fi nance: the consumer fi nance business line encompasses within Natixis a wide variety of activities focused on the revolving credit value chain (marketing, grant, administration and non-litigious collection, etc.) and personal loan administration activities. These activities are carried out through Natixis Financement, which houses and manages the revolving credit outstandings of the Banques
France. This was followed by the creation of Coface holding, which now houses all subsidiaries of the business line within a single legal entity. The business includes trade receivables management and offers customers tailored products to manage, protect and fi nance their receivables.
Financial data and management of public procedures on behalf of the French
Natixis Global Asset Management. They cover all asset categories and are carried out mainly in the United States and in France. These activities are performed by autonomous entities (specialized management companies and specialized distribution units) coordinated by a holding company that ensures the organization’s consistency by overseeing its strategic direction. These companies are thus able to focus on their core business of achieving high performance, while retaining the option of developing their own institutional clientele and benefi ting from the business line’s other support functions, with appropriate economic models. A number of them have forged a strong reputation, such as Harris Associates, Loomis
Together, these specialized management companies enable the Group to provide a full range of expertise meeting demand from all the various customer segments. Coverage of the various customer segments is optimized by the organization of distribution around the Advisors/Global Associates platform and the business franchises developed over the long term by the management companies, mainly with group clientele.
Nonetheless, the management companies continue to handle distribution among shareholder networks in France.
Segment reporting is based on fi nancial aggregates taken from the balance sheet and income statement and reconciled with the consolidated fi nancial statements. Results for each segment comprise directly attributable operating income and expenses, including transactions with other segments of
Information on risk management required under IFRS7 standard are presented in the management report, chapter IV
Natixis’ main objectives in terms of capital management are to ensure that the group meets the capital requirements imposed by its external environment and maintains an adequate rating to sustain its activity and to maximize shareholder value.
Natixis adapts the management of its capital structure in line with the changes taking place in economic conditions and in the risk characteristics of its activities. There were no changes in terms of objectives, policies or processes during the course of 2007.
CRBF regulation No. 90-02. The denominator represents all of the bank’s weighted credit risks and market risks. Natixis complied with the 8% minimum level at December 31, 2007.
The liquidity ratio compares liquid assets with a maturity of less than one month with liabilities falling due within the same period. Natixis complied with the 100% requirement during fi nancial year 2007.
of the bank’s regulatory capital, and all of the risks carried on benefi ciaries who individually exceed 10% of the bank’s regulatory capital must not exceed 800% of its regulatory capital. Natixis complied with this requirement during fi nancial year 2007.
(1) Full-time equivalents active within the Natixis group at December 31, 2007.
Retraites”) pension fund, for which Natixis employees from the former Caisse Centrale des Banques Populaires were also eligible, was closed on December 31, 1993, in accordance with the professional agreement of September 13, 1993, applicable to the Banque Populaire banks under the Group agreement of January 7, 1994.
Group and a residual supplementary banking pension calculated on the basis of the difference between banking rights at December 31, 1993, and social security pensions.
For end-of-career allowances, consolidated entities cover all or part of their commitments through insurance policies with
Security fi nancing act for 2007 are no longer applicable: as of October 11, 2007, all allowances paid by the employer when an employee is retired without consultation is subject to an employer’s contribution. The employer’s contribution on early retirement plans has been raised from 24.15% to 50%; as of January 1, 2010, the employer will no longer be able to retire an employee before the age of 65. Departures will therefore be on the employee’s initiative and subject to social security contributions. Thanks to the collective agreement signed in 2005, retirements by the employer before the age of 65 will continue to be exempt from social security contributions through to December 31, 2009.
These new measures will contribute to an increase in the amount of commitments.
Analysed under IAS 19 as a change of system, the impact of this new law on the amount of commitments will be refl ected in earnings and spread over the entitlement vesting period as of
January 1, 2008, with the law enacted at the end of 2007.
The change of status for former-Ixis CIB employees will take place on January 1, 2008. As of this day, these employees will be covered by the end-of-career benefi t system, the supplementary healthcare system and the long service award system for Natixis employees.
The main actuarial assumptions made as at December 31, 2007 are as follows: Supplementary pensions
For end-of-career awards and long service awards, employee turnover is calculated by age bracket and grade based on a three-year average. The rate is 0% for employees over 55.
Benefi ts paid over the period (5) (8) (2) (1) (15)
Change in actuarial gains or losses not recognized (15) (24) 12 (27)
(1) Iincluding the breakdown by scheme for liabilities from entities contributed by the CNCE in 2006.
Transfers, reductions and other 5 (3) 3 13.4 - Share-based payment plans
All combined, 101,602 employees were awarded a total of 6,084,120 shares on November 12, 2007.
Law for fi nancing profi t-sharing and employee shareholding of 2006. It was authorised at Natixis’ extraordinary general meeting on May 24, 2007.
The Plan is based on three stages spread over four years: November 12, 2007: allocation date and start of the twoyear vesting period.
French law runs as of this date. Over this period, employees do not own the shares. They have a non-transferable allocation right through to the end of the vesting period, but they do not have any voting rights or rights to dividends; November 12, 2009: acquisition of shares subject to the presence conditions, and start of the two-year holding period.
At the start of this period, each benefi ciary employee still present on this date will receive their shares and will allocate them to a registered account or mutual fund for a mandatory two-year holding period. In this way, employees own the shares at the start of this period. They are entitled to dividends, but are not allowed to sell their shares; November 14, 2011: availability of shares.
Share fair value on allocation date Net expense for the year
(1) 24/08/2007 for US benefi ciaries and 24/08/2008 for European benefi ciaries
Net expense/net income on stock option plans for other unlisted Group companies (180) 926
Financial assets available for sale 6,260 92 511 21,768 1,227 6,993 (2,090) 34,761
Privée Saint Dominique, Compagnie 1818-Banquiers Privés and Natexis Private Banking Luxembourg).
Receivables Management [6] encompasses the credit insurance and credit management services provided by
Change in value of goodwill (1) 0 0 0 0 0 (1)
NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT 836 346 (174) 1 92 0 1,101 14.2.2 Balance sheet
A fi nancial guarantee is a contract that requires the issuer to make specifi ed payments to reimburse the holder for a loss it incurs because a specifi c debtor fails to make payments when due. The exercise of these rights is subject to the occurrence of an uncertain future event.
A fi nancing commitment given is a contingent liability, defi ned by IAS 37 as: a possible obligation arising from past events whose existence will be confi rmed only by the occurrence or nonoccurrence of one or more uncertain future events not wholly within the control of the enterprise; or a present obligation arising from past events but which is not recognized because it is not probable that an outfl ow of economic benefi ts will be required to settle the obligation; or a reliable estimate of the amount of the obligation cannot be made.
December 31, 2007. The Group also grants liquidity lines to eight funds arranged by third parties (Landale, Ebbets, Fenway,
Chase). At December 31, 2007, none of these vehicles was consolidated as the group does not have control and because they are not exposed to most risks and advantages related to securitized assets.
The following table presents assets and liabilities based on their remaining contractual maturity.
Assets and liabilities without a maturity date, such as receivables and related payables, ordinary accounts or immediately due receivables are shown in the column for “under one month”.
Financial assets at fair value through profi t and loss 98,952 3,327 11,273 3,000 8,110 67,935 10,330 202,928
Financial data 16.2 - Breakdown of assets and liabilities by currency
Fédérale and its subsidiaries, Banques Populaires and their subsidiaries, the Caisse d’Epargne Group including CNCE
Net gains or losses on fi nancial instruments at fair value through profi t and loss 103 (957) 6 (64)
Cash and balances with central banks and post offi ces 3,092 1,061
Revaluation differences on portfolios hedged against interest rate risk 1 46
Revaluation differences on portfolios hedged against interest rate risk 1 39
Net gains or losses on fi nancial assets available for sale 515 1,252
Dominique Ferrero, Chief Executive Offi cer and Member of Natixis’ Executive Board (compensation from November 17, 2006) 1,104,262 120,048
The number of stock options awarded in respect of offi ces held in the issuing company and associated undertakings was as follows: Number of options awarded Dec. 31, 2007 Dec. 31, 2006
Dominique Ferrero, Chief Executive Offi cer and Member of Natixis’ Executive Board 190,000 none
Dominique Ferrero, Chief Executive Offi cer and Member of Natixis’ Executive Board - none
Group’s executive offi cers, in accordance with the provisions of the status associated with this category.
This scheme was set up before May 1, 2005, i.e. before law 2005-842 of July 26, 2005 came into force.
The maximum amount payable may not exceed 42/12ths of annual compensation.
16.5 - Elements from insurance companies 16.5.1 Results of insurance companies
Assurances and its subsidiaries (life insurance, personal risk insurance, non-life insurance), Foncier Assurances (life insurance), Natixis Garanties (legal guarantees and bonds) and
It also shows the consolidated contribution made by insurance companies in the banking format.
Capital gains and losses on sale of investments (net of reversals of amortization and depreciation) 323 323 323 323
Change in fair value of investments carried at fair value through profi t and loss 189 191 191 191
Income or expenses net of reinsurance transfers (62) (62) (62) (62)
Net gains or losses on fi nancial assets available for sale 345 189
We examined the control procedures applicable for monitoring credit risks, provisioning methodologies, assessing the risks of nonrecovery and determining the related specifi c and collective provisions; the Group uses internal models and methodologies to measure fi nancial instruments that are not traded on active markets, as well as to book certain provisions and assess the relevance of their designation as hedging instruments (in particular fi nancial assets and liabilities at fair value through profi t or loss, available-for-sale assets and fi nancial instruments recognized at amortized cost, the fair value of which is presented in note 7.1 of the notes to the fi nancial statements). We have examined the control procedures relating to the verifi cation of the models and determination of the parameters used.
Furthermore, in the notes 1.2 and 6 to the fi nancial statements, the Group reviewed the specifi c context of the crisis, its direct and indirect exposures and the system implemented to estimate them, and the changes made for the calculation of valuation and writedown of certain fi nancial instruments. We examined the system implemented to assess these exposures and their valuation, and the appropriateness of the information contained in the above-mentioned note.
The Group reviewed its material intangible assets and goodwill recorded in the consolidated balance sheet (notes 7.7 and 3.5 of the notes to the fi nancial statements). We obtained an understanding of its conclusions and verifi ed that they had been taken into consideration in preparing the consolidated balance sheet.
We have assessed the reasonable nature of these estimates. The assessments were made in the context of our audit of the consolidated fi nancial statements, taken as a whole, and therefore contributed to the formation of the unqualifi ed opinion expressed in the fi rst part of this report.
We have nothing to report regarding the fairness of this information and its consistency with the consolidated fi nancial statements.
