PRESENTATION OF NATIXIS 3 1.2 History and links with BPCE 8 1.3 2013 Key fi gures 10 1.4 Natixis’ business lines 12 1.6 Natixis and its shareholders 30
RISK MANAGEMENT 131 4.1. Risk factors 133 4.2 Pillar III 139 4.3 Overall interest rate, liquidity, structural foreign exchange risks 171 4.4 Insurable risks 174 4.5 Legal risks 175 4.6 Insurance risks 180 4.7 Sensitive exposures in accordance with the recommendations of the Financial Stability Forum 185
FINANCIAL DATA 189 5.1 Management report at December 31, 2013 190 5.2 Consolidated fi nancial statements and notes 206 5.3 Statutory Auditors’ report on the consolidated fi nancial statements 351 5.4 Parent company fi nancial statements and notes 353 5.5 Statutory Auditors’ report on the parent company fi nancial statements 401 5.6 Statutory Auditors’ special report on related-party agreements and commitments 403
ADDITIONAL INFORMATION 437 7.1 Statement by the Person responsible for the registration document 438 7.2 Documents available to the public 439 7.3 Cross-reference table of registration document 440 7.4 Cross-reference table for the annual fi nancial report 442 7.5 Cross-reference table for the management report 443 7.6 Cross-reference table of Social and Environmental information 444
This registration document was fi led with the French Financial Markets Authority on March 14, 2014, in accordance with Article 212-13 of the general regulations of the French Financial Markets Authority. It may be used in connection with a fi nancial transaction only if accompanied by a transaction note approved by the French Financial Markets Authority.
Presentation of Natixis 1.5.1 Description of GAPC (workout portfolio management) 27 1.5.2 Description and valuation of segregated assets within GAPC 27 1.5.3 Review of credit assets 27 1.5.4 Description of the guarantee 28 1.5.5 GAPC governance 29 1.6 NATIXIS AND ITS SHAREHOLDERS 30 1.6.1 Key share data at December 31, 2013 30 1.6.2 Breakdown of share capital at December 31, 2013 30 1.6.3 Shareholder scorecard 30 1.6.4 Share price information 31 1.6.5 Natixis and its individual shareholders 32 1.6.6 Investors relations 33
Natixis is the corporate, investment and fi nancial services arm of Groupe BPCE, the 2nd largest banking group in France (1)
With about 22,000 employees, Natixis boats a number of areas of recognized expertise which are divided into in three main business lines: Wholesale Banking, Investment Solutions (Asset Management, Private Banking, Insurance, Private Equity) and Specialized Financial Services.
Natixis Global Asset Management 20 asset management companies: Natixis Asset Management, Loomis-Sayles, Harris Associates, Harris associates, AEW…
• Global distribution platform covering Europe, the US, Asia and the Middle East
In completing the New Deal, Natixis developed a strong foundation for future growth.
The 2014-2017 strategic plan aims to optimize the allocation of capital in core business lines by achieving a return on assets exceeding the cost of capital while managing the consumption of scarce resources. In this respect, Natixis has confi rmed that it will close GAPC by mid-2014 and dispose of Coface over the term of the plan.
In terms of capital allocation, the plan includes: V higher allocation to Investment Solutions business lines with the aim of creating an Insurance division, and also for developing Asset Management; V stability for Wholesale Banking for the duration of the plan; V a slight increase in allocated capital for Specialized Financial Services.
Wholesale Banking draws essentially on the operational implementation of the Originate-to-Distribute model to ensure growth in revenues while maintaining its strict management of the consumption of scarce resources over the duration of the plan.
In terms of Investment Solutions, New Frontier aims to: V make Natixis a European player in Asset management. This transformation will include the incorporation of new associates, the European roll-out of a multi-boutique model and the operational implementation of a European distribution platform; V create an Insurance division within Natixis serving Groupe BPCE.
From January 1, 2016, the maturity date for sales agreements between CNP Assurances and Groupe BPCE, Natixis intends to roll out its personal insurance offer in both its Banque Populaire and Caisse d’Epargne networks.
Specialized Financial Services will continue to optimize its IT processes with the Groupe BPCE networks and to diversify its refi nancing sources. These measures will help improve the cost/ income ratio and boost business growth while strictly controlling consumption of scarce resources.
The ambitions of the 2014-2017 strategic plan include continuing the roll-out of Natixis solutions to Caisses d’Epargne and Banques Populaires customers: V with Specialized Financial Services, to bring the market share in France close to that of Groupe BPCE networks; V with Investment Solutions, by creating the single Insurance platform, adapting Asset Management solutions and continuing the roll-out of Private Banking; and
By the end of the plan, Natixis aims to generate more than half of its revenues abroad. Wholesale Banking will favor selective international expansion by sending half of its personnel abroad in 2017.
The Investment Solutions division will continue its international growth primarily through: V the development of its US platform through investment in new expertise and access to new distribution channels; V improved distribution in dynamic regions (Asia, Latin America, the Middle East) through organic growth and via local partnerships.
Natixis was formed in 2006 through the combination of Natexis Banques Populaires and various subsidiaries of the Groupe Caisse d’Epargne, notably Ixis Corporate & Investment Bank (Ixis CIB) and Ixis Asset Management (Ixis AM): V Natexis Banques Populaires itself was created from the July 1999 contribution of the operating activities of the Caisse Centrale des Banques Populaires, founded in 1921, to Natexis S.A., a holding company that was formed from Crédit National, founded in 1919 and which had acquired a 100% stake in Banque Française du Commerce Extérieur, founded in 1946. At December 31, 2000, Groupe Banque Populaire held 79.23% of Natexis Banques Populaires following a capital increase largely taken up by retail investors; V Ixis CIB and Ixis AM were originally part of CDC Ixis, itself part of the Caisse des Dépôts. The Ixis CIB and Ixis AM businesses were then contributed to the Caisse Nationale des Caisses d’Epargne (CNCE) as part of the transformation of the Groupe Caisse d’Epargne into a major full-service banking group at the end of 2004.
As a result of these contributions, CNCE and BFBP (directly and indirectly through SNC Champion) each had a 45.52% shareholding in Natexis Banques Populaire, whose name was changed to Natixis.
On August 6, 2013 Natixis sold all of the cooperative investment certifi cates (CCIs) that it held internally to the Banque Populaire banks and Caisses d’Epargne. This transaction was part of a move to simplify Natixis’ structure. For more detailed information, see section [1.4.4], “Major contracts”.
Groupe BPCE is No. 2 banking group in France with more than 8,000 branches, 36 million customers, 8.8 million cooperative shareholders and 115,000 employees. Groupe BPCE develops a broad range of banking and fi nancial services for a wide variety of customers.
Pursuant to Article L.511-31 of the French Monetary and Financial Code (Code Monétaire et Financier), BPCE shall, as the central institution, take any measures necessary in order to guarantee the liquidity and solvency of Groupe BPCE. Natixis, in its capacity
Insurance subsidiaries 20 Banques Populaires 19 Banques Populaires 17 Caisses d’Epargne 17 Caisses d’Epargne
(a) In Basel 3, based on Natixis’ understanding of CRR-CRD4 rules without phase-in except for DTAs on tax loss carry forward, including treatment of insurance company securities at 370% in risk-weighted assets.
PRESENTATION OF NATIXIS 1 2013 Key fi gures 1.3.4 PRE-TAX PROFIT BY BUSINESS
After market close (subject to modifi cation) 2014 First Quarter Results
After market close (subject to modifi cation) 2014 Second Quarter Results
After market close (subject to modifi cation) 2014 Third Quarter Results 1.3.7 CONTACTS
At December 31, 2013, Natixis’ Wholesale Banking division employed 3,269 people (FTEs) in 29 countries around the world: 63% in France and 37% abroad. It operates in the major global marketplaces with three platforms: North and South America, Asia-Pacifi c and EMEA (Europe (except France), Middle East and Africa).
In 2013, the Wholesale Banking division continued to adapt its business lines to the new economic and regulatory environment. The implementation of the Originate to-Distribute model (O2D) in the fi nancing business lines, for example, helped optimize balance-sheet rotation while at the same time increasing the bank’s underwriting capacity, allowing it to better meet its customers’ needs.
V Coverage: bankers in the Coverage department develop strategic dialog with corporate clients, institutional investors and Private Equity funds in order to anticipate their needs in terms of changes in their industries and offer them the full range of the bank’s products and services, in cooperation with all the business lines.
V Strategic advisory: advisory activities in mergers & acquisitions, initial public offerings and capital increases, financing and rating strategy advisory.
V Financing: in addition to the range of traditional bank loans, the structured financing teams provide customers with their comprehensive advisory, arrangement, underwriting and financial engineering expertise in asset financing, aircraft, export and infrastructure finance, energy and commodities financing, strategic and acquisition finance, real estate financing, and financial engineering in financial investments.
V Portfolio Management: as part of the Originate-to-Distribute model implemented in 2013, Portfolio Management is responsible for the active management of Wholesale Banking’s financing portfolio, allowing Natixis to provide growing origination capacity.
The Advisory business line is aimed at supporting customers from the strategic planning of development opportunities via organic growth or acquisitions through to implementation of the necessary acquisitions or disposals, and also during the required fi nancing transactions. This approach requires an indepth understanding of the competitive positioning of the customers it advises and of possible growth drivers.
V The Equity Capital Markets business line offers Natixis customers a personalized advisory service for all transactions involving equity and shareholding structure: setting up IPOs, capital increases, share buybacks, issues of convertible bonds or Obsar (bonds with redeemable warrants). This business line is also developing advisory services for carrying out a public tender or exchange offer and implementing defense strategies to combat the risk of hostile takeover bids.
In terms of structured fi nancing, Natixis has comprehensive advisory, arrangement, underwriting and fi nancial engineering capacity in aircraft fi nancing, export and infrastructure fi nance, energy and commodities fi nancing, strategic and acquisition fi nance, real estate fi nancing and fi nancial engineering in fi nancial investments.
Natixis’ offer in aircraft, export and infrastructure financing combines expertise in fi nancial, arrangement, structuring and agent advisory services for aircraft and infrastructure fi nancing. The team is developing optimized fi nancing solutions in both the banking and bond markets. The team played an essential role in the EETC (Enhanced Equipment Trust Certifi cates) market for aircraft fi nancing and in the bond projects market as a bookrunner for the two largest European issues (Castor and R1). Natixis continued to develop its infrastructure debt platform through the partnership signed with CNP, following the one set up with Ageas in 2012. Its innovation is regularly recognized by the trade press: in 2013, numerous aircraft fi nancing operations (Virgin Australia, Air Canada, Synergy Aerospace) (1) and infrastructure fi nancing operations (R1 motorway, offshore platforms for Odebrecht and N’Goma, the Nghi Son refi nery where Natixis is an agent for German export credit agency Euler-Hermes) (2) arranged by Natixis won “Deal of the Year” awards from highly-regarded fi nancial publications.
(3) in agricultural products with, for example, the classification of Natixis as the leading arranger of commodities financing in the Asia-Pacific region (excluding Japan) (5).
Over the next few years, Natixis will continue to selectively develop its international franchise (in Latin America, Asia, Russia, Africa and the Middle East) by drawing on its expertise in structured fi nance and commodity trade fi nance and expanding the range of solutions available to its customers.
Natixis is a world-class player in Acquisition & Strategic Finance, with more than 20 years of global experience in this sector. In 2013, Natixis set itself apart both in France and abroad in major acquisition fi nancing transactions in all types of situations (public tender offer, private to public, spin off, etc.), supporting corporate buyers - Salini’s acquisition of Impreglio (€1.4 billion, Italy), Shuanghui Group’s acquisition of Smithfi eld Foods ($4 billion, USA-China), and investment funds in leveraged buy-outs (Maisons du Monde, Eon Energy from Waste, MediPartenaires, Lafarge India, Trescal, etc.).
PRESENTATION OF NATIXIS1 Natixis’ business lines In terms of financial engineering in financial investments, the Equity Linked Finance (ELF) team designs, advises and implements structured transactions on listed shares for corporate fi nance, with fi nancing tools, derivatives and other fi nancial instruments, aimed at Natixis’ large European corporate clients.
Over 700 people make up the teams of the Fixed Income Commodities & Treasury (FICT) business line. They are based in Europe - in Paris, London, Milan, Madrid and Frankfurt - as well as in Asia - in Singapore, Tokyo and Hong Kong - and the United States - in New York and Houston. FIC&T offers clients investment and hedging products in the fi xed income, credit, foreign exchange and commodity markets of OECD countries, and is also positioned in emerging markets.
The dynamic commercial activity seen in 2013 highlights the Sales-Trading platform’s ability to offer customized solutions that meet all of its customers’ needs, from corporate clients and institutional investors to central banks or hedge funds.
For the third year in a row, the debt platform – combining loan syndication, the primary bond market and Global Structured Credit & Solutions (GSCS) – recorded a solid performance across all borrower segments. Despite a slowdown in issue volumes, 2013 solidifi ed Natixis’ market position. The loan syndication business line continued to grow, as did GSCS, which offered alternative fi nancing solutions, in particular through securitization, designed to meet borrowers’ needs in light of regulatory changes.
In emerging markets, Natixis offers a full range of fi xed income, credit and forex products. Natixis is expanding this activity both at the local level (Moscow, Shanghai) as well as in Paris and New York.
The teams’ expertise in fi nancial engineering and the successful incorporation of Strategic Equity Solutions and Funds Solutions have enabled the Equity Markets business line to continue the expansion of its product range. Innovative solutions were thus implemented in 2013 to better meet customers’ needs, in particular by being better matched to their risk profi les; asset swap, synthetic prime brokerage, light exotic convertible bond fi nancing, etc.
Refl ecting this success, Natixis was chosen by AXA as structurer and main derivatives counterparty for the “AXA Shareplan 2013”, AXA’s employee share ownership plan.
In terms of e-business, new services and tools such as Squal, e-Maps, eFlow and eConvert have been added to the range of electronic services offered to customers.
At the same time, Natixis has continued to develop its Equity Markets customer coverage abroad by expanding its sales teams. Revenues generated abroad have increased markedly thanks in particular to the development of the Americas and Asia regions.
Equity Derivatives also posted robust growth, particularly in fl ow products.
(1) “Best lead manager in euro covered bonds in 2012 and 2013” and “Best overall bank for covered bonds in 2011” as part of a poll of 200 issuers on this market organized by The Cover, a EuroWeek publication specialized in the covered bonds market.
In the extremely competitive environment of 2013, GTB’s innovation enabled Natixis to successfully develop a new product offering in account administration and cash infl ows. The year was also marked by the teams’ hard work with regard to the SEPA migration (Single Euro Payments Area).
With nearly 450 employees in 12 countries, the Asia-Pacifi c platform offers customers access to the majority of Wholesale Banking’s fi nancing and capital markets activities. Its goal is to increase the Bank’s customer base and build up specialized business expertise in this fast-growing region.
In 2013, the plan to develop capital markets activities was stepped up, with the aim of positioning Natixis as a true provider of solutions. To this end, the distribution platform’s sales teams were expanded and are now organized by country. The new plan was a success in Taiwan, with the issue of numerous structured notes and the exclusive arrangement of a “Dim Sum” bond issue. In a very competitive market environment, Natixis broke new ground in Korea. At the same time, the integration of the Strategic Equity Solutions teams was fi nalized.
Following the challenging conditions of 2012 due to the liquidity crisis, the structured fi nance business lines renewed their transaction portfolios with strong sales successes. The most emblematic examples include (i) the $4 billion cofi nanced loan granted to the Chinese company Shuanghui Group for its acquisition of Smithfi eld Foods in the United States, (ii) the fi rst EEN (Enhanced Equipment Notes) issue by aircraft manufacturer Virgin Australia, a transaction that was awarded “Aircraft debt deal of the year Asia-Pacifi c” by Global Transport Finance, (iii) the $300 million fi nancing of a fl oating production, storage and offl oading facility for liquefi ed natural gas in Malaysia’s Berantai fi eld and (iv) the arrangement of a $250 million facility for commodities negotiator Gunvor in Singapore.
Customer relations are now more of a priority for the platform than ever before. Thus Natixis launched at the end of 2013 the implementation of a new sales structure to better position itself as a strategic partner for its Asian customers by placing its Coverage team at the heart of the platform’s sales coordination. By distinguishing between the senior bankers and Commercial Banking and creating a sales steering and operational marketing function for the whole Asia-Pacifi c Platform, this structure enables Natixis to build stronger customer relations and create the interactions required to meet its ambitious selective growth targets in the region.
In 2013, the Asia-Pacifi c Platform also launched a program to develop its activities in Japan, drawing on existing licenses.
The Americas Platform provides customers worldwide looking for fi nancing in dollars with key access to the US market. Thanks to the diversity of the various business lines within the bank, the platform provides regional and sector expertise designed to meet the complex needs of customers in corporate fi nance, markets, coverage and advisory.
The creation in 2013 of a platform dedicated to Latin America allowed Natixis to be part of major lending transactions within the region, for example for PMI Trading, Pemex and Ternium Mexico, and facilitated the fi nancing of Advent International’s acquisition of a minority stake in Ocensa, in Columbia.
In Canada, the bank has also played leading roles in the fi nancing of renewable energy implemented by the aircraft, export and infrastructure fi nancing business line.
The local credit platform, which contributes to the bank’s balancesheet rotation strategy (Originate-to-Distribute model), continued to expand in origination and the distribution of bond fi nancing and loans. Natixis took part in 86 bond issues totaling $78.9 billion, 22 of which as joint bookrunner. Among other major transactions carried out in 2013, two Collateralized Loan Obligations granted to management company TCW are particularly noteworthy.
In 2013, the bank adapted its positioning to the individual strategy for each area in the region: V In Southern Europe, Natixis’ approach is differentiated by market. In Italy and Spain, it has a strong historical presence in all Wholesale Banking business lines with corporate clients and financial institutions alike. Wholesale Banking’s exposure is limited, however, in Greece and Portugal; V In Northern Europe (the United Kingdom, Germany, Scandinavia, the Benelux countries and Switzerland), the bank is present in numerous specialized financing business lines such as UK-based projects, commodities in Switzerland, real estate in Germany and acquisition financing throughout the region. The core business is nonetheless focused on capital markets; V In the Middle East, Turkey and the Community of Independent States, including Russia, the bank has a historical presence with confirmed positions in structured financing, particularly in energy and commodities in Russia and Dubai. This sustainable presence, combined with relations established with local customers, enables the bank to offer new products and broaden its reach with, for example, the launch of Islamic financing in 2013; V In Central Europe and Africa, Wholesale Banking demonstrates selective growth based on structured financing with a clear emphasis placed on risks and centralized management from Paris.
Wholesale Banking’s Research is an integral part of Natixis’ client-driven approach. Every day, the Research teams publish analyses to guide clients in their investment decisions, while also contributing to the creation of fi nancial solutions tailored to customer needs.
With 380 European stocks tracked in 25 sectors and 22 countries, Natixis boasts one of the market’s leading equity research departments.
Investment Solutions is Natixis’ investment division, covering the Asset Management, Insurance, Private Banking and Private Equity activities. The division is centered on Asset Management, a fi eld in which Groupe BPCE has global ambitions, boasting internationally acknowledged asset management expertise, as well as distribution structures adapted to the specifi c features and regulations of the various markets in which it operates. It also aims to strengthen the positioning of the Banque Populaire and Caisse d’Epargne networks in the fi nancial savings segment in France and to seek new international growth drivers.
Natixis’ Asset Management subsidiary, Natixis Global Asset Management (NGAM), aims to further its international development. Two-thirds of NGAM’s 3,200 employees already work outside France, mainly in the United States, the world’s leading asset management market. In addition, a global distribution platform employing 650 people is present throughout the world and NGAM occupies a leading position in the US mutual fund segment. Private Banking also has a platform in Luxembourg, where some 100 people are working to build up the European Private Banking business, while Private Equity offers a global range of funds of funds through asset management fi rms in the US and Asia.
Natixis Global Asset Management’s business model is based on a global distribution platform serviced by multi-specialist asset management companies meeting the needs of a large international client base. Drawing on its diverse range of portfolio management skills, strong distribution network and fl exible business model, Natixis Global Asset Management has consolidated its position as a major international player in asset management. NGAM has been ranked 15th in the world among asset managers (1).
In 2013, Natixis Global Asset Management pursued its global growth strategy. The Company carried out an investment policy aimed at ensuring the steady development of its asset management expertise and reinforcing the distribution platform in the United States, Europe and the rest of the world, particularly in Asia. Accordingly, a distribution offi ce was opened in Hong Kong.
For the global asset management market, 2013 was marked by economic growth, particularly in the United States, and a continuation of the improved performance of the US and European fi nancial markets observed since the second half of 2012.
