3 RISKS AND CAPITAL ADEQUACYOverall interest rate, liquidity, structural foreign exchange risks V funding structure: the refinancing structure is monitored to ensure that resources are well diversified, by type of counterparty, by market segment and by geographic area, in order to mitigate all concentration risk (see section 3.8.4.3); V market depth testing by the Joint Refinancing Pool: these liquidity tests aim to collect the maximum resources in O/N liquidity to ensure that the limits granted by our counterparties are still available for our two signatures.
The strategy to collect and diversify client funds that began three years ago continued into 2015, mainly through the formation of the “client collection” business line within the Corporate & Investment Banking division. The funds collected by this business line continued to grow this year, with increased diversifi cation (mainly through an offering in Asia) and the improved effi ciency of these resources from a “regulatory liquidity” standpoint.
Finally, the weight of net resources provided by the Group was as always linked to the BPCE/Natixis Joint Refi nancing Pool, crossexchanges of liquidity for managing and maximizing liquidity gaps and regulatory ratios, and the Group policy, making BPCE the sole public issuer in the long-term segment.
The following charts are established on the basis of management data and do not fall under «Data certifi ed by the Statutory Auditors in accordance with IFRS 7».
■ GROSS WEIGHT OF THE BANK’S ON-BALANCE SHEET REFINANCING SOURCES, BY MAJOR CATEGORY OF VEHICLE AND/OR BY CUSTOMER SEGMENT AT END-2015
The refi nancing structure by currency, net of deposits to Groupe BPCE and central banks (ECB and Fed), was stable on the whole at December 31, 2015.
■ BREAKDOWN BY CURRENCY OF THE REFINANCING STRUCTURE - AT CURRENT EXCHANGE RATES - END-2015
■ 12.31.2014: BREAKDOWN BY CURRENCY OF THE REFINANCING STRUCTURE, AT CURRENT USD EXCHANGE RATES
This ratio was calculated on a parent company (non-consolidated) basis and according to regulations had to be greater than 100%. Natixis’ ratio was 125% at December 31, 2014 and 121% at September 30, 2015. It no longer applies since the LCR took effect on October 1, 2015.
These new rules were enacted in the European Union through Regulation (EU) No. 575/2013 of June 26, 2013, which laid down the fi ling obligations in force during the observation period from January 1, 2014 and set forth the conditions of implementation of these prudential requirements as from 2015 by a Commission Delegated Act (1) for the LCR, via a legislative proposal to be submitted no later than end-2016 for the NSFR.
3 RISKS AND CAPITAL ADEQUACYOverall interest rate, liquidity, structural foreign exchange risks V quarterly statements on stable funding, which are entirely descriptive (amounts and terms) without any weighting applied. The document enacting the NSFR, which Basel requests member countries to apply as a minimum requirement starting in 2013, in the European Union is currently being prepared by the European Commission.
The liquidity buffer – in the regulatory sense – is the numerator of the LCR (HQLA) and predominantly consists of: V level 1 liquid assets, i.e. cash deposits with central banks (FED and ECB, excluding mandatory reserves), and loans to central banks with very high credit ratings; V other level 1 liquid assets comprised mostly of debt securities, guarantees by sovereign issuers, central banks and public sector entities, and very high quality covered bonds; V level 2 liquid securities, mainly consisting of covered bonds, sovereign or public-sector debt securities that are not eligible for level 1, corporate bonds and equities listed on the markets and meeting certain conditions.
From an operational standpoint, Natixis has two liquidity reserves that contribute to the Group’s reserves: V a reserve of liquid assets eligible for central bank collateralized operations to secure intra-day settlements. This relatively stable reserve is made up of central bank loans and securities, and is located in Paris (about €4 billion in the 3G Pool) and New York (approximately $3 billion at the FBR discount window); V a liquidity reserve established in advance to meet a liquidity crisis similar to the one simulated by the LCR. The amount of this reserve ranges from €20 billion to €30 billion and is mainly reinvested with the ECB and the US Federal Reserve. Since 2015 a small share of assets in this reserve are under discretionary management with an allocation strategy focused on the list of financial instruments deemed to be level 1 and level 2 HQLA as defined by LCR regulations in force. The liquidity of the portfolio under discretionary management and the assets reinvested with central banks ensure the reserve can be mobilized immediately if needed.
As a result, Natixis has managed to reduce its balance sheet by €100 billion at constant exchange rates over the course of 2015 to reach a leverage ratio target above 4% at end-2015. These deleveraging efforts focused on balance sheet-intensive but low RWA-consuming activities. These efforts focused mainly on the reduction in the short-term cash fl ows raised but not used by business lines, on a lower activity of temporarily carrying securities held on clients’ behalf and of French primarily dealer (“SVT» and «SPVT”), on a wider use of clearing houses, and on a greater use of the derivatives portfolios’ compression’ operations.
Other fi nancial liabilities at fair value through profi t and loss 93 - 30 14 3 6 4 5 9 24
3 RISKS AND CAPITAL ADEQUACYOverall interest rate, liquidity, structural foreign exchange risks (in billions of euros) Liabilities
Other fi nancial liabilities at fair value through profi t and loss 139 - 45 24 6 8 4 5 8 39
They are covered under the LCR management policy and were evaluated at 3.5 billion in euro equivalent at December 31, 2015, versus 4 billion in euro equivalent at December 31, 2014.
Debt securities issued besides own secured bonds or own asset-backed securities 3,352
Assets, collateral received and debt securities issued besides secured bonds or securities backed by encumbered assets
At December 31, 2015, Natixis’ encumbered assets amounted to €78,760 million, of which: V €53,628 million in encumbered securities for corporate actions and issues of securities; V €5,334 million in encumbered receivables in mechanisms other than secured bonds; V €609 million in receivables securing secured bond issues; V €19,189 million in encumbered assets in respect of margin calls on derivatives.
The Compliance Department is in charge of establishing best practices to prevent and mitigate the risk of non-compliance with banking and fi nancial regulations. It also oversees IT Systems Security and business continuity. Reporting to the Corporate Secretary, the Compliance Department functions independently of the operational departments. It acts in accordance with the rules set out by Groupe BPCE. Its scope of action encompasses all of the business lines and support functions of Natixis, the subsidiaries and branches in France and abroad.
The operating rules of the Compliance and Permanent Control Department are set out in a charter approved by Natixis’ Senior Management Committee. For the business lines operating within the parent company, the Heads of Compliance report hierarchically to Natixis’ Chief Compliance Offi cer. There is a “direct” reporting line between the subsidiary and branch compliance managers and Natixis’ Chief Compliance Offi cer. Through this line, Natixis’ Chief Compliance Offi cer issues prior approval for the assignment, appointment or removal of subsidiaries’ compliance managers, participates in annual performance and career advancement reviews, approves annual work plans and fulfi lls reporting and alert requirements vis-à-vis Natixis’ Compliance Department.
The department carries out second-level controls to ensure the compliance of transactions with banking and fi nancing regulations, and ensures that anomalies detected by the relevant business lines are remedied.
Training and awareness-raising initiatives are regularly conducted so that employees can demonstrate adequate levels of knowledge and vigilance.
Lastly, it reports to the members of the Senior Management Committee and the Board of Directors (Audit Committee and Risk Committee) on the main risks detected and on the implementation and effectiveness of the means to address these risks.
The department is equipped with a set of tools to cover all of the areas under its responsibility, including: V behavioral analysis tools, used in conjunction with KYC tools, to detect money laundering and internal fraud, verify compliance with embargoes and prevent terrorist financing; V tools to monitor sensitive transactions, keep lists of insiders and manage conflicts of interest.
The prevention of confl icts of interest is ensured through: V employee compliance with professional obligations; V the set-up and monitoring of information barriers; V the update of risk maps with situations posing a risk of conflict of interest; V the verification of compensation policies; V the keeping of a conflict of interest catalog; and
Whenever the risk of compromising a customer’s interests becomes unavoidable in spite of the internal procedures in place, Natixis informs the customer of the nature of the confl ict of interest before taking action on the customer’s behalf, allowing the customer to make an informed decision on whether to proceed with the transaction.
Information barriers are put in place and reviewed each time the organizational structure changes in order to prevent the unwarranted circulation of confi dential information. These barriers function as partitions between business lines and departments, setting limits to the circulation of information on a need-to-know basis. As such, information is transmitted only in the customer’s interest and only to employees who absolutely require the information to carry out their duties. These barriers may be organizational, physical or electronic and may be permanent or temporary.
Since 2005 Natixis has implemented a procedure that allows employees to report any action or professional activity that they suspect as improper or incompatible with banking provisions.
The procedure is optional. There is no penalty imposed on employees who do not use this procedure. Employees who do use the procedure are entitled to strict confi dentiality, and they may not be penalized or subject to unequal treatment.
Natixis is committed to protecting the personal data of customers and employees alike. Accordingly: V processes involving the use of personal data are conducted pursuant to the French Data Protection Act and, in most cases, are declared to the Commission Nationale de l’Informatique et des Libertés (CNIL – French Data Protection Authority) in France or to the competent authorities internationally; V Natixis takes the necessary measures to guarantee the confidentiality of such data and to keep the persons whose data are being processed informed so that they can fully exercise their rights of access and rectification.
V client information on the use of their personal data was updated in the account agreement and on the client website.
The prevention of corruption is handled by an overall system of fi nancial security. Natixis is a signatory to the United Nations Global Compact and upholds its principles.
Processes and procedures are implemented to prevent, manage and supervise: V conflicts of interest; V fraud and money laundering; V political contributions and contributions to public officials; V donations, patronage and sponsorship; V gifts and benefits.
3 RISKS AND CAPITAL ADEQUACYCompliance and reputational risk, legal risks All employees are called upon to exercise vigilance against pressure and solicitation and in situations such as those involving abnormally high or overcharged commissions and informal and private interactions with public companies.
On the international level, Natixis ensures strict compliance with local regulations such as the UK Bribery Act and the Foreign Corrupt Practices Act.
To combat of money laundering, Natixis has introduced: V due diligence and KYC obligations on customer onboarding and throughout the customer relationship; V a procedure for reporting “suspicious” transactions to the relevant financial intelligence unit; V regular employee training and notification to ensure compliance with these obligations.
The anti-fraud measures are steered by the Financial Security Department’s Anti-Fraud Coordination Unit in collaboration with the concerned business lines. This unit is also in charge of drafting and implementing standards and principles for fraud risk management and of coordinating the anti-fraud offi cers’ network across the subsidiaries and branches of Natixis in France and abroad.
In 2015 the fraud surveillance tool deployed to the Capital markets activities was updated with additional indicators to refi ne the detection of atypical behaviors. Vigilance and actions to prevent social engineering-type payment fraud were maintained, as this continually evolving fraud is particularly widespread. As for information leaks, mechanisms were strengthened with the implementation of a dedicated prevention and response plan.
The ITSS-BC Department coordinates its activities on the basis of the risks. It relies on a method which identifi es, in terms of operational risk, the risk situations of concern to the business lines and to link them to their IT assets that may be vulnerable. This crosschecking is used to produce a map of the major IT Systems Security and business continuity risk, and devise the action plans to reduce these risks. The IT Department implements the technical solutions devised to respond to the needs expressed by the business lines.
The user authorization management program was initiated in 2012 to review all management processes, tools, the documentation of application profi les, the setting of business line profi les and the reauthorization of user rights and the associated controls. At the end of 2015, 70% of the entities (business lines and support functions) had been reviewed as part of the program.
The most signifi cant disputes are described below. Their inclusion in the list does not indicate that they will necessarily have an impact on Natixis and/or its consolidated subsidiaries. The other disputes are deemed unlikely to have a material impact on Natixis’ fi nancial situation or profi tability and/or that of Natixis and its consolidated subsidiaries as a whole, or have not reached a stage where it can be determined whether they will have such an impact.
Associates LP billed services to these three funds at an excessively high rate in light of applicable regulations. These proceedings are among numerous legal claims initiated in recent years against investment advisors. Harris Associates L.P. and the plaintiffs fi led motions for summary judgment.