3 Cash and balances with central banks and post offi ces 175 44 24 3 Loans and advances to banks 132,133 54,110 65,174 5 Bonds and other fi xed-income securities 58,917 15,586 13,934 5 Equities and other variable income securities 34,080 3,873 1,339 7 Investment in associates and other securities held for investment 9,385 8,996 162 4 Finance leases 4 Operating leases
Liabilities 14 Due to central banks and post offi ces 1,405 613 412 17 Deferred income and accrued charges 15,916 2,924 2,376 18 Provisions for contingencies and charges 2,019 1,067 934 20 Fund for general banking risks 239
Revaluation surplus 20b Regulated reserves & government grants 47 94 106
Commitments given to customers 17,694 17,369 17,061 23 of which institutional activities: 1
Depreciation, amortization and impairment of property, plant & equipment and intangible assets (60) (30) (21)
Income before exceptional items and tax (604) 570 477 20 Net (charge to)/reversal of fund for general banking risks and regulated provisions (5) 231 0
Measures to coordinate commercial strategy and the main operational activities have been effective since the end of 2006.
Moves to group employees together at offi ces in Paris (near the Austerlitz and Lyon train stations and the Bercy complex)
The fi nancial impact of Ixis CIB’s merger into Natixis resulted in the recognition of a negative technical value adjustment in the accounts of the Natixis S.A. parent company. This adjustment represented the difference between the value of Ixis CIB
Fédérale de Banques Populaires (BFBP) and Caisse Nationale des Caisses d’Epargne et de Prévoyance (CNCE) on April 2, 2007.
central institutions, BFBP and CNCE are responsible for ensuring Natixis’ smooth-functioning. They are required to take all measures needed to guarantee its liquidity and solvency, and to exercise technical, fi nancial and administrative control over its organization and management.
Group (Ixis AMG), previously acquired from SanPaolo IMI (SPIMI); – these transfers were remunerated in the form of Natixis shares issued for this purpose; – the subscription for 20% of the capital of each of the Banques Populaires, via a reserved rights issue of cooperative investment certifi cates (Banques
– the acquisition of a 66% equity interest in Novacrédit (consumer fi nance) from the Banques Populaires.
Equity interest in IKB: Natixis has held a very small minority interest in the German bank IKB since 1993 and which represents 2.5% of IKB’s capital. Business relations between the two institutions are essentially focused on fi nancing medium-sized and large German corporations.
They do not concern – either directly or indirectly – IKB’s fi nancing and investing activities in European and US real estate markets. In response to the German bank’s fi nancial diffi culties related to the subprime crisis, Natixis recognized a €15.8 million value impairment on its IKB shares.
Non-performing loans are identifi ed and accounted for in accordance with standard CRC 2002-03 and the opinion issued by the CNC Urgent Issues Task Force on December 18, 2003, which set out the rules for classifying loans as nonperforming and irrecoverable.
In 1991 and 1992, a defeasance transaction was carried out and a put option was purchased on BFCE sovereign risks. The defeasance structure, Edval Investment Ltd, and the vehicle set up to hold the put option, Worledge Investment Ltd, were consolidated for the fi rst time at December 31, 2002.
These provisions cover certain businesses of Natixis that carry potential future risks. These businesses are reviewed quarterly and where necessary included in the basis of provisioning for sound exposure in countries or industries likely to experience diffi culties. During these quarterly reviews, the country and industry provisioning rates are adjusted according to Natixis’
perception of how the businesses will evolve, either negatively or positively.
Securities are classifi ed according to the purpose of the transaction regardless of their legal form (equities, bonds and notes, treasury bills, certifi cates of deposit, negotiable instruments, money market securities, etc.), based on the following rules, in compliance with CRC 2005-1: trading account securities are securities traded on liquid markets, which are bought or sold with the intention of reselling or repurchasing them within a short period. They are carried in the balance sheet at cost, including transaction expenses and accrued interest. At the period-end, they are marked to market and the resulting unrealized gain or loss is recognized in income; ■
Consolidated investments: Natixis valued its investments in consolidated subsidiaries at December 31, 2007.
Consolidated investments were valued at their net present value using the discounted cash fl ow method based on business plans drawn up by management of the main subsidiaries and validated by Natixis Executive
The results of this method were corroborated using other methods such as standard market comparisons and restated net asset value.
1.6 - Income, value adjustments and gains or losses on securities
December 31, 1976 are stated at fair value as determined at the time of the 1976 legal revaluation. Assets purchased since 1976 are stated at cost. Fixed assets of the former BFCE are carried in the balance sheet at their fair value as determined at the time of BFCE’s acquisition by Crédit National. Fixed assets of the former Caisse Centrale des Banques Populaires were transferred at their net book value following the partial asset contribution.
In line with the new standards, a specifi c deprecation schedule is drawn up for each signifi cant component of an item of property, plant and equipment, which has a different useful life or rate of consumption of future economic benefi ts than the items as a whole. For buildings used in the business and investment property, the following signifi cant components and depreciation periods have been identifi ed: land:■ n/a; indestructible elevations:■ n/a; walls, roof, waterproofi ng:■ 20 to 40 years; foundations, framework:■ 30 to 60 years; external rendering:■ 10 to 20 years; equipment and installations:■ 10 to 20 years; internal fi xtures and fi ttings:■ 8 to 15 years.
Where perpetual subordinated loan notes are treated as equivalent to debt repayable in installments, each periodic payment is broken down between the repayment of principal, which is deducted from the outstanding debt, and interest, which is recognized in income as interest and similar expenses 1.9 - Participating notes
Financial data 1.11 - Interest rate revision charges and prepayment penalties
Interest rate revision charges and prepayment penalties are treated as deferred interest income and recognized in income over the life of the loan in proportion to the interest income lost in each year based on the original loan repayment schedule.
With effect from January 1, 1994, Natixis elected to defer all debt issuance expenses over the life of the debt, as permitted by tax legislation (law of August 8, 1994) and in line with trends in the nature of such expenses, which are in substance an additional fi nancing cost.
The notional amount of these instruments is recorded offbalance sheet for internal monitoring and regulatory purposes, but they are not included in the published statement of offbalance sheet items. Further details are provided in the notes to the fi nancial statements.
The fi rst two categories are treated for income statement purposes as equivalent to lending/borrowing transactions and the amounts received or paid are recognized in income on an accruals basis.
1.13.2 Currency instruments: Spot currency transactions outstanding at the year end are valued at the year-end rate.
The provision recognized in the balance sheet is equal to: the amount of the actuarial liability in respect of postretirement and similar benefi ts for employees and retirees; less the market value of plan assets; ■
Actuarial gains and losses are recognized in income using the “corridor” method. Under this method, the portion that exceeds 10% of the greater of the group’s obligation or the fair value of plan assets is deferred over the remaining working lives of the employees participating in the plan.
The French Pensions Act of August 21, 2003 reformed the terms and conditions of retirement applicable to employees.
Issues Task Force, this reform was treated as a change of applicable regime and its effect deferred over the employees’
The 2006 pro forma income statement and balance sheet were prepared in order to enable comparisons to be made regarding earnings formation and the asset position, as if the merger had taken place on January 1, 2006.
Net (charge to)/reversal of fund for general banking risks (5) 231 0 231
Investment in associates and other securities held for investment 9,385 8,996 1,663 10,659
Off-balance sheet items – Commitments received Natixis contribution Natixis contribution Ixis CIB
Cash and balances with central banks and post offi ces 175 44 24
INTERBANK AND MONEY MARKET ASSETS 153,074 58,131 70,092 securities received under repurchase agreements: 76,696 19,186 36,582
(1) The gross values shown in the “Securities held for sale” and “Debt securities held for investment” columns represent their redemption value.
Investments in associates and other securities held for investment 9,385 8,996 162
CEP NORD FRANCE EUROPE – formerly PAS DE CALAIS 3,304,598 392,170,378.00
NOTE 9 DISCLOSURES OF SIGNIFICANT SHAREHOLDINGS IN FRENCH COMPANIES DURING THE YEAR
CEP NORD FRANCE EUROPE – formerly PAS DE CALAIS 20.00% 3,304,598
CEP PAYS DE L’ADOUR (absorbed by CEP AQUITAINE POITOU CHARENTE )
NATIXIS INVESTIMA – formerly SDGP 43 (transfer of all assets to holding company)
A - Investments with a carrying value in excess of 1% of the share capital of the reporting company - Investments in subsidiaries and associates (holdings in excess of 10 %)
30 RUE PIERRE MENDÈS-FRANCE 75013 PARIS 573,130 EUR 469,006 EUR 100.00%
1209 ORANGE STREET – WILMINGTON NEW CASTLE COUNTY – DELAWARE ÉTATS-UNIS D’AMÉRIQUE 2,077,760 USD 1,959 USD 21.00%
45 RUE SAINT DOMINIQUE 75007 PARIS 5,761 EUR 1,851 EUR 100.00%
62, CHEMIN DRARENI MOHAMED HYDRA ALGER 3,483,193 DZD 2,026,532 DZD 100.00%
68 76 QUAI DE LA RAPÉE 75012 PARIS 80,399 EUR 499,164 EUR 100.00%
1345 AV. OF THE AMERICAS NEW YORK, NY 10105-4300 151,503 USD (14,954) USD 100.00%
LTD-85 KING WILLIAM STREET EC4N 7BL LONDON 35,788 USD 17,493 USD 100.00%
ORMONDE HOUSE 12 LOWER LEESON STREET DUBLIN IRLANDE 100,000 EUR 165,184 EUR 100.00%
47 QUAI D’AUSTERLITZ 75648 PARIS CEDEX 13 150,060 EUR (16,532) EUR 100.00%
1 TVERSKAYA YAMSKAYA 23 RU 125047 MOSCOW 1,153,089 RUR 269,894 RUR 100.00%
36TH FLOOR 9W 57TH STREET NEW YORK NY 10019 25 USD 253,377 USD 100.00%
30 RUE PIERRE MENDÈS-FRANCE 75013 PARIS 36,753 EUR 4,033 EUR 100.00%
5-7 RUE DE MONTTESSUY 75007 PARIS 438,456 EUR 149,533 EUR 100.00%
PO BOX 309GT UGLAND HOUSE SOUTH CHURCH STREET GEORGE TOWN ILES CAIMAN 370 USD nc USD 100.00%
CAISSE D’ÉPARGNE ET DE PREVOYANCE (SOMME) 4,127,564 EUR 11,744,698 EUR 20.00%
Property, plant & equipment and intangible assets used in the business 1,480 (281) 1,199 347 (172) 175 286 (165) 121
Non-operating property, plant & equipment 8 0 0 (3) 0 5
Property, plant & equipment used in the business 125 64 35 (43) (1) 180
Retail certifi cates of deposit and savings bonds 1 1 1
(in € millions) Share capital Share premium Legal reserve General reserve
Depreciation, amortization and impairment of property, plant & equipment and intangible assets
Investments in associates and other securities held for investment (41) (3) (18)
Investments in associates and other securities held for investment (1) (606) (5) (5)
(1) Year 2005: compensation on termination of lease contract over the Liberté 2 building.
Income after tax, deprecia tion, amortization and provisions 200,728,250.83 213,582,296.25 459,177,494.14 744,399,468.97 (467,183,610.92)
Income after tax, but before depreciation, amortization and provisions 5.06 5.24 7.3 0.51 0.81
Social security, pension costs and other employee benefi ts (in euros) 144,067,570.23 166,610,951.72 193,645,949.43 233,880,070.04 269,404,568.47
We conducted our audit in accordance with professional standards applicable in France. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the fi nancial statements. It also includes assessing the accounting principles used and signifi cant estimates made by management, as well as evaluating the overall fi nancial statements presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the fi nancial statements give a true and fair view of the fi nancial position and the assets and liabilities of the company and the results of its operations, in accordance with accounting principles generally accepted in France.