(1) Cerrulli Rankings - July 2013 based on AuM at end-2012.
The European asset management business posted €319.8 billion in assets under management at end-2013, a very slight increase on the end-2012 fi gure of €318.3 billion. This was due to a positive market effect; however, it was undermined by sharp net outfl ows in money market funds. All European asset management companies saw an increase in assets under management in 2013.
R VEGA Investment Managers (40%-owned, €5.4 billion): funds of funds management and fund selection.
R Natixis Environnement et Infrastructure Luxembourg (€0.9 billion): fi nancing for existing (“brownfi eld”) infrastructures.
Natixis Global Asset Management operates in Europe through Natixis Asset Management, one of the leading European asset management companies.
Natixis Asset Management’s assets under management totaled €291 billion at end-2013 versus €292.5 billion at end-2012. Money market products recorded heavy outfl ows due to unattractive short-term interest rates and the intense competition in on-balance sheet investment products. By contrast, assets under management for diversifi ed, matching and fi xed income products increased.
Further progress was made in the implementation of Natixis Asset Management’s strategic plan structured around six specialized divisions (Fixed Income, European Equities, Investment and Client Solutions, Volatility and Structured Products, Global Emerging and Responsible Investment). In particular, a Networks department was set up to support Groupe BPCE’s banking networks and Mirova, an asset management company dedicated to responsible investment and a leader in several areas of SRI (socially responsible investment) became a subsidiary of Natixis Asset Management on January 1, 2014. These changes are part of a stated intention to include Europe in the optimization of NGAM’s multi-affi liate model.
The performance of UCITS managed by Natixis Asset Management improved and the percentage of bids won increased. New collective products and packaged funds were launched for the Banque Populaire and Caisse d’Epargne networks. Strengthening sales for Natixis Asset Management and its subsidiaries in Europe, and developing synergies within the Investment Solutions division remain major priorities.
Together, Natixis’ European asset management companies provide a full range of products and services covering all traditional asset classes – money market, fi xed Income, equity and real estate – rounded out by expertise in high value-added areas such as structured products, socially responsible investment and funds of funds management.
The group’s US asset management companies directly provide distribution services for institutional clients in the United States. In the retail banking segment, they benefi t from strong support from the distribution platform, which provides asset management products, advisory and structuring capabilities, and related services that can be tailored to differences in markets and distribution channels. This platform supplies both volume retailers and private investment advisors.
In 2013, several portfolio management teams and individual portfolio managers were once again recognized with awards, in particular those of Loomis and Harris Associates.
US and Asian asset management companies at end-2013 (assets under management in billions of dollars): R Loomis Sayles ($199.8 billion): equities (growth, core, value) and bonds (core to high yield).
PRESENTATION OF NATIXIS1 Natixis’ business lines Natixis Assurances operates in Luxembourg through its subsidiary Natixis Life, and in Lebanon through an equity stake in a subsidiary in partnership with a local private bank.
In 2013, insurers continued to play a major role in social welfare. They also played a massive part in corporate funding, particularly for SMEs and mid-tier fi rms.
For its part, Natixis Assurances posted a 36% increase in gross life insurance infl ows, far greater than the bancassurance market. Assets rose by 4% to €39.2 billion at end-December 2013 and infl ows invested in unit-linked policies totaled 18%.
In a highly competitive market, Natixis Assurances continued to record strong business growth, driven by Groupe BPCE’s ambitions (Ambition Banquier Assureur program). On the whole, earned premiums in the property and casualty business rose 9% to €272 million, a far greater increase than that of the market (+2% - Source: FFSA - GEMA - 2013).
One year on from its creation, VEGA Investment Managers’ is benefi ting fully from its dual ownership structure (60%-owned by Banque Privée 1818 and 40%-owned by Natixis Asset Management).
The result of the merger of Natixis Multimanager and 1818 Gestion on December 31, 2012, VEGA Investment Managers’ teams have pooled their expertise to create a dynamic company. The company specializes in bespoke investment management solutions for private investors. It is also Natixis’ specialized unit for open-architecture fund-of-funds management and fund selection for all kinds of clients (individuals, institutions and companies). It activity is structured around three business lines: collective investments, discretionary portfolio management and advisory & fund selection. VEGA Investment Managers is developing a rigorous investment strategy and in 2013 it was recognized as the best French asset manager in its category in the European Funds Trophy awards (February 2013).
Its two French equity funds, Elite 1818 France Opportunité and Sopraine Actions France, are among Gestion de Fortune magazine’s top ten funds over fi ve years in the French Equity large caps category (December 2013 - Performances as of November 15, 2013). To date, VEGA Investment Managers is the only asset manager to have had two of its funds at the top of this prestigious ranking.
Natixis’ Private Equity operations comprise three distinct and complementary business lines, six asset management companies and almost €5.1 billion in assets under management. The majority of the more than 120 employees are seasoned investors in unlisted companies.
Seventure Partners. Following its 2012 merger with Masseran Gestion Capital Risque, Seventure Partners is now one of the leading French venture capital fi rms (approximately €500 million under management) and is establishing itself as the main provider of tax exemption products for both of Groupe BPCE’s banking networks. New strategic projects are aimed at expanding the Seventure Partners product range, particularly for more institutional clients wishing to invest in areas of innovation. Seventure Partners fi nances companies operating in three areas of expertise: software and Internet, electronics and telecom and life sciences.
Development on behalf of third parties, which was signifi cant in 2012, continued in 2013, with assets under Naxicap Partners’ management reaching €1.5 billion, practically equal to Natixis’ commitment.
Alliance Entreprendre. This 12-person company manages €156 million via venture capital funds marketed primarily through the Caisse d’Epargne network, but also through external investors. The company operates mainly in France and specializes in buyouts and capital restructuring operations.
Investment advisory services provide advice on allocation and fund or SPE selection for a Private Equity portfolio adapted to each investor’s specifi c risk profi le.
In 2009, Groupe BPCE’s “Ensemble” project targeted potential additional net revenue synergies for Natixis of almost €400 million by 2013, more than half to be generated in Specialized Financial Services. This target was exceeded at end-2013 by both Natixis and the SFS division.
Natixis Factor has continued to enhance its products and services: the new ESSENTIEL offering on a fl at-rate basis and with no commitment for SMEs; a smartphone application providing customers with permanent access to the key indicators of their factoring contracts.
The platform offers a highly diverse range of products tailored to various economic participants: individuals (joint-and-several mortgage guarantees), professionals (business start-ups/ transfers, equipment, commercial property), social economy and social housing, public-private partnerships, real estate companies and professionals: builders, developers, third party management of retail and offi ce space, property administrators and realtors.
The company shares the leading position in the property administration, third party management of retail and offi ce space, and realtor market, issuing nearly 4,800 guarantees under the Hoguet Law. It guaranteed the completion of 14,411 single-family homes in France, accounting for 25% of the market.
Two of Natixis Lease’s strengths, its specialization in corporate fi nance and its in-depth knowledge of professional real estate, gives it a better understanding of customer expectations in the Banque Populaire, Caisse d’Epargne and Natixis networks.
In 2013, Natixis Car Lease launched its new long-term vehicle leasing offer with the majority of the Caisses d’Epargne and Banque Populaire banks and received close to 4,000 orders, a 14.5% increase over 2012.
Natixis Financement develops revolving credit products and manages personal repayment loans for Groupe BPCE banking networks.
New loans totaled €7.9 billion (nearly €1.1 billion for revolving credit and more than €6.8 billion for personal repayment loans).
Outstanding loans climbed 13% year-on-year to €15.4 billion at December 31, 2013, thus cementing the company’s No. 3 spot on the French market (source: annual reports, Natixis Financement survey).
PRESENTATION OF NATIXIS1 Natixis’ business lines 1.4.3.5 Film Industry fi nancing
In 2013, Natixis Cofi ciné issued new loans totaling €285 million, down 13% due to strong growth in the 2012 fi scal year. Total provision of funds amounted to €625 million, down 2% yearon -year.
Natixis offers a comprehensive range of employee benefi ts planning solutions, developed by Natixis Interépargne and Natixis Intertitres. These include employee savings, pension schemes, employee share ownership, collective insurance and special payment vouchers.
In 2013, Natixis Interépargne consolidated its leading position in employee savings account administration in France, with over 3 million employee accounts under management, i.e. market share of 26.5% (source: AFG at June 30, 2013).
In electronic banking, Natixis Paiements is developing a full array of services for the bank distribution networks, ranging from product design to technical and marketing support. Natixis Paiements contributes to the development of professional and retail markets and prepares the systems needed to launch new products (e.g. contactless payments, debit/credit cards, prepaid cards, e-commerce, etc.). Natixis Paiements managed over 17 million cards and processed nearly 3.5 billion card transactions in 2013.
Its service offer is customizable and à la carte: secure provision of information systems, all-inclusive back offi ce services (order routing, transaction accounting, client reporting, securities custody, etc.), dedicated middle offi ce services and network assistance services.
On August 6, 2013 Natixis sold all of the cooperative investment certifi cates (CCIs) that it held internally to the Banque Populaire banks and Caisses d’Epargne for a total of €12.1 billion. This transaction was part of a move to simplify Natixis’ structure. This disposal led to the unwinding of the P3CI transaction (loan covering the CCIs).
Furthermore, since 1946 Coface has managed guarantees aimed at supporting and securing medium- and long-term funded French exports, as well as French investments abroad, both for and with the backing of the French government.
Net revenues for 2013 were €706 million, up 0.2% on 2012, boosted by extraordinary fi nancial income, mainly capital gains generated from the centralization of investment management. Insurance net revenues rose 1.4%, whereas net revenues from factoring in Germany and Poland fell by 11%.
A standardized sales process was defi ned at the beginning of 2013 to facilitate the Group’s business development. This covers everything from training of sales representatives, methods of compensation and underwriting rules through to monitoring tools.
At the beginning of 2013, Coface launched a new visual identity and logo that symbolize a revitalized, modernized image to accompany the substantial transformation of the company. This identity comes with a new tagline “For safer trade”, which expresses Coface’s specifi c added value as a credit insurer and its promise to support its customers by ensuring safer trade worldwide.
Since June 30, 2009, a portion of the GAPC portfolios has been covered by a guarantee from BPCE. The mechanism, cost and accounting & prudential consequences of this guarantee are also described below.
V Valuation of assets by external advisors using base case and stress case scenarios.
V Approval and announcement in August 2009 of the principle of the guarantee provided by BPCE to Natixis (the “Guarantee”).
PRESENTATION OF NATIXIS1 GAPC V measurement of the recovery rate of these losses at completion for assets insured by monoline insurers on the basis of a credit analysis specific to each monoline insurer; V analysis of the sensitivity of results on the basis of “high stress” assumptions and, as regards monoline insurers, junior treatment of the CDS contracts compared to the financial guarantees.
This review concluded that the valuation in the Natixis fi nancial statements of these assets refl ected the losses at completion expected in the event of a stress scenario. The external valuation carried out gave a total portfolio value of €36.6 billion. The assumptions used were downgraded with respect to certain digital assets at the request of Natixis’ management, trimming €2 billion off this value (€34.6 billion), ending up very close to the value at which these assets are carried in the Natixis accounts (€34.4 billion).
The Guarantee covers credit assets, except for complex credit derivative portfolios and RMBS portfolios (fully sold on December 31, 2012) insured by US Agencies (FNMA known as Fannie Mae, FHLMC known as Freddie Mac) but including the hedging of risks linked to counterparties not providing collateral.
The implementation of the Guarantee triggered two payments to BPCE: V the first for €1.183 billion in respect of the financial guarantee (including €1.035 billion for assets recognized as loans and receivables (L&R) and €148 million for available-for-sale assets (AFS) versus €1.249 billion in provisions; and
In 2013, the impact of the Garantee on the Natixis fi nancial statements was - €52.2 million. Over this period, disposals represented a €1.934 billion nominal amount for assets covered by the fi nancial guarantee, and a €2.974 billion nominal amount for assets under the TRS, with a net impact on results before the Guarantee of - €2 million.
The implementation of the Guarantee did not have an initial impact on Natixis’ earnings. Since then, the consequences are as follows: V changes in the value of the portfolio guaranteed, from June 30, 2009, by the TRS will be offset by the TRS up to 85%; V the Option is measured at fair value through profit and loss primarily on the basis of the change in the value of the portfolio guaranteed by the two TRS; V the equivalent value of the €1.183 billion payment in consideration for the financial guarantee is amortized almost symmetrically with the reversal of the provisions for writedown that were funded for this portfolio at June 30, 2009 and the amortization of reclassification discounts.
The CGAC is the new body responsible for providing direction and monitoring regarding all counterparty and market risks relating to the operations transferred to GAPC. It has replaced the CRPC.
V to provide BPCE, in connection with certain matters relating to the Guarantee or the guaranteed assets, with the right to suspend a decision pending review by a meeting of the CSG.
(a) Calculated using the average number of shares (excluding treasury shares) during the period and after accounting for net interest payments on the deeply subordinated notes after tax.
In 2013, Natixis’ share price increased by 101% (from €2.12 at the end of 2012 to €4.27 at the end of 2013). Over the same period, the Euro zone banking stocks index (DJ Euro Stoxx Bank) rose by around 26%.
PRESENTATION OF NATIXIS1 Natixis and its shareholders 1.6.5 NATIXIS AND ITS INDIVIDUAL
V A dedicated e-mail address (actionnaires@natixis.com), managed directly by the Individual Shareholder Relations team, enables individual shareholders to send questions to the Company. In 2013, 818 questions were processed.
R features Natixis press releases, calendar and fi nancial news in the “Investor Relations” section and in 2013, information relating to the special dividend,
R includes all editorial content and documents for shareholders and, in particular, all issues of the Shareholder annual Newsletter in the “Individual Shareholders’ Corner”.
New in 2013 Club membership is now open to all shareholders with at least one registered or bearer share.
Registration can be completed on the Shareholders’ Club website at clubdesactionnaires.natixis.com by clicking on “Je souhaite m’inscrire” (I would like to sign up) and following the online registration procedure.
Moreover, three information meetings for shareholders on Natixis were held in Amiens, Montpellier and Lyon. These meetings were organized in partnership with fi nancial magazines and enabled shareholders to learn more about Natixis, its business lines, fi nancial results and strategy. These multi-issuer events bring together hundreds of shareholders and provide individual investors the opportunity to submit questions to Natixis representatives. In 2013, discussions included Natixis’ dividend payment policy and the special dividend payout.
During the General Shareholders’ Meeting, a dedicated “Shareholders’ Club” stand welcomes Club members and prospective members and provides information on Natixis to all shareholders.
Once again this year, Shareholders’ Club members were personally invited to the Actionaria trade show by letter accompanied by an invitation giving them free access to the event. They were also personally welcomed at the Natixis stand.
V During its last meeting of 2013, members of the Committee reviewed the May 2013 General Shareholders’ Meeting to identify areas for improvement for future meetings.
On May 21, 2013, the General Shareholders’ Meeting called to approve the 2012 fi nancial statements was attended by some 500 individual shareholders. This meeting presented the work carried out by the Appointments and Compensation Committee.
Institutional investors and analysts can contact the Investor Relations Department by e-mail at natixis.ir@natixis.com.
2.1 STRATEGIC OUTLINES AND ORGANIZATION OF THE SUSTAINABLE DEVELOPMENT POLICY 36 2.1.1 Sustainable development as a growth driver 36 2.1.2 Managing our direct impact on the environment 43 2.1.3 Responsible purchasing policy 45 2.1.4 Human Resources policy and diversity management 46 2.1.5 Community outreach 47 2.2 REPORTING FRAMEWORKS AND METHODOLOGY 49 2.3 LABOR INFORMATION 50 2.3.1 Changes in the workforce 50 2.3.3 Work management 52 2.3.4 Employee relations 53 2.3.5 Occupational health and safety 54 2.3.7 Diversity and equal opportunity 55 2.3.8 Promotion of and compliance with ILO fundamental conventions 57
Natixis’ corporate social responsibility (CSR) strategy and operational practices are guided by a set of international agreements and consultations within the banking industry: V commitment to the United Nations Global Compact confirmed each year since 2007; V adherence to the Principles for Responsible Investment (PRI) since 2008; V signatory of the Equator Principles since 2010.
The Sustainable Development team works alongside some 20 correspondents from Natixis’ various businesses (Wholesale Banking, Investment Solutions, Specialized Financial Services, Support Functions) and in collaboration with BPCE’s Sustainable Development division.
Through its fi nancing and investment activities, Natixis plays a major role in developing an environmentally-friendly economy.
In a market that is growing despite the continuing instability of the regulatory environment, in 2013 Natixis participated in the development of renewable energies in France and abroad.
In the Wholesale Banking division, the “Global Infrastructure and Projects” team fi nanced fi ve new deals in Canada and one in Italy, amounting to €1.364 billion (of which €158 million attributable to Natixis): V three solar PV projects with a capacity of 144 MW; V two wind power projects with a capacity of 420 MW; V one biomass project with a capacity of 36 MW.
In 2013, Natixis Energéco fi nanced 27 projects for a total amount of €473 million (of which €195 million attributable to Natixis Energéco): V 17 solar PV projects with a capacity of 151.93 MW; V eight wind power projects with a capacity of 153 MW; V two biomass cogeneration projects with a capacity of 31.9 MW.
Natixis places a high value on extra-fi nancial factors when defi ning its investment strategies for its clients. Natixis believes that by factoring in sustainable development concerns it can offer its investors solutions that create long-term value.
In this respect, Natixis’ SRI team provides bespoke research analyses and services to European investors, including contributions to specialized publications, sector-specifi c presentations, investment optimization and SRI management structuring assistance, organization of events, etc.
It is structured around three areas: the connection between finance and the real economy by investing in innovative business models that will shape the future, value creation by identifying sustainable assets able to deliver a high long-term return, and fi nally responsibility and commitment, by actively becoming involved in the improvement of corporate, business sector and fi nancial practices.
V Equities: investing in companies that are exposed or contribute solutions to sustainable development issues based on an original reading of the markets through eight key themes.
V Fixed Income: enhancing conviction-based management on the bond markets by incorporating ESG criteria within our credit analysis and supporting environmental and social issues.
V Infrastructure: financing potentially high-return infrastructure projects that are designed to maximize the environmental and social impacts on all of the infrastructure sectors and the renewable energy sector.
This public infrastructure project methodology is the result of a collaboration between Mirova’s extra-fi nancial research team, the FIDEPPP management team and the sustainable development strategic consulting fi rm BeCitizen. It is based on the main analysis principles of Mirova’s research team (consideration of risks and opportunities, analysis of main sustainable development issues, etc.) and has been adapted to the specifi c requirements of public infrastructure projects.
V Voting and commitment: supporting institutional investors and asset managers in the exercise of voting rights and the introduction of social commitment initiatives with the aim of long-term value creation for all stakeholders.
2013 Key event As part of their SRI development strategy, Natixis Interépargne and Mirova have launched Impact ES, the fi rst employee savings SICAV (open-ended investment fund) entirely dedicated to SRI. The aim of this innovation is to make it easier for employees, particularly of SMEs and micro-enterprises, to access SRI and more closely involve the Inter-Union Employee Savings Plan Committee (CIES) in the governance of socially responsible asset management.
Through its subsidiary Mirova, Natixis Asset Management is a key player in SRI and solidarity investment and the No. 2 European asset manager by assets under management in open-ended SRI funds (1).
SRI and solidarity assets under management (in billions of euros) in open-ended, dedicated and employee savings funds (3) 9.0 9.3 9.3
Share of SRI and solidarity assets under management relative to Natixis Asset Management’s total AuM (as %) 3.07 3.14 3.24
Share of solidarity investment market (as %) 28 (2) 32 35
Number of SRI funds with the Novethic SRI label 4 4 5
Following the certifi cation programs conducted in 2013, two existing buildings were awarded the HQE/BBC or HQE operating label.
In addition, four assessment tools are used to measure the energy effi ciency of buildings: energy audits (energy consumption with a 10-year works program), Green Rating, which AEW Europe was instrumental in setting up (environmental performance criteria in a number of areas distinguishing between intrinsic performance
– independent of the building’s tenants at the time – and quality of use) and the CO2 audit (status before improvement works and post-works follow-up) and the DPE (2).
A general information system has also been developed since 2013 for all assets managed, allowing for the assets’ environmental performance to be centrally managed.
Various solutions for reducing energy consumption have been implemented, including systems for remotely monitoring heat production equipment, low-energy lighting and building envelope upgrades.
(1) HQE: haute qualité environnementale (high environmental quality), a voluntary French standard, BREEAM: Building Research Establishment (BRE) Environmental Assessment Method, a voluntary UK standard, LEED: Leadership in Energy and Environmental Design, a voluntary US standard. BBC: bâtiment basse consommation (low-energy building).