In March 2008 Natixis and Natixis Funding Corp. were named among the defendants in multiple class-action and individual lawsuits fi led by and on behalf of certain state, county and municipal bond issuers in the US federal courts in New York, Washington D.C. and California. The plaintiffs alleged that providers and brokers of municipal derivatives conspired to fi x prices, rig bids and allocate customers beginning in 1992. The various lawsuits, as initially fi led, named more than 30 other US and European banks and brokers as defendants in all. The lawsuits were regrouped in federal court (the United States District Court for the Southern District of New York) under the caption “Municipal Derivatives Antitrust Litigation.” Some plaintiffs sought to certify a class of all state, local and municipal government entities, independent government agencies and private entities that purchased municipal derivatives from the defendants or through brokers beginning in 1992, and sought to recover alleged damages resulting from the alleged anticompetitive activities.
These civil claims arose out of investigations in the industry that were performed beginning in late 2006 by certain government agencies, including the US Internal Revenue Service (“IRS”), the Department of Justice (“DOJ”) Anti-Trust division, the US Securities and Exchange Commission (“SEC”) and state prosecutors.
The settlement and releases, covering Natixis and all affi liates, encompass all claims that were or could have been brought in this nationwide consolidated class action as well as by the group of Attorneys General, and will be binding on all class members except individual claimants who may choose to fi le requests for exclusion from the class. The class action settlement is still subject to court approval so the litigation, known as the “Municipal Derivatives Antitrust Litigation,” remains pending in the United States District Court for the Southern District of New York.
Outstanding Madoff assets, net of insurance, were estimated at €475 million at December 31, 2015, and were fully provisioned at this date. The effective impact of this exposure will depend on both the extent of recovery of assets invested in Natixis’ name and the outcome of the measures taken by the bank, primarily legal. With this in mind, Natixis has appointed law fi rms to assist it in these recovery efforts. Moreover, in 2011 a dispute emerged over the application of the insurance policy for professional liability in this case; a ruling on the merits took place in early 2015 confi rming the application of the insurance policies, for the full amount covered, of the losses incurred by Natixis as a result of the Madoff fraud, which was appealed by the insurers.
In March 2009 the Paris public prosecutor’s offi ce (Parquet de Paris) launched a preliminary investigation into a complaint fi led by Natixis minority shareholders and coordinated by the Association de Défense des Actionnaires Minoritaires (ADAM – Association for the Defense of Minority Shareholders). As the plaintiffs have initiated civil proceedings, a judicial investigation has been opened.
In August 2011 the Commune of Sanary-sur-Mer in France fi led a complaint against Natixis and other defendants before the Administrative Tribunal of Toulon seeking the joint and several payments of €83 million for the loss of the Commune’s planned investments and the loss of future contributions to its budget following the abandonment of the planned construction of a local
In January 2013 Natixis received a compulsory third-party joinder at the request of SEEM. This company seeks a joint sanction against Natixis and particularly Cube Energy SCA for the payment of approximately €23 million, alleging that Cube Energy SCA acted in breach of its duty of loyalty to its partner SEEM. Natixis believes the outcome of this case will be positive for Natixis and the companies in its Group.
In June 2013 Union Mutualiste Retraite fi led three complaints with AEW Europe in relation to the acquisition and management of two real estate portfolios in Germany between 2006 and 2008. The amounts claimed by Union Mutualiste Retraite total €103 million. The case is still in progress.
Legal proceedings regarding residential mortgage-backed security (RMBS) transactions executed between 2001 and mid-2007 have been initiated against Natixis in the United States.
In 2013 EDA Selcodis fi led a complaint against Compagnie Européenne de Garanties et Cautions for the sudden termination of commercial relations following the refusal by Compagnie Européenne de Garanties et Cautions to grant EDA Selcodis a guarantee. In November 2013 EDA Selcodis fi led a joint complaint against Natixis, BRED and CEGC for unlawful agreements for which EDA Selcodis requested the joinder of the procedure with that conducted against CEGC for the sudden termination of commercial relations and requests the joint sanction of these three entities for the total payment of €32 million.
In June 2014 the administrators of the MPS Foundation (Fondazione Monte dei Paschi di Siena), an Italian foundation, fi led a claim against 11 banks, including Natixis, which granted it fi nancing in 2011 at the request of its previous offi cers, on the grounds that the fi nancing thus granted was in violation of its bylaws, which state that the MPS Foundation cannot hold debt exceeding 20% of its total balance-sheet. The damages claimed from all of the banks by the MPS Foundation totals €285 million.
The liability adequacy test carried out in accordance with IFRS 4 showed that insurance liabilities measured under local standards, for the year ended December 31, 2015, were greater than the fair value of these liabilities, taking into account the redemption option incorporated in the policies.
According to the sensitivity analysis carried out at endDecember 2015: V a 10% drop in the equity market would have a negative impact of €24.9 million on equity (after taking into account the variation attributable to policyholders and taxation), i.e. 1.5% of equity; V a 10% drop in the real estate market would have a negative impact of €9.3 million on equity (after taking into account the variation attributable to policyholders and taxation), i.e. 0.57% of equity; Also, Natixis Assurances fully reinsures the guaranteed minimum payment on unit-linked policies.
The annual reinsurance plan seeks to diversify reinsurers and to deal only with parties having a high-quality rating. No reinsurance treaty is entered into or renewed with parties that are non-investment grade (rating of BB+ to D-). In practice, the ratings of reinsurers with which Natixis Assurances does business range from AA to A-. The reinsurers that Natixis Assurances works with have a low issuer risk, and the risk of concentration in a given counterparty is limited since Natixis uses several reinsurers.
This business is susceptible to three risks: V mispricing risk: a portfolio monitoring policy was implemented whereby each policy is given a score based on its track record over three years. Factored in are types of claims, number of claims, their cost and other variables specific to the activity in question (degree of liability and bonuses/penalties for motor insurance, for instance). Corrective measures can range from increasing premiums to terminating the policy upon expiry. This monitoring policy also contributes to detecting potential risks arising from large claims, and to arranging adequate reinsurance coverage;
Credit risk concerns the risk of loss generated by the portfolio of insurance policies. Coface manages credit risk through a number of procedures, whose scope includes the approval of the terms of policies relating to products, pricing, the monitoring of credit risk hedging and portfolio diversifi cation. Traditionally, Coface makes a distinction between frequency risk and event risk: V frequency risk represents the risk of a sudden and significant increase in delinquency by numerous debtors. This risk is measured for each region and country by monitoring the instantaneous loss ratio (1) and the monthly indicator that breaks down the changes in domestic/export credit by DRA (Debtor Risk Assessment) and business sector, by acceptance rate on the DRA scale, or by product line (deposit, single risks). Missed payments are analyzed weekly by the Group Management Board and monthly by Coface’s Underwriting Committee. Loss ratios for the different underwriting regions are also monitored at the consolidated Coface level; V event risk represents the risk of abnormally high losses recorded for the same debtor or group of debtors, or of an accumulation of losses for the same country. Event risk coverage is the main purpose of Coface’s reinsurance whose management has been centralized under the lead company Coface Re SA since January 2015.
Coface maintains a diversifi ed credit risk portfolio, in order to minimize the risk of a default by a debtor, a slowdown in a particular sector of activity, or an adverse event in a given country having a disproportionate impact on its overall claims expense. The insurance policies also contain clauses enabling the changing of credit limits mid-contract. Furthermore, the fact that the great majority of Coface’s risks are short-term (95% of total outstandings) allows it to reduce the risk covered for a debtor or a group of debtors relatively quickly and to anticipate a decrease in their solvency.
The following chart analyzes the breakdown of debtors by total credit risk exposure borne by Coface at December 31, 2015.
Underwriting risk is the main risk incurred by CEGC. It is essentially a counterparty risk, as the commitments given by CEGC to benefi ciaries of guarantees result in direct exposure to underwriters. These regulated commitments recorded on the liabilities side of the balance sheet amounted to €1.43 billion at December 31, 2015 (up 17.7% compared to the end of 2014). This increase was in line with fi scal year 2014, driven mainly by mortgage guarantees for retail customers.
The sharp decrease in regulated commitments in the real estate development segment is due to a reversal of a provision on a major claim (a risk that did not materialize) and to the payment of a major claim which therefore no longer a commitment.
Gross balance sheet value of the provision % breakdown Fair value % breakdown
CEGC hedges its liability portfolio by implementing a reinsurance program tailored to its activities. Through this program, the Company is able not only to secure its underwriting income and solvency margin on loan guarantees, but also to protect its equity in the event of high-severity claims on activities other than loan guarantees. Due to their considerable granularity, loan guarantees do not present concentration risk.
CEGC uses a default mapping tool and database tailored to its activities and developed on the basis of business line processes. This database is the standard framework used to catalog incidents and risky situations, and for monitoring corrective action plans based on the methods deployed by Natixis.
Strategy risks consist of: V the risk inherent to the strategy chosen; V or resulting from Natixis’ inability to implement its strategy.
The membership of these various bodies is presented in Chapter 2, «Corporate governance». The Internal Rules of the Board of Directors, including the procedure for calling meetings, can be found in Chapter 2, paragraph 2.3.1, of this registration document.
The identifi cation and management of these risks are presented in Chapter 6 of this registration document.
(These data form an integral part of the financial statements certified by the Statutory Auditors.)
Net exposure at 12.31.2015 AAA AA A BBB BB B CCC C
At December 31, 2015 exposures to sovereign risk in countries receiving fi nancial aid or facing uncertainties (political, currency, etc.) were as follows: (in millions of euros)
Sovereign securities Derivatives (b) Other Total * Countries which benefi ted from European Union fi nancial assistance.
(c) Exposure corresponds mainly to the "shipping fi nance" sector amounting to €145 million.
4.1 MANAGEMENT REPORT AT DECEMBER 31, 2015 190 4.1.1 Note on methodology 190 4.1.3 Consolidated results 193 4.1.4 Analysis by Natixis business line 195 4.3 POST-CLOSING EVENTS 202 4.4 INFORMATION CONCERNING NATIXIS S.A. 203 4.4.1 Natixis S.A.’s parent company income statement 203 4.4.2 Proposed allocation of earnings 203 4.4.3 Payment terms 203
4 OVERVIEW OF THE FISCAL YEARManagement report at December 31, 2015 4.1 Management report at December 31, 2015 4.1.1 NOTE ON METHODOLOGY
Beginning in 2015, capital is allocated to Natixis business lines on the basis of 10% of their Basel 3 average risk-weighted assets, versus 9% beforehand, thereby aligning the standard used for measuring each division’s requirement with the Bank’s target Core Tier 1 ratio (CET1). Pro forma calculations were performed for 2014.
ROE and ROTE for Natixis and the business lines are calculated as follows: V the result used to determine Natixis’ ROE is net income (group share), from which DSN interest expense is deducted, net of tax effects as recognized in equity. The equity used is average annual shareholders’ equity (group share) under IFRS, after distribution of dividends, eliminating unrealized or deferred gains and losses recognized in equity and excluding DSNs; V the calculation of business line ROE is based on normative capital, plus goodwill and intangible fixed assets related to the business line.
In 2015 Natixis was impacted by the depreciation of the euro against the dollar, particularly at the start of the year, and in Europe the continued decline of short-term rates into negative territory, the improvement in European stock market indices and stability on the US markets. Moreover, in December the Fed raised its key interest rate for the fi rst time in 10 years. On the economic front, the global growth outlook was revised downward due to the diffi culties faced by emerging countries and the limited turnaround in the advanced economies. Lastly, the price of oil took several tumbles to hit its lowest level in 11 years at end-2015, pulling down most commodity prices in its wake.
In this context, Natixis pursued the roll-out of its New Frontier strategic plan, which aims to turn Natixis into a bank that is entirely dedicated to clients while offering them fi nancial solutions with substantial added value. Some of this project’s achievements in 2015 include the acquisition of DNCA by the Asset Management business line, and of Leonardo and Co S.A.S. (“Leonardo France”) by Corporate and Investment Banking. Natixis disengaged from non-strategic activities, as illustrated by its disposal of Kompass International (Financial Investments) in September.
Moreover, Natixis bolstered its positions on its core businesses and continued their business development, with a focus on the BPCE networks and its own clientele.
In 2015 the Investment Solutions division consolidated the synergies of its four business lines (Asset Management, Insurance, Private Banking and Private Equity) with Natixis’ other core businesses and the Groupe BPCE networks.