In accordance with the requirements of Art. L. 823-9 of the French Commercial Code (Code de commerce) relating to the justifi cation of our assessments, we draw your attention to the following matters: Estimates made within the context of banking activities
We examined the methodology used to value these commitments, as well as the assumptions and parameters used. We have assessed the reasonable nature of these estimates.
The company reviews the value of its investments in subsidiaries (paragraph 5.2 of the section on accounting policies and valuation methods). We verifi ed that the forecast data used was consistent with the medium-term plans drawn up by the Group.
We have no comments to make on: the fairness and consistency with the annual fi nancial statements of the information provided in the management report and in the documents addressed to the shareholders with respect to the company’s fi nancial position and statements; the fairness of information provided in the management report concerning compensation and employee benefi ts paid to executive offi cers concerned, as well as benefi ts granted on taking up, cessation or change of functions or subsequent to such events.
In our capacity as Statutory Auditors, we hereby present our report on related-party agreements.
As a result of the merger at the end of 2007 between Natixis and Ixis Corporate & Investment Bank (“Ixix CIB”), this report presents the commitments authorized by Natixis and those authorized by Ixis CIB and taken on by Natixis.
It is not our responsibility to ascertain the existence of such agreements, nor to comment on their relevance or substance. We are simply required to report to shareholders, based on the information provided, on the basic terms and conditions of agreements that have been disclosed to us. Under the provisions of article R. 225-58 of the French Commercial Code, it is the shareholders’
Corporate offi cers concerned: Charles Milhaud, Nicolas Mérindol, Bruno Mettling, Jean-François Comas, Claude Cordel, Jean-Louis
BFBP and CNCE, setting the contribution paid by Natixis at €10,000,000 net of tax, representing €5,000,000 per central body, with an annual indexing based on objective criteria.
To make it possible for Natixis to act as the arranger for the €25,000,000,000 secured bond issue program by BFBP, the Supervisory
The income recorded relative to these two agreements represented €100,000 net of tax for the year ended December 31, 2007.
1.1.3 Sale of CIFG Holding shares held by Natixis to BFBP and CNCE
On December 19, 2007, the Supervisory Board approved the signature of an agreement to sell CIFG Holding shares held by Natixis to BFBP and CNCE, with the following main characteristics: sale price of US $ 2; if BFBP and CNCE were to sell over 34% of the capital of CIFG Holding to a third party before December 31, 2009, Natixis would receive a price supplement; Natixis’ entitlement to a price supplement would be applied for up to US $ 800,000,000 in gross capital gains (before factoring in capital gains tax) generated by BFBP and CNCE. Above this amount, Natixis would not be entitled to any supplement on the portion of the capital gain exceeding US $ 800,000,000.
1.1.4 Mandate for risk control and assistance for control and the supervision of the CIFG Group in the interests of BFBP and CNCE
Porte du Theil, Nicolas Mérindol, Jean-Claude Créquit, Francis Henry, Bruno Mettling Didier Patault, Jean Clochet, Bernard Jeannin and Philippe Sueur.
Palatine relative to CNCE’s transfer of the operational and technical management of the “Clic’n Trade” site to Banque Palatine, with
CNCE remaining the owner of the site and the counterparty for forward and cash exchange transactions in relation to Ixis CIB.
FINANCIAL DATA 6 Auditors’ report on related-party agreements 2. AGREEMENTS APPROVED IN PRIOR YEARS AND STILL IN EFFECT DURING THE YEAR
Furthermore, in accordance with the French commercial code, we have been informed of the following agreements that were approved during previous years and continued to apply over the last fi nancial year.
2.1.1 Collateralized Loan Obligation, to which Natixis, Natixis Asset Management and Vallauris CLO plc are party
Commercial Paper Corp.), which were terminated effective December 19, 2007 (midnight), have continued to apply respectively for all guaranteed transactions entered into before the termination or end date for the joint and several guarantees that they depend on, through to their completion.
For joint and several guarantees b), c) and d), the creditors of Ixis CIB relative to operations guaranteed under such guarantees, entered into before their respective end dates, may, in accordance with the letter from the Chief Executive Offi cer of CDC dated October 12, 2004, exercise their rights directly against CDC through to the end dates for the transactions covered, as if this commitment had been taken out directly by CDC for the creditors of Ixis CIB.
FINANCIAL DATA 6 Auditors’ report on related-party agreements 2.2.2 Letters of joint and several guarantee and commitment in force
On June 15, 2006, the Supervisory Board authorized the conclusion of letters of joint and several guarantee and commitment between Ixis CIB, and: a) Natixis Financial Products Inc. (previously Ixis Financial Products Inc.) for the USMTN issue program . The guarantee given by Ixis
2.2.3 Agreement entered into between CDC, CNCE (acquiring rights in CDC Ixis) and Ixis CIB (previously CDC Ixis Capital Markets) relative to guarantee commissions
On February 5, 2001, the Supervisory Board authorized the conclusion of an agreement between CDC, CNCE (acquiring rights in CDC Ixis) and Ixis CIB (previously CDC Ixis Capital Markets), specifying the conditions for the payment and calculation of the guarantee commission due by Ixis CIB relative to the joint surety agreement terminated by CDC effective June 30, 2001.
This agreement did not have any fi nancial impact in 2007.
On December 19, 2001, the Supervisory Board authorized the conclusion of a de facto association agreement between CDC, CNCE
(acquiring rights in CDC Ixis) and Ixis CIB (previously CDC Ixis Capital Markets).
This agreement, tacitly renewable every three years, replaces the agreement entered into on August 30, 1996 between CDC and
The total cost for Ixis CIB relative to this agreement represented €3,124,704 for the year ended December 31, 2007.
The income recorded by Ixis CIB relative to this agreement totalled €1,083,202 for the year ended December 31, 2007.
2.2.5 Agreement entered into between Ixis CIB (previously CDC Ixis Capital Markets) and Natixis Securities (previously CDC Ixis Securities) relative to research offi ce services
2.2.8 Agreements to transfer rights to use software and services between Ixis CIB and Crédit Foncier de France
On June 15, 2006, the Supervisory Board authorized the conclusion of agreements to transfer rights to use software and services between Ixis CIB and Crédit Foncier de France (“CFF”).
Under these agreements, Ixis CIB granted CFF the non-transferable, non-exclusive and personal right to use the AMeRisC software.
The income recorded by Ixis CIB under this service agreement (annual charge per platform based on use of the software) represented €209,300 for the year ended December 31, 2007.
CHAIRMAN’S REPORT ON CORPORATE GOVERNANCE AND INTERNAL CONTROL (ARTICLE L. 225-68 OF THE FRENCH COMMERCIAL CODE) 7
PREPARATION AND ORGANIZATION OF TASKS UNDERTAKEN BY THE SUPERVISORY BOARD 378
This report was prepared and signed by Charles Milhaud, Chairman of Natixis’ Supervisory Board as at December 31, 2007.
Natixis was formed from the merger of the corporate and investment banking and services arms of Groupe Banque
– which came into effect on December 31, 2007 – was approved by the CECEI on November 15, 2007. Natixis’
shareholders and central institutions are Banque Fédérale des Banques Populaires and Caisse Nationale des Caisses d’Epargne.
CRBF rule n° 97-02, under which applicable companies must implement a consolidated internal control system that is able to ensure: permanent checks of compliance, security and validation of transactions, as well as other forms of diligence relating to the monitoring of all types of risk resulting from transactions; periodic checks in the form of enquiries and audits of the compliance of transactions, conformity with procedures and the effectiveness of permanent control systems.
In reference to its regulatory requirements and commitments made to the CECEI, Natixis structured its internal control system around a periodic control body that undertakes audits, together with units in charge of exercising permanent control over compliance and transaction security, and verifying the effectiveness of the Bank’s risk control and monitoring procedures.
Natixis is also subject to the joint controls of its two shareholders and central institutions, Banque Fédérale des
Commission; regarding its foreign branches and subsidiaries, Natixis not only applies the Group’s organization standards, but also the regulations defi ned by the regulators with jurisdiction in the markets in which Natixis possesses offi ces (in particular, the
Although responsibility for fi rst-tier controls falls to the heads of operational or functional departments, second-tier permanent controls and periodic controls are carried out by independent central functional departments, the heads of which, within the meaning of articles 7 and 11 of CRBF rule n° 97-02, report directly to Natixis’ executive body within the meaning of article 4 of the same rule; Natixis organizes its internal control functions into global units in order to ensure consistency throughout the Group.
The internal control system therefore covers all risks and extends to all business lines and subsidiaries of the Natixis
Group. Local permanent and periodic control functions within the Group’s subsidiaries or business lines report to Natixis’ corresponding central control departments,
“risk”, “compliance” and “inspection/audit” units constitute separate business units; Natixis’ control system is organized in accordance with the principles set out by Groupe Caisse d’Epargne and Groupe
Banque Populaire. This organization is geared to ensuring a consolidated approach to risk within the framework of the joint control exercised by the two shareholder groups
(and central institutions), and the regulatory requirements to monitor risk on a consolidated basis as specifi ed in amended
The Controls department was created on October 1, 2003, with a remit to cover all business lines and support functions at the former Natexis Banques Populaires (NBP). It reported to Natixis’ Risk and Controls Department from November 17, 2006 (prior to that, to the Corporate Secretary) and was thus totally independent from the operational lines.
The Controls Department also had other control responsibilities, such as monitoring implementation of recommendations from the relevant regulators or from internal and external auditors.
The concrete implications of these changes involved: reorganizing the tasks assigned to Controls: the Department was eliminated as such and its teams redeployed between the Risk, Compliance and Internal Audit Departments; extending Compliance’s remit to include ensuring procedures are effectively applied.
In order to optimize the organization of permanent secondtier controls and clarify the border between these and periodic controls, it was decided to reorganize Controls’ teams and tasks by: a) refocusing on permanent control work concerning the application of procedures, by discharging internal controllers from periodic-control type tasks; b) transferring the personnel in charge of recurring secondtier accounting controls to the Financial Department; c) strengthening the Risk Department by transferring personnel to work in the operational risk area and, following completion of the three stages listed above; d) by repositioning procedures-application control tasks and teams within the Compliance Department. This transfer led to the development of a common permanent control methodology (compliance and procedures application), improved visibility on permanent controls for operational businesses and enhanced effi cacy.