SOCIAL AND ENVIRONMENTAL PERFORMANCE2 Strategic outlines and organization of the sustainable development policy 2013 2012 2011
Installation of fl uid meters that can be read remotely 20 6
In June 2013, AFIC also signed the United Nations’ “Principles for Responsible Investment” as a “Network Supporter”. AFIC’s responsible investment program has in this way become a reality.
Compliance and strict adherence to the professional rules of conduct are vital concerns at Natixis. Through its preventative and monitoring activities, the Compliance Department contributes to the trust afforded by our customers, the markets and the regulators.
It provides employees with answers to questions about information management, prevention of confl icts of interest, dealings with customers and/or counterparties and dealings with the markets.
Natixis’ compliance culture is disseminated during 360° Security Day and Compliance Day, for which more than 130 awarenessraising initiatives were organized in 2013 on the group’s various locations in France and abroad.
In 2013, 28 e-learning courses on compliance issues were taken by Natixis employees in France and abroad.
The handling of customer complaints contributes substantially to the relationship of trust with our customers. The framework procedure presenting the system applied within Natixis is updated every year.
Natixis has long since introduced an internal procedure giving every employee the opportunity to fl ag any potential failure to meet banking and fi nancial obligations.
In terms of the prevention of money laundering, Natixis has introduced: V due diligence and KYC obligations on customer onboarding and throughout the customer relationship;
V the reporting of “suspicious” transactions to the relevant financial information department; V regular employee training and notification to ensure compliance with these obligations. In 2013, the AML-CFT e-learning training course was updated and seven new case studies were added.
Regarding terrorist fi nancing, funds, fi nancial assets or economic resources identifi ed as likely to benefi t people or entities linked to terrorist acts are automatically frozen. Natixis must meet three fundamental obligations: V checking that its customers do not appear on the official lists of people or entities suspected of participating in terrorist financing; V introducing permanent control procedures to detect and freeze funds belonging to people or entities appearing on these lists; V complying with sanctions against various countries.
The prevention of fraud is viewed by Natixis as a major concern. Natixis is therefore fully committed to guaranteeing a secure environment for its customers, partners and employees. Integrity, loyalty and ethical behavior are strong values at Natixis and form a fi rst line of defense against fraudulent practices. Natixis’ anti-fraud culture is also constantly reinforced through regular awareness-raising campaigns for its employees and customers, and specifi c controls of activities that are especially at risk. In 2013, the emphasis was mainly on social engineering-type fraud.
At Natixis, the prevention of corruption is part of an overall system of fi nancial security. As a signatory of the United Nations Global Compact, Natixis supports its principles and in particular applies a strict procedure to gifts received and offered.
By signing the Equator Principles in December 2010, Natixis acknowledged the importance of measuring the weight of the environmental and social (E&S) impact of projects fi nanced and adopted a methodology for managing this impact recognized by a large number of fi nancial institutions. Natixis’ fi rst year as an “EPFI” (Equator Principles Financial Institution) bank was fully dedicated to setting up its organizational structure, producing appropriate internal and loan approval procedures and running a training program for the business lines affected, which ended in the fi rst quarter of 2012.
In 2011, a team dedicated to the integration of environmental and social responsibility (ESR) considerations in the Wholesale Banking business lines was created to implement and follow up on the Equator Principles.
The organizational structure set up within Wholesale Banking is based on the principle that both the business lines and the ESR team are involved in the assessment and managements of transactions.
For the most sensitive transactions (category A and, where appropriate, category B), a prior review of the E&S documentation by an independent consultant is required, particularly in order to validate the conclusions of the initial analysis and determine the additional actions needed to correct and mitigate the impacts as much as possible. An action plan is then drafted and added to the project’s fi nancial documentation so that the borrower is bound to comply with the actions envisaged throughout the loan’s lifetime.
SOCIAL AND ENVIRONMENTAL PERFORMANCE2 Strategic outlines and organization of the sustainable development policy For category A (and, where appropriate, category B) transactions, the ESR team conducts a second review of the E&S documentation for the projects and the independent consultant’s report, if one is required, simultaneously with the analysis by the business lines. Particular attention is paid to the transactions that pose the highest potential E&S risks. This parallel review is intended to support and confi rm the analysis by the business line or to correct it.
As the E&S appendix is incorporated in the loan application report, the loan approval body is aware, before making a decision, of any previous conclusions and recommendations. For category A projects, the procedure provides for referral to a higher ranking loan approval body.
A = high impact B = medium impact C = no or limited impact
R BREAKDOWN OF THE PROJECTS ANALYZED (BY NUMBER) BY CATEGORY AND GEOGRAPHIC CLASSIFICATION
Coface, a credit insurance subsidiary of Natixis, takes into account the social and environmental risks of projects managed on behalf and with the guarantee of the French government. In accordance with the OECD’s Recommendation on Common Approaches for Offi cially Supported Export Credits and Environmental and Social Due Diligence, an environmental and social impact assessment is systematically carried out for all projects of an amount exceeding €10 million or located in environmentally and socially sensitive areas. Such projects must comply with host country and applicable international standards, specifi cally those developed by the World Bank in the area of environmental protection and social well-being in its broad sense, including waste management, the protection of populations, biodiversity, cultural heritage, employee working conditions, etc.
The necessary resources were marshaled to implement the expected measures for mitigating major impacts. The on-site team dedicated to the project is highly committed to making the project a model for development in the LNG sector.
All-in-all, although some impacts are irreversible, such as the construction of the on-shore complex and dredging of the port, the major ones should be controlled throughout the project’s lifetime. Measures mitigating the identifi ed environmental and social impacts will be monitored through the transmission of the many monitoring plans developed by the project team.
Since March 2009, Natixis has followed a policy that excludes all fi nancing and investment in companies involved in the manufacture, storage and trade of land mines and cluster bombs.
With nearly 22,000 employees worldwide, Natixis, like any company, has an impact on the environment in terms of both resource consumption and the production of waste and carbon emissions. To reduce this impact, Natixis has introduced an environmental policy structured around three key areas: the environmental management of buildings, the prevention of global warming and employee awareness-raising.
SOCIAL AND ENVIRONMENTAL PERFORMANCE2 Strategic outlines and organization of the sustainable development policy 2.1.2.1 Environmental management of our buildings
certifi ed. The renovation also earned the HPE(4) label (“BBC (5) Effi nergie Rénovation” level).
Thanks to cutting-edge facilities, primary energy consumption will be 70 Watt per m² per year versus 150 to 230 for a standard building. Improvements have also been made in other environmental areas, such as acoustic and visual comfort, waste processing, water management, and so on.
Thanks to optimized building management and increased employee awareness of “environmentally-friendly practices”, the buildings’ energy consumption has fallen over the past few years (see indicators in section 2.4.2.3).
2013 Key event In 2013, Natixis continued to set up “disability friendly” meeting rooms to receive visitors with reduced mobility or who are hearing or sight impaired.
These meeting rooms differ particularly in their contrasting signposting, low-vision digital equipment, sound amplifying systems and large maneuvering spaces for people in wheelchairs.
V business travel: rules for travel by rail or air defined in the travel policy; restricted use of taxis and development of videoconferencing; V IT : putting computers into hibernation, stricter rules for giving out mobile equipment to employees (cell phones, laptops, etc.), streamlining of the printer pool with the general roll-out of multifunction printers.
European Waste Reduction Week: Natixis Asset Management exhibited an artwork made from 2,800 plastic cups used within the building in its entrance hall. This work highlights the considerable impact of the daily use of these disposable cups, with 635,000 per year, in other words an average of three cups per day worked and per person.
In addition to these awareness-raising measures, employees are given occasional training in environmental issues and more broadly in sustainable development. For instance, in 2013 a new training course was organized to present sustainable development and CSR concepts, the ramifi cations for the banking fi eld and the practical applications for Natixis’ business lines and the Company’s operation.
2.1.2.4 Resources allocated to the prevention of environmental risks and pollution
SOCIAL AND ENVIRONMENTAL PERFORMANCE2 Strategic outlines and organization of the sustainable development policy By obeying these various clauses, Natixis’ suppliers undertake to comply with current CSR standards and regulations and to promote/ensure the application of these commitments by their suppliers and subcontractors.
2013 Key event In 2013, Natixis participated in the AgiR (act for responsible purchasing) project initiated by Groupe BPCE in September 2012, with the aim of getting group companies and suppliers involved in achieving comprehensive sustainable performance.
Following this analysis, a responsible purchasing policy was defi ned and distributed by BPCE Achats (purchasing department) to all of the group’s Purchasing partners.
Share of purchases managed by the purchasing department that incorporate social and environmental criteria (as %) 79 78 90
NB: the projects taken into account do not include purchase orders.
In 2013, Human Resources continued with the initiatives launched as part of the New Deal strategic plan in terms of talent management, managerial development and diversity.
In 2013, taking advantage of an employment framework strengthened by solid tools and practices, Human Resources began an analysis of its development and scheduled the launching of innovative tools to support the Company’s strategy as effectively as possible for the benefi t of customers, managers and employees.
Malaria is a parasitic disease that affects more than 100 countries, mainly in tropical climates. It claims around 1 million victims each year, mainly pregnant women and young children, who could be saved through simple prevention and treatment measures. For the ninth year running, Natixis has actively supported prevention programs in endemic regions and research into the disease.
The activities carried out in 2013 included training healthcare professionals (308 community health agents have been trained) and awareness-raising: more than 15,000 households were met through home visits and six radio advertisements were broadcast to make the public more aware. The NGO also provides material support to healthcare agents with the distribution of follow-up manuals, donations of malaria medications and bicycles, which are vital for visiting villages.
2013 Key event With the support of Racing Metro 92, the Plan France association and the Institut Pasteur, in 2013 Natixis organized the “Ensemble, plaquons le palu!” campaign, combining rugby with malaria prevention to make a wider public aware of this cause.
(1) Physiological process of aging (in this specifi c case: the cell aging process).
Through this sponsorship program, Natixis is also leading many initiatives to raise its employees’ awareness, including a cycle of conferences and videoconferences with speakers from the institute, a quiz to test their knowledge about the different types of cancer, a dedicated page on the intranet site and articles in internal communication materials.
Many Natixis employees are involved in solidarity-based initiatives. These are encouraged by Natixis as a source of cohesion, showing their commitment to social issues and their strong capacity to rally around a cause.
In partnership with the Works Council and the Athletic Union, 304 employees and their families took part in the 2013 Odysséa race organized to raise money for the fi ght against breast cancer. Many also took part in the 27th annual Stock Market and Finance Industry Telethon. The funds raised for the Odysséa race and the telethon were 100% matched by the Company. In 2012, for the fourth year running, Natixis also supported the “Course du cœur” race, organized by the association Trans-Forme to raise public awareness of organ donation.
In partnership with the Planète Urgence association, Natixis employees took solidarity holidays to make their expertise available to social and/or environmental projects. The solidarity holiday assignments are focused on three areas: improving adults’ skills, providing socio-educational support to the very young and the protection and enhancement of biodiversity.
The Company and all of its employees got involved with gifts to the association, the organization of collections according to the association’s needs, and a fi rst skill sponsorship project that resulted in the creation of a Facebook page to increase knowledge of the association.
Natixis Global Asset Management has continued to develop its sponsorship program in support of charitable organizations (shelters, medical centers, etc.) in the US, in which it involves its employees. Volunteers have in this way given their support to each of the partner organizations, according to their centers of interest. Again in the US, employees of the New York branch of Natixis took part in the Annual New York Corporate Challenge Run, an intercompany run organized for the upkeep of Central Park.
For the thirdyear, Natixis’ managers helped young graduates from underprivileged neighborhoods in their search for jobs. This mentoring scheme is a result of a partnership with the association “Nos Quartiers ont des Talents”. In 2013, workshops particularly on the theme of skills identifi cation were set up to assist Natixis’ 60 mentors as effectively as possible in their role working with young people from underprivileged areas looking for their fi rst job.
Natixis organized the second “The Boost” event, a call for projects to support individual or collective initiatives led by employees in the humanitarian, cultural, scientifi c and sporting fi elds. Project selection, which is subject to a vote by all employees through the Internet, is objective and fair. Four projects received fi nancial support from Natixis: “Action pour le Développement du Ngalam en Mauritanie”, “Les Toiles Enchantées”, “L’École des Rizières” and “L’ Association Française de l’Atrésie de l’Œsophage”.
Specifi c methodological information on audited data: V the headcount includes all employees who have an active employment contract with one of Natixis’ legal entities. Interns, apprentices and beneficiaries of a VIE (International Volunteer Program) assignment are not considered. Expatriates are accounted for in their entity of origin; V hires include external recruitment and transfers from Groupe BPCE; V departures include resignations, terminations, retirements, dismissals, contract terminations due to death or incapacity and transfers to BPCE; V SRI and solidarity assets under management include openended, dedicated (to Natixis’ clients) and employee savings funds which take into account environmental, social and governance criteria and are managed by Natixis Asset Management; V purchases that include sustainable development criteria take into account contracts within which a sustainable development clause has been signed by the vendor; V the absentee rate is the total number of days absent (due to illness, accidents in the workplace or in transit, maternity or parental leaves, etc.) divided by the total number of employee workdays theoretically available; V the number of hours worked annually for the business, used to calculate the frequency and severity rates for workplace accidents (notes a) and b) in section 2.3.5), is equal to the average monthly workforce in FTE multplied by the number of work hours theoretically available or 1,820 hours (151.67 x 12).
Unless otherwise stipulated, the social and environmental information refers to Natixis’ French scope, which includes Natixis S.A. and its subsidiaries, including in particular, as in 2012, six subsidiaries with more than 500 employees each (Natixis Asset Management, Natixis Factor, Natixis Financement, Coface S.A. and Coface Services).
There was no change in the Natixis France scope between 2012 and 2013.
In line with the “New Frontier” strategic plan, the consolidated Natixis scope has been defi ned excluding fi nancial investments.
Consolidated Natixis France Natixis and all of its subsidiaries in France, excluding fi nancial investments (see Note 16 in Chapter [5] “Financial Data”) 11,566
There was no change in the Natixis France scope between 2012 et 2013.
Some pollution indicators have not been included as they are considered to be irrelevant given the nature of Natixis’ operations, which do not generate any serious or specifi c pollution: V measures for the prevention, reduction or remediation of discharges into the air, water or ground that are seriously damaging to the environment; V the taking into account of noise pollution and all types of pollution specific to a particular activity.
Geographic area 5: Africa, NME, Russia & Others (as %) 5.1 5.1 5.0
(c) Coface, Corporate Data Solutions, Natixis Private Equity, Natixis Algérie, Vietnam subsidiary.
Average gross annual compensation of staff under permanent employment contracts (excluding profi t sharing and employer contributions to the Company savings plan) (in thousands of euros) 77.1 74.0 79.2
Mandatory employee profi t-sharing (in millions of euros)* 25.7 33.5 19.4
Total employer contribution paid in respect of the Company savings plan and the collective pension plan (PERCO) (in millions of euros) 32.9 31.6 22.7 * Consolidated fi gures at 02.13.2014.
More than 72% of the employees of Natixis in France, working at 36 different companies, are covered by the collective bargaining agreements of the banking and insurance industries. There are, however, eleven separate agreements across the whole scope, containing specifi c details depending on the sector in question, particularly with respect to working hours.
Within Natixis S.A., the collective workweek is 38 hours and employees also enjoy compensatory time off in lieu of overtime.
This framework now rests on: V a single consolidated Natixis employee savings plan; V a single complementary pension plan (PERCO); V a common profit-sharing scheme; V uniform salary measures; V a common policy on the professional integration and retention of employees with disabilities; V a uniform allocation for disabled children; V common preferential banking conditions.
In 2013, the “Professional Behavior, Prevention of Harassment and Distress at Work” Commission continued to fulfi ll its role in analyzing special situations.
The results of the Stress Observatory show a continuous improvement since its instigation in 2009, with a situation that is still better than for the sample of companies with which Natixis’ service provider (Capital Santé) works.
Severity rate of workplace accidents (b) (by number of days of incapacity per thousand hours worked) 0.15 0.10 0.10
Absentee rate for sick leave (including for occupational illness) (c) (as %) 2.8 2.6 2.2
In accordance with its strategic focuses, Natixis’ training policy aims to further the development of the three core business lines and support functions in four major areas: V increasing the professionalism of staff; V keeping pace with major projects and changes to business lines; V guiding individual career paths within the Company; V and developing management skills.
V Offi cial qualifi cation courses (as %) 4.9 9.6 7.7 * Provisional consolidated fi gures at 02.06.2014 representing at least 90% of hours worked during the year.
As a signatory of the diversity charter since 2009, Natixis is committed to preventing discrimination in every form and at every stage of Human Resources management, including recruitment, training and management of its employees’ careers. It is introducing a policy aimed at capitalizing on the diversity of profi les, experience and expertise.
In 2013, Natixis strove to continue with its initiatives to promote diversity, based on three priority areas: V gender equality; V the retention of older employees; V the professional integration and retention of employees with disabilities.
For several years, Natixis’ goal has been to guarantee gender equality thanks to a number of recruitment, training, compensation and career management measures. In addition to the schemes set up in 2012 (progress plan, compensation on hiring, access to top management positions, specifi c training courses, and so on), Natixis has introduced further initiatives: V organization of conferences on diversity within the Company for employees; V introduction of a scheme to provide women with mentoring; V distribution of a parenting guide and a time charter.
In terms of training, some thirty women employees completed the “Réussir sa carrière au féminin” training module in 2013. Natixis has also designed a training course dedicated to leadership by women, which will be rolled out in 2014. The fi rst group to graduate from the program for potential leaders, the Natixis leadership program, contained an equal number of men and women, sending a strong equality signal.
The 2012-2014 action plan promotes the retention of the over-55s. The plan consists of dedicated training and career management programs and access to assisted part time work for staff over 58 so as to cater for the aspirations of older members of staff as they reach the end of their careers.
In 2013, Natixis continued to develop a policy to promote the professional integration and retention of employees with disabilities and carried out numerous initiatives under the framework agreement signed in 2011 (see inset below). At the end of 2013, the employment rate was estimated to be greater than 2.5%, or nearly twice the rate recorded prior to the agreement signed in 2011.
SOCIAL AND ENVIRONMENTAL PERFORMANCE2 Labor information 2013 Key event First disability action plan: satisfactory results
The fi rst agreement on the professional integration and retention of employees with disabilities for 2011-2013 has expired.
Percentage of women on the Executive Committee (as %) 11.8 9.4 16.1
Percentage of employees aged 55 and over in the workforce (as %) 15.5 13.8 12.2
(a) The direct ratio is the ratio of disabled workers to all staff. Estimated data (value range) at 02.12.2014.
In accordance with the commitments made on the signing of the Global Compact, Natixis complies with all of the ILO’s rules, particularly freedom of association and the right to collective bargaining, the prevention of discrimination, the elimination of forced labor and the abolition of child labor.
These rules are applied within the Company, in accordance with the labor law and professional regulations current in each country.
These rules are also applied to the projects fi nanced by Natixis: attention is paid to the impact of projects on the local populace, in accordance with International Finance Corporation (IFC) standards.
Waste-sorting, which was launched in 2006 and is managed by the Real Estate and Logistics Department, has now been extended to all of Natixis’ buildings. It consists of the following: V sorting and recycling of paper in offices; V collection and special disposal of used ink cartridges and batteries (for business and personal use); V recovery of WEEE (Waste Electrical and Electronic Equipment) by recycling companies.
(1) Including the offi ce space managed by the Real Estate and Logistics Department and the offi ce space used by third-parties (owners or property administration agencies).
The large increase in the number of batteries sorted between 2012 and 2013 is due to the collecting of inverter batteries in addition to the small batteries collected from employees.
Consumption in m3 per m2 of usable fl oor area 0.26 0.27 0.33
Consumption per workstation (in kg) 30.91 45.78 49 2013 Key event Since 2012, Natixis has been streamlining its printer pool to reduce paper and energy consumption and equipment maintenance costs.
Energy consumption per m2 of usable offi ce space (in MWh) excluding data centers 0.21 0.22 0.39
For the second year running, there was a fall in the energy consumption of Natixis’ offi ce buildings following energy consumption reduction and optimization measures.
The carbon footprint assessment based on 2012 and 2013 data, for the consolidated Natixis France scope, showed a 5% reduction in emissions, mainly due to the lower consumption of energy (electricity and heating and cooling utilities) and inputs (purchases and services).