The following events took place in the course of NGAM’s development in fi rst-half 2015: V the April 2015 purchase of an additional 10% stake in Euro Private Equity, in accordance with the acquisition agreement. NGAM now holds 70% of its share capital; V NGAM’s subscription to the Ossiam capital increase in June 2015. Following this transaction, NGAM holds a 57.86% stake in Ossiam capital (versus 51% beforehand); V the June 2015 launch by Natixis Asset Management (NAM) of “Emerise”, its new Singapore-based specialized unit dedicated to emerging markets. Emerise offers a range of emerging market equity funds providing investors with solutions that combine long-term growth with portfolio diversification.
After 2014, 2015 was yet another bumper year for NGAM in terms of results and infl ows: V in the first quarter of 2015 NGAM’s assets under management exceeded the €800 billion mark (€801.1 billion at end-2015); V net inflows totaled €33 billion, the highest level achieved (in current euros) since 2006; V NGAM International Distribution posted record gross and net inflows of $102.2 billion and $19.6 billion respectively; V NGAM US Distribution posted very strong gross inflows of $62.7 billion, with net inflows reaching $1.7 billion.
In 2015 Banque Privée 1818 garnered considerable success in the area of corporate advisory services. Its team received mandates on several occasions for management advisory services on LBO deals. For the third year in a row, the team also maintained its ranking as a market leader in the “best investment bank for managerial team support” category, bestowed by Décideurs magazine.
The parties agreed to a highly targeted partnership in the areas of personal protection, collective health and long-term care insurance.
In early 2014, work on the “Assurément#2016” program began in order to help the Caisse d’Epargne network distribute the Insurance business line’s life insurance and personal protection insurance products. This work has continued and is on schedule to launch the new range of products as of the fi rst quarter of 2016.
Lastly, as part of its commitment to continuing the digital transformation of its operating processes, the Insurance business line is offering Groupe BPCE’s networks and customers its products and services and new consumer modes: online subscription, electronic signature, real-time management, smartphone applications, etc.
These efforts are widely recognized: at the end of 2015 Natixis Assurance was named the winner of the Argus digital insurance award in the “Best Internal Corporate Digital Transformation Strategy” for the Digistrat project, and the website Instit Invest named the business line “Digital Communication Strategist of the Year”. Similarly, the innovativeness of OWI, a semantic analysis tool for email designed by the non-life Insurance business line, was awarded with a Groupe BPCE internal Innovation Trophy.
In 2015 Natixis’ Corporate & Investment Banking division undertook structure-building projects across all business lines, in line with the objectives of the New Frontier strategic plan.
It expanded its expertise in providing support to companies and client coverage, which saw it play a leading role in landmark deals, such as the public tender offer by the Chinese conglomerate Fosun for the Club Med group. It affi rmed its expertise in the primary equities market by ranking as No. 1 bookrunner for capital increases with preferential subscription rights (PSP) in France (Source: Bloomberg). In 2015 the bank expanded its M&A activity in France with mid cap and investment fund clientele with the acquisition of the French operations of Leonardo & Co, now called Natixis Partners. This acquisition has boosted Natixis’ positioning in this market and is now ranked No. 3 in M&A advisory services in France by number of deals carried out in 2015 (Source: Thomson Reuters – Mergers & Acquisitions Review). It carried out largescale, high value-added structured fi nancing transactions in the aviation, export, infrastructure, strategic and acquisition funding, and real estate fi nance. It was also ranked No. 2 bookrunner in France for leveraged fi nancing with private equity funds, and No. 5 in the EMEA region (Source: Dealogic, full year 2015), No. 3 MLA in the syndicated loan market by Trade Finance in 2015 (Source: Dealogic, Global Trade Finance Review), No. 5 bookrunner in real estate fi nance in the EMEA region in 2015 (Source: Dealogic, EMEA Syndicated Real Estate Finance Loan Review 2015, ranking excluding REITS).
With its cross-expertise research, Natixis offers its clients crossdisciplinary insight into the markets (equity, credit, economic). In 2015 Natixis was recognized in this line of service for having the Best Credit Research team in six sectors: ABS, agencies, covered bonds, consumer products and retail, general industries and utilities (Sources: Euromoney - Fixed Income Research Survey 2015).
Global Transaction Banking furthered the expansion of its activities internationally, particularly in the areas of trade fi nance and liquidity management. GTB also confi rmed its capacity for innovation by creating myContrôles, a digital service that secures international payments and transfers, thus helping corporate clients safeguard against the risk of social engineering fraud, such as “fake president fraud” or “supplier fraud”.
Natixis continued to develop internationally. In this respect, the Americas platform pursued its geographic expansion strategy by intensifying its presence in Latin America. It posted robust results in all business lines and broadened its range of products and services. In Asia-Pacifi c, Natixis garnered signifi cant commercial success. Finally, the EMEA platform saw the implementation of a development in Africa and the acquisition plan of 360 Corporate Finance, S.A. in Spain.
The Financial Investments division pursued its disengagement strategy with the transfer of its Ho Chi Minh branch to BPCE International in October 2015, and the disposal of Kompass, a core entity of Corporate Data Solutions, in September 2015.
The development of the core businesses went hand-in-hand with strict fi nancial management. RWA were down 2% year-on-year to €113.3 billion at December 31, 2015. Corporate & Investment Banking’s RWA dropped by 4% to €69.4 billion at December 31, 2015.
Until the June 30, 2014 closure of GAPC, legacy assets were segregated from the recurring net income (group share). This presentation facilitates comparisons between reporting periods and makes it easier to interpret business performances.
Natixis’ net revenues amounted to €8,704 million at December 31, 2015, up 16.0% from December 31, 2014. Revaluation of own senior debt (1) accounted for €139 million in net revenues for the year.
Excluding the impact of the revaluation of own senior debt, net revenues climbed 11% over the year to €8,565 million, refl ecting solid momentum in the core businesses (+14%).
Net revenues (2) generated by the businesses rose 12.7% to €8,706 million. All three core businesses posted increased revenues, with 5% for Corporate & Investment Banking excluding non-recurring items (3), 25% for Investment Solutions and 3% for Specialized Financial Services.
Net revenues from Financial Investments totaled €828 million, stable compared to 2014, and down 1.6% excluding the exchange rate effect, scope effect and non-recurring items.
Recurring expenses amounted to €5,955 million, including an expense of €43 million as a contribution to the Single Resolution Fund. They rose by 5% compared to 2014 at constant exchange rates. This increase was mainly attributable to the Investment Solutions division (up 8% at constant exchange rates) which is pursuing its development in Asset Management and Insurance. Meanwhile Corporate & Investment Banking posted a 4% rise in expenses at constant exchange rates, and the Specialized Financial Services division’s expenses increased a modest 2%.
Natixis’ headcount was up 3% year-on-year to 15,855 FTEs at end2015 driven by the development of the Corporate & Investment Banking (especially internationally) and Investment Solutions divisions.
The cost/income ratio improved by 3.5 points to 68.4%. Excluding the impact of the revaluation of own senior debt, it improved by 0.4 point year-on-year to 69.5%.
The provision for credit losses was €291 million in 2015, and was down 3% compared to 2014, which refl ected a slight improvement in economic conditions and solid management of the quality of transactions introduced to the portfolio.
Pre-tax profit therefore amounted to €2,473 million in 2015 versus €1,877 million in 2014, up 32%. It includes an impact of €139 million from the revaluation of own senior debt versus -€208 million in 2014. Excluding this impact, pre-tax profi t climbed 12% from 2014 to 2015.
(1) The impact on net revenues of the revaluation of Natixis’ own senior debt was €139 million in 2015 versus -€208 million in 2014.
Gross operating income was up 39.2% (up 25.5% at constant exchange rates) to €1,138.8 million.
Pre-tax profit totaled €1,156.6 million, up 41.0% at current exchange rates.
Natixis Global Asset Management continued to grow and earned a number of awards: in early January 2016, three NGAM affi liates received awards at the 23rd edition of the Gestion de Fortune Awards: V H
O Asset Management was named Firm of the Year; V DNCA Finance was ranked No. 1 in the category “Asset Management Companies with over €5 billion in AuM”; V Dorval Asset Management came first in the category “Asset Management Companies with less than €1 billion in AuM”.
Assets under management exceeded €800 billion at December 31, 2015. They totaled €801.1 billion, up €21.5 billion (up 2.8%) compared to December 31, 2014 at constant exchange rates, buoyed by the strongest level of net infl ows since 2006 (in current euros).
Net inflows of €33.0 billion underscored the activity’s momentum in Europe in particular.
NGAM International Distribution posted record gross and net infl ows of $102.2 billion and $19.6 billion respectively.
The average rate of return on AuM of 29.1bp was up versus 2014 levels. Bond products, insurance products and equity products remained predominant in the product mix at end-2015 (29.7%, 24.1% and 22.4%, respectively).
Expenses totaled €1,900 million, up 21.2% compared to 2014 (up 7.3% at constant exchange rates) due to the development of the distribution and asset management business in the US, as well as higher expenses in Europe (mainly scope effects and performance fees). Excluding the scope effect, Asset Management expenses increased 5.9% at constant exchange rates.
Premiums on Personal Protection and Payment Protection insurance (€702 million, up 12%) maintained a similar pace of growth to 2014 (+15%). The personal protection insurance business saw marked premium growth (up 8% vs. (1)% in 2014). The payment protection insurance business maintained a high growth rate (up 13%).
Operating on mature and highly competitive markets, the Property & Casualty Insurance business benefi ted from the entry into force of France’s Hamon Act, a consumer protection bill, which presented a real opportunity to gain market share for networks aiming to expand their client base. Compared to 2014, the 1.2 million new policies acquired by the BP and CE networks represented a 6% increase, driven by the 21% climb in the number of new Automotive and Multi-Risk Home policies. The number of policies under management grew by 10% to €4.9 million for the BP and CE networks. Earned premiums on Property & Casualty Insurance across the entire BP and CE networks were up more than 11% to €1,180 million, driven by growth on Multi-Risk Home Guarantees and Automotive Guarantees.
At December 31, 2015, Private Banking posted net inflows of €1,759 million, refl ecting the strength of the business, especially in international wealth management and the private B2B management services provided by the networks.
In 2014 Private Banking net revenues rose 12.7% to €144.7 million (up €16.3 million) compared to 2014, owing to a 10% rise in fees on AuM, strong incentive fees (up €5.6 million over the year), and the strong performance of transaction fees.
Expenses rose 8.3% on 2014 to €138.2 million, due in large part to IT expenses related to the go-live phase of IT projects and on variable payroll costs in relation to income growth.
In 2015 Corporate & Investment Banking’s net revenues amounted to €3,056 million, up 9% compared to 2014. After restatement for non-recurring items relating to Fixed Income and Treasury activities in 2014 (expense of €119 million), revenues increased 5% at current exchange rates. These non-recurring items were related to a change in CVA/DVA/FVA methodology in 2014.
Revenues from Fixed Income, Credit, Forex, Commodities and the Treasury activities gained 15.4% compared to 2014. Restated for non-recurring items included in the above-mentioned net revenues in 2014, they increased by 2% at current exchange rates.
V Revenues generated by the Debt Platform are stable. Within this scope, the securitization activity gained 11%, attributable mostly to the development of the business in the US.
V Revenues from Fixed Income and Forex activities were up 9% with a marked increase in forex earnings over the year.
Equities activities generated net revenues of €537 million, up 26% relative to 2014.
V Income from Equity Markets activities were up 26%. While Equity Cash activities declined, equity derivatives activities (excluding the SET joint venture) increased by 44%, making it the primary growth driver of Global Markets.
The cost/income ratio was 60.9% in 2015, down 0.3 points compared to 2014. Restated for the above-mentioned non-recurring items in 2014, it went down by 2.2 points.
At €198 million in 2015, the provision for credit losses increased by 7% compared to 2014, attributable in large part to run-off activities (Corporate Solutions) and structured fi nancing.
Leasing continued to refocus on providing services to the Banque Populaire and Caisse d’Epargne networks, recording a 10% increase in new business compared to 2014.
Assets under management in Employee Savings Plans continued to climb, reaching €24.2 billion. Securities Services maintained strong development momentum, with a 2015 market share gain of 0.5 point to 16.0% in Chèque de Table meal vouchers.
Net revenues reached €1,308 million in 2015, up 3% in persistently challenging French economic conditions.
A Coface 2015 turnover progressed 3.4% at €1.5 billion. At constant scope and exchange rates, it gained 1.2% on 2014 amid deteriorated conditions in emerging countries. Insurance, which accounts for 95% of turnover, gained 3.6% while factoring remained stable.
Gross credit insurance outstandings decreased 6% year-on-year to reach €453.4 billion.