The Compliance Department promotes the development of best practices in preventing and managing compliance risk at Natixis, thereby helping to prevent fi nancial loss and the related image risk. Compliance operates in line with the two shareholder Groups’ recommendations and covers all of the
Compliance’s main responsibilities involve: conducting legal and regulatory watch in the compliance area, in conjunction with the legal function; defi ning the standards and methods for assessing compliance, control and reporting risks. These standards were devised in order to ensure market integrity and the primacy of customer interest, as well as to prevent confl icts of interest (including independence in third-party account management), and uphold know-your-client principles; conducting permanent second-tier controls (regarding compliance standards and application of procedures); establishing a compliance risk map; implementing links with the Risk Department geared to recognizing operational defects liable to generate compliance risk and establishing the necessary rectifying action; issuing a written opinion concerning all new activities, structures, processes, products and transactions, and signifi cant changes to existing products. This opinion is accompanied by the right of blockage or appeal, within the framework of New Product Committees set up within Natixis’
business lines or set up centrally for products common to many business lines; advisory business lines in order to secure activities and ensure compliance with standards; contributing to employee training in conjunction with Human
Resources; acting as client for IT systems projects geared to monitoring and managing compliance risk at the consolidated Group level, in conjunction with subsidiarized business lines where necessary; ■
The Compliance Department reports to the Chairman of the Executive Board, and is independent of operational departments. The Head of Compliance is responsible for permanent compliance risk controls, as defi ned in article 11 of regulation 97-02.
The main challenges of 2007 entailed the rollout within the relevant business lines of the European Markets in Financial
November 1, 2007, together with the overhaul of compliance standards as part of the Natixis/Ixis Corporate & Investment
Compliance played a pivotal role in the considerable work carried out to implement the MiFID Directive. All of the
Department and is in charge of measures to counter money laundering and terrorist fi nancing within Natixis. During 2007,
Financial Security continued efforts to reinforce the mechanism in place within the Parent Company and subsidiaries.
the application of procedures. This involves ensuring that procedures exist and are effectively applied (in accordance with article 40 of rule 97-02), and that these procedures comply with the rules applicable to the various types of risk.
The Compliance Department’s controls may take three forms: controls based on the reporting documents arising from fi rst-tier controls; controls based on alerts arising from automated control tools, especially related to anti-money laundering efforts; controls based on document checks and, if appropriate, on-site checks, so as to ensure that automated controls are relevant. These controls also ensure adherence to more qualitative rules (knowledge of and classifi cation of the client, applying Chinese Walls, managing confl icts of interest, etc.).
The risk-mapping approach continued in 2007, via the controls executed by Compliance Department controllers. This approach takes into account the areas of risk highlighted by the operational risk function and which might have an impact in the fi eld of compliance.
CHAIRMAN’S REPORT ON CORPORATE GOVERNANCE AND INTERNAL CONTROL 7 Internal c ontrol p rocedures the Committee on Operational Risks and Security in
IT Systems Security was handled by a 60-strong team at end-2007. The team participates fully in the Bank’s internal controls system. Its activities are fully in keeping with the recommendations contained in the French Banking
IT security mechanism and the various parties engaged in managing, implementing and controlling IT systems security policy. These parties include: Heads of ITSS within the subsidiaries who are in charge of applying security policy in light of the subsidiary’s environment
The ITSS functions as a whole is steered by: an ITSS Strategic Committee, which acts as the decisionmaking body in the fi eld of IT security for Natixis and its subsidiaries. The Committee is chaired by a member of the
Ongoing responsibilities include: undertaking permanent controls dealing with technical vulnerabilities and security equipment; helping business lines effectively integrate security issues throughout project life spans and developing control tools; ■
administering logical security and coordinating a network of logical security correspondents; leading major IT security projects; overseeing crisis management and informational intelligence; managing business continuity mechanisms and ensuring they remain in operating condition.
In 2007, Natixis conducted: 38 user fallback tests in the shared internal back-up site, 12 of which were for Natixis Altaïr; 12 user fallback tests in the external back-up site; 6 “Flows and Exchange Systems” users tests.
All of these tests incorporated transmission of real orders by the various operators: 12 technical emergency tests at the Central Systems backup site (SUNGARD); 4 real-life tests (2 week-ends, one partial production week and one total production week), again at the Central Systems site; business IT tests, back-up telephone tests and check processing channel tests in Nanterre.
Project-type activities involved: instituting governance for the ITSS function and defi ning security objectives. ITSS governance was adapted to factor in the changes entailed by the formation of the new Group, notably by defi ning the roles and missions of local ITSS
Continuity Plan; continuing to review authorization profi les for banking applications (introduction of business line profi les) and rolling out centralized authorizations databases; working on the “chain of confi dence” program, designed to implement the security modules needed for paper-free customer relations; conducting more technical projects for upgrading and maintaining security equipment.
Based on the assessment of Natixis’ level of compliance with the security policy drawn up in late-2007, ITSS’s main objectives for 2008 are to: coordinate and control all of the ITSS function within Natixis in order to standardize the level of security and institute
Caisses d’Epargne (CNCE) – in accordance with the principles approved by the CECEI on November 15, 2006. Also in accordance with these principles, Internal Audit heads up a global audit function.
Internal Audit is responsible for verifying the bank’s controls and is one of the bodies responsible for the correct functioning of the internal control system within the meaning of CRBF rule n° 97-02. In this respect, it is independent from all business lines and support functions. It has no operational role and can therefore never be in the position of both judge and interested party.
Natixis group (p arent c ompany, subsidiaries and branches), covering all classes of risk involved in the Bank’s various business activities. It has full and unrestricted access to all
information, confi dential or otherwise. Its fi eld of investigation encompasses all of Natixis’ operational activities, as well as its functional departments – including in particular entities in charge of permanent controls – and outsourced activities. In each business line, its job consists of in-depth analysis of the
and CNCE’s internal audit departments also receive a copy of all internal audit reports issued by Natixis, in accordance with the provisions of the fi le approved by the CECEI on
Audit department is also able to carry out ad hoc audits in order to address issues arising in the course of the year that were not initially included in the audit plan.
These undertakings were carried out in active coordination with BFBP and CNCE’s Internal Audit Departments. To this end, nine internal audit coordination committee meetings were carried out during the year.
Risk, Compliance, Internal Audit and IT Systems Security and the Special Advisor to the Chairman of the Executive Board.
See Chapter II for developments relating to the functioning of the executive bodies.
The Risk Department contributes to the secure development of the Natixis Group by ensuring that the risk control system is both effective and exhaustive. Its scope of action extends to the following risks: credit risks; market risks; interest-rate, currency and liquidity risks; operational risks; and to all entities falling within Natixis’ consolidation scope.
It also reports to the Supervisory Board and Audit Committee by providing them, in particular, with performance charts and one-off analyses.
Committees (the Joint Risk Committee, the Joint Standards and Methods Committee and the Joint Information Systems
Group Compliance Department for entries into business relations, internal country risk and sovereign risk ratings, etc.; ■
Each credit dossier submitted for a decision must including a ratings proposal and a recommended limit.
Banques Populaires and Ixis CIB. Consequently, no review was carried out during the merger between the two entities.
In addition to this decision-making system on an individual basis, the Group’s Risk Committee approves the main risktaking procedures and sets overall limits relating, for example, to country risk.
Natixis bases its credit management decisions on an individualized internal rating system (decision-making, surveillance, etc.).
In coordination with the central institutions, Natixis chose the target rating methodologies applicable to the asset classes held jointly by the three groups.
Groupe Caisse d’Epargne. The objective was to re-rate the stock of counterparties using target models and ensure the uniformity and consistency of the methodologies used and ratings attributed.
An IT system is used to consolidate limits and credit exposures on a global basis across the whole of Natixis and its subsidiaries.
Internal management criteria (business lines, desk, etc.) are also taken into account.
Cases entailing deteriorations in risk are detected as they emerge and immediately reported to the Risk Department, the Special Affairs and Litigation Department, and to the business line involved, in accordance with watch list and alert procedures.
Each core business has a provisioning committee that meets quarterly. Provisioning Committees examine cases liable to require provisions and adjust levels of existing provisions where necessary.
Committee, with the documentation and reports being presented in the session.
Sectors of activity and countries are analyzed and monitored in detail in order to identify objective indices of value impairment.
These indices usually comprise a combination of micro- or macro-economic indicators specifi c to the sector or the country. Where necessary, an expert opinion is sought in order to confi rm the result obtained.
Natixis has selected the Scénarisk model developed internally by Ixis CIB and validated by the French Banking Commission.
CIB and has gradually been rolled out to all of Natixis’ positions with the aim of facilitating a consolidated VaR calculation.
The continued work throughout the year to standardize and uniformize risk indicators led to the introduction of a number of overall limits per activity, based on operational indicators.
Further work was carried out on stress tests in 2008, especially concerning the defi nition of historic stress.
The charter defi nes: the principles and system governing Natixis’ market risk system; ■
CHAIRMAN’S REPORT ON CORPORATE GOVERNANCE AND INTERNAL CONTROL 7 Internal c ontrol p rocedures the conditions under which market risk limits are examined, allocated and monitored; the respective roles of the Front Offi ce, the Risk Department and Natixis’ Group Market Risk Committee.
Natixis’ Risk Department plays a key role in the market risk management mechanism: it provides an independent (i.e. non-business line) view during the market risk decision process; it defi nes risk measurement and fair-value adjustment methods and submits them to the Market Risk Committee for approval; it proposes or examines limits, whether they are requested by the business lines or on its own initiative under the aegis of the Market Risk Committee; it is responsible for the day-to-day analysis and measurement of risks, using a process designed to ensure that all risks to which Natixis has signifi cant exposure are duly taken into account and, secondly, the reliability and uniformity of the calculations made within the Group; it is responsible for defi ning, implementing and operating the market risk measurement tools that enable risk to be aggregated on a consolidated basis at Natixis. The decisions in this area are validated on principle by the Market Risk
The system is based on business-line delegations and determining factors such as: VaR amounts; quantitative and qualitative operational limits; percentage increase in the event of a request for an increase to an existing limit; transaction type.
The Market Risk Department checks daily that limits are respected. Any excesses are reported to the front offi ce and management as specifi ed in the procedure for notifying excesses.
Global risk reporting is sent to members of the Executive Board and front offi ce business- line managers on a daily basis, and,
if requested, to the Supervisory Board. The Risk Department submits overall limits and the main standards and procedures for validation to Natixis’ Risk Committee, which is the highest authority in this area.
Financial Department and the Risk Department, is responsible for monitoring Natixis’ structural balance sheet risks. It meets once a quarter and concentrates on the following duties: monitoring on- and off-balance sheet movements; defi ning internal refi nancing rules for the business lines; validating overall policy on refi nancing, non-operational currency risk management and reinvestment of available equity; approving assumptions and rules used to devise indicators and stress scenarios; validating the overall limits applying to structural balancesheet risk indicators and liquidity crisis management procedures.
businesses as well as Groupe Banque Populaire’s market resource requirements. By centralizing overall short-, mediumand long-term refi nancing requirements on a large number of currencies, the Treasury function constantly optimizes liquidity costs for the benefi t of the Group as a whole. It also facilitates an issuing policy that seeks maximum diversifi cation of Natixis’
Within the p arent c ompany perimeter, this mismatching is centralized by the Treasury via the use of internal supporting contracts which it manages via delegation by the ALM
Overall interest-rate risk on the Treasury Department’s portfolio is measured and tracked daily by the Risk Department, in keeping with established directional limits and one-day VaR
As regards the Natixis Lease and Natixis Factor subsidiaries, the ALM Committee approved a formal limit for the sensitivity of the economic value of portfolios to a 100-bp variation in interest rates.