Carbon footprint assessment items Tons of CO2 equivalent Tons of CO2 equivalent
This PDIE, which includes the setting up of secure pedestrian and cyclable routes, low-impact transport solutions, car-sharing and a carpool platform, won a Trophée d’Argent from Tisséo Écomobilité, which grants awards in recognition of company initiatives aimed at employee mobility.
Natixis is gradually standardizing its procedures and vehicle selection by adopting a car policy designed to reduce the fl eet’s environmental impact.
emission rate: 150 g vs. 190 g in the previous policy; V reduction of the emission ceiling for the vehicles assigned to Category 1 sales representatives and managers: 135 g vs. 150 g; V reduction of the motor pool car emission ceiling: 105 g vs. 110 g.
This lowering of the thresholds improves the environmental quality of the fl eet, particularly with regard to the selection of vehicles offered in the catalog: V the average for the vehicles in the two top categories is 117 g; V six hybrid vehicles and one electric motor pool car are listed.
Since 2011, the business travel policy has set rules ensuring the safety and comfort of employees during business trips, while contributing to the policy of optimizing the costs and managing the environmental impact of these trips. This policy applies in France to Natixis and its subsidiaries, excluding fi nancial investments (consolidated Natixis scope). The subsidiaries and branches abroad produce travel rules consistent with the worldwide travel policy.
This notably includes travel rules that have an environmental impact: V where a destination can be reached by both rail and air, trains are now compulsory for a number of destinations in France and Europe (depending on journey time); V economy class is compulsory for domestic flights, flights between European countries and intercontinental flights of less than four hours; V the use of taxis and the reimbursement of per kilometer expenses are governed by rules on specific use (approval by manager, exceptional circumstances). Natixis also prefers the use of “green taxis” (hybrid vehicles) for travel by its employees; V when vehicles are used on a short-term rental basis, the category depends on the circumstances (number and type of people transported); V the use of alternatives to travel should be preferred (telephone conferences, videoconferences and web conferences). Use of these alternatives further increased at Natixis in 2013: 27,000 videoconferences were held (compared to 24,000 in 2012 and 15,500 in 2011).
Since 2012, in line with the operational effi ciency program (see section 2.1.2.2), these rules have been reconfi rmed and specifi cally sent to the heads of entities and made available to all on the intranet. A travel agency listed since 2012 to cover the worldwide scope has been tasked with applying these rules to travel booked by employees.
Social information 2.5 Social information 2.5.1 TERRITORIAL, ECONOMIC AND SOCIAL IMPACTS
It helps to develop local employment through its sites: more than 8,000 employees work in our offi ces, branches and subsidiaries abroad. Virtually all of these employees are recruited locally.
Finally, Natixis sets up numerous partnerships with local associations, described in section [2.1.5].
In accordance with its responsible purchasing policy (presented in paragraph 2.1.3), Natixis asks its suppliers to comply with current CSR standards and regulations and to promote/ensure the application of these commitments by their subcontractors.
Measures taken to safeguard against all forms of corruption are described in section [2.1.1.3] “CSR risk management”.
As a signatory of the United Nations Global Compact, Natixis is committed to the respecting of human rights. This fundamental principle is factored in at various levels at Natixis: V it is naturally applied within the human resources management policy, which aims to maintain good working and safety works for Natixis employees worldwide; V it is taken into account in Natixis’ responsible purchasing policy: supplier contracts and the rules and principles established by the purchasing department (calls for tenders, supplier sustainable development charter, contracts) contain clauses governing compliance with human rights by suppliers and their subcontractors; V it is included within the framework of the Equator Principles’ application (see section 2.1.1.3), with close attention being paid to the impact of financed projects on the local populace. In 2013, the Equator Principles were updated to recognize the UN’s framework for companies and human rights and to more effectively deal with human rights under the duty of care.
Report of the Statutory Auditors 2.6 Report of the Statutory Auditors appointed as independent thirdparty bodies on the consolidated social, environmental and corporate information provided in the Management Report
In our capacity as the Statutory Auditors to Natixis appointed as independent third-party bodies, whose request for accreditation has been accepted by the French Accreditation Commission (COFRAC) under Nos. 3-1048, 3-1049 and 3-1058, we hereby present our report on the consolidated social, environmental and societal information for the fi nancial year ended December 31, 2013, as presented in the Management Report (hereinafter the “CSR Information”), pursuant to the provisions of Article L. 225-102-1 of the French Commercial Code.
The Board of Directors is responsible for drawing up a Management Report including the CSR Information provided for in Article R. 225-105-1 of the French Commercial Code, prepared in accordance with the procedures applied (hereinafter the “Standards”) by the Company, a summary of which is provided in the Paragraph entitled “Reporting Frameworks and Methodology” in the Management Report; this summary is available from the Company’s head offi ce on request.
Our independence is determined by the regulations, our professional ethics code, and the provisions set out in Article L. 822-11 of the French Commercial Code. Moreover, we have implemented a quality control system that includes documented policies and procedures aimed at ensuring compliance with business ethics rules, professional practice standards, and the applicable legislation and regulations.
We performed the work described below in accordance with the professional practice standards applicable in France, and with the Order of May 13, 2013 setting out the conditions under which the independent third-party body performs its assignment, and with the ISAE 3000 (1) international standard where the reasoned opinion on fairness is concerned.
(1) ISAE 3000 – Assurance engagements other than audits or reviews of historical fi nancial information.
SOCIAL AND ENVIRONMENTAL PERFORMANCE2 Report of the Statutory Auditors We ascertained that the CSR Information covered the consolidation scope, i.e. the Company and its subsidiaries within the meaning of Article L. 233-1 of the French Commercial Code, and the companies that it controls within the meaning of Article L. 233-3 of that Code, within the limitations of the methodology information that accompanies the CSR Information, and specifi cally of the Paragraph entitled “Reporting Frameworks and Methodology” in the Management Report.
Based on this work, and given the limitations set out above, we hereby certify that the CSR Information required is included in the Management Report.
We held meetings with around ten individuals responsible for preparing the CSR Information at the departments in charge of gathering the information, and where applicable, with the individuals responsible for the internal control and risk management procedures, in order to: V assess the appropriate nature of the Standards in terms of their relevance, completeness, reliability, objectivity, and comprehensible nature, taking best practices in the sector into consideration, where applicable; V ascertain that an information gathering, compilation, processing and control process had been implemented, with a view to the completeness and consistency of the Information, and familiarize ourselves with the internal control and risk management procedures relating to the preparation of the CSR Information.
Based on our work, we did not observe any signifi cant misstatement likely to call into question the fact that the CSR Information, taken as a whole, is presented in a fair manner, in accordance with the Standards.
(2) Quantitative social indicators: Total workforce at December 31, Breakdown of the workforce by gender, Total number of hires, Total number of departures including redundancies, Percentage of women in the workforce, Percentage of women in the workforce in the executive category, and Total number of training hours.
Quantitative indicators: SRI and solidarity assets under management (in € and as a %), Review of transactions that were subject to social and environmental procedures – Adherence to the Equator Principles.
3.4.1 Compensation and benefi ts of any kind for members of the Board of Directors 105 3.4.2 Compensation and benefi ts of any kind for the CEO 106 3.5 POTENTIAL CONFLICTS OF INTEREST 113 3.5.1 Competence and integrity of directors 113 3.5.2 Contracts binding the company and the directors and senior management 113 3.5.3 Confl icts of interest 113 3.6 CHAIRMAN’S REPORT ON INTERNAL CONTROL PROCEDURES 114 3.6.1 Internal control mechanisms 114 3.6.2 General organization 115 3.6.3 Control system participants 116 3.6.4 Risk monitoring and control 121 3.6.5 Internal control procedures relating to accounting and fi nancial information 126 3.7 STATUTORY AUDITORS’ REPORT ON THE REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 129
The information it contains takes into consideration, in particular, Annex I of European Regulation (EC) 809/2004 of April 29, 2004 as well as the 2010 Autorité des Marchés Financiers (AMF - French Financial Markets Authority) report on corporate governance and internal control published on July 12, 2010 and the supplementary report of December 7, 2010, the AMF’s 2011 report on corporate governance and management compensation published on December 13, 2011, the AMF’s 2012 report on corporate governance and management compensation published on October 11, 2012, and the Guide for compiling registration documents, also published by the AMF on December 10, 2009 and amended on December 17, 2013.
V On April 30, 2009, Natixis changed its form of governance from a French société anonyme (a public limited company) with a Supervisory Board and a Management Board to a French société anonyme with a Board of Directors.
Francois Pérol Date of birth: 11.06.1963 Nationality: French Natixis shares held: 60,000
Chairman of the BPCE Management Board 50, avenue Pierre Mends-France 75201 Paris Cedex 13
Member, Audit Committee First appointed: Board Meeting of 01.28.2013 Term expires: 2015 AGM (b)
Chairman (2), Appointments and Compensation Committee First appointed: Board Meeting of 02.22.2011 Term expires: 2015 AGM (b)
Laurence Debroux * Date of birth: 07.25.1969 Nationality: French Natixis shares held: 1,000
Michel Grass (1) Date of birth: 11.12.1957 Nationality: French Natixis shares held: 189
Director First appointed: Co-opted by the Board on 02.19.2014 Term expires: 2015 AGM (b)
Catherine Halberstadt Date of birth: 10.09.1958 Nationality: French Natixis shares held: 1,097
Director First appointed: OGM of 05.29.2012 Term expires: 2018 AGM (c)
Chief Executive Offi cer of Banque Populaire Massif Central 18, bd Jean Moulin 63057 Clermont-Ferrand Cedex 1
Director First appointed: Co-opted by the Board on 11.12.2009 and ratifi ed at the CSM of 05.27.2010 Term expires: 2015 AGM (b)
Didier Patault Date of birth: 02.22.1961 Nationality: French Natixis shares held: 2,442
Member, Appointments and Compensation Committee First appointed: Board Meeting of 04.30.2009 Term expires: 2015 AGM (b)
Henri Proglio* Date of birth: 06.29.1949 Nationality: French Natixis shares held: 1,000
Chairman and Chief Executive Offi cer of EDF 22-30, avenue de Wagram 75008 Paris
Philippe Sueur Date of birth: 07.04.1946 Nationality: French Natixis shares held: 4,000
Member, Appointments and Compensation Committee First appointed: Board Meeting of 08.06.2013 Term expires: 2019 AGM (d)
Chairman of the Groupe M6 Management Board 89, Avenue Charles de Gaulle 92575 Neuilly sur Seine Cedex
Pierre Valentin Date of birth: 02.06.1953 Nationality: French Number of shares: 1,000
Director First appointed: Co-opted by the Board on 01.28.2013 and ratifi ed at the CSM of 05.21. 2013 Term expires: 2015 AGM (b)
Structure of the corporate and executive bodies 3.2.2 SENIOR MANAGEMENT AT MARCH 1, 2014
Name and surname of the executive corporate offi cer Main role in the Company Main role outside the Company
Laurent Mignon Date of birth: 12.28.1963 Nationality: French Natixis shares held: 1,090
Chief Executive Officer First appointed: Board Meeting of 04.30.2009, effective 05.14.2009 Term expires: 05.14.2015
R MEMBERS OF THE SENIOR MANAGEMENT COMMITTEE (CDG) AT MARCH 1, 2014
John Hailer Investment Solutions Natixis Global Asset Management US and Asia
Christophe Lanne Wholesale Banking / FSM – Financing Portfolio Management and GTB – GAPC
Christel Bories (born May 20, 1964). Christel Bories is Deputy Chief Executive Offi cer of IPSEN and an independent director of Natixis. A graduate of the École des Hautes Études Commerciales (HEC), Christel Bories fi rst practiced as a strategy consultant at Booz Allen & Hamilton and then moved to Corporate Value Associates (1986-1993). Next, she joined the Union Minère group as Director of Strategy and Control (1993-1995). She later joined the Péchiney group where she was successively a member of the Executive Committee, Director of Strategy and Management Control (1995-1998), and Director of Packaging (1999-2003). Chairman and CEO of Alcan Packaging (2003-2006), then of Alcan Engineered Products (20062010 ), she was, at the same time, a member of the Executive Committee of Alcan, then a member of the Executive Committee of Rio Tinto Alcan. She then became CEO of Constellium in 2011. She chaired the Executive Committee of the European Aluminium Association between 2007 and 2009. Key advisory skills: expertise in strategic and industrial issues; transformation and restructuring of international corporations.
Deputy CEO of: Ipsen (since 02.27.2013) Director and Chairman of the Strategic Committee, Member of the Audit Committee of: Legrand SA Director and Member of the Audit & Compensation Committee of: Smurfi t Kappa Vice-Chairman of: La Fabrique de l’Industrie
Member of the Board of: Natixis (1) (since 02.22.2011) Chief Executive Officer of: Constellium (until November 2011)
Member of: AFEP Member of: the Women Forum Member of: the Women Corporate Directors (WCD) Member of the Board of Directors of: Atlas COPCo AB, Sweden Senior Vice President of: Rio Tinto Member of the Executive Committee of: Rio Tinto Alcan Member of the Executive Committee of: the EAA (European Aluminium Association) Member of: Le Cercle de l’Industrie (Association of the Chairmen of the leading French industrial companies)
Thierry Cahn (Director since 01.28.2013) (born September 25, 1956). Chairman of the Board of Directors of Banque Populaire d’Alsace since September 30, 2003, Thierry Cahn is also a member of the Supervisory Board of BPCE. He holds a Professional Lawyers’ Certifi cate (Certifi cat d’Aptitude a la Profession d’Avocat - CAPA) and joined the fi rm of Cahn et Associés in 1981. In 1984, he joined the General Council of the Colmar Bar (Conseil de l’Ordre des avocats de Colmar) of which he is still a member. In 1986, he was named Secretary General to the National Lawyers’ Association (Confédération Nationale des avocats), which he chaired from 1995 to 1996, before becoming Chairman of the Colmar Bar Association from 1998 to 1999. In addition, since 1985 he has been Head Tutor at the Institut Universitaire de Technologie (IUT) de Haute Alsace and the CRFPA d’Alsace. Key advisory skills: expertise in legal matters, particularly in business law.
Chairman of the Board of Directors of: Banque Populaire d’Alsace Member of the Supervisory Board of: BPCE Member of the Board of: Natixis (1) (since 01.28.2013) Member of the Supervisory Board of: Banque Palatine
Permanent Representative of BP Occitane, member of the Supervisory Board of: SOTEL (2)
Permanent Representative of BP Occitane, member of the Investment Committee of: Multicroissance Permanent Representative of BP Occitane, Managing Partner of: SNC Immocarso Managing Partner of: SCI de l’Hers (2)
Chief Executive Officer of Banque Populaire Occitane Member of the Supervisory Board of BPCE (since 06.27.2012) Chairman of: Fondation d’entreprise BP Occitane Member of the Board of: Natixis (1) (since 05.29.2012), Natixis Asset Management Permanent Representative of BP Occitane, Vice-Chairman of the Board of Directors of: CELAD S.A. (2)
Permanent Representative of BP Occitane, Member of the Board of: i-BP, IRDI (2)
Permanent Representative of BP Occitane, member of the Investment Committee of: Multicroissance Permanent Representative of BP Occitane, Managing Partner of: SNC Immocarso Managing Partner of: SCI de l’Hers Non-voting member of the BPCE Supervisory Board (until 06.26.2012) Member of the Board of: Natixis Interépargne (until 06.29.2012) Permanent Representative of BP Occitane, member of the Supervisory Board of: ABP IARD (until 07.10.2012)
Non-voting member of the BPCE Supervisory Board Chief Executive Officer of Banque Populaire Occitane Chairman of: GIE Carso Matériel Member of the Board of: Natixis Asset Management, Natixis Interépargne Permanent Representative of BP Occitane, Vice-Chairman of the Board of Directors of: CELAD S.A. Permanent Representative of BP Occitane, Member of the Board of: i-BP, IRDI Permanent Representative of BP Occitane, member of the Supervisory Board of: SOTEL, ABP IARD Permanent Representative of BP Occitane, Managing Partner of: SNC Immocarso
Laurence Debroux (born July 25, 1969). Laurence Debroux has been Chief Financial and Administrative Offi cer of Groupe JCDecaux SA since 2010 and an independent director of Natixis. A graduate of HEC, Laurence Debroux began her career in 1992 at Merrill Lynch Bank. From 1993 to 1996, she worked in the Finance division of Elf Aquitaine. In 1996, she joined Sanofi fi rst as Chief Financing & Treasury Offi cer and then as Chief Financial Offi cer before becoming Director of Strategy and being promoted to the Executive Committee of Sanofi -Aventis. Key advisory skills: expertise in issues related to fi nance, communications and business strategy.
Chairman of the Board of Directors of BRED Banque Populaire Vice-Chairman of the Supervisory Board of: BPCE Chairman of the Board of Directors of: SPIG (2), Natixis Institutions Jour, Banque Internationale de Commerce-Bred, BRED Gestion, Cofi bred, NRJ Invest (2)
Chairman of the Board of Directors of BRED Banque Populaire Vice-Chairman of the Supervisory Board of: BPCE Chairman of the Board of Directors of: SPIG, Natixis Institutions Jour, Banque Internationale de CommerceBred, BRED Gestion, Cofi bred, NRJ Invest Member of the Board of: Natixis (1), Natixis Pramex International Milan, Natixis Algérie, BCI Mer Rouge, Thales (2), Bercy Gestion Finances+, Promepar Gestion, BRED Cofi lease, Prépar IARD, Veolia (2) (since 11.21.2012), Banca Carige (since 09.17.2012), BICEC (since 06.23.2012), BCI (Banque Commerciale Internationale) (since 2012) Member of the Supervisory Board of: Prépar-Vie Representative of BRED Banque Populaire on the Board of Directors of: BICEC (until 06.29.2012), BCI (Banque Commerciale Internationale) (until 2012)
Chairman of the Board of Directors of BRED Banque Populaire Chairman of the Board of Directors of: Natixis Pramex International (until 02.23.2011), SPIG, Natixis Institutions Jour, Banque Internationale de Commerce-Bred, BRED Gestion, Cofi bred, NRJ Invest, Fondation d’entreprise de la BRED, Chairman of: Agence Banque Populaire pour la Coopération et le Développement, Bureau international du Forum Francophone des Affaires Member of the Board of: Natixis Pramex International Milan, Natixis Algeria, BCI Mer Rouge, Thales, Bercy Gestion Finances +, Promépar Gestion, BRED Cofi lease, Prépar IARD Member of the Supervisory Board of: Prépar-Vie Representative of BRED Banque Populaire on the Board of Directors of: BICEC, BCI (Banque Commerciale Internationale)
Chairman of the Board of Directors of: BRED Banque Populaire, Natixis Pramex International, SPIG, Natixis Institutions Jour Chairman of the Supervisory Board of: Banque Internationale de Commerce-BRED (Bic-BRED) Chairman of: BRED Gestion, Cofi bred, Agence Banque Populaire pour la Coopération et le Développement, Bureau International-Forum Francophone des Affaires Member of the Board of: Coface (until 10.07.2010), Natixis Algeria (until 12.31.2010), Natixis Pramex International Milan, Société Marseillaise de Crédit (until 09.21.2010), Thales, BGF+, Promépar Gestion, BRED Cofi lease, Prépar IARD Member of the Supervisory Board of: Prépar-Vie Representative of BRED Banque Populaire on the Board of Directors of: BICEC, BCI (Banque Commerciale Internationale)
Member of the Supervisory Board of: BPCE Member of the Supervisory Board (until 04.30.2009) and member of the Board of Directors of: Natixis (1)
Michel Grass (born November 12, 1957). Michel Grass has been Chairman of the Board of Directors of Banque Populaire Bourgogne Franche Comté since 2010. Holding a degree in Management Sciences from Université de PARIS 1, Michel Grass began his career in 1983 as a Clinic Director in the healthcare sector in Sens. From 1987 to 2010, he created and ran a regional group of private clinics. In 2000, he became a director at Banque Populaire de Bourgogne and has served as a commercial court judge since 2009. Key advisory skills: entrepreneurial experience, knowledge of the regional economic fabric.
Chairman of the Board of Directors of Banque Populaire Bourgogne Franche Comté Vice President of: Fédération nationale des Banques Populaires Member of the Supervisory Board of: Banque Palatine (since 08.30.2013) Member of the Board of: Natixis (1) (since 02.19.2014), NGAM Judge with the Commercial Court of Sens Associate member of the Chamber of Commerce and Industry of Yonne
CORPORATE GOVERNANCE3 Structure of the corporate and executive bodies Catherine Halberstadt (born October 9, 1958). Catherine Halberstadt has been Chief Executive Offi cer of Banque Populaire du Massif Central since 2010 and a member of the Supervisory Board of BPCE. With a post-graduate degree in fi nancial accounting (DECS) and another in business, administration and fi nance (DESCAF) earned at the École Supérieure de Commerce in Clermont-Ferrand, Catherine Halberstadt has been with Groupe BPCE since 1982. She began her career at Banque Populaire du Massif Central in Marketing Research (19821986 ) before becoming a Communications Offi cer (1986-1992). She was later appointed Human Resources and Organizational Director (1992-1998), Chief Financial Offi cer (1998-2000) and then Deputy CEO (2000-2008). In 2008, she joined Natixis Factor as Chief Executive Offi cer (2008-2010). Key advisory skills: expertise in Human Resources issues; extensive knowledge of retail banking and business fi nancing.