The loss ratio net of reinsurance came out at 52.5% versus 50.4% in 2014, losing 2.1 points.
Gross operating income decreased by 2% (down 6% at constant exchange rates and like-for-like).
Net revenues in 2015 reached €82 million, down 1% on 2014. Restated for the sale of Kompass, net revenues increased by 3%.
4 OVERVIEW OF THE FISCAL YEARManagement report at December 31, 2015 2015 net revenues were negative at -€3 million versus (-€13) million in 2014, which factored in an exceptional impact of -€10.9 million linked to a haircut on seven funds which were sold in 2015.
Natixis Algérie posted a 3% decrease in net revenues on 2014 to €67 million. Excluding the exchange rate effect, net revenues were up 1%.
The provision for credit losses was -€290.8 million at December 31, 2015, of which -€313.2 million in respect of individual risk and €22.4 million in collective provisions. At December 31, 2014, the provision for credit losses (excluding GAPC) totaled -€300.0 million.
In these market conditions, Natixis raised a total of €14.5 billion under its medium- and long-term refi nancing program (versus €10.7 billion in 2014). As the only long-term issuer in the public issues segment, BPCE provided Natixis with fi nancing for a total euro-equivalent amount of €7.7 billion.
Refer to Note 14, “Post Closing Events”, in Chapter 5.1, Consolidated Financial Statements and Notes.
In 2015 net revenues posted a -€237 million decrease to €3,483 million due to: V a -€333 million decrease in the interest margin; V a €37 million increase in net fee and commission income; V a -€245 million decrease in income from variable-income securities; V a €56 million increase in income from trading book transactions; V a €229 million increase in income from transactions on securities held for sale; V a €19 million increase in other banking operating income and expenses.
The provision for credit losses decreased by €36 million compared to 2014 to -€165 million in 2015.
Natixis’ fi nancial statements at December 31, 2015 showed positive net income of €1,134,225,514.40 which, once added to retained earnings of €681,035,833.91, results in distributable profi ts of €1,815,261,348.31.
R 1 - MANAGEMENT RESULTS RECLASSIFIED AS CONSOLIDATED RESULTS IN 2015
Of which due to change in methodology in application of IFRS 13 and FVA impact (-€119 million, CIB).
** Capital gain on the disposal of offi ce space (Corporate Center).
5.1 CONSOLIDATED FINANCIAL STATEMENTS AND NOTES 206 5.2 STATUTORY AUDITORS’ REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS 336 5.3 PARENT COMPANY FINANCIAL STATEMENTS AND NOTES 338 5.4 STATUTORY AUDITORS’ REPORT ON THE PARENT COMPANY FINANCIAL STATEMENTS 373
Loans and receivables due from banks 6.5 71,462 71,718 o/w institutional operations
Customer loans and receivables 6.5 107,189 107,224 o/w institutional operations 682 646
Financial liabilities at fair value through profi t and loss 6.1 158,990 220,622
Revaluation adjustments on portfolios hedged against interest rate risk 227 233
Accrual accounts and other liabilities 6.9 39,937 39,189 o/w institutional operations 4 4
V Non-recyclable gains and losses recorded directly in equity (78) (125)
Net gains or losses on available-for-sale fi nancial assets 7.4 609 543
Net income/(loss) attributable to shareholders (see note 5.23) - group share - per share, calculated on the basis of the average number of shares over the period, excluding treasury shares 0.41 0.35
Equity as of December 31, 2013 after appropriation of income 4,960 5,701 989 (19) 6,434
(b) Other equity instruments issued: refers to the undated deeply subordinated notes and preference shares that were reclassifi ed as equity instruments.
(e) Of which a €189 million impact related to the purchase options awarded to minority shareholders of the DNCA France entities and Natixis Partners.
(f) Of which -€424 million related to the recognition of a deferred tax liability on the tax amortization of goodwill (see Note 15.5) and -€142 million related to the withdrawal of capital gains on reclassifi cation following the repayment of a line of undated deeply subordinated notes subscribed for by BPCE.
= Total non-cash items included in pre-tax profi t and other adjustments 3,939 4,022
+/- Decrease/(increase) in fi nancial assets and equity interests (a) 139 444
(b) Flows from or to shareholders include: V dividends paid to BPCE (-€757 million) and dividends paid outside the Group (-€376 million); V the capital increase reserved for employees (see Notes 5.17 and 11.2.4) (+€45 million).
NOTE 3 CONSOLIDATION SCOPE 224 3.1 Key events 224 3.2 Changes in consolidation scope since January 1, 2015 224 3.3 Interests in subsidiaries 225 3.4 Interests in partnerships and associates 227
NOTE 8 STATEMENT OF NET INCOME (LOSS) AND OTHER COMPREHENSIVE INCOME 296 8.1 Change in gains and losses recorded directly in other comprehensive income 296 8.2 Breakdown of tax on gains and losses recognized in other comprehensive income 296
NOTE 9 SEGMENT REPORTING 297 9.1 Corporate & Investment Banking 297 9.2 Specialized Financial Services 297 9.3 Investment Solutions 298 9.4 Private Equity (non-core activities) 298 9.6 Corporate Data Solutions 299 9.7 Corporate Center 299 9.8 Segment reporting 299 9.9 Other disclosures 301
NOTE 11 HEADCOUNT, PAYROLL COSTS, COMPENSATION AND EMPLOYEE BENEFITS 305 11.2 Compensation and employee benefi ts 305
NOTE 13 COMMITMENTS 314 13.1 Guarantee commitments 314 13.2 Financing commitments 315
(1) The complete body of standards adopted by the European Union may be consulted on the European Commission website at: internal_market/accounting/ias/index_fr.htm.
The European Union has not yet adopted IFRS 9. However, given the importance of the changes introduced by this standard, Natixis began work on analyzing the standard and applying it operationally in the fi rst half of 2015 as part of the organization of a project involving all affected business lines and support functions. This work will continue in 2016 and will include implementing the necessary IT developments for the standard to be properly applied.
IFRS 15 applies to all contracts with customers except for leases (covered by IAS 17), insurance contracts (covered by IFRS 4) and fi nancial instruments (covered by IFRS 9).
Natixis will begin assessing the impact of the new standard in 2016.
The consolidated fi nancial statements are based on the individual fi nancial statements at December 31, 2015, of the entities included in Natixis’consolidation scope.
Unless otherwise indicated, the fi gures given in the notes are expressed in millions of euros.
Natixis’consolidated fi nancial statements include the fi nancial statements of Natixis and its main subsidiaries.
The scope of Natixis’consolidated entities is provided in Note 17 of the fi nancial statements.
2.2 The notion of control and consolidation methods 2.2.1 Control of an entity
If this is not the case, control is determined through the exercise of judgment and by taking into account all facts and circumstances, such as: V the objectives, terms and circumstances surrounding the creation of the entity; V the nature of the entity’s relevant activities and the decisionmaking processes concerning these activities; V the scope of Natixis’decision-making rights (from voting rights or contractual agreements) over the management of the entity’s relevant activities (i.e. activities having a significant impact on the entity’s returns); V exposure to variability in the entity’s returns (the significance of the returns received by Natixis compared to the returns received by the other investors, etc); V rights held by other parties (withdrawal rights, early redemption rights, rights on termination of the entity, etc.).
Full consolidation involves replacing the book value of the investments by the full value of all of the subsidiary’s assets and liabilities.
Natixis exercises joint control when, by virtue of a contractual arrangement, decisions pertaining to the entity’s relevant activities require the unanimous consent of the parties sharing control over the partnership and when each partner has the ability to prevent the other partners from controlling the arrangement.
IFRS 11 distinguishes between two types of partnerships: jointventures and joint operations.
V Joint-ventures are partnerships in which the parties exercising joint control over the company have rights to that company’s net assets. They are consolidated using the equity method. Consolidation by the equity method involves replacing the book value of the investments in the owner’s account by Natixis’interest in the shareholders’equity and income of the owned entity.
Signifi cant infl uence is the power to participate in the fi nancial and operating policy decisions of the corporate entity owned without having control over such policies. Signifi cant infl uence is presumed to exist when Natixis directly or indirectly owns at least 20 % of the voting rights of the company in question. IAS 28 defi nes companies over which signifi cant infl uence is exercised as associates. These are consolidated using the equity method in accordance with the same terms as those applicable to joint-ventures (see above), with the exception of Private Equity investments which Natixis classifi es under assets designated at fair value through profi t and loss, pursuant to the option available under IAS 28.
In the event of an increase in Natixis’percentage of ownership in an already-controlled entity, the difference between the acquisition cost of the additional interest share and the share acquired in the entity’s net assets at this date is recorded in “Consolidated reserves”. In the event of a decrease in Natixis’percentage of ownership in an entity without loss of control, the difference between the selling price and the book value of the share of interests sold is also recorded in “Consolidated reserves”.
The granting of put options to minority shareholders by Natixis has no impact on the determination of Natixis’controlling interest in the subsidiary in question as long as the option is not exercised, unless Natixis also holds an immediately exercisable call option.
The method used to measure non-controlling interests and goodwill varies depending on whether IFRS 3 or IFRS 3R is applied.
V Application of IFRS 3 to business combinations carried out before January 1, 2010: R minority interests are determined based on their share in the identifi able net assets of the acquired entity, measured at their fair value at the purchase date (partial goodwill method),
R goodwill is the difference between the cost of the business combination and the share of the purchasing entity’s interest in the net fair value of identifi able assets, liabilities and contingent liabilities; V Application of IFRS 3R to business combinations carried out after January 1, 2010: R for each business combination, Natixis chose to determine non-controlling interests: R either based on their share in the identifiable net assets of the acquired entity, measured at their fair value at the purchase date, and therefore without recognizing goodwill on the noncontrolling interests (partial goodwill method),
R or based on their fair value at the purchase date, resulting in the recognition of goodwill, both for the Group share and the non-controlling interests (full goodwill method); R hence, goodwill is a residual item determined as the difference between (i) the sum of the purchase price, the fair value at the purchase date of the share of interest held in the acquired entity prior to the purchase date, and the amount of non-controlling interests (determined using the partial or full goodwill method) and (ii) the net amount of the assets and liabilities assumed, measured at their fair value at the purchase date.
Combinations between entities or operations under joint control are understood to be combinations in which several operations are combined and all interested parties (entities or operations) are ultimately controlled by the same party or parties for a relatively long period before and after the combination. Such combinations do not fall within the scope of IFRS 3R.
The assets contributed by the CNCE to Natixis fall into two different categories: V shares in the corporate and investment banking and service subsidiaries; V a portion of the cooperative investment certificates (CCIs) conferring entitlement to the share capital of the Caisses d’Epargne.
Other transactions affecting the structure of the Group that led to the creation of Natixis were accounted for by the purchase method for consolidation purposes, in accordance with IFRS 3.
Goodwill arising in connection with the above-mentioned business combination on December 31, 2006 was accounted for as follows: Goodwill on contributed entities
All items of goodwill are impaired, based on the value in use of the cash-generating units (CGUs) to which they have been allocated. However, the former Corporate Data Solution (CDS) CGU was evaluated using a company-by-company approach in light of disposal plans and actual disposals concerning several entities of the CGU and limiting the synergies of the remaining group. For the Coface CGU, a listed entity since June 2014, which is not one of Natixis’core businesses and which is managed on an asset basis, value in use was supplemented by other approaches using market data including market multiples, stock market prices and brokers’target prices. An average valuation was determined by weighting the different approaches.
Value in use is determined principally by discounting the expected future cash fl ows from the CGU (DCF method) on the basis of the fi ve-year medium-term business plans drawn up by Natixis.
The following assumptions have been used: V estimated future cash flows: forecast data drawn from mediumterm plans established in conjunction with the core business lines as part of Natixis’strategic plan and resulting from the new business plan for Coface; V perpetual growth rate: 2.5%; V discount rate: use of a specific rate for each CGU: 9.7% for Investment Solutions (9.9% in 2014), 11.2% for Specialized
These tests resulted in a write of €3.5 million in the equityaccounted investment in the Graydon entity based on forecast data drawn from the entity’s multi-annual plan. The goodwill of €2.4 million included in the book value of the equity investment was fully written down.