The exposure of Natixis’ banking portfolio to overall interestrate risk in 2007 does not call for any major comments; the application of the Basel Committee’s standard shock (+200-bp shock on the yield curve) at end-2007, suggested a decrease of around €100 million in the portfolio’s economic value.
Liquidity mismatching risk on Natixis’ banking portfolio is measured on the basis of mismatching ratios defi ned for each class of maturity, e.g. the ratio of assets remaining due to liabilities remaining due. Minimum ratios validated by the ALM
ability to cover its commitments through recourse to additional refi nancing (repos, tripartite repos, etc). This analysis is performed both at the Natixis level and the tripartite level, by consolidating sources of stress within the framework of the liquidity guarantee granted by the central institutions. It forms part of the implementation of a formal emergency plan.
Against this backdrop, Natixis capitalized on the combination of the former Ixis CIB and Natixis signatures and the diversifi cation of its liabilities sources. In addition, the Treasury function systematically presented securities accepted by the
(acquisitions of shareholdings, capital allowances, etc.) via purchases of foreign currencies, in order to immunize the
Bank’s capital adequacy ratio. This refl ected the fact that some of the weighted risks were denominated in currencies other than the euro. The ALM Committee set exposure limits both in terms of the sensitivity of the capital adequacy ratio to adverse stress on the EUR/USD exchange rate and in terms of the portion of equity denominated in USD.
The Operational Risk function is in charge of monitoring and controlling risks arising from the inappropriateness or failure of procedures, staff and internal systems or from outside events.
CHAIRMAN’S REPORT ON CORPORATE GOVERNANCE AND INTERNAL CONTROL 7 Internal c ontrol p rocedures
In 2007, Operational Risk took steps to bring its organization into line with that announced to the CECEI (the French credit and investment institutions regulator).
At the end of 2007, the Operational Risk function was organized into fi ve units each covering a particular business line or activity, i.e. marketing, fi nancing, services, instruments and asset management. The fi rst four units were directly integrated into the Operational Risk Management function, while asset management is functionally attached to it. 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.
she is responsible for reviewing progress in implementing the system and with ongoing projects (implementation of tools, risk quantifi cation methodologies, setting and monitoring of indicators, etc.). The Committee examines Group reporting
(especially the most serious incidents during the period in question) and monitors the action plans instituted to avoid any new occurrence of incidents.
Lastly, as regards the risks affecting the Bank as a whole, Natixis’
The Committee met on a quarterly basis in 2007, in line with the
CHAIRMAN’S REPORT ON CORPORATE GOVERNANCE AND INTERNAL CONTROL 7 Internal c ontrol p rocedures an audit trail system to trace the accounting data published in the fi nancial statements and their notes, based on the accounts of each consolidated entity and consolidation entries; archiving and security procedures including the twice-daily back-up of the unifi ed consolidation database and regular data recovery testing; regular support and training of accounting teams at the consolidated entities, promoting the use of best practices throughout the Group.
In addition, the implementation of regular formalized monitoring of period-ends also reduced the time taken to prepare fi nancial statements. This was done by gradually factoring in new regulatory requirements (Transparency Directory) and moving to quarterly published of accounts (as from September 2007).
Natixis’ creation nevertheless further increased the complexity of the process. This was refl ected in a signifi cant increase in the number of entities consolidated and the need to use two differently-confi gured consolidation tools and thus develop bridges between the two (transcoding tools).
the accounting and fi nancial procedures of all consolidated entities, whether or not they have credit institution status.
The fact that most subsidiaries have their own management and control functions means that internal control procedures are decentralized. Procedures are tailored to the organization of each of the consolidated entities. In all cases, the process includes several layers of controls: basic permanent and local controls are included in processing programs at operational level and formalized in clearly defi ned working programs; second-tier independent checks of processing operations performed by each entity’s fi nancial and accounting departments and which are geared to ensuring accounting data is both accurate and complete; third-tier controls conducted by the Internal Audit department.
At the Natixis p arent c ompany level, work continued during 2007 on the projects geared to developing an overall systems blueprint and adapting the accounting control mechanism to new account tools.
Natixis completed work in a number of areas that provided it with: a single general and analytical accounting tool (Matisse)
incorporating both the traditional functional capabilities of an accounting ERP tool (accounting codes, foreign currency accounting, schedule management, audit data trail, etc.), and specifi c management control processing (capital invoicing, overhead allocation); an inventory database including all of the data needed for data aggregation systems and regulatory declarations; an inventory and accounting reconciliation engine integrated into the tool, including two possible levels of reconciliation
(inventory and transactions) and adaptable to different accounting code parameters; dedicated data warehouses enabling the confi guration of standardized reporting available to the Bank as a whole.
These essential phases not only served to prepare for the implementation of the new accounting tool and the phaseout of the current tool, but also provided the opportunity to assist the business lines in gradually gaining profi ciency in the accounting processes specifi c to the new tool.
A large-scale training project, incorporating all of the themes in the new ERP, was undertaken in order to guarantee the effi ciency of the reception and and parallel-run phases, and to enable users to become familiar with the new tool.
The gradual implementation process has equipped the system with two applications solutions: the fi rst is used for recovering, reporting and managing controls. It also provides access to a database of accounting control procedures and documentation; the second industrializes reconciliation and suspense monitoring processes. In addition to the standard reconciliation and comparison functions, the tool includes a suspense control module that: freezes suspense items at period-end date and tracks them until they are cleared, characterizes Natixis’ risks according to their age and measures their coverage rate.
Customer Accounting; changes resulting from the adoption of the new accounting code and new databases; the transfer of certain functions previously handled in the accounting tool.
Accounting and fi nancial control procedures for activities emanating from the former Ixis CIB are organized in a similar manner, based on two levels: tier-one controls decentralized at back offi ce level, for producing inventories justifying the ledger and a results unit for analysis relating to results.
These two units, which periodically report to the central accounts department, continued to enhance account reliability during the year, by improving applications and reconciliation processes; a centralized second-tier with operational and analytical responsibility for data justifi cation and product information, and which also executes additional controls; control processes were formalized and rolled out to a number of Group entities during the year (especially the Luxembourg group of entities).
CHAIRMAN’S REPORT ON CORPORATE GOVERNANCE AND INTERNAL CONTROL 7 Internal c ontrol p rocedures the juxtaposition of two control systems with distinct operating rules.
As a result, the ERP tool needs to be applied across the whole of the Parent Company’s CIB operations.
Within the Natixis Finance Department, additional human resources were brought in temporarily in order to undertake additional consistency checks and analyses on the batches sent in, and to monitor the second-tier controls carried out by the Finance or Accounting Departments of each entity. This involved systematizing the analytical review process initiated in
and of Natixis itself; audits carried out by the French Banking Commission in its role as banking regulator. In this respect, the conclusions and recommendations arising from the Commission’s audit of Groupe Banque Populaire’s IFRS restatements are subject to regular follow-up; audits carried out by the external auditors, who work in collegiate fashion consistently throughout all Group entities.
Natixis’ compliance with its standards and the effectiveness of local internal control procedures.
Supervisory Board and the Audit Committee – which met nine times during the year – paid particular attention to this subject during the year.
In addition, Natixis also had to respond to the challenges created by the merger process initiated in late-2006, and to develop strategies aimed primarily at consolidating governance systems, and integrating and rationalizing internal control systems.
In line with these objectives, Natixis undertook sizeable efforts to converge accounting and reporting systems during the course of 2007. These efforts are set to continue in 2008.
Natixis also reorganized its internal control systems during the year. The periodic and permanent control entities were clearly demarcated in line with banking regulations, and set up as separate functions operating across all of Natixis. They were also integrated into the control functions of Natixis’ two central institutions, Banque Fédérale des Banques Populaires and
Lastly, early-2008 witnessed a major incident affecting one of the largest banks in the Paris market.
As soon as news of the incident emerged and the contributing factors were identifi ed, Natixis drew up an action plan comprising a number of immediate measures. The focus is on detecting possible similar areas of risk within Natixis’ own processes, executing recurring action designed to protect the
STATUTORY AUDITORS’ REPORT PREPARED IN ACCORDANCE WITH ARTICLE L. 225-235 OF THE
FRENCH COMMERCIAL CODE ON THE CHAIRMAN’S REPORT ON INTERNAL CONTROL OVER FINANCIAL
The Chairman is required to report on the company’s corporate governance system and its internal control procedures. It is our responsibility to report to you on the information and statements contained in the Chairman’s report with respect to internal control over the fi nancial reporting process.
We conducted our investigations in accordance with the professional standards applied in France. Those standards require that we perform our procedures to assess the fairness of the information contained in the Chairman’s report with respect to internal control procedures over the fi nancial reporting process. These procedures principally consisted of: familiarizing ourselves with the internal control procedures over the fi nancial reporting process, as presented in the Chairman’s report; familiarizing ourselves with the procedures underlying the information presented in the report; determining if major internal control defi ciencies over the fi nancial process that we would have noticed were presented in the
On the basis of our investigations, we have no particular comment to make on the information and statements with respect to internal control over the fi nancial reporting process contained in the Chairman’s report, prepared in accordance with Article L. 225-68 of the
Shareholders’ meetings are called by the Executive Board, or, failing that, under the conditions provided by Article 225-103 of the French Commercial Code. Notices of meetings are issued in accordance with current regulations. Meetings take place either at the company’s head offi ce or at any other place specifi ed in the notice of meeting.
Shareholders may always be represented at shareholders by a properly authorized proxy. Such proxies are not entitled to be replaced by another person.
Pursuant to Article 26 of the bylaws, shareholders are entitled to one vote for each share that they own or represent.
Approval of parent company fi nancial statements, assignment of result, setting of dividend.
Company intervention on the market for the shares: delegation of authority to the Executive Board.
November 17, 2006, and expiring before the next annual shareholders: to increase capital via the issue of capital securities, with preferential subscription rights,
ADDITIONAL INFORMATION 8 Legal information to increase capital via the issue of capital securities, without preferential subscription rights, the right to increase issue in the event of surplus demand, the possibility of shares issued without preferential subscription rights to be used as remuneration for shares tendered in the event of a share swap offer or an asset transfer, to increase capital via the incorporation of premiums, reserves and earnings, to undertake a capital increase reserved for employees, in order to reduce the capital by cancellation of shares held by the company.
REPORT OF THE EXECUTIVE BOARD ON THE RESOLUTIONS TO BE PUT TO THE VOTE AT THE ANNUAL SHAREHOLDERS’ MEETING
In the first resolution, the Executive Board seeks approval of Natixis’ parent company fi nancial statements for 2007 and particularly the movements occurring concerning retained earnings since December 31, 2006.
RESOLUTIONS TO BE PUT TO THE VOTE AT THE ANNUAL SHAREHOLDERS’ MEETING OF MAY 22, 2008
Having considered the appropriation of earnings proposed by the Executive Board, the shareholders hereby approve their proposal and resolve as follows: fi rst: to allocate the year’s loss of: €467,183,610.92
to: retained earnings up to: €434,333.00, the general reserve up to: €101,687,301.10, the other reserves up to: €198,166,070.35, the issue premium up to: €166,895,906.47, the allocated sum equal to the loss: €467,183,610.92; second: to deduct, from the issue premium, the sum of €549,919,212.30, to pay a total dividend of €549,919,212.30.