Chairman of the Audit Committee of: BPI France Financement (2) (formerly OSEO) Permanent Representative of Banque Populaire Massif Central, Chairman of: Sociétariat BPMC SAS Permanent Representative of Banque Populaire Massif Central, Member of the Board of: Association des BP pour la Création d’Entreprise, i-BP Permanent Representative of Banque Populaire Massif Central, Member of the Committee of: Banques d’Auvergne
Member of the Board of: Cie Européenne de Garanties et Cautions (until 06.14.2013)
Chief Executive Officer of Banque Populaire du Massif Central Member of the Supervisory Board of: BPCE (since 04.04.2012) Member of the Board of: Natixis (1) (since 05.29.2012), Crédit Foncier (since 05.10.2012), Cie Européenne de Garanties et Cautions, Oseo, Association Les Elles de BPCE (since 02.01.2012) Permanent Representative of Banque Populaire Massif Central, Chairman of: Sociétariat BPMC SAS Permanent Representative of Banque Populaire Massif Central, Member of the Board of: Association des BP pour la Création d’Entreprise, i-BP Permanent Representative of Banque Populaire Massif Central, Member of the Committee of: Banques d’Auvergne
Chief Executive Officer of: Banque Populaire du Massif Central (since 09.01.2010) Chief Executive Officer of: Natixis Factor Member of the Board of: OSEO (since 12.07.2010) Member of the Supervisory Board of: Foncia Groupe (since 11.02.2010) Permanent representative of: BP Massif Central, Member of the Board of: IBP (since 09.01.2010), BICEC (since 09.01.2010) Permanent Representative of Banque Populaire Massif Central, M ember of the Committee of: Banques d’Auvergne
Member of the Management Board of: BPCE (since 08.06.2013) Chairman of the Board of Directors of: de Natixis Global Asset Management, Coface SA Member of the Board of: Arkema (1) (2), Lazard Ltd (1) (2)
Chairman of the Board of Directors of: Natixis Global Asset Management Member of the Board of: Sequana (1) (2), Arkema (1) (2), Lazard Ltd (1) (2)
Chairman of: SAS Coface Holding Permanent representative of Natixis, member of the Board of: Coface Permanent representative of Natixis, non-voting member of the Board of Directors of: BPCE
Chairman of: SAS Coface Holding Non-voting member of: BPCE (Permanent representative of Natixis)
Member of the Supervisory Board of: HLD INTERNATIONAL Chairman of: Centaurus Capital Limited Member of the Board of: Centaurus Capital Holdings Limited, Centaurus Global Holding Limited, Centaurus Management Company Limited, Centaurus Capital International Limited Trustee of: École Polytechnique Charitable Trust
Member of the Board of: Tigers Alliance Fund Management (Vietnam) (until June 2013) Member of the Advisory Board of Ondra Partners (until September 2013)
Member of the Supervisory Board of: HLD INTERNATIONAL Chairman of: Centaurus Capital Limited Member of the Board of: Centaurus Capital Holdings Limited, Centaurus Global Holding Limited, Centaurus Management Company Limited, Centaurus Capital International Limited, Tigers Alliance Fund Management (Vietnam) Trustee of: École Polytechnique Charitable Trust Member of the Advisory Board of: Ondra Partners
INTERNATIONAL Chairman of: Centaurus Capital Limited Member of the Board of: Centaurus Capital Holdings Limited, Centaurus Global Holding Limited, Centaurus Management Company Limited, Tigers Alliance Fund Management (Vietnam) (since 07.01.2010) Trustee of: École Polytechnique Charitable Trust Member of the Advisory Board of: Ondra Partners
Representative of Caisse d’Epargne Rhône Alpes, Treasurer of: Fondation Belem (since May 2013)
Chairman of the Supervisory Board of: Rhône Alpes PME Gestion (2) (since 03.13.2012) Member of the Board of: Natixis (1) (since 05.29.2012), Siparex Associés (2) (since 03.30.2012), Crédit Foncier Representative of Caisse d’Epargne Rhône Alpes, member of the Supervisory Board of: IT-CE Representative of Caisse d’Epargne Rhône Alpes, member of the Board of Directors of: Compagnie des Alpes (2) (since 10.18.2012), Fondation d’entreprise CERA, Fédération Nationale des Caisses d’Epargne (FNCE), Habitat en Région (2)
01.30.2012), Ouest Croissance Gestion (until 01.30.2012) Representative of Banque Populaire Atlantique, ex-officio member of: Crédit Maritime Mutuel Atlantique (until 01.30.2012) Representative of Banque Populaire Atlantique, Treasurer of: Comité des Banques de Pays de la Loire FBF (until 01.31.2012) Representative of Ouest Croissance, member of the Board of Directors of: Banque Populaire Développement (until 01.30.2012) Representative of the Fédération Nationale des Banques Populaires, Chairman of: Association Française de la Micro-Finance (until 01.31.2012)
Chairman of the Management Board of Caisse d’Epargne Bretagne-Pays de Loire (CEBPL) (until 04.25.2013) Chairman and Chief Executive Officer of: SODERO (until 04.26.2013) Chairman of the Board of Directors of: SODERO Participations (until 04.26.2013), SA des Marchés de l’Ouest (SAMO) (until 04.26.2013) Chairman of the Supervisory Board of: SODERO Gestion (until 04.26.2013), BATIROC Bretagne – Pays de Loire (until 04.26.2013) Member of the Board of: Compagnie de Financement Foncier – SCF (until 05.31.2013), La Mancelle d’Habitation (until 04.26.2013) Permanent Representative of CEBPL, member of the Board of Directors of: Pays de la Loire Développement (until 04.26.2013), SEMITAN (until 04.26.2013), Nantes Atlantique Place Financière (NAPF) (until 04.26.2013), FNCE (until 04.25.2013) Permanent Representative of CEBPL, member of the Supervisory Board of: IT-CE (until 04.26.2013)
Chairman of the Management Board of: Caisse d’Epargne et de Prévoyance de Bretagne Pays de Loire Chairman and Chief Executive Officer of: SODERO Chairman of the Board of Directors of: SODERO Participations, S.A. des Marches de l’Ouest (SAMO) Chairman of the Supervisory Board of: SODERO Gestion, BATIROC Bretagne – Pays de Loire Member of the Supervisory Board of: GCE Capital Member of the Board of: Compagnie de Financement Foncier – SCF, Natixis Cofi ciné, Mancelle d’Habitation, CE Holding Promotion Permanent Representative of CEBPL, member of the Board of Directors of: Pays de la Loire Développement, SEMITAN, NAPF, FNCE Permanent Representative of CEBPL, member of the Supervisory Board of: GCE IT-CE (formerly GCE Technologies), GCE Business Services (until December 2011) (absorbed by GCE IT-CE, formerly GCE Technologies)
Member of the Supervisory Board of: BPCE (since 07.31.2009) Member of the Supervisory Board (until 04.30.2009) and member of the Board of Directors of: Natixis (1)
Chairman of the Management Board of: BPCE Chairman of the Board of Directors of: Natixis (1)
Chief Executive Officer of: BP Participations, CE Participations (until 08.05.2010) Chairman of the Board of Directors of: BPCE IOM, Crédit Foncier de France (since 04.26.2010), Fondation des Caisses d’Epargne pour la Solidarité (since 06.30.2010) Chairman of: CE Holding Promotion (since 06.30.2010), Fédération Bancaire Française (since 09.01.2010) Chairman of the Supervisory Board of: Foncia Groupe Vice-Chairman of the Board of Directors of: Crédit Immobilier et Hôtelier (Morocco) Member of the Board of: BP Participations, CE Participations (until 08.05.2010), CNP Assurances, Sopassure, Crédit Immobilier et Hotelier-CIH (Morocco), Musée d’Orsay (2)
Member of the Board of: Dassault Aviation (1), CNP Assurances (1), EDF International SAS, EDF Energies Nouvelles Member of: the High Commission for Transparency and Information on Safety in Nuclear Facilities, the National Commission for Sectors of Vital Importance, the Committee for Atomic Energy INTERNATIONAL Chairman of the Board of Directors of: Edison (since 04.24.2012) Member of the Board of: FCC (1) Espagne, Edison, South Stream Transport AG (since 04.12.2012), South Stream Transport BV (since 11.13.2012) Chairman of: EDF Energy Holdings Ltd FRANCE Member of the Board of: Veolia Environnement (1) (until 10.22.2012), Veolia Propreté (until 05.03.2012) Member of the Supervisory Board of: Veolia Eau (until 12.12.2012) INTERNATIONAL Chairman of the Board of Directors of: Transalpina di Energia (until 05.24.2012)
Chairman and Chief Executive Officer of: EDF Chairman of the Board of Directors of: Veolia Environnement (until 12.12.2010), Veolia Propreté, Veolia Transport Member of the Board of: Dassault Aviation, CNP Assurances, Veolia Environnement (since 12.16.2010), EDF International (since 12.06.2010) Member of the Supervisory Board of: Veolia Eau and Boards A and B of Dalkia (SAS) (until 03.23.2010) Member of: the High Commission for Transparency and Information on Safety in Nuclear Facilities, the National Commission for Sectors of Vital Importance, the Committee for Atomic Energy INTERNATIONAL Chairman of: EDF Energy Holdings Ltd (since 03.08.2010) Chairman of the Board of Directors of: Transalpina di Energia (since 02.08.2010) Member of the Board of: Veolia Environnement North America Operations (until 09.13.2010) Member of the Board of: FCC Espagne (since 05.27.2010) and Edison (since 02.08.2010)
Philippe Sueur (born July 4, 1946). Philippe Sueur is Vice-Chairman of the Caisse d’Epargne Île-de-France Steering and Supervisory Board. Philippe Sueur holds a postgraduate degree in political science and history, a doctorate in law, and is an Associate Professor in Roman Law and Institutional History. He began his career in 1974 as a Lecturer before becoming a Full Professor at Université d’Amiens and then Université de Paris III - Sorbonne Nouvelle and Paris-Nord. From 1992 to 2002, he was Dean of the Faculty of Law, Political and Social Science at Université Paris XIII - Nord. As Mayor of Enghien-les-Bains since 1989, Philippe Sueur also holds various elected positions such as Regional Councilor until 2011, Councilor at Large for the Val d’Oise region since 1994, and Vice-Chairman of the General Council of Val d’Oise between 2001 and 2008 and then again since 2011. Key advisory skills: Recognized academic authority, extensive knowledge of local and regional authorities.
Vice-Chairman of the Steering and Supervisory Board of: Caisse d’Epargne Île-de-France Chairman of: Société d’Économie Mixte d’Aménagement du Val d’Oise (SEMAVO) (2), Institut de Formation des Animateurs de Collectivités (IFAC – Local Supervisors’ Training Institute) for France and Val d’Oise (non-profi t organizations) (2)
Vice-Chairman of: Association Nationale des Maires de Stations Classées et Communes Touristiques (ANMSCCT) - French Association for Mayors of Tourist Municipalities) (2), Conseil Général du Val d’Oise (2)
Member of the Supervisory Board (until 04.30.2009) and member of the Board of Directors of: Natixis (1)
Permanent representative of CEIDF to SICAV Association Vice-Chairman of: Association Nationale des Maires de Stations Classées et Communes Touristiques (2)
Chairman of: Institut de Formation des Animateurs de Collectivités(IFAC) for France and Val d’Oise (non-profi t organizations) (2)
Member of the Board of: Natixis (1) (since 07.31.2013), Nexans SA (1), GL Events SA (1)
Member of: the Supervisory Board of Ediradio SA (RTL/RTL2/FUN RADIO) Member of: the Board and Vice-Chairman of: the Compensation Committee of Antena3 (1)(2) (renamed Atresmedia in 2013) Other positions held in Groupe M6: Chairman of: M6 Publicité, M6 Web and M6 Interactions. Member of: the Board of Home Shopping Service (HSS), Football Club des Girondins de Bordeaux, Extension TV (Série Club), TF6 Gestion (TF6) and Société Nouvelle de Distribution (SND).
Member of: the Supervisory Board of Ediradio SA (RTL/RTL2/FUN RADIO) Member of: the Board and Vice-Chairman of: the Compensation Committee of Antena3 (1)(2) (renamed Atresmedia in 2013) Chairman of: the Association of European Commercial Television (ACT) (2)
Other positions held in Groupe M6: Chairman of: M6 Publicité, M6 Web and M6 Interactions. Member of: the Board of Home Shopping Service (HSS), Football Club des Girondins de Bordeaux, Extension TV (Série Club), TF6 Gestion (TF6) and Société Nouvelle de Distribution (SND).
* All offi ces held outside Natixis are carried out in companies that do not belong to Groupe BPCE.
Pierre Valentin (born February 6, 1953). Pierre Valentin has been Chairman of the Steering and Supervisory Board of Caisse d’Epargne Languedoc-Roussillon since 2006 and is a member of the Supervisory Board of BPCE. Pierre Valentin holds a degree in private law and another from the Institut des Assurances d’Aix-Marseille. Pierre Valentin, an entrepreneur, began his career in 1978 with Mutuelle d’Assurances du Bâtiment et des Travaux Public in Lyon. In 1979, he created the company Valentin Immobilier and joined the Caisse d’Épargne network. In 1984, he joined the Advisory Board of Caisse d’Épargne d Alès. In 1991, he joined the Advisory Board of Caisse d’Épargne LanguedocRoussillon. Since 2000, he has been a member of the Steering and Supervisory Board of Caisse d’Epargne LanguedocRousillon.
Chairman of the Steering and Supervisory Board of: Caisse d’Epargne Languedoc-Roussillon (CELR) Chairman of the Board of Directors of: SLE Vallée des Gardons Vice-Chairman of the Supervisory Board of: Banque Palatine Member of the Supervisory Board of: BPCE, Banque Palatine Member of the Board of: Natixis (1) (since 01.28.2013), CE Holding Promotion, Clinique Bonnefon (2), Pierre et Lise Immobilier (2), Fédération Nationale des Caisses d’Epargne (FNCE) Managing Partner of: SCI Les Trois Cyprès (2), SCI Les Amandiers (2)
Member of the BPCE Supervisory Board Chairman of the Steering and Supervisory Board of: Caisse d’Epargne Languedoc-Roussillon Chairman of the Board of Directors of: SLE Vallée des Gardons Vice-Chairman of the Supervisory Board of: Banque Palatine Member of the Board of: CE Holding Promotion, Clinique Bonnefon, Pierre et Lise Immobilier, FNCE Member of the Supervisory Board of: Banque Palatine Managing Partner of: SCI Les Trois Cyprès, SCI Les Amandiers
Member of the BPCE Supervisory Board Chairman of the Steering and Supervisory Board of: Caisse d’Epargne Languedoc-Roussillon Chairman of the Board of Directors of: SLE Vallée des Gardons Vice-Chairman of the Supervisory Board of: Banque Palatine Member of the Supervisory Board of: Caisse Nationale des Caisses d’Epargne (from 05.28.2009 to 07.31.2009), Banque Palatine Member of the Board of: Caisses d’Epargne Participations, Clinique Bonnefon, Pierre et Lise Immobilier, FNCE Managing Partner of: SCI Les Trois Cyprès, SCI Les Amandiers, SCI Le Victor Hugo
CORPORATE GOVERNANCE3 Role and operating rules of the corporate bodies 3.3 Role and operating rules of the corporate bodies
Natixis’ corporate governance, based on the Group’s current form as a French société anonyme with a Board of Directors as defi ned in Articles L.225-17 et seq. of the French Commercial Code, is based on the corporate bylaws adopted by Natixis’ Combined Shareholders’ Meeting of April 30, 2009.
At its meeting of December 11, 2013, and following the report submitted by the Appointments and Compensation Committee, Natixis’ Board of Directors examined each director’s expertise, judgment and freedom of thought and expression and, more specifi cally, compliance with the independence criteria laid down in the AFEP/Medef Code and incorporated into the Board’s Internal Rules (see 3.3.1.2 - Role and Powers of the Board of Directors below).
It particularly examined the assessment of the relative signifi cance of the business relationship maintained by each independent director with Natixis or its group.
Has not been an auditor of the Company in the previous fi ve years OK OK OK OK OK
Has not been a Board member of the Company for more than 12 years OK OK OK OK OK
The term of offi ce of Natixis directors is currently set at six years (and not four years as recommended by the AFEP/Medef Code). This term of offi ce meets Natixis’ legal and statutory requirements as well as the rules in force applicable to all of Groupe BPCE.
However, Natixis, together with BPCE, is considering reducing the term of Natixis directors to four years.
Since April 30, 2009, the Board of Directors has been chaired by François Pérol, Chairman of the BPCE Management Board.
V Changes made to the Board of Directors in 2013: R on January 28, 2013, the Board of Directors of Natixis coopted Thierry Cahn and Pierre Valentin to replace Olivier Klein and Philippe Queuille, respectively, for the remainder of their predecessors’ terms of offi ce, namely until the General Shareholders’ Meeting called to approve the fi nancial statements for the fi scal year ending on December 31, 2014. The Combined General Shareholders’ Meeting of May 21, 2013 ratifi ed these co-opting decisions. The Board of Directors also took note that the new Permanent Representative of BPCE on the Board was now Daniel Karyotis; R on July 31, 2013, the Ordinary General Shareholders’ Meeting appointed Nicolas de Tavernost as director, replacing Vincent Bolloré who resigned in December 2012, for a term of six years, i.e. until the end of the Annual Shareholders’ Meeting convened to approve the fi nancial statements for the year ending December 31, 2018.
With respect to the principle of gender parity within the Board of Directors, as set out in the Law of January 27, 2011, Natixis had four female directors out of a total of 15, i.e. 26.7%, as at March 1, 2014. Natixis has therefore been in compliance with the transitional provisions since its General Shareholders’ Meeting of May 29, 2012.
CORPORATE GOVERNANCE3 Role and operating rules of the corporate bodies Natixis will observe the recommendations of the AFEP/Medef Code and the applicable legal provisions by the required deadlines.
In accordance with the law, the number of directors who are over the age of 70 is limited to one-third of the number of directors in offi ce.
When a director is appointed, his résumé with a career summary and a list of corporate offi ces are sent to the other directors and to the shareholders.
The Chairman of the Board or the Chief Executive Offi cer are required to provide each director with all of the documents and information needed to carry out their duties.
Accordingly, an independent member of the Board of Directors may not: V be an employee or a corporate officer of Natixis or the Group, or an employee or Board member of a shareholder with a controlling interest, either on its own or in concert, in Natixis (as per Article L.233-3 of the French Commercial Code) or in a Company consolidated by it, or have served in such a capacity during the previous five years; V be a corporate officer of a company in which Natixis holds a directorship either directly or indirectly, or in which a designated employee of Natixis or a corporate officer of Natixis (currently or within the last five years) holds a directorship;
V be a customer, supplier, investment or corporate banker: R that is material for Natixis or the Group,
R receive or have received signifi cant additional compensation from Natixis or the Group, excluding directors’ fees, including participation in any stock option plan or other performancebased compensation.
Each director represents all of the shareholders and endeavors to act in the corporate interest of Natixis at all times. He undertakes to defend and promote the values of Natixis.
CORPORATE GOVERNANCE3 Role and operating rules of the corporate bodies Article 5: Confi dentiality
This duty to refrain concerns shares and any investment securities issued or to be issued by Natixis, as well as the rights that may be detached from those securities (e.g. pre-emptive rights) and any derivative whose underlying assets are the rights or securities issued by Natixis.
Role and operating rules of the corporate bodies director or non-voting director in question must abstain from participating in the meeting of the Board of Directors or any one of its Committees regarding the plan in question. Consequently, he does not participate in the Board’s deliberations, nor in voting on the plan in question, and the section of the minutes relative to the plan in question is not submitted to him.
Each director must become familiar with and must request, within the appropriate time, that the Chairman of the Board of Directors and/or the specialized Committees of which he is a member, provide the information critical to useful action on the topics on the agenda of the Board or the specialized Committees.