Similarly, the sensitivity of future business-plan cash fl ows to variations in key assumptions does not signifi cantly affect the recoverable amount of CGUs: V for Investment Solutions, a 10% decline in the “equity” markets and one point decline in the EONIA and 10-year long-term interest rates would have a negative impact of 3% on the recoverable amount of the CGU and would not lead to any impairment being recorded; V for Specialized Financial Services, a one point drop in the threemonth EURIBOR applied to Factoring and recreating a “20082009 ” (drop in production and increased cost of risk) type crisis on Leasing would have a - 8% negative impact on the recoverable amount of the CGU and would have no impact in terms of impairment;
The assets and liabilities of subsidiaries which Natixis intends to sell within a maximum period of 12 months, and for which it is actively seeking a buyer, are identifi ed separately on two specifi c lines of the consolidated balance sheet as non-current assets and liabilities (see Note 5.9).
On December 31, 2014, Natixis undertook negotiations concerning the sale of its subsidiary Midt factoring A/S. At December 31, 2014, Natixis maintained the full consolidation of its subsidiary and combined, in accordance with the provisions of IFRS 5 “Non-current Assets Held for Sale and Discontinued Operations”, the assets and liabilities of that entity under two separate balance sheet line items: “Non-current assets held for sale” and “Liabilities associated with non-current assets held for sale”. At December 31, 2015, as Natixis had revised its objectives and the entity was no longer held for sale, the presentation of the entity under IFRS 5 was discontinued.
Reserves also include economic hazards related to end-of-year premiums as well as a reserve for management fees.
Pursuant to paragraph 30 of IFRS 4, insurance policies and investment contracts with discretionary participation (life insurance) are measured using shadow accounting, which consists in recognizing the portion of unrealized gains or losses potentially attributable to policyholders as a deferred profi t-sharing reserve. The deferred profi t-sharing reserve thus refl ects the potential entitlement of policyholders to unrealized gains for fi nancial investments or their portion of unrealized losses. Considering prospective pay-out ratios for the duration of the 2016-2017 Medium-Term Business Plan and in accordance with the pay-out ratio recorded for 2015, the deferred profi t-sharing rate adopted at December 31, 2015 was 90%
In the event of net unearned losses, a deferred profi t-sharing asset is recognized up to the amount for which future deferred profi tsharing of policyholders is estimated to be highly probable.
The change in the deferred profi t-sharing asset and liability is recognized: V in equity when it relates to changes in the value of “available-forsale assets”; V in income when it relates to changes in the value of assets “at fair value through profit and loss” or investment property held to cover insurance policies, as well as changes in provisions for prolonged declines in value in “available-for-sale assets”.
Application of the shadow accounting mechanism resulted in the recognition of a deferred profi t-sharing liability on December 31, 2015 as on December 31, 2014.
Prospective analysis of the deferred profi t-sharing asset’s recoverability is therefore carried out to demonstrate the ability and intention of companies to meet liquidity requirements over the remaining recoverability period without selling investments in unrealized losses. This process corresponds to a forward-looking view of future cash fl ows, built following regulatory and contractual conditions applied to contracts and with the help of economic scenarios based on historic probability.
In accordance with Article 41 of the Amended Finance Act for 1997 (No. 97-1239 of December 29, 2007), amended by Article 121 of the Amended Finance Act for 2008 (No. 2008-1443 of December 30, 2008), Article 5 of the Amended Finance Act for 2014 (No. 2014-1655 of December 29, 2014) and the agreement signed with the French State on September 21, 2011, and its amendment of June 24, 2015, Natixis manages certain public procedures on behalf of the French State, mainly consisting of loans and gifts to foreign States conferred in the framework of Public Development Aid, non-subsidized Treasury loans to foreign States, gifts under the “Fund for Private-Sector Aid and Studies” and the stabilization of interest rates for export credit guaranteed by Coface. The related transactions, some of which may be guaranteed by the State, are recognized separately in the fi nancial statements. The State and other related creditors have a specifi c right over the assets and liabilities allocated to these institutional operations. The bank’s assets and liabilities relative to these operations are identifi ed on the balance sheet under each of the headings concerned with these operations.
In July 2015, the French government decided to transfer the management of State export guarantees to Bpifrance. The principle of the transfer is recognized in Article 103 of the amended Finance Act for 2015, which will come into force on a date set by decree and no later than December 31, 2016. The transfer will involve the sale to Bpifrance of the standalone State guarantees business, consisting of dedicated teams and resources (IT, contracts, etc.) as well as its corresponding assets and liabilities.
Coface will continue to be remunerated by the French government until the transfer of this activity becomes effective.
In 2015, Natixis completed the acquisition Leonardo & Co France’s operations, renaming the company Natixis Partners, which has become its Mergers & Acquisitions entity for investment funds and mid-cap clients.
At December 31, 2015, Natixis owned 92% of the share capital in Natixis Partners. Natixis holds a controlling interest in Natixis Partners in accordance with IFRS 10 and consolidates it using the full consolidation method.
This transaction generated goodwill of €4.8 million, as determined using the partial goodwill method.
During fi scal year 2015, Natixis fi nalized the acquisition of asset manager DNCA Finance via Natixis Global Asset Management (NGAM). This deal expanded NGAM’s expertise to include retail clients.
Natixis holds a controlling interest in DNCA Finance, through NGAM, in accordance with IFRS 10 and consolidates it using the full consolidation method.
V Acquisition of 92% of the share capital and voting rights in Leonardo & Co. SAS on May 13, 2015. This company was renamed Natixis Partners; V The Liquidité Short 1 UCITS and Natixis US MTN Program LLC issuance vehicles are now included in the consolidation scope; V Creation of the Natixis Beijing branch on April 30, 2015.
V Liquidation of the following entities: R Universe Holdings Ltd; R Natixis Corporate Solutions (Asia) Pte Ltd; R Natixis Corporate Financement; R Natexis US Finance Company LLC.
V The percentage interest in EDF Investissement Groupe is 6.11%, versus 4.49% at December 31, 2014, an accretion resulting from an unevenly subscribed capital reduction on September 30, 2015.
V Acquisition of Apostle, which was renamed NGAM Australia, in the first quarter of 2015; V Acquisition of DNCA Group on June 30, 2015. This acquisition resulted in the full consolidation of the following entities: DNCA & Cie, DNCA Finance SA, DNCA Finance Luxembourg, DNCA Courtage SARL and DNCA Management; V Consolidation of the AAA Actions Agro Alimentaire fund, invested in by Natixis Assurances representing unit-linked policies; V Consolidation of the Natixis Credit Opportunities I/A EUR fund, managed and predominantly invested in by Natixis Asset Management; V Consolidation of SCPI Fructifonds Immobilier in the fourth quarter of 2015 when its ownership interest thresholds were crossed; V Consolidation of Ecureuil Vie Développement on an equity basis following Natixis Assurances’repurchase of 49% of the shares previously held by BPCE; V Creation and consolidation of GIE BPCE Relation Assurances in October 2015.
V NGAM Canada (formerly Nexgen) Ontario Inc was dissolved in January 2015; V Deconsolidation of two mutual funds, Fructifonds profil 3 and Zelis actions monde, when their ownership interest thresholds were crossed in the first quarter of 2015; V Disposal on August 12, 2015 of the following entities: Reich & Tang Asset Management LLC, Reich & Tang Deposit Solutions LLC, Reich & Tang Distributors Inc, Reich & Tang Services Inc, Reich & Tang Stable Custody Group LLC, and Reich & Tang Stable Custody Group II LLC; V The Seeyond Multi Asset Allocation Fund was deconsolidated when its ownership interest thresholds were crossed in the third quarter of 2015; V Disposal of Cube Infrastructure Managers (formerly Natixis Environnement et Infrastructures Luxembourg) on December 22, 2015; V Liquidation of the following entities: R PBW Ream in the third quarter of 2015,
V Creation and full consolidation in the second quarter of 2015 of the Natixis Financement securitization vehicle FCT PUMACC (Purple Master Credit Cards).
V Deconsolidation of the securitization fund FCT Fast at the end of December 2015 in the absence of new receivables.
V Decrease in the percentage interest in Natixis Coficiné following the sale of 4% of the shares held by Natixis S.A. Natixis now holds 96% of the entity’s shares.
V Disposal of Kompass Belgique and Kompass International in the third quarter of 2015.
V The company Providente was absorbed into Natixis Private Equity on August 3, 2015.
3.3.2 Impact of changes to percentage holdings in subsidiaries still under control at December 31, 2015
Consolidated fi nancial statements and notes 3.3.3 Impact of the loss of control during the period of a subsidiary in which an interest is retained
Natixis is subject to liquidity risk supervision, which requires it to establish a liquidity pool limiting the use of the assets constituting it (see Note 3.8.4. “Liquidity Risk and Refinancing Strategy” of Chapter 3 , “Risk Management and Capital Adequacy” of the registration document).
The share of encumbered assets that cannot be freely used is presented in section 3.8.4 “Liquidity Risk and Refi nancing Strategy” of Chapter 3, “Risk Management and Capital Adequacy” of the registration document.
Natixis Financement is a stakeholder in partnerships in the form of sociétés en participation (SEPs), with a lending institution (Banque Populaire bank or Caisse d’Epargne). The purpose of these SEPs is to ensure the origination, distribution, marketing, management and out-of-court collection of: V personal repayment loans granted by the Banque Populaire or Caisse d’Epargne network; V revolving credit products granted by Natixis Financement to the customers of the Banque Populaire or Caisse d’Epargne network.
Natixis does not have interests in joint-ventures having a material impact on Natixis’consolidated fi nancial statements.
The main investment by Natixis consolidated using the equity method at December 31, 2015 is the EDF Investment Group (EIG) entity. This entity met the defi nition of “joint-venture” at December 31, 2013, when IFRS 11 was initially adopted. Following a change in governance in H1 2014, this entity now falls under the defi nition of “associate”.
* The percentage of ownership and voting rights at 12.31.2015 are 6.11% each.
5 FINANCIAL DATAConsolidated fi nancial statements and notes At December 31, 2014
3.4.4 Risks associated with interests in joint-ventures and associates held by entities
4.1 Scope of structured entities with which Natixis has dealings 4.1.1 General principles
R a restricted scope of interests held in real estate funds and external private equity funds for which Natixis acts simply as a minority investor.
R Unit-linked policies are policies under which the insured party selects the funds in which the insurer invests on its behalf. The value of the insurer’s interest in such funds is refl ected in the insurance policies. Invested funds representing unit-linked policies, which were not consolidated under SIC 12, are now consolidated under IFRS 10 if all of the control criteria are met cumulatively and if the funds have a material impact; V other Natixis entities and business lines may hold minority interests, intended mainly to meet cash investment needs.
A fund is subject to consolidation: V if Natixis acts as principal, i.e. if Natixis is a manager and is nonrevocable by a limited number of persons and if Natixis holds a large enough material interest to conclude that it controls the fund; or
Just as for non-guaranteed mutual funds, guaranteed mutual funds are subject to consolidation under IFRS 10 whenever Natixis acts as principal (e.g. Natixis acts as an irrevocable manager and holds a material interest).
The relevant activities of these funds are those involving the investment and divestment of real estate assets. These funds are managed on behalf of investors by the management companies of NGAM (AEW Europe, AEW Growth Management, etc.).
A fund is subject to consolidation if Natixis acts as principal (e.g. Natixis is a manager and is non-revocable by a limited number of persons and holds material variable returns).
The following types of securitization are encountered at Natixis and involve structured entities: V transactions through which Natixis (or a subsidiary) transfers credit risk related to one of its asset portfolios to a dedicated vehicle in cash or synthetic form; V securitization transactions on behalf of third parties. These transactions consist in placing the assets of a third-party company in a dedicated structure (generally a special purpose entity (SPE)
Consolidated fi nancial statements and notes or a conduit). The SPE issues shares that may in some cases be subscribed to directly by investors, or subscribed to by a multiseller conduit which refinances the purchases of its shares by issuing short-maturity “notes” (treasury notes or commercial paper).
In contrast, given that Natixis is not part of the governing body holding the power to decide on activities relevant to the Magenta conduit, it is not consolidated in Natixis’accounts.
The NGAM sub-group is involved in such funds as manager of the underlying portfolio for third-party investors. Its role is strictly defi ned by the portfolio management agreement, which never provides it with effective control of the structure but rather with the role of agent. Furthermore, neither NGAM nor any other Natixis entity holds a material interest in these funds. Therefore, Natixis is not signifi cantly exposed to the variability of returns. Consequently, no such fund was consolidated as of December 31, 2015.