In application to the dividend for the 2007 fi nancial year of the clauses of Articles L. 232-18 and under the Commercial
Code and Article 34 paragraph 3 of the company statutes, the shareholders decide to grant the possibility of opting for payment in shares of the entire dividend relating to the shares that they own.
The shares may be bought, sold, exchanged or transferred by any means, on the stock market or over-the-counter, including by means of block trading, public tender offers, the use of derivative fi nancial instruments or warrants or negotiable securities conferring a right to shares of the Company, or by the use of options-based strategies, under the conditions provided by market authorities and in accordance with the regulations. The entire authority may be used to purchase or sell the shares by means of block trading.
The shareholders resolve that the number of shares that may be purchased pursuant to this resolution may not exceed 5% of the Company’s capital stock, namely a total of 61,102,134 shares on the date of this meeting, and that the total investment cost may not exceed €1,833 million.
Articles L. 225-177 et seq. of the French Commercial Code, the shareholders hereby: 1. Resolve to authorize the Executive Board, on one or more occasions, to grant options valid for a period of seven
(7) years conferring a right to subscribe for new, or to purchase existing, shares of the Company made available as a result of buybacks carried out under the conditions provided by the bylaws and by law, to employees or company offi cers of the Company or of companies associated with the Company within the meaning of
ADDITIONAL INFORMATION8 Legal information 2. Resolve that the total number of stock options granted pursuant to this authority may not confer a right to subscribe for more than 10,000,000 shares; 3. Resolve that the options to subscribe for and/or purchase shares must be granted before the expiry of a period of 38 months from the date of this general meeting ; 4. Formally acknowledge and, if necessary, resolve, that this authority shall automatically involve a waiver by the shareholders of any preferential subscription rights in respect of the shares to be issued following the exercise of the options, in favor of the benefi ciaries of the stock options; 5. Confer all necessary powers on the Executive Board to implement this authority under the conditions provided by law and by the bylaws, particularly in order: to determine the conditions under which the options will be granted and to draw up a list or the categories of benefi ciaries of the options, to determine the price of subscription of the shares (in the case of options to subscribe for shares) and the purchase price of the shares (in the case of options to purchase shares) and the date on which the options will be granted
(on the understanding that this price may not be lower than the value arrived at by the application of the current regulations, to adjust the subscription and purchase price of the shares to take account of any fi nancial transactions that may take place before the options are exercised, to determine the period or periods of exercise of the options thus granted, to make provision for temporary suspension of the exercise of options for a maximum period of three months in the event of fi nancial transactions involving the exercise of a right attached to the shares, if necessary, to record the number and the amount of shares issued during the fi nancial year as a result of the exercise of options, at its fi rst meeting following the end of each fi nancial year, in its sole discretion and if it sees fi t, to charge the expenses of increases in the capital stock to the amount of premiums referable to those increases, and to deduct from that amount the sums necessary to bring the legal reserve back up to one tenth of the new capital stock after each increase, to complete or arrange for the completion of any acts and formalities necessary to make defi nitive any capital increases that may be carried out pursuant to the authority granted by this resolution, to make the consequential amendments to the bylaws, and generally, to do whatever may be necessary; 6. Formally notes that this authority cancels any previous authority granted for the same purpose.
Such authority is valid for a period of twenty-six months from the present meeting; 2. Decide that the total amount of increases in equity capital which may be thus carried out immediately and/or in future, may not be greater than €150 million (one hundred and fi fty million euros) in nominal value, to the amount of which will be added, where appropriate, the additional amount of shares to be issued to preserve, in accordance with the law, the rights of the bearers of securities giving the right to shares; 3. Decide that the maximum nominal amount for the issue of securities representing debt or giving access to capital that may be carried out under the present authority may not exceed a nominal amount of €1,500 million or the exchange value of this amount in case of issue in another currency; 4. In case of the use by the Executive Board of the present authority: decide that the issue or issues will be reserved by preference under the conditions provided for by the law for shareholders who may subscribe by way of right, give the Executive Board the right to grant shareholders the right to subscribe, subject to allocation, to a number of shares greater than those which to which they may subscribe by way of right, in proportion to the subscription rights that they have and in any case, within the limit of their request,
Code, namely: limit the capital increase to the amount of subscriptions on condition that this reaches at least three-quarters of the amount of the initially-decided issue, freely distribute all or part of the issued and non-subscribed securities between the persons of its choice, offer to the public, on the French or international market, all or part of the issued and non-subscribed securities, decide that any issue of stock purchase warrants for the Company’s shares may be the subject either of a subscription offer under the conditions provided for above or a free assignment to the owners of old shares, formally record and decide that the present authority signifi es, as of right, for the benefi t of the holders of the issued securities, express renunciation by shareholders of their preferential subscription rights to securities to which the issued securities will give right; 5. Decide that the Executive Board will have the necessary powers, with the right to sub-delegate to its president or to one of its members under the conditions set by the law and the statutes to implement the present authorization and particularly to: determine the conditions for the capital increase (or increases) and/or the issue (or issues), determine the number of shares and/or securities to issue, their issue price and the amount of the premium, the payment of which, where appropriate, may be requested at the time of the issue, determine the date and terms of the issue and the type and form of securities to be created, which may in particular take the form of subordinated or unsubordinated securities and with determined or indeterminate periods, determine the mode of payment of the issued shares and/
or securities, set, if there is cause, the terms for exercising the rights attached to the securities issued or to be issued and, in particular, determine the dated date of the new shares, which may be retroactive, as well as all the other conditions and terms for carrying out the issue(s), set the terms under which the Company will, where appropriate, have the right to buy or exchange in the market, at any time or during determined periods, the securities issued or to be issued; provide for the right to suspend, possibly, the exercise of the rights for the securities during a maximum period of three months,
set the terms under which, where appropriate, the rights of the holders of securities that give future rights to the
Company’s shares will be preserved, in accordance with legal and regulatory measures, at its sole initiative, set off the fees from the increase (or increases) of capital against the amount of the premiums which relate to it and deduct from this amount the sums necessary to bring the legal reserve to one tenth of the new capital after each increase, determine the terms under which the Company will have the right to purchase stock warrants in the market, at any time or during determined periods, in order to cancel them, in case of the issue of securities giving the right to the assignment of capital securities on presentation of a warrant, generally, conclude any agreements, particularly to ensure the success of the envisaged operation(s), take any measures and carry out any formalities in relation to the fi nancial servicing of the issued securities, in accordance with the present authority and the exercise of the rights which are attached to it, account for the completion of each capital increase, carry out correlative modifi cations to the statutes and generally do what is necessary.
The shareholders, giving the ruling on the quorum and majority conditions for special shareholders’ meetings, after having been made aware of the Executive Board’ report and the special report from the Acting Auditors, and in accordance with the clauses of Articles L. 225-129-2, L. 225-135,
Executive Board the power to institute, for the benefi t of shareholders, a right of priority to subscribe to them in application of the clauses of Article L. 225-135 of the
Commercial Code; 5. Decide that the issue price of the shares will be at least equal to the weighted average of the fi rst prices quoted during the three last market sessions (on the Paris market)
preceding its setting, possibly reduced by a discount within the limit provided for by the legislation and regulations in force; 6. Formally record and decide that the present authority signifi es, as of right, for the benefi t of the holders of the issued securities, express renunciation by shareholders of their preferential subscription rights to securities to which the issued securities will give right; 7. Decide that the balance of the issue which may not have been subscribed will be divided at the behest of the
Executive Board, totally or partially, or that the amount of the issue will be limited to the amount of subscriptions received, it being specifi ed that the Executive Board may use, in the order that it considers correct, the options above, or only one of them; 8. Decide that the Executive Board will have the necessary powers, with the legal right to sub-delegate to its president or to one of its members under the conditions set by the law and the statutes to implement the present authorization and particularly to: determine the conditions for the capital increase (or increases) and/or the issue (or issues), determine the number of shares and/or securities to issue, their issue price and the amount of the premium, the payment of which, where appropriate, may be requested at the time of the issue,
determine the date and terms of the issue and the type and form of securities to be created, which may in particular take the form of subordinated or unsubordinated securities and with determined or indeterminate periods, determine the mode of payment of the issued ordinary shares and/or securities, set, if there is cause, the terms for exercising the rights attached to the securities issued or to be issued and, in particular, determine the dated date of the new shares, which may be retroactive, as well as all the other conditions and terms for carrying out the issue(s), set the terms under which the Company will, where appropriate, have the right to buy or exchange in the market, at any time or during determined periods, the securities issued or to be issued, provide for the right to suspend, possibly, the exercise of the rights for the securities during a maximum period of three months, at its sole initiative, set off the fees from the increases in equity capital against the amount of the premiums which relate to it and deduct from this amount the sums necessary to bring the legal reserve to one tenth of the new capital after each increase, generally, conclude any agreements, particularly to ensure the success of the envisaged operation(s), take any measures and carry out any formalities in relation to the fi nancial servicing of the issued securities, in accordance with the present authority and the exercise of the rights which are attached to it, account for the completion of each capital increase, carry out correlative modifi cations to the statutes and generally do what is necessary; 9. Formally record that the present authorization cancels any previous authorization having the same purpose.
For each one of the issues decided in application of the eighth and ninth resolutions, the number of securities to be issued may be increased under the conditions set by Article
L. 225-135-1 of the Commercial Code and by the decree dated February 10, 2005, when the Executive Board observe excess demand, in the thirty days following closure of the subscription, within the limit of 15% of the initial issue and at the same price as that chosen for the initial issue, and without exceeding the limit on the overall ceiling provided for by the fi fteenth resolution.
Code; 2. Delegate to the Executive Board, subject to prior authorization from the Supervisory Board in the cases provided for in the statutes, during a period of twenty-six months from the date of the present meeting, the authority necessary to issue shares and securities giving access, immediately and/or in future, to the Company’s capital, within the limit of 10% of the equity capital at the time of the issue, in order to remunerate contributions in kind granted to the Company and made up of capital securities or securities giving access to capital, when the clauses of Article L. 225-148 of the Commercial Code are not applicable; 3. Formally record that the present authority signifi es, as of right, renunciation by shareholders of their preferential right of subscription to shares of the Company to which securities issued under the present authorization may give right, to the benefi t of the holders of securities giving access to capital issued in accordance with the present resolution; 4. Decide that the Executive Board will have the necessary powers for these purposes, and particularly: in case of issues based on Article L. 225-147 paragraph 5, to approve the evaluation of contributions, to set the number of new shares issued in payment for contributions and the conditions of their issue, to determine, where appropriate, the amount of the cash adjustment to pay, and to account for the completion of contributions, in the case where securities are issued to pay for securities contributed as part of a public offer containing an exchange component initiated by the Company, determine the list of securities contributed to the exchange, set the issue
In all cases, the amount of capital increases carried out in accordance with the present resolution comes under the overall ceiling provided for by the fi fteenth resolution; 5. Formally records that the present authorization cancels any previous authorization having the same purpose.