Should one of Natixis’ directors no longer be in a position to perform his duties in compliance with the Charter, either for his own reasons or for any other reason including those specifi c to Natixis’ rules, he must notify the Chairman of the Board of Directors, seek measures to remedy the situation, and, if none are found, suffer the personal consequences with respect to performing his duties.
The Head of Compliance for Natixis is available to each director for any questions about the code of conduct.
At its meeting of February 17, 2013, the Board of Directors of Natixis drew up an internal charter on “related party agreements” in accordance with AMF recommendation No. 2012-05.
This charter defi nes the criteria for establishing “related party agreements” in accordance with the provisions of Article L.225-38 of the French Commercial Code.
In particular, it sets out the procedure to be followed, from the notifi cation of the Board of Directors to approval by the General Shareholders’ Meeting, in light of the Statutory Auditors’ special report (see Statutory Auditors’ special report on related party agreements in Chapter 5 “Financial Data”).
The Board of Directors held a total of eight meetings in 2013. The attendance rate was near 91% for the year as a whole, compared with 90% in 2012.
At least three days before a Board meeting, each director received a fi le via a secure website containing the items on the agenda in order to be able to review and analyze the topics addressed.
In accordance with banking legislation, the Board examined the reports on internal control requirements and the assessment and monitoring of risks. It also reviewed the internal control operations carried out and their results, in particular compliance controls. The Board approved the Board of Directors’ report for 2012 as well as the Chairman’s report on the preparation and organization of the Board’s work and the internal control procedures implemented by the Company. The Board also prepared the draft resolutions for submission to the General Shareholders’ Meeting.
In terms of monitoring the company’s activity, the Board approved Natixis’ parent company and consolidated fi nancial statements and reviewed the interim and quarterly fi nancial statements. It reviewed and approved Natixis “New Frontier” plan (20142017 ) and the budget projections for fi scal year 2014. It was also presented with the current position of the GAPC assets.
It was regularly informed of all correspondence from the Autorité de Contrôle Prudentiel et de Résolution (ACPR - French Prudential Supervisory Authority) and the Autorité des Marchés Financiers (AMF - French Financial Markets Authority).
Over the course of 2014 and in accordance with the bylaws and the Internal Rules, the Board also met to approve the following projects: V Natixis’ sale of cooperative investment certificates to all the Banque Populaire banks and Caisses d’Epargne; V the new strategic plan (2014-2017): “New Frontier”; V the capital increase reserved for members of the savings plan; V the draft employment agreement; V the opening of a Natixis representative office in California; V various complete transfers of assets and liabilities between small subsidiaries of Natixis and Natixis.
For the 2010 fi scal year, Natixis used the services of an outside fi rm. For the 2011 and 2012 fi scal years, Natixis carried out an internal assessment, based on individual interviews and a questionnaire.
The summary of the assessment will be provided in the update to this registration document, scheduled for August 2014.
These training programs were completed by two of the new directors that joined the Natixis Board of Directors in 2013.
To help it with its deliberations and lay the groundwork for some of its discussions, the Natixis Board of Directors set up three specialist committees: an Audit Committee, an Appointments and Compensation Committee, and a Strategic Committee, each chaired by an independent member.
Two-thirds of the Audit Committee are not independent members, as recommended by the AFEP/Medef Code, in order to represent the different components of the Company’s main shareholders (members from the Caisses d’Epargne and the Banque Populaire banks, plus a representative of BPCE).
The Chairman and the members of the Audit Committee have extensive accounting and fi nancial expertise gained over the course of their professional careers. Mr. Oppetit is a fi nancial market specialist and has substantial experience in complex fi nancial products and alternative management companies. Ms. Debroux is recognized for her fi nancial analysis and corporate strategy skills. Mr. Karyotis has extensive experience as a Chief Financial Offi cer, a position he holds at BPCE. Ms. Halberstadt boasts solid experience in fi nancial analysis, retail banking and factoring businesses. Finally, Ms. Paix has considerable expertise in bank audits, factoring, cash management and operations management.
The Company’s CEO provides the Audit Committee with any documents and information it needs to perform its duties. The following list is not exhaustive: V parent and consolidated financial, accounting, and regulatory documents prepared periodically by the Company; V summary reports by the Company’s Statutory Auditors; V any audit reports concerning the Company; V any internal control reports prepared by the Company for the regulatory and supervisory authorities; V accounting policies and methods applied within the Company; V internal control policies and procedures; V projected parent and consolidated results at the end of March, June, September and December; V consolidated budgets and financial statements of the main subsidiaries, as well as any related documents provided to the Board of Directors or, if applicable, the Audit Committee of the principal subsidiaries.
Depending on its agenda, the Audit Committee also benefi ted from the presence at its various meetings of the Natixis Chief Finance and Risk Offi cer, as well as the Head of Accounting and Ratios, the Head of Risk, the Heads of Internal Audit for Natixis and BPCE, the Corporate Secretary and the Head of Compliance for Natixis.
On the subject of internal control and compliance, risk monitoring and internal control reports submitted to the ACPR were presented to the Committee. It also reviewed the activity and results of the Natixis compliance and internal control functions, as well as the audit program of Natixis’ Internal Audit.
V the acknowledgment of all correspondence from the Autorité de Contrôle Prudentielle et de Résolution (ACPR) as well as all correspondence and information from the Autorité des Marchés Financiers (AMF) and the answers to said correspondence from Natixis.
The scope of responsibility of Natixis’ Appointments and Compensation Committee essentially relates to compensation reviews and the selection of corporate offi cers. The Appointments and Compensation Committee’s powers and operating procedures are described in greater detail in the Internal Rules of the Board of Directors, the latest version of which was approved on May 11, 2011.
To this end, the Committee may confer with Natixis’ internal control departments or outside experts as appropriate.
The Committee is also in charge of selections and appointments. The Committee gives an opinion and, upon request from the Board, makes proposals and recommendations to the Board on the appointment of a CEO and, when appropriate, one or more Deputy CEOs or directors.
Minutes of each of the Appointments and Compensation Committee’s Meetings are prepared and sent to individual members. The Chairman of the Committee provides a report on the Committee’s work to the Board of Directors, thereby enabling the Board to make fully informed decisions. It is also specifi ed that when these reports are presented, the Board of Directors shall not make decisions regarding compensation in the presence of corporate offi cers.
The Appointments and Compensation Committee met seven times in 2013. The attendance rate was 91% for the year as a whole, compared with 100% in 2012.
The Committee’s work consisted in: V deciding on the variable compensation of the Chief Executive Officer for fiscal year 2012 and paid in 2013; V deciding on the criteria to be applied in calculating the variable compensation of the Chief Executive Officer for fiscal year 2013; V attendance fees allocated to directors for fiscal year 2013; V compensation for Material Risk Takers for 2012 and 2013; V compensation for control functions; V the Company’s policy on salary and professional equality; V the annual review of the classification of the status of directors as independent members; V the annual review of recommendations by the AFEP/Medef Code in terms of compensation of corporate officers; V the replacement of four directors including one independent director; V the impact of the sale of the cooperative investment certificates (CCIs); V payment of a top-up to Natixis employees.
The Strategic Committee was formed in 2011 following suggestions made by members of the Board of Directors as part of the assessment of the Board’s work.
The scope of responsibility of the Strategic Committee relates to thoroughly examining the global strategy of Natixis and its business lines, and sharing Senior Management’s vision for Groupe BPCE.
In 2013, the Strategic Committee examined the different components of Natixis’ “New Frontier” strategic plan (2014-2017).
CORPORATE GOVERNANCE3 Role and operating rules of the corporate bodies 3.3.3 SENIOR MANAGEMENT
On December 31, 2012, members included: Luc-Emmanuel Auberger (Operations and Information Systems), Gils Berrous (Specialized Financial Services), Jean Cheval (Finance and Risks), Alain Delouis (Human Resources), André-Jean Olivier (Corporate Secretariat), Olivier Perquel (Wholesale Banking – Financing & Market Solutions), Pierre Servant (Investment Solutions) and Marc Vincent (Wholesale Banking – Coverage & Advisory).
As Natixis’ decision-making body, the Senior Management Committee’s remit is to examine and validate the Company’s core strategy and oversee its management, notably as regards the effective application of the Company’s strategy and budget, all major projects and investments, its organization and Human Resources, the performance of its business lines and its results, and the control of its activities.
Natixis’ Senior Management Committee closely surveyed changes in the economic and regulatory climate within the banking and insurance sectors and their possible impact on the Company’s respective businesses. It also oversaw the development of existing measures to safeguard Natixis’ growth in a time of heightened liquidity and solvency constraints. In particular it defi ned Natixis’ policy governing the LCR and leverage ratio, and worked to anticipate the impacts of the new regulatory developments (law on the separation and regulation of banking activities, the new US regulation on International Holding Companies, etc.).
The Senior Management Committee determined the Bank’s main objectives and supervised, where applicable over the course of specifi c weeks, the preparation of Natixis’ “New Frontier” strategic plan for 2014-2017. To this end, it reviewed the proposed objectives for all the business lines and made the necessary adjustments. It also ensured that Natixis’ objectives are in line with those adopted by Groupe BPCE in its “Growing Differently” strategic plan. It supervised the preparation of internal actions and external communication events (Investor Day) related to the “New Frontier” plan.
The Senior Management Committee continued the operational effi ciency program initiated in 2012. The recommendations of the different sub-programs were presented to it for approval. It also approved the signing of a framework agreement with the employee representatives and took part in talks aimed at adapting the number of posts to the changes in Natixis’ business lines in France.
The Senior Management Committee reviewed and validated the strategic operations undertaken by Natixis, before they were presented to the Company’s Board of Directors, including in particular the sale of the cooperative investment certifi cates held by Natixis to each of the Banque Populaire banks and Caisses d’Epargne and the planned acquisition of BPCE Assurance with the aim of creating a large Insurance division at Natixis.
The Senior Management Committee regularly examined the Company’s business development and results during its meetings throughout the year. It reviewed the interim and quarterly fi nancial statements before presenting them to the Board of Directors. It participated in defi ning the Company’s fi nancial disclosure.
The Senior Management Committee monitored the management and risk management measures within Natixis; in particular, it regularly reviewed changes in the Company’s risks. Finally, pursuant to the recommendations of the supervisory authorities for the banking industry, the Senior Management Committee updated its resolution and recovery plan, which was expanded in the second half to include a component focused on US operations, in accordance with local regulations.
Shareholders’ meetings may take the form of Ordinary, Extraordinary or Combined Meetings depending on the items on the agenda.
OGMs are held annually and their purpose is to inform shareholders about the running of the Company. Their principal objective is to give an opinion on the fi nancial statements of the previous fi scal year, to determine the appropriation of earnings, and to set the dividend and the conditions for its payment.
With respect to holders of bearer shares, it is their authorized intermediaries which hold accounts of bearer shares which prove their clients’ status as a shareholder directly to the centralizing body of the meeting. They do so by producing a certifi cate that they attach to the voting form or admission card request in the name of the shareholder or the name of the registered intermediary acting on behalf of the shareholder. A certifi cate is also delivered to shareholders wishing to attend the meeting in person and who have not received an admission card by D-3, 12 midnight, Paris time.
Any individual or legal entity that owns, directly or indirectly, alone or jointly, a 1% share of the voting rights, or any multiple of this percentage, must notify the Company, by registered letter with acknowledgment of receipt, of the number of voting rights that they possess. This notice must be made within a period of 15 days following each acquisition or sale of this fraction.
Policies and rules for determining compensation 3.4 Policies and rules for determining compensation and benefits of any kind paid to members of the corporate bodies
3.4.1.1 Compensation and benefi ts of any kind for the Chairman of the Board of Directors
The Chairman of the Board of Directors waived all fi xed and variable compensation with respect to the performance of his duties at Natixis in 2013, as in previous fi scal years.
The members of the Board of Directors of Natixis received directors’ fees with respect to 2013 under the terms and conditions stipulated below.
Attendance fees are granted according to the following rules: V members of the Board of Directors: R fi xed portion: €10,000 per year,
R variable portion: €2,000 per meeting, capped at fi ve meetings, i.e. €20,000 maximum in total; V specialized Committee members: R Audit Committee: Chairman: €20,000, members of the Audit Committee: R fixed portion: €5,000,
R variable portion: €1,000 per meeting, capped at five meetings; R Appointments and Compensation Committee: Chairman: €10,000, members of the Appointments and Compensation Committee: R fixed portion: €3,000,
R variable portion: €1,000 per meeting, capped at five meetings; R Strategic Committee: no directors’ fees.
The fi xed gross annual compensation of Laurent Mignon in relation to his duties as CEO of Natixis was €800,000 for 2013. This fi xed compensation has not been changed since he arrived in 2009.
The variable compensation to be paid for 2013, capped at 156% of his fi xed compensation, was calculated on the basis of quantitative and qualitative criteria defi ned and validated by the Board of Directors, as follows: V quantitative criteria relate to 70% of the variable compensation. These criteria are based on the performances of Groupe BPCE (net revenues, net income Group share and cost/income ratio) and Natixis (net revenues, net income Group share, cost/ income ratio and Core Tier 1 ratio); V qualitative criteria relate to 30% of the variable compensation. These criteria are evaluated by the Board of Directors and concern the definition of Natixis’ strategic plan in coordination with that of BPCE, the establishment of plans to adapt business lines and support functions to the objectives of the Operational Efficiency Plan, the development of Natixis’ cooperation with BPCE’s networks, and managerial performance evaluated with respect to foresight, decision-making and leadership implemented.
The Board of Directors meeting of February 19, 2014, on the opinion of the Appointments and Compensation Committee, decided to allocate variable compensation to the CEO for a gross amount of €958,000 based on the performances of Groupe BPCE and Natixis and the level of qualitative targets achieved.
The portion of variable compensation indexed to Natixis shares is allocated in the form of Units. These Units are fi nancial instruments whose value is equal to the Natixis share price. The Units take the legal form of a right to deferred compensation (which is therefore treated as a salary).
The CEO does not own these Units until they are fully vested. They are paid out in thirds over a period of three years, subject to continued employment and performance criteria. The CEO is therefore unable to take any action regarding the payment date or the valuation method, which are set at the time of allocation.
In November 2013, the Board of Directors, on the opinion of the Natixis Appointments and Compensation Committee, approved the proposal to award 90 Natixis shares to the CEO.
These shares are subject to a two-year vesting period, and all shares granted must be held until the end of the CEO’s term of offi ce.
The CEO benefi ts from the collective provident insurance and healthcare scheme in force at Natixis.
V With regard to the calculation of severance payments for the duties of Chief Executive Officer, the Board of Directors, on the advice of the Appointments and Compensation Committee, authorized during its mee ting of February 22, 2011, the commitment establishing the terms and conditions for compensation due or liable to be due to Laurent Mignon in the event he no longer performs the duties of Chief Executive Officer of Natixis (herein after referred to as “Commitment Regarding Severance Payments for Termination of Duties”). This commitment regarding severance payments was approved by the Combined General Shareholders’ Meeting of May 26, 2011 (see sixth resolution).
The Board of Directors, on the advice of the Appointments and Compensation Committee, authorized during its meeting of February 19, 2014, amendent No. 1 to this Commitment Regarding Severance Payments for Termination of Duties, which is to be voted on by shareholders at the Ordinary General Shareholders’ Meeting on May 20, 2014 (see fifth resolution). The purpose of this amendment is to modify the rules for calculating the amount of severance to be paid to Natixis’ Chief Executive Offi cer in order to take into account the length of time he has performed his duties.
The Chief Executive Offi cer will not receive severance payments in the event of gross negligence or willful misconduct, if he leaves the Company at his initiative to take another position or changes his position within Groupe BPCE. In addition, this payment will not be made if the Company is experiencing serious economic diffi culties. Furthermore, in accordance with the provisions of the AFEP/Medef Code of corporate governance, the right to compensation is subject to a certain number of criteria and performance conditions.
In accordance with the recommendations of the AFEP/Medef Code, upon the departure of the Chief Executive Offi cer, the Board of Directors must make a decision regarding whether to enforce the non-compete clause provided for under this agreement. Furthermore, the amount of severence, together with the non-compete payment, if applicable, received by the Chief Executive Offi cer is capped at 24 months of the monthly reference compensation as defi ned in the Commitment Regarding Severance Payments for Termination of Duties.
R TABLE 2 Summary table of the compensation of each executive corporate officer In the tables below: V the expression “amounts due” refers to compensation and benefits allocated to corporate officers within the context of their duties over the year, irrespective of the payment date; V the expression “amounts paid” refers to compensation and benefits actually paid to corporate officers within the context of their duties over the year irrespective of the date of allocation.
(a) The amount paid for the family allowance, i.e. €2,940 is declared under benefi ts in kind.
Table showing directors’ fees and other compensation received by non-executive corporate officers of Natixis from January 1 to December 31, 2013
In respect of BPCE and its subsidiaries 25,500 36,500 38,500 39,000
In respect of BPCE and its subsidiaries 18,000 19,000 20,500 15,500
In respect of BPCE and its subsidiaries 90,500.04 94,287.04 95,000 (15) 102,591.63 (15)
Benefi ts in kind in respect of BPCE 2,621 2,621 0 0
Member of the Natixis Audit Committee 20,000 20,000 (9) 20,000 20,000 (9)
(in euros) Non-executive corporate offi cers 2013 fi scal year (1) 2012 fi scal year
In respect of BPCE and its subsidiaries 21,300 22,300 22,176.80 22,176.80
In respect of BPCE and its subsidiaries 36,125 60,125 53,100 53,600
(2) Part of which from attendance fees due for fi scal year 2012.
(3) Part of which from attendance fees due for fi scal year 2011.
(4) Housing payment of €64,959.16 for 2013 is included in the fi xed compensation in respect of his corporate offi ce.
(5) Variable compensation for fi scal year 2013, of which €215,999 (50%) paid in cash in 2014 and the balance deferred (50%) over three years in equal shares of €72,000.
(10) Variable compensation for fi scal year 2013 , of which €356,398 (4 0%) paid in cash in 2014 and the balance deferred (6 0%) over three years in equal shares of €178,199 .
(15) The amounts indicated in the 2012 registration document are: amounts due €15,000; amounts paid €22,591.63.`
CORPORATE GOVERNANCE3 Policies and rules for determining compensation R TABLE 4
Subscription or purchase options granted during the period to each executive corporate officer by the issuer and by any group companies
Number of shares subscribed as at Dec. 31, 2013 0 0
Laurent Mignon, CEO Date term of offi ce commenced: May 14, 2009 Date term of offi ce expires: May 14, 2015 X X* X X
Potential confl icts of interest 3.5 Potential conflicts of interest 3.5.1 COMPETENCE AND INTEGRITY OF DIRECTORS
V for permanent and periodic control, Natixis applies the standards defined in Groupe BPCE’s control function charters; V Natixis complies with recommendations from international organizations dealing with prudential regulation issues for international banks, the most important being the Basel Committee.
Natixis’ internal control system is organized according to the following bodies of rules: V a set of charters and procedures for governing and managing Natixis’ risk processes (such as the procedure governing the credit decision process, the market risk management charter, the charter for measuring, controlling and managing operational risks, the charter for managing compliance risks, etc.); V Natixis’ audit charter; V the general IT/data security policy establishing the governance rules for the security and continuity of IT systems, as well as the security principles to be applied; V the charter formally defining areas of responsibility for country managers in Natixis’ foreign operations and organizing relations with heads of the business lines represented locally; V the “compliance manual,” which defines all best practices applicable to Natixis’ employees (especially concerning preventing conflicts of interest, countering money laundering, employee professional ethics, protecting confidential information, etc.).
V Concerning the scope of internal control, Natixis organizes its control functions on a global basis so as to ensure consistency of the internal control mechanism throughout the whole Company. The internal control system thus covers all risks and extends to all business lines and subsidiaries within Natixis. Local permanent and periodic control functions within subsidiaries or business lines report to Natixis’ corresponding central control departments, either on a functional basis in the case of subsidiaries or on a hierarchical basis in the case of business lines. The “risk”, “compliance” and “audit” functions constitute distinct business function.
V Natixis structures its control mechanism in a manner consistent with the principles set out by BPCE, with the objective of ensuring a consolidated approach to risk under the framework of control exercised by the shareholder group and central body, as well as satisfying the consolidated monitoring requirements set out in the CRBF Regulation.
Depending on situations and activities, these fi rst-level controls are carried out by the operating entities themselves or by ad hoc control units, such as middle offi ce or accounting control entities.