The Coface sub-group’s credit enhancement operations consist of insuring receivables securitized by a third party for investors via a structured entity for losses in excess of a predefi ned amount. A distinction must be made between the policies taken out by the German branch Coface Deutschland and those taken out by Compagnie Française d’Assurance pour le Commerce Extérieur: V under the German policies, the credit insurer is only liable for losses in excess of a deductible termed the Aggregate First Loss. This first loss tranche contractually defines the amount of first losses that are not covered by the credit insurer. The coverage provided by Coface Kredit via these policies is similar to “Natural disaster” type coverage. An analysis of these structures shows that the amount of the first loss is systematically higher than the expected loss, namely the average losses expected over the year. Furthermore, the activity of the structured entity is not conducted on behalf of the credit insurer, which is only a protection seller. Coface Kredit does not sponsor the securitization structures. Coface Kredit does not play any role in determining the activity of the structured entity, nor in its operational or administrative management. Coface Kredit has no power over the relevant activities of the securitization vehicle (selecting receivables comprising the portfolio, managing receivables, etc.). As the criteria for powers and significant exposure to returns are not met, these funds are not subject to consolidation; V the French policies taken out by Coface rarely include noncovered “first losses”. However, the policies only cover a small portion of the receivables held by the SPE. Furthermore, the quality of portfolio risk covered by Coface, compared to that borne by the other stakeholders (other insurers, sponsors, sellers) is not such as to significantly transfer the structure’s risks to Coface. In addition, Coface France does not play any role in determining the activity of the structured entity, nor in its operational or administrative management. In the event of a guarantee activation, Coface only has powers corresponding to its protective rights. Indeed, Coface France does not have any power over activities relevant to the securitization vehicle. Accordingly, such funds do not require consolidation.
V The Natixis Lease sub-group owns a certain number of structured entities which own real estate assets. Three of them are consolidated to the extent that Natixis has power over the relevant activities and is significantly exposed to the variability of returns.
V Natixis Coficiné has relationships with: R structured entities created by producers to host a fi lm production. Cofi ciné is involved only as a lender. It has no stake in the entity, which is wholly owned by the producer. Cofi ciné does not participate in managing the entity, as activity falls within the remit of the producer. Cofi ciné, and therefore Natixis, has no power over the relevant activities of these structured entities and has no control under IFRS 10; R Film Industry Financing companies (SOFICA). Natixis holds a non-material stake in these SOFICAs and receives management fees at market rates consistent with the services rendered. Natixis does not hold any other interests in these structured entities. Therefore, they are not subject to consolidation under IFRS 10.
Financial assets at fair value through profi t or loss 307 5,799 617 104 6,827
MAXIMUM EXPOSURE TO RISK OF LOSS 8,911 20,860 6,507 4,369 40,647
Financial assets at fair value through profi t or loss 303 5,523 1,069 1 6,897
Financial liabilities at fair value through profi t and loss (derivatives) 59 112 27 4 201
MAXIMUM EXPOSURE TO RISK OF LOSS 9,140 17,342 5,799 2,023 34,304 4.3 Non-consolidated structured entities in which Natixis is involved only as a sponsor
With respect to information that must be disclosed under IFRS 12, Natixis sponsors a structured entity when the two following indicators are both met: V Natixis is involved in the creation and structuring of the structured entity; and
V Natixis contributes to the entity’s success by transferring assets to it or by managing the structured entity’s relevant activities.
Net gains or losses on instruments at fair value through profi t and loss 70 199 268
Carrying amount of the assets transferred from the entity over the year* 2,369 2,369 * The book value of assets transferred to these vehicles corresponds to assets sold by Natixis during 2015, where the information on the sold amounts by all investors is not available.
Carrying amount of the assets transferred from the entity over the year* 1,085 1,085 * The book value of assets transferred to these vehicles corresponds to assets sold by Natixis during 2014, where the information on the sold amounts by all investors is not available.
On initial recognition, available-for-sale fi nancial assets are measured at fair value including transaction costs. After initial recognition, loans and receivables are measured at amortized cost using the effective interest rate method, and tested for impairment at each reporting date. Where necessary, an impairment charge is recorded in income under “Provision for credit losses”. Transactions intended to hedge interest rate risk on these securities are not permitted under IFRS.
“Loans and receivables” also include non-derivative fi nancial assets initially classifi ed at fair value through profi t and loss or available-for-sale, but subsequently reclassifi ed as “Loans and receivables”, under the conditions set out in the “Reclassifi cation of fi nancial assets” amendment to IAS 39 and IFRS 7 published on October 13, 2008. Assets reclassifi ed in accordance with this amendment meet the defi nition of loans and receivables at the reclassifi cation date, i.e. they are not quoted on an active market, or were no longer quoted on an active market at the reclassifi cation date. Assets reclassifi ed in accordance with this amendment cannot be held with the intention of being sold in the near term.
The reserve to be recycled to the income statement in respect of instruments reclassifi ed from “Available-for-sale fi nancial assets” to “Loans and receivables” remains fi xed at its level as of the reclassifi cation date. The amounts in question are recycled to income using the effective interest rate method over the residual life of the assets, or immediately if the instrument has been impaired or sold since reclassifi cation.
5 FINANCIAL DATAConsolidated fi nancial statements and notes Financial diffi culties are determined by observing a number of criteria such as amounts past due for over 30 days or an at risk rating. The “restructuring” of a loan does not necessarily result in the counterparty being classifi ed in the Basel default category, as the fi nancial diffi culty is addressed before the counterparty is downgraded into the Basel default category.
Determining whether there is objective evidence of impairment is based on a multi-criteria approach and independent expert opinions, particularly in the case of debt instruments. Evidence of impairment includes: V for debt instruments: default on interest or principal payments, existence of mediation, warning or legal reorganization procedures; counterparty bankruptcy and any other indicator pointing to a material decline in the counterparty’s financial position, such as losses on completion projected by discounted cash flow models; V for equity instruments (excluding investments in unlisted companies): any item suggesting that the entity will not be able to recover all or part of its initial investment. Securities presenting an unrealized capital loss of over 30% on their face value, or presenting an unrealized capital loss for a period of more than six months, are systematically tested for impairment. The test involves a qualitative analysis considering a variety of factors such as share price performance over a given period or information relating to the issuer’s financial position. Where necessary, an impairment loss is recognized based on the market price at the reporting date. Irrespective of this analysis, an impairment loss is systematically recognized when securities present an unrealized capital loss of over 50% at the reporting date, or an unrealized capital loss on their face value for a period of more than 24 months; V for investments in unlisted, non-consolidated companies: unrealized capital losses of over 20% on their face value for a period of more than 18 months, or significant changes in the technological, market, economic or legal environment having an unfavorable impact on the issuer, suggesting that the amount invested in the equity instrument may not be recoverable; V for shares in venture capital funds (FCPRs), net asset value alone is not enough to determine whether there is any evidence that the initial investment might not be recovered. This is because net asset value during the investment phase is reduced by startup costs (structuring and brokerage fees, etc.). Accordingly, for investments of this type which are not quoted on an active market, the following impairment principles apply: R no impairment is recognized if, at the reporting date, the position and results of the fund are in line with the business plan,
If the fair value of an available-for-sale fi nancial asset increases during a subsequent period, and this increase can be objectively linked to an event occurring after the impairment loss was charged to income: V reversals of impairment losses on equity instruments are recorded in equity rather than in the income statement; V reversals of impairment losses on debt instruments are recorded in the amount of the previously recorded impairment loss.
At inception, assets held under a fi nance lease are recognized in the lessor’s balance sheet and presented as a receivable at an amount equal to the net investment in the lease, corresponding to the present value of minimum lease payments due from the lessee discounted at the rate of return implicit in the lease, plus any nonguaranteed residual value accruing to the lessor.
Loans in default are reclassifi ed as performing loans once a normal business relationship has resumed with the counterparty. However, this may not occur before the end of the six-month observation period during which payments may have resumed.
Since risk measurement under the terms of Basel 2 is generally based on the probability of default within one year, the calculation of expected losses is adjusted to refl ect the probability of default over the remaining term of the loans affected.
At each such date, changes in the fair value of hedging instruments (excluding accrued interest) are compared with changes in the fair value of the hypothetical assets and liabilities hedged (synthetic instruments representative of hedged assets or liabilities). To be effective, changes in the fair value of hedging instruments must offset changes in the fair value of hedged items in a range of 80%- 125%.
5 FINANCIAL DATAConsolidated fi nancial statements and notes When a hedging relationship is discontinued, the hedging instrument is reclassifi ed in fi nancial instruments at fair value through profi t and loss, while the unrealized gain or loss on the hedged item is fi xed at its amount on the date the hedge is discontinued and taken to income through to maturity.
Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency at the spot rate prevailing at the reporting date. The resulting exchange gains and losses are recognized in income, except in two cases: V only the portion of the foreign exchange gains and losses calculated based on the amortized cost of available-for-sale financial assets is recognized in income, with the remainder being recognized in “Gains and losses recognized directly in equity”; V foreign exchange gains and losses arising on monetary items designated as cash flow hedges or as part of a net investment in a foreign operation are recognized in “Gains and losses recognized directly in equity”.
Non-monetary items denominated in foreign currencies and measured at historical cost are translated at the exchange rate on the transaction date (or the date of reclassifi cation in equity for deeply subordinated notes issued: see Note 12.3.1).
This adjustment is the difference between the bid price and the ask price corresponding with the selling costs. It refl ects the cost requested by a market player in respect of the risk of acquiring a position or of selling at a price proposed by another market player.
Observing certain prices or inputs used in valuation techniques may be diffi cult or the price or input may be too regularly unavailable to determine the selling price. Under these circumstances, an adjustment may be necessary to refl ect the probability that market participants might adopt different values for the same inputs when evaluating the fi nancial instrument’s fair value.
Value adjustment for internal credit risk (Debit Valuation Adjustment – DVA)
The DVA is symmetrical to the CVA and represents the expected loss, from the counterparty’s perspective, on liability valuations of derivative fi nancial instruments. It refl ects the impact of Natixis’credit quality on the valuation of these instruments. The DVA is measured by observing Natixis’credit market inputs.
The following criteria are used to determine whether or not a market is active: V the level of activity and trend of the market (including the level of activity on the primary market); V the length of historical data of prices observed in similar market transactions; V scarcity of prices recovered by a service provider; V sharp bid-ask price spread; V steep price volatility over time or between different market participants.
Most over-the-counter derivatives, swaps, forward rate agreements, caps, fl oors and plain vanilla options are traded in active markets, i.e. liquid markets in which trades occur regularly.
Instruments measured using Level 2 inputs also include: V securities that are less liquid than those classified as Level 1, whose fair value is determined based on external prices put forward by a reasonable number of active market makers and which are regularly observable without necessarily being directly executable (prices mainly taken from contribution and consensus databases); where these criteria are not met, the securities are classified as Level 3 fair value; V securities not quoted on an active market whose fair value is determined based on observable market date. E.g. use of market data published by listed peer companies or the multiple method from techniques commonly used by market participants; V Greek sovereign securities, as well as Portuguese ones, whose fair value was recorded under Level 2 given the wide bid-ask price spread on market prices; V shares of UCITS whose NAV is not determined and published on a daily basis, but are subject to regular reporting or offer observable data from recent transactions; V debt issues measured at fair value through profit and loss. The valuation of the “issuer credit risk” component is based on the discounted cash-flow method, using inputs such as yield curves, revaluation spreads, etc. For each issue, this valuation represents the product of its remaining notional amount and its sensitivity, taking into account the existence of calls, and based on the difference between the revaluation spread (based on BPCE’s cash reoffer curve at December 31, 2015, as on the previous reporting dates) and the average issue spread. Changes in the issuer spread are generally not material for issues with an initial maturity of less than one year.
R the “payoff”, i.e. a calculation of positive or negative cash fl ows attached to the product at maturity,
The hybrid local volatility combined with H&W1F consists of combining the local volatility model described above with a onefactor Hull & White model, described below (see fixed-income products).
The Tskew model is a valuation model for mono and multiunderlying options. Its principle is to calibrate the distribution of the underlying asset or assets at maturity to standard option prices.