The shareholders, being aware of the Executive Board’ report and in accordance with the clauses of Articles 225-129-2,
ADDITIONAL INFORMATION8 Legal information 3. Decide that the Executive Board will have the necessary powers, with the legal right to sub-delegate to its president or to one of its members under the conditions set by the law and the statutes to implement the present authorization and particularly to: fi x the amount and type of the sums to incorporate in the capital, set the number of shares to be issued or the amount by which the nominal value of shares making up the equity capital will be increased, determine the dated date, which may be retroactive, for the new shares or the date on which the raised nominal value takes effect, decide, in accordance with the clauses of Article
Thirteenth resolution: renew the authority to undertake a capital increase reserved for employees in accordance with Article L. 225-129-6 of France’s Commercial Code
L. 225-138-1 of the Commercial Code, and Articles L. 443-1 and following of the Employment Code, 1. Delegate to the Executive Board the authority to decide on increasing the Company’s equity capital for an overall maximum nominal amount of €16 million in one or several stages, by issuing new shares for cash that are reserved for employees of the Company or the companies which
Employment Code; 3. Decides to abolish, for the benefi t of these employees, the preferential right of shareholders to subscribe to the new shares concerned and to give up all rights to the shares that may be freely assigned based on the present resolution; 4. Decide that the subscription price of the shares issued in application of the present authorization will be set by the
The shareholders, being aware of the Executive Board’ report and the report of the Acting Auditors, and giving a ruling on the conditions for a quorum and the majority that are required for special shareholders’ meetings: 1. Give the Executive Board authorization to cancel, on its sole decision, in one or more stages, up to a limit of 61,102,134 shares, namely 5% of the capital, shares that the company holds or may hold following repurchases carried out in the context of Article L. 225-209 of the
French Monetary and Financial Code (Code monétaire et financier) and its bylaws.
The Company was incorporated on November 20, 1919 under the name Crédit National. Its term was increased to 99 years on November 9, 1994, save for extension of this term or early dissolution of the Company. The name “Natixis” was adopted by the shareholders at their meeting on November 17, 2006.
French State in economic and fi nancial areas under the provisions of special agreements; the conduct of all and any brokerage business; the acquisition of interests in companies, groups or associations with a direct or indirect connection with the activities referred to above; the completion of all and any private and commercial transactions.
Paris Trade and Companies Register registration number: Access to legal documents
Annual dividends shall be paid on the date or dates set by the Executive Board but no later than nine months after the year end.
Board shall be 70 years. Any member of the Executive Board who attains that age shall automatically be deemed to have resigned.
The Executive Board shall be appointed for a term of six
Any member of the Executive Board may be dismissed, either by the Supervisory Board or by the general meeting of shareholders. If the dismissal takes place without just cause, it may give rise to the payment of damages. The dismissal of a member of the Executive Board shall not result in the termination of his or her employment contract.
The Supervisory Board shall appoint one of the members of the Executive Board as Chairman. The Chairman shall exercise his or her functions throughout his or her term of offi ce as a member of the Executive Board. He or she shall represent the
Executive Offi cer allocated to members of the Executive Board, may be withdrawn at any time by the Supervisory Board.
Meetings shall be chaired by the Executive Chairman or, in his or her absence, by the Chief Executive Offi cer appointed by the Chairman. The Executive Board may only validly deliberate if at least half its members are present. Decisions shall be taken by a majority of the votes of members present or represented.
The proceedings of the Executive Board shall be recorded in minutes contained in a special minute book and signed by the members of the Executive Board that attended the meeting.
The Executive Board may appoint one or more of its members or any non-member of the Executive Board to carry out such special permanent or temporary missions as it shall determine, and may delegate to them the powers it considers necessary for one or more particular purposes, with or without the power to subdelegate.
Supervisory Board under the conditions provided by law and by the bylaws. The Executive Board shall convene all general meetings of shareholders, decide their agenda and execute their decisions.
Article 13 – Compensation of the members of the Executive Board
The Supervisory Board shall fi x the manner and amount of the compensation of each of the members of the Executive
and no more than eighteen (18) members, subject to the derogation provided by law in the event of a merger.
Chairmen from among its members, for the duration of their term of offi ce. They must be physical persons.
of its meetings. Notices of meetings shall include the detailed agenda for the meeting.
The Supervisory Board shall draw up internal regulations which may provide that, save for the adoption of decisions relating to the verifi cation and control of the parent company and consolidated fi nancial statements, members of the Supervisory
16.2 In the event of urgent business as defi ned below
(“Urgent Business”), the accelerated procedure set out below may be applied.
characterized by the existence of a short period of time, which is imposed by a third party on pain of foreclosure and where failure to comply would be likely to cause loss to the Company or to one of its Principal Subsidiaries (the term Principal
At any time of the year, it shall carry out such verifi cations and inspections as it shall consider appropriate, and it may obtain
ADDITIONAL INFORMATION 8 Additional information from the Executive Board any documents that it considers necessary for it to carry out its task.
Board to be informed of developments in the Company’s business, together with the quarterly and half-yearly fi nancial statements.
The Supervisory Board shall appoint and may dismiss the members of the Executive Board, the Executive Chairman and the Chief Executive Offi cers, under the conditions provided by law and by Article 9 of these bylaws.
17.2 The following operations shall be subject to the prior authorization of the Supervisory Board: a) pursuant to current legal and regulatory provisions: the sale of land and other immovable assets, the total or partial sale of shareholdings, any agreement subject to Article L. 225-86 of the French
Commercial Code; b) pursuant to these bylaws: any increase of the capital stock, immediate or future, while maintaining preferential subscription rights, with a value including premium in excess of €75 million, any extension of the activities of Natixis to signifi cant businesses not carried on by Natixis, any appointment of members of the Supervisory
Boards, Boards of Directors or Executive Boards, and, if applicable, of Chief Executive Offi cers and Deputy Chief
any acquisition or increase of a shareholding, and any investments or disinvestments (including the transfer of cooperative investment certifi cates issued by the Caisses d’Epargne or Banques Populaires) or the formation of joint ventures by Natixis or any of its subsidiaries, in an amount in excess of €150 million, any asset transfer, merger or spin-off transaction to which
fees to the Supervisory Board. The Supervisory Board shall distribute them among its members as it sees fi t.
The Supervisory Board may also award exceptional compensation to its members in the cases and subject to the conditions provided by law.
The ordinary general meeting of shareholders can appoint one or more non-voting directors, whose term of offi ce shall be six
Non-voting directors shall receive the same information as the members of the Supervisory Board and shall be called to all meetings of the Supervisory Board. They shall sit on the
Board subject to ratifi cation by the next general meeting of shareholders.
Form and transfer of shares (Title II, Article 4 of the bylaws)
The capital stock was €1,955,268,310.40 at December 31, 2007, divided into 1,222,042,694 shares with a nominal value of €1.60 each, fully paid-up.
At their general meeting on November 17, 2006, the shareholders conferred authorities on the Executive Board in accordance with Article L. 225-129-2, L. 228-92 and
For the purpose of increasing capital via the issue of ordinary shares or of any capital securities, with preferential subscription rights accorded to existing shareholders
For the purpose of allocating options to subscribe for or to purchase shares options Jan. 21, 2008 options
These options were granted until 2005: to employees and executive directors of Natexis Banques
to employees and executive directors of Banque Fédérale des Banques Populaires, the Banque Populaire banks and entities that are more than 50%-owned either directly or indirectly, exclusively or jointly, by Banque Fédérale des
NATEXIS BANQUES POPULAIRES BECOMES Natixis – DIVISION OF THE NOMINAL VALUE BY 10 new situation 1,233,235,210 1,973,176,336 allocation of 2006 expenses to the transfer premium (3,879,879.00)
shares in respect of the exercise of subscription options 2,181,580 3,490,528 13,635,082.21 shares in respect of the exercise of subscription options 2,153,693 3,445,908 14,166,927.51 shares in respect of ESOPs 24,671 39,473 352,203.20
At December 31 2007, the principal shareholders of Natixis were as follows: % of the capital % of the voting rights
agreement pursuant to which they act in concert, the principal provisions of which are described in “Major Contracts”
The members of the Supervisory Board, whether physical or legal persons, owned 68.90% of the capital of Natixis (almost all of this amount being owned by BFBP and CNCE), at
The ownership of shares by company offi cers is not signifi cant.
Page 414 contains details of Company stock options granted to certain employees and company offi cers.
As a result of the changes in Natixis quotation in August 2007, and in compliance with the shareholders’ agreement, Banque
In the context of the share buyback program authorized by the general meeting of shareholders on May 24, 2007, Natixis owned 7,226,571 treasury stock at December 31, 2007.
The table below shows the number percentage of shares owned as treasury stock at January 1, 2008 and March 31, 2008.
This authority covered a maximum of 6,600,000 shares and was exercised by the Executive Board on November 12, 2007.
BFBP and CNCE undertake to maintain strict parity of investment in the capital of Natixis for a period of 10 years, which could be extended for successive periods of fi ve years.
Consequently, any acquisition or sale of Natixis shares is prohibited during this period, with the exception: of sales of shares carried out in the context of the market operation that took place at the end of 2006; of joint sales by each of the shareholders of an identical number of Natixis shares, on condition that upon completion of the sale, each shareholder retains a strictly identical investment in terms of number of shares, and which is greater than or equal to 34% of the capital of Natixis on a fully-diluted basis; of sales of shares to a physical person appointed as a member of the Supervisory Board, up to the number of shares required by the bylaws; of acquisitions of shares carried out in the event of
The fi rst Chairman of the Supervisory Board is Mr. Charles
Milhaud. The Vice-Chairman of the Supervisory Board is a representative of the shareholder whose representative is not the Chairman of the Supervisory Board. The two shareholders are represented equally on the Audit Committee and on the
Compensation committee, each of which has six members of whom two are appointed on a proposal from CNCE and two on a proposal from BFBP, two independent members being appointed jointly by CNCE and BFBP.
Certain major decisions are subject to the prior authorization of the Supervisory Board, which makes its decisions by a simple majority of the members present and represented, or in the case of certain operations classifi ed as “essential decisions”, by a dual majority (i) of the members presents and represented and (ii) of the members representing each of the two shareholders.
Executive Board; the decision to appoint one (or two) member(s) of the
Offi cer from a member of the Executive Board; any acquisition or increase of a shareholding, or any investment or disinvestment (including the transfer of the
any increase in the capital stock of Natixis, immediate or future, while cancelling preferential subscription rights, including the allocation of options to subscribe for shares or of free new shares; the proposal of any amendment of the bylaws to the general meeting of shareholders.
Board of Natixis, the essential decision concerned will not be implemented, without either of the two shareholders having the benefi t of an exit right.
BFBP and CNCE shall consult before each general meeting of shareholders of Natixis in order, as far as possible, to arrive at a joint position on the resolutions submitted to the vote of the shareholders.
The shareholders’ agreement entered into on November 17, 2006 provides for the appointment of the directors (Executive
Natixis to be subject to the prior approval of the Supervisory
of the principal subsidiaries of Natixis shall be composed, in addition to the members representing the Executive Board of Natixis, of an equal number of members appointed on a proposal from BFBP and members appointed on a proposal from CNCE.
of the net consolidated profi t in respect of each fi nancial year
(ii) to voting in favor of such a distribution at general meetings of Natixis shareholders.