V The Compliance Department’s main responsibilities are to: R ensure a legal and regulatory watch relating to compliance, in conjunction with the legal function,
R ensure the execution of permanent second-level controls (including controlling compliance with standards and the application of procedures),
R implement a system of cooperation and links with the Risk Department, concerning the observation of operational defects that may entail compliance risks and measures to rectify them,
R intervene in an advisory role in order to support activities with a view to ensuring security and compliance with standards,
R manage IT systems projects dedicated to monitoring and managing compliance risks on a consolidated basis at Natixis group level,
R centralize the reporting of any anomalies within the meaning of Article 11-2 of Regulation 97-02 as amended, at subsidiary or business-line level, with a view to their consolidation by the Natixis group and their communication to BPCE; and defi ne the conditions for operating the alert mechanism provided for by this article whilst respecting the confi dentiality of declaring parties,
R prepare regular summary reports, notably for Natixis’ and BPCE’s Senior Management,
This strong functional link of a hierarchical nature is refl ected in: V Natixis’ Chief Compliance Officer being required to issue prior approval to the secondment, appointment or removal of a subsidiary’s Compliance manager; V Natixis’ Chief Compliance Officer participating in annual performance and career advancement reviews; V the obligation to send information to Natixis’ Chief Compliance Officer.
Permanent second-level controls, for which the Compliance Department is responsible, focus on: V transaction compliance: this involves checking not only transactions, but also that transaction execution processes comply with applicable banking, financial and market rules; V organizational compliance; V the quality of data transmitted to the Compliance Department (through automated systems and indicators); and
The IT Systems Security and Business Continuity Department is responsible for implementing the IT Systems Security and Business Continuity policy, which it defi nes, controls and maintains.
The IT Systems Security and Business Continuity (ITSS-BC) department works for Natixis and its subsidiaries in France and abroad. Its role includes: V ensuring at all times that security policy is appropriate to the risks incurred and to regulations; V promoting security policy and ensuring compliance with it at all levels; V if necessary, identifying the security services to be implemented; V verifying and monitoring compliance with this policy and ensuring oversight across the whole of Natixis.
Natixis’ Head of ITSS and BC reports to the Head of Compliance. He works in close cooperation with the Internal Audit Department and the Risk Department. He is in charge of the IT Systems Security and Business Continuity function, which includes the ITSS-BC Department and all persons charged with locally implementing and controlling operational IT system security and business continuity policies.
Governance of the IT Systems Security and Business Continuity function is provided by the following Committees: V a strategic ITSS Committee, which is Natixis’ highest-level decision-making body in the field of IT system security and business continuity. This Committee is chaired by a member of the Senior Management Committee and all business lines are featured in it; V an IT Systems Security Coordination Committee that regularly brings together the various participants involved in security, and especially the Heads of ITSS within subsidiaries. It is responsible for monitoring the annual security plan, coordinating and steering all the function’s actions and pooling security projects; V a Plenary Business Continuity Committee that regularly brings together all persons involved in business continuity to ensure that continuity actions are monitored; V Business Line or Subsidiary Security Committees that steer IT system security and business continuity actions for their subsidiary or business line.
The permanent control plan is revised each year. The results are now presented by division and will gradually be presented by business line. They include the performance of hacking tests, vulnerability tests and analyses of security events.
Initiatives aimed at reinforcing and controlling application security were initiated in 2012 and continued in 2013. These actions involved: V improving the management of user authorizations for information systems
ITSS-BC oversees the THOR (Traceability, Permissions, Optimization and Recertification) program aimed at improving, through increased automation, the processes for granting permissions (business line profiles, authorization workflows), maintaining permissions databases (departures and transfers/ promotions, recertification for key permissions) and control (widespread implementation of regular permissions reviews, detection of incompatible rights and atypical behavior). The roll-out by business line was started in 2013 and will continue in 2014; V protection of information
CORPORATE GOVERNANCE3 Chairman’s report on internal control procedures Security is also provided by raising the awareness of employees regarding best practices. Over 9,000 employees completed awareness-raising initiatives in 2013 via e-learning modules, special training courses and events.
Work in 2013 focused on: V Keeping the business continuity system in working order
In 2013, Natixis had over 1,300 backup positions for users, a backup data center and crisis meeting rooms.
By the end of 2013, all entities had integrated the BCP management software tool (Sanaga) selected at the end of 2012, which is used to update all Impact Analysis Assessments. Furthermore, to validate the effectiveness of their BCPs, Natixis’ business lines and support functions in France and abroad, performed: R 57 backup user site exercises,
In December 2013, the ITSS-BC Committee validated Natixis’ most critical activities (market activities) to be continued in the event of a regional crisis such as the Flooded Seine scenario.
The monitoring and support unit set up to coordinate and steer the various crisis units and to inform executive crisis unit members (CDG Natixis), particularly in the event of a cross-business crisis, was contacted for several incidents that did not cause any harm.
The Head of Business Continuity provided function participants with a “business continuity” e-learning module for all employees. In addition, the new Heads of BCP received special training and new employees received training in business continuity.
The Internal Audit Department reports directly to Natixis’ Chief Executive Offi cer. It has strong functional ties with Groupe BPCE’s General Inspection, in accordance with the principles approved by the CECEI in its decision on November 15, 2007, the BPCE General Inspection’s charter and Natixis’ internal audit charter revised in 2013. Also in accordance with these principles, the Internal Audit Department coordinates a global audit function.
Natixis’ Internal Audit Department is responsible for verifying the Bank’s controls and is one of the bodies responsible for the proper operation of the Bank’s internal control system within the meaning of the CRBF Regulation. In this respect, it is independent from all operational entities and support functions. It has no operational role and can therefore never fi nd itself in a position of confl ict of interest.
The Internal Audit Department follows up on recommendations. It conducts follow-up audits and checks, making use of recurrent work in the area carried out by operational departments and permanent control teams.
The work of Natixis’ Internal Audit Department is based on an annual Audit Plan drafted jointly with Groupe BPCE’s General Inspection and which aims to optimize the allocation of audit resources across the scope covered. It is part of a four-year plan that sets out the intervention frequency and adapts resources to the risks to be controlled.
Furthermore, several specialist projects involving all Internal Audit staff contributed to the consolidation of Natixis’ Audit function. These included in particular: V the publication of a new version of the audit charter, which was distributed to all staff; V the enhancement of the Audit function’s governance, with reinforced standards and procedures, a stronger operational framework at Natixis’ foreign subsidiaries, and a more closely supervised planning process for local audit teams; V the organization of audit relationships with Natixis’ business lines, jointly with BPCE’s General Inspection, in order to improve the quality of the permanent controls of activities and thus the knowledge of auditable units; V a special focus on risk assessment with new procedures (alerts and annual revision) concerning Audit risk mapping common to BPCE’s General Inspection and Natixis’ Internal Audit, and with a commitment to begin preliminary work with permanent controls aimed at consolidating existing specialized risk maps; V the automation of the recommendation monitoring system with the implementation of the dedicated Reco! system proposed by BPCE and its roll-out across all Natixis business lines. In 2013, as during the previous reporting periods, special attention was paid to the handling of audit recommendations and particularly the monitoring of priority recommendations; V the implementation of new data management resources (data manager hired and ACL software acquired).
The applied credit risk management system has been based on the advanced internal ratings-based approach since 2010.
The Risk Department provides Senior Management and the bank’s business line managers with reports analyzing Natixis’ risks: trend analyses, scorecards, stress test results, etc.
Procedures specify the operational breakdown of the mechanism described in the Natixis market risk regulation charter. They also describe in detail the limit authorization system as well as the two decision-making levels (front offi ce and risk).
In line with the recommendations of the Lagarde report, the Market Risk Department ensures that each trader is aware of his own limits. Each trader has to send an e-mail confi rming his attachment to the desk concerned and agree to their limits. The limit notifi cation procedure has been changed accordingly.
In mid-2009, BPCE granted a guarantee on most of the workout portfolio management assets in Paris and New York. Nevertheless, the Market Risk Department continues to manage risks on all transactions on a standardized and exhaustive basis, whether these transactions are guaranteed or not by BPCE. Overall VaR and stress tests taking into account the effects of this guarantee are produced on a daily basis.
CORPORATE GOVERNANCE3 Chairman’s report on internal control procedures Specifi c reports by activity are sent to the traders and managers concerned on a daily basis. A global market risk report is also distributed daily to Senior Management, BPCE and front offi ce managers. Finally, specifi c reports covering the scope of BPCE’s guarantee are sent to BPCE daily.
Two backtesting exceptions were observed in 2013 relative to regulations. The loss responsible for this exception exceeding VaR by more than 20% was reported to the Audit Committee and the ACPR in connection with the alert thresholds defi ned under Regulation No. 97–02 (Articles 17 ter and 38).
Solutions, the Head of Risk, the Head of the Single Treasury and Central Bank Collateral Management Pool, the Head of Financial Management and BPCE’s Head of Asset/Liability Management. The Committee meets every two months and is mainly responsible for: V validating the main asset/liability management rules (including those relating to internal liquidity pricing), agreements, indicators and limits (including liquidity budgets allocated to the business lines as part of budgetary procedure) used to monitor, manage and supervise structural balance sheet risks, all within the standard ALM framework set up by BPCE; V validating the overall refinancing policy in conjunction with BPCE ALM; V supervising the main balance sheet aggregates and their developments; V supervising structural balance sheet risks and compliance with limits.
Under this organizational framework: V the BPCE/Natixis single treasury and central bank collateral management pool, placed under the supervision of BPCE, coordinates the operational management of the Group’s refinancing needs in order to secure and optimize access to liquidity for the entire Group and its businesses; V circulation of cash between both balance sheets is governed by pricing rules and rules on managing conflicts of interest that have been documented and approved by the Group ALM Committee;
Liquidity risk is controlled, managed and monitored as follows: V supervision of each business line’s liquidity consumption: to manage the bank’s refinancing needs, liquidity budgets are allocated for each business line as part of the budgetary procedure and approved by the ALM Committee. Consumption is monitored weekly for Wholesale Banking business lines and monthly for other business lines; V supervision of short-term mismatching, which is measured using liquidity gaps. This indicator is produced daily for a one-year horizon in intervals of one day, based on all of the parent company’s transactions, including its US subsidiaries. It is subject to four permanent limits validated by the ALM Committee and monitored daily (overnight market exposure, 60-day, 150-day and 330-day static gaps); V supervision of medium-term mismatching, which is measured on the basis of liquidity gaps and asset/liability hedging ratios. These ratios, calculated for all currencies combined and for the US dollar, are subject to minimum hedging ratios validated by the ALM Committee. They are monitored monthly; V simulations of liquidity stress scenarios: the purpose of these scenarios is to measure the Group’s ability to continue to respect its commitments and operate in the event of a liquidity crisis. Natixis periodically simulates its contribution to the group’s earnings based on different crisis scenarios (systemic, specific, combined, etc.) and different levels of intensity (moderate, strong, extreme, etc.) over one-, two- and threemonth periods for which assumptions are set by BPCE; V refinancing structure: this structure is monitored in order to ensure that our resources are well-diversified in terms of counterparties, market segments and geographic areas for the purpose of keeping concentration risk under control.
The duties and organization related to operational risk are described in the operational risk policies and procedures validated by the Natixis Operational Risk Committee. This document defi nes: V the procedures for detecting, analyzing and measuring operational risk: R recording incidents,
Business-line Operational Risk Committees are offshoots of Natixis’ Operational Risk Committee. They closely manage each business line’s operational risk exposure. The Committees are chaired by the Head of the relevant business line with the participation of the Operational Risk Department, which acts as Committee secretary.
Operational Risk function governance has served to accompany change and reorganization in the banking business lines, while also maintaining constant efforts to improve procedures through corrective actions and action plans.
The Finance division prepares Natixis’ consolidated fi nancial statements using the consolidation tools and databases developed and administered by Natixis. As a listed company, Natixis prepares separate consolidated fi nancial statements, although the sub-group which is the Head of the group, has been included since July 1, 2009, in the BPCE consolidation group formed by the Banque Populaire banks and the Caisses d’Epargne.
Natixis has a system enabling it to: V produce a local IFRS-compliant reporting package, including, for foreign entities, a reporting period foreign currency conversion feature; V guarantee the consistency of data relating to the banking and insurance consolidation scopes; V offer retrieval features that can be used to input data into the various reports; V enable BPCE to access Natixis data through dedicated interfaces; V secure the integration process for consolidation packages received from international entities through the implementation of local first-level controls followed by centralized secondlevel controls.
As part of the regulatory process introduced by the Autorité de Contrôle Prudentiel et de Résolution (CRBF Regulation) concerning the internal control systems of credit institutions, Natixis’ Internal Audit Department uses the results of the periodic audits it performs to assess internal control procedures. There is a particular focus on accounting and fi nancial procedures
Chairman’s report on internal control procedures of all consolidated entities, whether or not they have credit institution status.
For all these systems, Natixis and its subsidiaries continue to upgrade their accounting and fi nancial control procedures and equip themselves with suitable audit trail tools. In this respect, Natixis’ Finance Department supervises, assists and monitors the various controls performed by the subsidiaries.
Firstly, as regards the scope of the Natixis entity, Accounting Controls are based on the following fundamental principles: V separation of the accounting entry and control functions; V standardization of control processes within the various business lines: methods, tools, reporting and schedules; V management centralized by the Finance Department and taken up by an independent Accounting Review team; V ensuring the size of the team is suited to the objectives defined.
The system is based on: V applying the principles established by the BPCE charter, which specifies the scopes governed by the two-level control processes and stipulates an approach covering supervision of the control teams; V two kinds of assignments (operational or organizational) to be carried out either as part of closing the accounts or in the form of periodic assignments; V dedicated tools that allow for the automated reconciliation of account entries and centralization of control results in an internal application; V formalized documentation, governed by a charter established by Groupe BPCE and specifically containing detailed procedures describing the mechanism’s structure as well as a map of controls spelling out the nature, execution frequency and responsibility of the two levels of control.
Outside France, Natixis continued to overhaul the accounting information system in the US, used by the parent company and rolled out at the US subsidiaries.
The 2014 fi scal year will be mainly dedicated to: V installing and rolling out the loan management tool in and the accounting system used in Paris throughout Europe (Milan, Madrid and London); V launching a major project aimed at streamlining the information systems used in the scope of market transactions (FO and BO systems) and rolling out new data input for the accounting tool in this scope; V continuing initiatives committed to strengthening second-level controls in the accounting, tax and regulatory areas; V implementing the governance bodies setup in 2013 both in France and abroad on a permanent basis, in line with the Review representatives at the subsidiaries and as part of the coordination of the Review function.
STATUTORY AUDITORS’ REPORT ON THE REPORT BY THE CHAIRMAN OF THE BOARD OF DIRECTORS, PREPARED IN ACCORDANCE WITH ARTICLE L. 225-235 OF THE FRENCH COMMERCIAL CODE
In our capacity as the Statutory Auditors of Natixis, and in accordance with Article L. 225-235 of the French Commercial Code, we hereby report on the report prepared by the Chairman of your Company in accordance with Article L. 225-37 of the French Commercial Code for the year ended December 31, 2013.
It is our responsibility: V to report to you on the information contained in the Chairman’s report on the internal control and risk management procedures relating to the preparation and processing of the accounting and financial information; and
Professional standards require that we implement procedures aimed at assessing the fairness of the information provided in the Chairman’s report regarding internal control and risk management procedures in respect of the preparation and processing of the accounting and fi nancial information. These procedures primarily consisted in: V obtaining an understanding of the internal control and risk management procedures relating to the preparation and processing of the accounting and financial information on which the information presented in the Chairman’s report is based, and the existing documentation; V obtaining an understanding of the work involved in the preparation of this information and the existing documentation; V determining whether any significant weaknesses in the internal control procedures relating to the preparation and processing of the accounting and financial information that we may have noted during the course of our assignment are properly disclosed in the Chairman’s report.
French original signed in Neuilly-sur-Seine and Paris-La-Défense, on March 14, 2014 by
RISK MANAGEMENT4 * The information provided in the following sections is an integral part of the fi nancial statements certifi ed by the Statutory Auditors.
V 4.3 Overall interest rate, liquidity, structural foreign exchange risks* 171
V 4.7 Sensitive exposures in accordance with Financial Stability Board Recommendations* 185
Natixis operates in an environment that presents inherent risks, some of which it cannot control. Certain risks to which Natixis is exposed are identifi ed below, with the caveat that it is not an exhaustive list of all risks taken by Natixis in relation to its business or in consideration of its environment. The risks set out below, as well as other risks that have not yet been identifi ed or are currently considered immaterial by Natixis, may have a material adverse impact on its operations, fi nancial position and/or results.
In accordance with the Financial Stability Board recommendations, Natixis’ sensitive exposures are described in detail at the end of this Chapter [4.7].
During 2013, the economic environment in which Natixis operates was marked by a continuing fragile economy in the euro zone and a persistently modest rebound in global growth during the second half of the year. Despite a few signs of improvement, large risks continued to weigh on global growth, mainly due to the lack of a true recovery in global trade, which could lead to major disruptions both in terms of credit and market volatility. Furthermore, the return of systemic risk could also impact the bank’s refi nancing conditions and the liquidity of the fi nancial assets it holds.
In addition to this persistently uncertain economic context, fi nancial and banking markets were adversely affected by other signifi cant events, often of a political nature, such as the US shutdown which lasted close to three weeks in October, the downgrading of France’s credit rating, the formation of a new government in Italy, the crisis in Cyprus and political tensions in the Middle East and North Africa, and fears of an economic slowdown in China.
RISK MANAGEMENT4 Risk factors Given the uncertainty of the global economic outlook for the short and medium term, further widespread economic deterioration in Europe, especially in France, could also have negative repercussions on provisions for risks and the deterioration of Natixis’ solvency.
In the event of a strong global economic recovery and runaway infl ation, or of a specifi c political event, central banks could decide at any time, with or without prior consultation, to change their monetary policy and adjust their liquidity policy, which could cause liquidity to suddenly dry up in these markets and in the economy at large. Against this backdrop, such developments could have a negative impact on the environment in which fi nancial institutions operate and, as a result, have an adverse impact on Natixis’ fi nancial position and results.
Governments (including governments of countries where Natixis entities are established) have responded to the fi nancial crisis by adopting, or are currently in the process of submitting to Parliament, a certain number of regulatory measures implementing major changes to the existing framework (Basel 3 (CRD4), Solvency 2, Dodd-Frank Wall Street Reform and Consumer Protection Act, Foreign Account Tax Compliance Act, European Market Infrastructure Regulation (EMIR), MiFID 2, French banking reforms, European banking union etc.). The analysis and interpretation of these measures, which arise from diverse sources, may generate new pressures for Natixis in its efforts to comply with all of the new regulations.
BPCE, Natixis’ principal shareholder, held 71.84% of its capital (and 71.96% of its voting rights) at December 31, 2013. Consequently, BPCE is in a position to exercise signifi cant infl uence over the appointment of Natixis’ corporate offi cers and executive managers, and on any other corporate decisions requiring shareholder approval. BPCE’s interests in relation to these decisions may differ from those of other Natixis shareholders.
Risk factors 4.1.3 RISKS RELATING TO NATIXIS’ OPERATIONS AND THE BANKING SECTOR
There are fi ve main categories of risk (credit risk, market, liquidity and fi nancing risk, operational risk and insurance risk) inherent to Natixis’ operations, which are summarized below and described more fully in sections [4.2.5 to 4.3, and 4.6] of this chapter and in section [3.6.4] of the “Chairman’s report on Internal Control” (the “Chairman’s report”), concerning, notably, the scale and the impact that these risks could have on the results and assets of Natixis, as well as the organization and control of these risks.
Natixis maintained a cautious risk policy over the year focused on targeted customer support.
Market risks were mainly carried by the bond activity, in particular as part of Natixis’ role as SVT (Spécialiste en Valeurs du Trésor - Government bond primary dealer). Financial market liquidity benefi ted from the accommodative monetary policies of central banks in developed economies and from their commitments to maintain key interest rates at very low levels. The exception was the US Federal Reserve’s tapering announcement (decreasing the purchase of securities) which triggered relatively high interest rate volatility but had no signifi cant impact on Natixis’ exposure.
OVERALL INTEREST RATE RISK, LIQUIDITY AND STRUCTURAL FOREIGN EXCHANGE RISK (FOR FURTHER DETAILS, PLEASE REFER TO SECTIONS [4.3] AND [3.6.4]).
Following on from the “New Deal” strategic plan, Natixis launched its new 2014-2017 strategic plan entitled “New Frontier” in November 2013. Guidelines for “New Frontier” are in line with Groupe BPCE’s plan. This new strategy aims to develop value-added customer solutions, step up the bank’s international expansion, create an Insurance division for the group’s needs and continue to identify synergies among the three core business lines and the networks of Caisses d’Epargne and Banque Populaire banks.