Level 3 comprises instruments measured using unrecognized models and/or models based on non-observable market data, where they are liable to materially impact the valuation. This mainly includes: V unlisted shares whose fair value could not be determined using observable inputs; V private equity securities not listed on an active market, measured at fair value with models commonly used by market participants, in accordance with International Private Equity Valuation (IPEV) standards, but which are sensitive to market fluctuations and whose fair value determination necessarily involves a judgment call; V structured or representative of private investment portfolios, held by the insurance business line; V hybrid fixed-income and currency instruments that are not classified in Level 2; V instruments with a deferred day-one margin; V shares of UCITS for which the fund has not published a recent NAV at the valuation date, or for which there is a lock-up period or any other constraint calling for a significant adjustment to available market prices (NAV, etc.) in respect of the low liquidity observed for such shares; V instruments carried at fair value on the balance sheet and for which data are no longer available due to a freeze in trading in the wake of the financial crisis, which were not reclassified as “Loans and receivables” pursuant to the amendment to IAS 39 and IFRS 7 published on October 13, 2008 (see below). When there is a significant drop in trading in a given market, a valuation model is used based on the only available relevant data.
In accordance with the decree of February 20, 2007, amended by the decree of November 23, 2011, relating to regulatory capital requirements applicable to credit institutions and investment fi rms, and in accordance with the European CRR Regulation of June 26, 2013 on requirements resulting from Basel 3, a description of crisis simulations and ex-post controls (validation of the accuracy and consistency of internal models and modeling procedures) is provided for each model used in Section 3.6 of Chapter III, “Risk Management and Capital Adequacy”.
At December 31, 2015, instruments for which the recognition of day-one profi t/loss has been deferred included: V multi-underlying structured equity and index products; V synthetic financing; V options on funds (multi-asset and mutual funds); V structured interest and exchange rate products; V securitization swaps.
Bivariate normal model to understand the time value of Spread Lock options, and replication for CMS and TEC Forwards
TRS and repos indexed to a basket of general collateral equities
Synthetic modeling of the underlying general collateral basket (with an estimated repo) and actuarial valuation for TRS or with a standard hybrid Equity/ Fixed Income model for TRS autocall
The approach used is a hybrid model coupling the local volatility-type multi-underlying equity model with a one-factor Heath-Jarrow-Morton (HJM1F) interest rate model
In accordance with this procedure, Capital Protected Notes, Helvetix derivatives, as well as repos and general collateral TRS have been transferred to Level 3 of the fair value hierarchy (see Note 6.7.5.2).
The model used previously consisted in applying a standard rate of recovery of 10% for unrealized capital losses on the underlying assets concerned (rate justifi ed by the low capitalization of monoline insurers given their risk exposures), except for a counterparty whose rate of recovery was deemed nil at December 31, 2014, and a probability of default calibrated to the credit risk associated with the credit enhancer.
b) Other instruments not exposed to US housing risk measured by Natixis using a valuation model
The valuation model used, for Private Finance Initiative (PFI) CDS, is based on an approach calibrated to the market prices of underlying PFI bonds and the use of a uniform collection rate.
The majority of Natixis’loans are variable-rate loans, and their fair value is determined on the basis of discounted future cash fl ows. The discount rate applied for a given loan is the rate at which Natixis would grant a loan with similar characteristics to a similar counterparty at the reporting date. As these are primarily variablerate loans, the contractual rate is adjusted according to the trend in market lending rates and in counterparty risk.
The measurement of the fair value of Natixis’borrowings and debt securities is based on the discounted cash fl ow method using inputs at the reporting date such as the underlying’s interest-rate curve and the spread applied to lending/borrowing between Natixis and Group entities.
The amount of the premium paid in 2009 by Natixis in return for the fi nancial guarantee amounted to €1.183 billion.
Since the unrealized capital losses or write-downs on the assets covered by the guarantee have already been recorded in income, the premium was not immediately taken to income or recognized on a straight-line basis.
In accordance with Article R. 332-210-1 of the French Insurance Code, a fi ve-year appraisal is conducted by an independent expert approved by the ACPR. Between two appraisals, the market value of property is certifi ed by experts on a half-yearly basis.
In line with IAS 16, a specifi c depreciation schedule is defi ned for each signifi cant component of an item of property, plant and equipment which has a different useful life or is expected to consume future economic benefi ts differently from the item as a whole. For buildings used in the business and investment property, the following components and depreciation periods have been identifi ed: Component Depreciation period
Other intangible assets mainly consist of components of the client portfolio, which are amortized over the term of the contracts (average term of four years for the United States).
Assets are tested for impairment whenever there is objective evidence that they may be impaired and at least annually in the case of intangible assets with an indefi nite useful life. Natixis considers whether there is any evidence of impairment at each reporting date. When any such evidence exists, the recoverable amount of the individual asset is estimated wherever possible; otherwise the recoverable amount of the CGU to which the asset belongs. The recoverable amount is the higher of fair value less selling costs and value in use, which is the present value of future cash fl ows expected to be derived from continuing use of the asset or cashgenerating unit. If the recoverable amount of the asset or CGU is lower than its carrying amount, an impairment loss is recognized in income under “Depreciation, amortization and impairment of property, plant and equipment and intangible assets”.
Write-downs may be reversed if there has been a change in the conditions that initially resulted in the write-down (for example there is no longer any objective evidence of impairment).
These include fi nancial liabilities held for trading (including derivative fi nancial instruments) and those designated as at fair value on initial recognition pursuant to the option available under IAS 39. The conditions for applying IAS 39 were described in the amendment to the standard published in June 2005.
Financial liabilities in this category are carried at fair value at the reporting date and shown in the balance sheet as “Financial liabilities at fair value through profi t and loss”. Changes in fair value, including internal credit risk (the issuer spread), are recognized in the income statement under “Gains or losses on fi nancial instruments at fair value through profi t and loss”.
R and the date the plan will be implemented; V Natixis has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features on the closing date.
A description of the main risks and litigation to which Natixis is exposed is given in Section 3.9 of Chapter III, “Risk Management and Capital Adequacy”.
Changes in provisions are recognized in the income statement on the line items corresponding to the type of future expenditure.
In accordance with IAS 32, issued fi nancial instruments are classifi ed as debt or equity depending on whether or not they incorporate a contractual obligation to deliver cash to the holder: V deeply subordinated notes and preference shares are classified in equity in light of the 2009 renegotiation of a clause making the payment of interest non-optional in the event of positive consolidated income and which has since become discretionary; V the change over the fiscal year is presented in Note 6.17, “Changes in subordinated debt over the period”, and in Note 12, “Capital management”; V however, if an instrument is considered equity: R its compensation is treated as a dividend and therefore affects equity, as do the taxes related to this compensation,
Stock options offered to employees under the Employee Savings Plan, with a discount compared to the average market price for a given period (called the reference price), are encumbered with a lock-up period of fi ve years. The advantage granted is measured as the difference between the fair value of the acquired share, taking into account the lock-up condition and the purchase price paid by the employee on the subscription date, multiplied by the number of shares subscribed.
In accordance with the principles set out in Directive 2013/36/ EU, known as “CRD IV”, and the Decree of November 3, 2014 and according to the criteria determined by the European Banking Authority (EBA) in its regulatory technical standard published on December 16, 2013 and approved by the European Commission in Commission Delegated Regulation (EU) No. 604/2014 of March 4, 2014, Natixis has set up a deferred variable compensation plan applicable to the so-called “regulated” categories of staff and to a certain number of employees not covered by the provisions of the Decree of November 3, 2014. Some plans are settled in Natixis shares, while others are settled in cash indexed to the Natixis share price.
Fees and commissions that form an integral part of the effective yield on an instrument, for example loan set-up fees, are recognized and amortized as an adjustment to the effective interest rate over the estimated term of the applicable loan. These fees and commissions are recognized as interest income rather than fee and commission income.
The tax expense for the year comprises: V tax payable by French companies at the rate of 38%, and by foreign companies and branches at the local rate. The French rate of 38% includes the additional contribution of 10.7% passed in December 2013 (French Finance Act for 2014) affecting the 2013, 2014 and 2015 fiscal years; V deferred taxes arising from temporary differences between the carrying amount of assets and liabilities and their tax basis, which are calculated using the balance sheet liability method.
All fi nancial guarantees issued by insurance subsidiaries that also meet the defi nition of an insurance contract were accounted for in line with the requirements of IFRS 4 “Insurance Contracts”, as permitted by paragraph AG64 (a) of the amendment.
The fair value of hybrid market instruments not traded on an active market is calculated using valuation techniques. Valuations produced using valuation models are adjusted, depending on the instruments in question and the associated risks, to take account of the bid and ask price for the net position, modeling risks, assumptions regarding the funding cost of future cash fl ows from uncollateralized or imperfectly collateralized derivatives, as well as counterparty and input risks. The fair values obtained from these methods may differ from the actual prices at which such transactions might be executed in the event of a sale on the market.
Unlisted equity instruments classifi ed as available-for-sale fi nancial assets primarily consist of investments in non-consolidated companies. The fair value of investments in unlisted nonconsolidated companies is obtained principally by using valuation methods based on multiples or DCF (discounted cash fl ow). Use
Fair value of loans and receivables recognized at amortized cost (excluding loans reclassified under the amendment to IAS 39 and IFRS 7)
Provisions recognized in the consolidated balance sheet, other than those relating to fi nancial instruments, employee benefi ts and insurance policies, mainly concern provisions for litigation, fi nes and penalties, as well as a provision for restructuring recorded at December 31, 2013 in respect of the workforce adaptation plan and the closing of the former GAPC hive-off.
A provision is raised when it is likely that an outfl ow of resources embodying economic benefi ts will be required to settle an obligation arising from a past event, and when the amount of the obligation can be reliably estimated. In order to calculate this amount, Management is required to assess the probability of the risk occurring. Future cash fl ows are discounted where the impact of discounting is material.
Diluted earnings/(loss) per share corresponds to net earnings/(loss) for the period attributable to the group, divided by the weighted average number of shares, adjusted for the maximum impact resulting from the conversion of dilutive instruments into ordinary shares. Stock options issued are taken into account in calculating diluted earnings/(loss) per share. The conversion of these instruments does not impact net income/(loss) used to calculate diluted earnings/(loss) per share.
Net earnings/(loss) attributable to the Group (in millions of euros) 1,344 1,138
Average number of shares used to calculate earnings/(loss) per share 3,121,912,000 3,107,314,636
Net earnings/(loss) attributable to the Group (in millions of €) 1,344 1,138
Net income/(loss) attributable to shareholders (in millions of euros) (a) 1,288 1,085
Number of potential dilutive shares resulting from stock option and bonus share plans (b) 1,272,861 2,615,148
Average number of shares used to calculate diluted earnings/(loss) per share 3,123,184,861 3,109,929,784
Securities classifi ed as instruments held for trading essentially comprise short sales of fi nancial assets.
Instruments designated at fair value through profi t and loss 6.1.2.1 and 6.1.2.2 64,837 96,936
Other liabilities 1,225 860 * The information presented takes into account the impact of offsetting carried out in accordance with IAS 32 (see Note 6.3).
5 FINANCIAL DATAConsolidated fi nancial statements and notes 6.1.2.1 Financial liabilities designated at fair value through profi t and loss and credit risk
(a) Natixis has contracted Total Return Swaps (TRS) with BPCE. These instruments are used to hedge changes in the fair value recognized since July 1, 2009 on instruments previously linked to the former GAPC hive-off carried at fair value through profi t and loss at December 31, 2015 and are included on this line for an amount of €32.6 million in assets (versus €43.9 million at December 31, 2014) and €34.9 million in liabilities (versus €54 million at December 31, 2014).
(b) Natixis has contracted a call option with BPCE for the purpose of recovering, 10 years term its implementation, any net gains in fair value transferred to BPCE via TRS. The call option was recognized on this line in assets for €576.5 million versus €569.8 million at December 31, 2014.
5 FINANCIAL DATAConsolidated fi nancial statements and notes 6.2 Hedging derivatives
The gross offset amounts refl ect derivatives and repurchase agreements with clearing houses for which the criteria set out in IAS 32 are met: V for derivatives, the information is presented in consideration of the effects of the currency offset between asset valuations and liability valuations of the derivatives; V as regards repurchase agreements, Natixis records on its balance sheet the net value of repurchase and reverse repurchase agreements that: R are entered into with the same clearing house; R have the same maturity date; R involve the same custodian; R are made in the same currency.
Financial assets at fair value through profi t or loss 125,409 28,039 97,370 133,228 48,240 84,988
Other fi nancial instruments 32 32 * Gross amount of fi nancial assets offset or covered by a master netting or similar arrangement.