The agreement entered into force on November 17, 2006 for a term of 15 years. Each of the two shareholders may, however, terminate the stability period (inalienability and upper limits)
Division of the nominal value by 10 on November 17, 2006
Dividends distributed in respect of the last fi ve fi nancial years: Financial year ending Dec. 31, 2007 Dec. 31, 2006 Dec. 31, 2005 Dec. 31, 2004 Dec. 31, 2003
** This proposal will be submitted to the general meeting of shareholders on May 22, 2008.
Natexis Banques Populaires had offered its shareholders the option receiving their dividend in the form of shares in the case of dividends paid in 2006 in respect of the fi nancial year 2005.
Dividends to be paid by Natixis in 2008 in respect of the fi nancial year 2007 could be paid in the form of a share dividend.
In order to obtain approval, the vendor must notify the Banque
Populaire concerned of its request for approval, indicating the identity of the purchaser, the number of Banques Populaires
In the event that approval is refused, and in default of abandonment by the vendor of its proposed sale, the Banque
Populaire whose CCI are the subject of the proposed sale must repurchase the said Banques Populaires CCI (with the consent of the vendor) or must arrange for them to be purchased by a third party, at a sale price that takes account of the proportion of the net assets to which the Banques Populaires CCI confer a right, and which complies with the valuation methods used to value the Banques Populaires CCI at the time of their issue. In the absence of agreement between the vendor and the Banque Populaire concerned, the purchase price of the
Banque Populaire, compliance with contractual commitments previously entered into within the Groupe Banque Populaire and compliance with the principles determined therein, will arrange the consolidation of the accounts of the Banques
Natixis in terms of the consistency of the development of each Banque Populaire with the objectives of Natixis; CONTENTS< >
(ii) the representation of Natixis on the Audit and Group Risks
Committee of BFBP (whose mission will be extended to examine the operational and fi nancial relationships existing between Natixis and the Banques Populaires, having regard to the investment of Natixis in the capital of the Banques Populaires), and on the Group Technology
Board of Directors of BFBP; (iii) the prior consultation of Natixis in its capacity as a nonvoting director as of right on the Board of Directors of
Populaires network of BFBP (in particular, defi nition of the policy and strategic direction of the Banques Populaires network, the negotiation and conclusion of national and international agreements on behalf of the Banques
Natixis to be maintained, Natixis must submit the precise terms of the changes made necessary to the Banques Populaires in order for them to be able to determine whether they should integrate the new aspects of infl uence in their arrangements or whether they should decide, on receiving prior authorization from the Board of Directors of BFBP, to exercise their right to buy back the CCI that they have issued.
The buyback value of the Banques Populaires CCIS will be calculated using the method of valuation used when they were issued, particularly as regards the calculation of revalued net assets, and must take account of the profi tability of the
Banques Populaires and of the proportion of the net assets to which the CCI confer a right. In the absence of agreement between Natixis and the Banque Populaire concerned, this buyback value will be determined by an expert.
Populaires will be maintained: the provision of computer infrastructures; the provision of industrial services (custody services, payment systems, operational management of currency accounting); the design and management of customer products on behalf of the Banques Populaires [ asset management, the whole range of insurance (life, provident, fi re, accident and other risks), factoring and lease fi nancing, fi nancial planning, development capital, employee benefi ts planning (and particularly employee savings), international planning, credit insurance and commercial information (Coface)] .
“Caisses d’Epargne CCI Agreement”), after approval by the Steering and Supervisory Board of each of the Caisses d’Epargne.
Agreement are as follows: 1. Restriction on the free transferability of the Caisses d’Epargne CCIS
In the event that CNCE agrees to the transfer of the Caisses d’Epargne CCI, their transfer will be subject to a fi rst-ranking right of pre-emption held by CNCE and then by the issuing
Caisse d’Epargne, compliance with contractual commitments previously entered into within the Groupe Caisse d’Epargne and compliance with the principles determined therein, will arrange the consolidation of the accounts of the Caisses d’Epargne CCI by the equity method.
(ii) by its “de facto” infl uence arising from the industrial and technical cooperation between the Caisses d’Epargne and
The particular legal infl uence of Natixis over the Caisses d’Epargne will arise notably from the following provisions of the Caisses d’Epargne CCI Agreement: (i) the extension of the mission of the non-voting director representing CNCE on the Steering and Supervisory
Boards of the Caisses d’Epargne to take into account the interests of Natixis in terms of the consistency of the development of each Caisse d’Epargne with the objectives of Natixis; (ii) the representation of Natixis on the Group Risks
Committee and on CNCE Committees for the approval of new customer and fi nancial products acting under the authority of CNCE’s Executive Board; (iii) the prior consultation of Natixis in its capacity as a nonvoting director as of right on the Supervisory Board of
CNCE, for all decisions of the Supervisory Board which relate to its mission as the central body of CNCE’s Caisses d’Epargne network (in particular, defi nition of the policy and strategic direction of the Caisses d’Epargne network, the negotiation and conclusion of national and international agreements on behalf of the Caisses d’Epargne network, the approval of the directors of the Caisses d’Epargne, the approval of increases in the capital, of bond issues and of acquisitions and sales of investments, and the centralization of cash fl ow surpluses of the Caisses d’Epargne and their refi nancing); (iv) the right of Natixis to request a second resolution in the event that the Supervisory Board of CNCE decides not to follow the advice given by Natixis on a decision likely to cause harm to its fundamental interests; (v) the right of Natixis to full and complete information regarding the operational and fi nancial management of the
3. Technical and industrial cooperation between Natixis and the Caisses d’Epargne
In the context of the development of this industrial and commercial cooperation, Natixis and the Caisses d’Epargne have agreed to maintain the existing industrial and commercial relations described above for a period of at least 10 years with effect from the Date of Completion.
or to the Caisse d’Epargne concerned, in accordance with the terms and conditions defi ned below, without the prior authorization of the special general meeting of the holders of
Caisses d’Epargne CCI, in the following circumstances: (i) any substantial alteration in the balance of the respective shareholdings of BFBP and CNCE in Natixis and/or an end to the joint control exercised by CNCE and BFBP over
CNCE and the Caisses d’Epargne and with their agreement, to make the necessary adaptations while either maintaining the rights and characteristics of the securities issued, or replacing the Caisses d’Epargne CCI with securities having the same characteristics, and particularly without voting rights and with
Natixis having the ability to consolidate the profi t of the Caisses d’Epargne by the equity method in proportion to its investment in the capital.
in cases (i), (ii) and (iv), CNCE’s right will have priority over that of the Caisse d’Epargne concerned.
In the event that CNCE and the Caisse d’Epargne concerned exercise their right to repurchase the Caisses d’Epargne CCI
in case (iii), the Caisse d’Epargne’s right will have priority over that of CNCE.
Under the terms of these undertakings, Natixis undertook to purchase 238,480 shares representing 37.22% of the capital stock and voting rights of Compagnie 1818 – Banquiers
The total exercise price of the undertakings is €34,448,822 subject to certain adjustments in the event of a cash transfer, dividend distribution or reduction of the capital of
Natexis Banques Populaires itself was created following the transfer of the operating activities of Caisse Centrale des Banques Populaires (CCBP) to Natexis S.A, which was approved by the shareholders of both entities in extraordinary general meetings held on July 27, 1999.
CCBP was founded in 1921 to support the expansion of the Banque Populaire regional banks, and to conduct both institutional activities on behalf of the Banque Populaire regional banks (managing and monitoring their cash surpluses, special assignments on behalf of the Chambre Syndicale des
S.A. This was followed by a friendly takeover bid as a result of which the Groupe Banque Populaire held 71.4% of Natexis
S.A. on June 2, 1998. This percentage was raised to 74.36%
At the end of 1999, the Groupe Banque Populaire held 88.06%
In May 2002, the German bank DZ Bank AG acquired shares in Natexis Banques Populaires as part of its partnership with the Groupe Banque Populaire.
In July 2002, pursuant to an agreement with Arnhold & S.
Bleichroeder Holdings Inc. (“ASB”), Natexis Banques Populaires agreed to acquire the entire capital stock of Arnhold & S.
Bleichroeder Inc. (“ASB”), a company incorporated under the laws of New York State, for the sum of USD105 million, payable in Natexis Banques Populaires shares.
Banques Populaires shareholders approving the contributions giving rise to the creation of Natixis.
The combination transactions include: the contribution by Caisse Nationale des Caisses d’Epargne
(“Placement Global”) for institutional investors in France and abroad, with: on December 6: Defi nitive price of the open price offer and global placement is set; on December 7: Listing of the shares under the name
(1) Except for Caisse d’Epargne et de Prévoyance de Martinique and Caisse d’Epargne et de Prévoyance de Nouvelle Calédonie.(1) Except for Caisse d’Epargne et de Prévoyance de Martinique and Caisse d’Epargne et de Prévoyance de Nouvelle Calédonie.
“To the best of my knowledge, the information contained in this shelf-registration document is true and accurate, and contains no omissions liable to impair its signifi cance.
To the best of my knowledge, the fi nancial statements were prepared in accordance with applicable accounting standards, and the information on the balance sheet, the fi nancial situation and the income of the company and the companies entering in the scope of consolidation is true and accurate. The management accurately refl ects the business, the income and the fi nancial situation of the company and all the companies included in the consolidation scope and provides a description of potential risks and uncertainties.
are partially included in this document and may be consulted at the Company’s head offi ce, preferably by appointment.
This shelf-registration document is available on the website of the Autorité of the Marches Financiers (www.amf-france.org)
6.4. Extent to which the issuer is dependent on patents or licenses, industrial, commercial or fi nancial contracts or new manufacturing processes 168 - 169 6.5. The basis for any statements made by the issuer regarding its competitive position 60 - 86 7. Organizational structure 7.1. Brief description of the Group 1 7.2. List of signifi cant subsidiaries 8 8. Property, plant and equipment 8.1. Existing or planned material tangible fi xed assets 255 - 256 8.2. Environmental issues that may affect the issuer’s utilization of the tangible fi xed assets 120 - 124 9. Operating and fi nancial review 10. Capital resources 10.1. Information concerning the issuer’s capital resources 174 ; 184 - 185 10.2. Sources and amounts of the issuer’s cash fl ows 186 10.3. Information on the issuer’s borrowing requirements and funding structure 174 - 175 10.4. Information regarding any restrictions on the use of capital resources that have materially affected, or could materially affect, the issuer’s operations N.A.
20.9. Signifi cant change in the issuer’s fi nancial position 177 21. Additional information 21.2. Memorandum and articles of association 408 - 411 23. Third party information and statement by experts and declarations of any interest N.A.
December 31, 2006, presented on Pages 191 to 321 , the statutory auditors’ report thereon, Pages 322 to 323 , and the Group management report, on Pages 136 to 188 of the registration document fi led with the AMF on April 17, 2007 under number D.07-0337,
December 31, 2005, presented on Pages 102 to 205, the statutory auditors’ report thereon, Pages 206 to 207, and the Group management report, on Pages 69 to 95 of the registration document fi led with the AMF on March 23, 2006 under number D.06-0152