Despite the risk management policies, procedures and methods in place, Natixis may be exposed to unidentifi ed or unanticipated risks likely to give rise to signifi cant losses
Natixis could suffer losses if any of the various instruments and hedging strategies that it uses to hedge the various types of risk to which it is exposed prove ineffective. Many of these strategies are based on observation of historical market behavior and historical correlation analysis. For example, if Natixis holds a long position in an asset, it could hedge the risk by taking a short position in another asset whose change in the past has allowed it to offset the change in the long position. In some cases, Natixis may only be partially hedged, or these strategies may not fully hedge future risks or effectively reduce risk in all market confi gurations, or may even cause an increase in risks. Any unexpected change in the market can also reduce the effectiveness of these hedging strategies. In addition, the manner in which gains and losses resulting from certain ineffective hedges are recorded may increase the volatility of Natixis’ reported earnings.
Natixis may encounter diffi culties in identifying, executing and integrating its policy in relation to acquisitions or joint ventures
Natixis may consider external growth or partnership opportunities from time to time. Even though Natixis performs in-depth reviews of companies that it plans to acquire or joint ventures it plans to carry out, it is generally not feasible for these reviews to be comprehensive in all respects. As a result, Natixis may have to assume liabilities unforeseen initially. Similarly, the results of the acquired company or joint venture may prove disappointing and the expected synergies may not be realized in whole or in part, or the transaction may even give rise to higher-than-expected costs. Natixis may also encounter diffi culties in consolidating a new entity. The failure of an announced external growth operation or the failure to consolidate the new entity or joint venture is likely to materially affect Natixis’ profi tability. This situation could also lead to the departure of key employees. Insofar as Natixis may feel compelled to offer its employees fi nancial incentives in order to retain them, this situation could also result in increased costs and an erosion of profi tability. In the case of joint ventures, Natixis is subject to additional risks and uncertainties in that it may be dependent on, and subject to liability, losses or reputational damage relating to systems, controls and personnel that are not under its control. In addition, confl icts or disagreements between Natixis and its joint venture partners may negatively impact the benefi ts sought by the joint venture.
Intense competition, both in Natixis’ home market of France, its largest market, and internationally, could adversely affect Natixis’ net revenues and profi tability
Competition is intense in all of Natixis’ primary business areas in France and in other areas of the world where it has signifi cant operations. Consolidation, both in the form of mergers and acquisitions and through alliances and cooperation, is increasing competition. Consolidation has created a number of fi rms that, like Natixis, have the ability to offer a wide range of products and services. Natixis competes with other entities on the basis of a number of factors, including transaction execution, products and services offered, innovation, reputation and price. If Natixis is unable to maintain its competitiveness in France or in its other major markets with attractive and profi table product and service offerings, it may lose market share in important areas of its business or incur losses on some or all of its operations. In addition, downturns in the global economy or in the economy of Natixis’ major markets are likely to increase competitive pressure, notably through increased price pressure and lower business volumes for Natixis and its competitors. More competitive new competitors could also enter the market, subject to separate or more fl exible regulation, or other requirements relating to prudential ratios. These new market participants may therefore be able to offer more competitive products and services. Technological advances and the growth of e-commerce have made it possible for non-deposit taking institutions to offer products and services that traditionally were banking products, and for fi nancial institutions and other companies to provide electronic and Internet-based fi nancial solutions, including electronic securities trading. These new players may exert downward price pressure on Natixis’ products and services or may affect Natixis’ market share.
Regulatory monitoring of bank capital was introduced by the Basel Committee on Banking Supervision (Basel 2) in 1988 and is based on three pillars that form an indivisible whole: 4.2.1.1 Pillar I
Pillar I sets minimum capital requirements. It aims to ensure that banking institutions hold suffi cient capital to provide a minimum level of coverage for their credit risk, market risk, and operational risk. To calculate their capital requirement, fi nancial institutions may use standardized methods or, with the prior approval of the Autorité de Contrôle Prudentiel et de Résolution (ACPR - French Prudential Supervisory Authority), their own internal models.
Accordingly, Natixis has strengthened its supervision system by adopting risk policies for the Bank’s main businesses/sectors. These risk policies defi ne the credit and market risk budgets in particular.
In particular, Natixis’ operations are subject to a system of country limits that regulates the geographic diversifi cation of activities. This system, which has been in place for several years for emerging countries, was expanded to include developed countries in 2011.
The following insurance companies are accounted for by the equity method under the prudential consolidation scope: V Coface (insurance activities); V Natixis Assurances; V Compagnie Européenne de Garanties et de Cautions.
CFDI is the only Natixis subsidiary subject to management ratios (solvency, large exposures, monitoring of shareholdings) on an individual basis. Natixis S.A. and other French subsidiaries having the status of credit institutions are exempt from compliance with these requirements on an individual basis, by authorization of the ACPR.
The French decree dated February 20, 2007 (amended by the decrees dated October 19, 2007, September 11, 2008, October 29, 2009, August 25, 2010 and December 13, 2010) is France’s version of the European CRD (Capital Requirements Directive), which implemented the Basel 2 reform. It sets out
In addition, the EBA (European Banking Authority) is mandated to defi ne technical regulatory or implementation standards, as well as the guidelines for implementing CRD4 and CRR. Lastly, some options will be left to the discretion of the local supervisory authorities.
These new rules only took effect as of January 1, 2014, and the drafting of all the technical standards has yet to be fi nalized. Natixis was nevertheless able to estimate what its Core Tier 1 solvency ratio would be according to its understanding of the available texts (both in progress and fi nalized).
Unrealized capital gains or losses on available-for-sale financial assets are recorded in equity and restated as follows: R for capital instruments, net unrealized capital gains are deducted from Tier 1 capital net of the amount of tax already deducted. Of these pre-tax gains, 45% is included in Tier 2 capital. Net unrealized capital losses are not restated,
R unrealized capital gains or losses recorded directly in equity due to a cash fl ow hedge are eliminated,
Core Tier 1 capital is defi ned as Basel 2 Tier 1 capital after deducting Tier 1-eligible hybrid securities .
Since December 31, 2010 and in accordance with the Autorité de Contrôle Prudentiel et de Résolution (ACPR), Natixis’ investments in the Caisses d’Epargne and Banque Populaire banks, in the form of cooperative investment certifi cates (CCIs), were no longer deducted from capital but were included in risk-weighted assets. These investments were sold during 2013. For further details on CCIs, see section [1.4.4] “Presentation of Natixis - Major contracts”.
Registered share capital amounted to €4,960,472,304 at December 31, 2013 (i.e. 3,100,295,190 shares with a par value of €1.60) versus €4,937,943,670.40 at December 31, 2012. This increase is attributable to a capital increase reserved for employees.
RISK MANAGEMENT4 Pillar III Basel 2.5 regulatory capital is structured as follows (all data after impact of the guarantee granted by BPCE): (in billions of euros) 12.31.2013 12.31.2012 Change
The decrease in shareholders’ equity group share, to €17.9 billion, can primarily be attributed to the payout of the dividend in respect of fi scal year 2012 (-€0.31 billion) and the exceptional dividend of €2.0 billion following the sale of the CCIs. Also contributing to this decrease was the impact of the redemption by Natixis, in the fi rst half of 2013, of some DSNs for -€0.30 billion, in addition to the change in accounting method relative to IAS 19 on employee benefi ts for a total after tax of -€0.13 billion. These items were partially offset by the incorporation of net income for the year (+€0.88 billion) and the impact of recycling the unrealized capital losses carried by the CCIs to the income statement at the date of their deconsolidation (+€0.72 billion).
Tier 2 capital came down, due mainly to the impact of the early redemption of certain TSN issues (-€0.7 billion) and regulatory amortization of lines nearing maturity . The other prudential restatements and deductions did not vary signifi cantly.
Risk-weighted assets are calculated in accordance with the French decree of February 20, 2007 as amended on October 19, 2007, September 11, 2008, October 29, 2009, August 25, 2010, December 29, 2010 and November 23, 2011, relating to regulatory capital requirements applicable to banks implementing the Basel 2 and Basel 2.5 (CRD3) reforms.
Operational risks increased by €0.1 billion due to the replacement of the reference indicator for fi scal year 2010 with that of fi scal year 2013 (standard practice is to calculate operational risk using the average indicator for the previous three years).
Of which present value of residual exposure at default on fi nancial leases 13 11
Economic capital requirements are compared with regulatory capital requirements and equity that would be available to Natixis in the event of a crisis.
This ratio is calculated on a parent company (non-consolidated) basis and according to regulations must be above 100%. Natixis’ ratio was 143% at December 31, 2013.
The regulation on controlling large exposures was revised on December 31, 2010 (CRBF Regulation No. 93-05 as amended by the decree of August 25, 2010). It aims to prevent an excessive concentration of risks for sets of counterparties that are related in such a way that if one encountered fi nancial problems, the others would also be likely to have funding or repayment problems. The regulation is underpinned by an obligation to be respected at all times: all risks associated with a single counterparty cannot exceed 25% of the bank’s capital. Natixis complied with this regulation in 2013, except for one day due to a technical incident that had no ultimate impact.
It uses three levels of coordinated controls: V internal controls are carried out by operational or functional departments under the supervision of their management: business lines are responsible for the risks they incur in their transactions, until their maturity. Depending on the precise situation and activities, first-level controls are conducted either by personnel themselves or by an ad hoc body, such as a middle office or an accounting control department, or, where appropriate, by both acting together; V second-level controls (within the meaning of Article 6-a of CRBF Regulation No. 97-02) are carried out by dedicated bodies acting independently from operational departments; V third-level controls, also known as periodic controls, are carried out by the Internal Audit Department.
The Risk function is highly integrated, has short decisionmaking channels, and cross-business ties via dedicated teams, notably the Consolidated Risk Department, which adopts a comprehensive approach to risks. A Service and Investment Solutions Risk Department coordinates the function and is in charge of the Heads of Risk in the two divisions.
Credit risk affects lending operations as well as other operations exposing Natixis to the risk of counterparty default, notably its trading operations in fi nancial instruments on capital markets and its settlement-delivery operations. For instance, a default by a bank could directly and signifi cantly affect Natixis through its trading positions and relations with said bank. Credit risk also exists in Natixis’ credit insurance and factoring businesses, although the risk lies with the default of the debtor’s customers rather than the default of the debtor itself.
Country risk is the risk that economic, fi nancial, political or social conditions in a foreign country will affect Natixis’ fi nancial interests.
RISK MANAGEMENT4 Pillar III Natixis’ credit risk measurement and management procedures are based on: V a standardized risk-taking process, structured via a system of limit authorizations and decision-making Committees; V independent analyses carried out by the Risk Department during the loan approval review process; V rating tools and methodologies providing standardized and tailored assessments of counterparty risk, thereby making it possible to evaluate the probability of default within one year and loss given default; V information systems that give an overview of outstanding loans and credit limits.
Pursuant to regulatory requirements, all counterparties in the banking book and the related exposures must have an internal rating where they: V carry a loan or are assigned a credit limit; V guarantee a loan; V issue securities used as collateral for a loan.
Ratings are established on the basis of two approaches, namely statistical approaches and expert appraisals.
Back-testing and performance-monitoring programs are also used at least once a year to ensure the quality and reliability of LGD estimates and rating models and LGD grids or default probability scales (Corporate, Banks, Sovereign and LGD Secured). They include a detailed analysis based on a range of indicators, e.g. differences in terms of severity and migration compared with agency ratings, observed defaults and losses and changes in ratings prior to default, and the performance measurements of LGD models, based on the quantitative analysis of historical data and supplemented by qualitative analysis.
Natixis checks whether default probability scales are consistent with actual default rates in its portfolio. Statistics and the results of these checks are reviewed by Oversight Committees in charge of monitoring and imposing corrective measures or adjustments wherever necessary, such as the enrichment or redefi nition of models, or the modifi cation of reference samples.
Credit risk is supervised by making the various business lines accountable, and by various control measures overseen by a dedicated Risk Department team.
The business lines carry out day-to-day counterparty risk monitoring and the Risk Department conducts second-level controls. Each month, the Risk Department submits an overview of its monitoring activities to Senior Management and the Audit Committee.
The Risk Department has introduced stress test scenarios based on: V macroeconomic assumptions in the form of four stress scenarios applicable to all stress scopes: a reference scenario and three crisis scenarios; these are drawn up by Economic Research in association with the Risk Department; V specific business line scenarios to take into account risks that would not have been covered by the macroeconomic scenarios.
This stress testing is regularly applied to the Natixis consolidation scope to evaluate the risk generated in the event of an adverse trend in economic and fi nancial data. The results are presented regularly to the Global Risk Committee which also validates the selected scenarios.
RISK MANAGEMENT4 Pillar III Monitoring of doubtful and disputed loans and impairment mechanism
The tables below show exposure to credit risk according to Basel 2 regulations (decree of February 20, 2007), which is defi ned as EAD (Exposure at Default).
The transition from book outstandings (consolidated scope) to gross exposure and risk exposure in the prudential credit risk scope includes the following main operations: V exclusion of exposure classified in the trading scope; V inclusion of netting agreements on market transactions; V restatement of factoring positions to take into account exposure to the risk of default and a exposure in risk dilution; V application of a credit-equivalent conversion factor on financing and guarantee commitments.
SMEs recorded in the retail customer category 1,991 1,905 1,910 1,841
Breakdown of exposure at risk by category of exposure for the main geographic areas
SMEs recorded in the corporate entities category 1.7% 0.2% 0.0% 0.2% 2.1% 2.3%
Sovereigns Central administrations and central banks 3.8% 1.1% 12.5% 1.0% 18.3% 16.7%
Other exposure recorded in the retail customer category 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%
(a) Of which 26% in exposure to Groupe BPCE, versus 23% at end-2012.
SMEs recorded in the corporate entities category 279 457 392 1,987 2,771 5,887 6,039
Banks and investment fi rms 35,984 35,351 5,736 12,876 20,719 110,666 94,651
Other exposure recorded in the corporate entities category 71,860 15,345 5,534 92,738
SMEs recorded in the corporate entities category 2,802 540 2,545 5,887
SMEs recorded in the retail customer category 869 - 1,036 1,905
Other exposure recorded in the retail customer category 467 - 2,453 2,920
The tables below present the breakdown by rating of gross exposures and drawn and undrawn commitments, as well as the weighted average credit conversion factors (CCF), exposure at risk and risk-weighted assets.
Having received ACPR authorization, Natixis has applied internal credit conversion factors to IRBA-approved entities since December 31, 2012.
AVERAGE OBSERVED WEIGHTING BY INTERNAL RATING (S&P EQUIVALENT) FOR IRB ASSET CLASSES
(a) After reclassifi cation of US and FR central bank exposures from AA- to AA+ for better alignment with the external ratings of these banks (change to notional allocation principle: level 1 internal rating, or an S&P equivalent ranging from AAA to AA- with an allocation to AA-).
For each transaction, the risk-weighting is calculated (i) on the basis of the counterparty’s internal rating (probability of default), (ii) depending on whether the exposure is senior or subordinated, on the type of assets received as collateral (percentage of loss given default), (iii) the type of off-balance sheet commitments (credit conversion factor), (iv) the LGD and (v) the maturity.
Gross fair value of contracts/exposure at risk/notional amount of credit derivative transactions.
R IMPACT OF RISK-REDUCTION TECHNIQUES ON CREDIT DERIVATIVES (DATA AS AT DECEMBER 31, 2013)
R EXPOSURES COVERED BY PERSONAL COLLATERAL BY CATEGORY OF EXPOSURE AS AT DECEMBER 31, 2013
Other physical collateral o/w tangible collateral o/w fi nancial collateral 12.31.2012
Other exposure recorded in the corporate entities category 7,852 353 4,709 7,916
Financial collateral encompasses securities and other instruments in accordance with Paragraphs b) and f) of Article 338.3 of the French decree of February 20, 2007.
Breakdown of value at risk representing kept or acquired securitization positions by risk-weighting category
R BREAKDOWN OF SECURITIZATION POSITIONS ACCORDING TO THE MAIN CATEGORIES OF UNDERLYINGS
Asset liquidity is also an important component of market risk. In the event of insuffi cient or non-existent liquidity (for example, due to a reduction in the number of transactions or a major imbalance in the supply and demand of certain assets), a fi nancial instrument or any other tradable asset may be unable to be traded at its estimated value. The lack of liquidity may lead to reduced access to capital markets, unforeseen cash or capital requirements, or legal restrictions.
The Risk Department places great importance on the formal defi nition of all risk policies governing market transactions based on both a qualitative and forward-looking analysis. This analysis includes the strategic review of global risk envelopes according to the respective objectives of each business line and market trends, and provides an early warning system for the different risks identifi ed.
The Risk Department defi nes the principles for measuring risk, submits them to the Senior Management for approval and monitors their effective implementation and follow-up. It validates market product valuation models and regularly ensures that models used are consistent with market developments and changes in best practices.
Different techniques are used to measure market risk: 1. Synthetic measures of VaR to identify potential losses in each business, based on a pre-determined confidence level (99%) and time period (1 day).
The solidity of the VaR is regularly backtested against the change in daily trading results. This exercise allows for an expost comparison of potential losses, as projected ex-ante by VaR, with actual losses.
The regulator has authorized Natixis to use these new indicators in order to determine its capital requirement since December 31, 2011; 2. Loss alerts by portfolio and aggregated by business line, which alert the management and Risk Department if losses reach a certain threshold over a given month or on a cumulative basis since the beginning of the year. These thresholds are set by the Market Risk Committee according to the characteristics of each portfolio, past performance and budgetary targets; 3. Stress tests to measure potential losses on portfolios in extreme market conditions. Natixis’ mechanism is based on two categories of stress tests: overall stress tests and dedicated stress tests for each business.
Overall stress tests are reviewed on a continuous basis. They are performed daily and can be grouped into two categories: V historic stress tests consist of reproducing sets of changes in market parameters observed during past crises in order to create an ex-post simulation of the P&L changes recorded. While stress tests do not have any predictive value, they do make it possible to gauge the exposure of the portfolio to known scenarios; V hypothetical stress tests are used to simulate variations in market parameters on all activities, on the basis of plausible assumptions concerning one market’s predicted response compared with another’s, depending on the nature of the initial stress. Stresses are determined through a joint effort involving the Risk Department, the front office and Natixis economists.
In addition, reverse stress tests are used to highlight the most high-risk scopes and market environments as well as concentration and contagion links.
The independent validation of models developed internally by Natixis plays a fundamental role in the supervision of market risks: it helps secure the valuation of fi nancial instruments traded by the bank and analyses the risks associated with observed market prices and relevant factors.
The chart below presents the trading VaR history between December 31, 2012 and December 31, 2013 for the entire scope and for GAPC after accounting for BPCE’s guarantee, as well as for Wholesale Banking.
RISK MANAGEMENT4 Pillar III Breakdown of total trading VaR by portfolio
Interest rate Foreign exchange Specific interest rate risk Specific equity risk Equity Compensation effect
Two backtesting exceptions were noted and reported to the Audit Committee and to the ACPR in accordance with Articles 17 ter and 38 of CRBF Regulation 97-02 governing loss alerts.
The 6.21.2013 exception resulted from the market shock observed on June 21, 2013 (interest rate hike and widening of sovereign yield curve spreads in Europe), sparked by the statements issued by the Fed Chairman. This market trend exceeded the 2.33% standard deviation and was thus not captured by VaR.
This indicator applies to the regulatory scope after accounting for the BPCE guarantee.
The hypothetical stress test replicating the fall in stock market indices gave the maximum loss (-€100 million at December 31, 2013).
R OVERALL STRESS TESTS AS AT DECEMBER 31, 2013 (INCLUDING THE BPCE GUARANTEE)
En er gi ng m ar ke t c ris is
A single, overall information system has been deployed across all of the Company’s entities and hosts all the components required to manage operational risk.
The Operational Risk Department maps the most critical risk situations in order to draw up preventative action plans to reduce exposure and prioritize these situations.
In each of its operating entities, Natixis has implemented measures to monitor action plans to reduce its exposure to operational risks. These action plans are monitored by the business line and central Operational Risk Committees.
R BREAKDOWN OF AMOUNTS BY EQUITY PORTFOLIO AND BY TYPE AND NATURE OF EXPOSURE
Private Equity held in suffi ciently diversifi ed portfolios Other equity exposure
RISK MANAGEMENT4 Pillar III R RISK-WEIGHTED EXPOSURE FOR THE EQUITY ASSET CATEGORY OF EXPOSURE
Private Equity held in suffi ciently diversifi ed portfolios 2,851 46 2,897 4,548
R FRACTION OF AMOUNTS OF UNREALIZED GAINS OR LOSSES INCLUDED IN TIER 1 OR TIER 2 CAPITAL AS AT DECEMBER 31, 2013