Financial liabilities at fair value through profi t and loss 115,026 27,830 87,196 128,850 48,228 80,622
(c) * (e) = (c) - (d) (c) * (e) = (c)
Available-for-sale fi nancial assets are tested for impairment at the end of each reporting period (i.e. every quarter). When there is objective evidence of impairment and a reduction in fair value has previously been recognized in equity, the aggregate impairment loss is removed from equity and taken to income.
Non-performing loans Total o/w: * Data related to net exposures by geographic area not available for 2014.
Customer lease fi nancing outstandings 6,044 4,149 10,194 6,344 4,088 10,432
At December 31, 2015, €329 million (€322 million at 31 December 2014) in bonds self-underwritten by Natixis and eliminated on consolidation were lent or sold under repurchase agreements.
6.7.3 Financial assets received as security and able to be sold or reused as security
The fair value of fi nancial assets received as security that Natixis may sell or reuse as security was €222 billion at December 31, 2015, versus €226 billion at December 31, 2014.
The fair value of fi nancial assets received as security that were resold or reused as security was €134 billion at December 31, 2015, versus €148 billion at December 31, 2014.
5 FINANCIAL DATAConsolidated fi nancial statements and notes 6.7.4 Financial assets that are past due but not impaired
For overdrafts, arrears are counted as of the date when the customer is notifi ed; the amount shown represents the total overdraft.
The data reported in 2014 includes late payments identifi ed by the factoring entities amounting to €1.477 billion. These data refer to all outstandings rather than the unpaid amount alone.
Consolidated fi nancial statements and notes 6.7.5 Fair value of financial assets carried at fair value in the balance sheet
Financial assets held for trading 121,656 42,385 75,338 3,933 159,375 64,679 91,382 3,315
Derivative instruments not eligible for hedge accounting (positive fair value) 70,546 427 67,263 2,856 85,749 1,555 81,699 2,494
Financial assets at fair value through profi t and loss 69,983 8,393 58,237 3,353 95,185 7,440 83,859 3,886
Securities at fair value through profi t and loss 13,202 8,393 2,462 2,348 12,348 7,440 2,622 2,286
Available-for-sale fi nancial assets 52,673 41,787 7,205 3,681 44,816 35,626 5,440 3,750
Available-for-sale securities - Equity investments 883 3 880 1,025 2 67 955
Financial assets at fair value through profi t and loss - Trading 3,315 242 (397)
Fixed-income securities held for trading 444 1 3 Derivative instruments not eligible for hedge accounting (positive fair value) 2,494 241 (400)
Financial assets at fair value through profi t and loss - Trading 3,267 1,097 98
TOTAL FINANCIAL ASSETS RECORDED AT FAIR VALUE 6,563 739 191 87
Sensitivity of the fair value of fi nancial instruments measured using unobservable inputs was estimated at 31 December, 2015. With the aid of probable assumptions, this sensitivity was used to estimate the impacts of market fl uctuations in uncertain economic environments. This estimate was performed using: V a “standardized (1)” variation in unobservable inputs related to assumptions of additional valuation adjustments for fixed income, currency and equity instruments. The resulting sensitivity was €15.9 million; V a flat variation of: R +/- 1% in the recovery rate for unsecured debt on uncollateralized derivatives; R +/- 50 basis points applied to the margin used for the discounted cash fl ow expected on TruPS CDOs.
Securities held for trading 386 901 6 29 o/w fi xed-income securities 83 901 6 29 o/w variable-income securities 302
Financial assets at fair value through profi t and loss 50 22
Securities at fair value through profi t and loss 30 o/w fi xed-income securities 29 o/w variable-income securities 2
Other available-for-sale securities 77 49 103 540 o/w fi xed-income securities 69 49 80 486 o/w variable-income securities 8 23 55
Securities held for trading 509 643 130 20 o/w fi xed-income securities 509 9 130 20 o/w variable-income securities 634
o/w interest rate derivatives o/w currency derivatives o/w credit derivatives o/w equity derivatives o/w other
Financial assets at fair value through profi t and loss 1,232 553 66
Loans and receivables due from banks 71,462 72,005 66,987 5,017 o/w unlisted fi xed-income securities 1,251 1,251 1,251 0
Customer loans and receivables 107,189 108,496 51,032 57,463 o/w unlisted fi xed-income securities 4,366 4,748 700 4,048 * Including ordinary bank current accounts.
(b) Deferred tax recognized from 2015 on the tax amortization of goodwill in the United States (see Note 15.5).
(in millions of euros) 12.31.2015 12.31.2014 Legal carryforward period Max. recognition period
United Kingdom 91 95 Unlimited 10 years 6.9 Accrual accounts, other assets and liabilities
The deferred day-one margin on TRS and repos linked to a basket of equities, reclassifi ed in Level 3 in the fair value hierarchy during the year (See Note 6.7.5.1), amounted to €35.6 million at December 31, 2015.
Consolidated fi nancial statements and notes 6.10 Property, plant and equipment, intangible assets, investment property 6.10.1 Changes in property, plant and equipment and intangible assets over the period
5 FINANCIAL DATAConsolidated fi nancial statements and notes The fair value of investment property, for which the valuation techniques are described in Notes 5.6 and 5.8, is classifi ed in Level 3 of the fair value hierarchy of IFRS 13.
Acquisitions during the period* Disposals Write-downs Translation adjustments Reclassifi cation and other activity Closing balance
The deferred profi t-sharing reserve represents the portion of unrealized gains or losses on investments potentially attributable to policyholders.
Other technical reserves 2,008 1,775 * At December 31, 2015, net deferred profi t-sharing liabilities amounted to €2.805 billion, compared with deferred profi t-sharing liabilities of €3.411 billion at December 31, 2014 (see Note 2.8).
6.16 Provisions and impairment 6.16.1 Summary of provisions and impairment 01.01.2015 Increase
Impairment losses taken on available-for-sale fi nancial assets 806 45 (303) 1 (10) 538
(a) Of which €139 million in reversals used following disposals of receivables made during the year (vs. €180 million at December 31, 2014).
(b) Of which €30 million in reversals not used following disposals of receivables made during the year (vs. €42 million at December 31, 2014).
Provisions for impairment deducted from assets 4,102 766 (735) (660) 86 (32) 3,527
Provisions for loans and receivables 2,783 613 (626) (424) 80 (34) 2,392
Impairment losses taken on available-for-sale fi nancial assets 937 69 (18) (183) 2 (1) 806 * Of which €104 million change in actuarial assumptions in 2014 for employee benefi ts recorded directly in non-recyclable equity.
(a) Of which €475 million in provisions at December 31, 2015 in respect of Madoff net outstandings.
(b) Of which €14.7 million at December 31, 2015 in respect of the workforce adjustment plan completed in 2015 and discussed in Note 5.14.
(b) Loan repayments and securities redemptions comprised: V redemption of subordinated notes for €77 million; V the repayment of a loan from BPCE for €25 million; V the repayment of a loan from BPCE for €10.5 million.
(c) Other changes mainly pertained to the revaluation of debts subject to hedging and variations in intra-group securities held by Natixis Funding for the purposes of market making with respect to Natixis’debt on the secondary market. This involved the line of participating loans from November 1985 and the DSN issues from July 2003, December 2006 and May 2007.
(d) Other changes mainly pertained to: V the revaluation of debts subject to hedging (+€15.3 million) and variations in intra-group securities held by Natixis Funding for the purposes of market making with respect to Natixis’debt on the secondary market (+€53.3 million); V a €40.5 million reduction resulting from the assumption by Natixis Assurances of subordinated debt issued by BPCE.
Consolidated fi nancial statements and notes 6.18 Fair value of financial liabilities carried at fair value in the balance sheet
Securities issued for trading purposes 23,181 22,707 450 24 38,628 37,019 1,598 10
Derivative instruments not eligible for hedge accounting (negative fair value) 70,207 506 68,165 1,536 84,123 1,522 80,357 2,244
Financial liabilities at fair value through profi t and loss 64,837 87 64,038 712 96,936 96,922 14
Securities at fair value through profi t and loss 15,531 15,496 36 13,637 13,637
Other fi nancial liabilities at fair value through profi t and loss 49,306 87 48,543 676 83,300 83,286 14
5 FINANCIAL DATAConsolidated fi nancial statements and notes 6.18.1 Financial liabilities at fair value measured using Level 3 of the fair value hierarchy
Financial liabilities at fair value through profi t and loss - Trading 2,254 430 (573)
Other fi nancial liabilities at fair value through profi t and loss
5 FINANCIAL DATAConsolidated fi nancial statements and notes 6.18.2 Financial liabilities at fair value: transfer between fair value levels
Derivative instruments not eligible for hedge accounting (negative fair value) 93 594 o/w interest rate derivatives (a) 35 569 o/w currency derivatives 12 o/w credit derivatives o/w equity derivatives (b) 46 26
Financial liabilities at fair value through profi t and loss (b) 765 4
Other fi nancial liabilities at fair value through profi t and loss 731 4
(a) For Helvetix derivatives, the contribution of valuation adjustments became very signifi cant with respect to the fair value of these instruments taken as a whole. Natixis therefore transferred them to Level 3 of the fair value hierarchy in 2015.
(b) TRS and repos indexed to a basket of equities were transferred to Level 3 of the fair value hierarchy in 2015 subsequent to a change in the valuation model based on proprietary data.
In 2014, transfers between fair value hierarchy levels did not represent material amounts.
Carrying amount Fair value Level 1 Level 2 Level 3 * Including ordinary bank current accounts.
The table below presents the balances of fi nancial assets and liabilities by contractual maturity in the balance sheet. Variable-income assets, derivative fi nancial instruments for trading and hedging purposes as well as revaluations of components hedged or unhedged by fi nancial assets and liabilities are considered as having an “undated” maturity. Likewise, delinquencies and non-performing loans are deemed to have an “undated” maturity.
5 FINANCIAL DATAConsolidated fi nancial statements and notes The technical provisions of insurance companies, which, for the most part are equivalent to demand deposits, are not shown in the table below.
Other fi nancial liabilities at fair value through profi t and loss 48 4 5 3 4 25 89 o/w o/w senior debt o/w senior debt
Amounts due to credit institutions 28 21 27 25 11 1 114 o/w
Financial assets and liabilities valued at amortized cost give rise to the recognition of interest calculated using the effective interest rate method.
Interest accrued on impaired loans and receivables (including restructured items) 18 0 18 13 13 7.2 Net fee and commission income
Consolidated fi nancial statements and notes 7.3 Gains and losses on financial instruments at fair value through profit and loss
Net gains/(losses) on fi nancial assets and liabilities held for trading (a) 1,721 1,240 o/w derivatives not eligible for hedge accounting (428) (60)
(b) Net gains and losses include the valuation of the issuer spread on issues carried out by Natixis and designated at fair value through profi t and loss with a positive €138.2 million impact on income for the period versus a negative impact of €214.9 million last year.
This line item also includes market discounts on syndicated loans. In fact, loans outstanding with a theoretical syndication date expired as at December 31, 2015 and at December 31, 2014 were analyzed on a case-by-case basis in order to take into account any market discounts observed at the end of the reporting period.
5 FINANCIAL DATAConsolidated fi nancial statements and notes (in millions of euros) 12.31.2015 12.31.2014
Other insurance income and expenses 7.5.2 6,127 (4,105) 2,022 5,563 (3,240) 2,323
Operating expenses mainly comprise payroll costs, including wages and salaries net of rebilled expenses, social security expenses and employee benefi ts such as pensions (defi ned benefi t plans), and expenses relating to share-based payment recognized in accordance with IFRS 2. The details of these expenses are provided in Note 11.
(c) Of which €26 million in a reversal of unused provisions, in respect of the workforce adjustment plan versus €10.6 million at December 31, 2014.
This line item mainly refl ects net risk recorded on lending transactions: net provisions for reversals of individual and collective provisions, loans and receivables written off during the period and recoveries on bad debts written off.
total net reversals: 318 414 7.8 Gain or loss on other assets
Consolidated fi nancial statements and notes 7.9 Reconciliation of the tax expense in the financial statements and the theoretical tax expense
+ Impairment of goodwill 0 51 - Share in income of associates (46) (40)
= Consolidated taxable income/(loss) 2,603 1,638 x Theoretical tax rate 33.33% 33.33%
(a) The main permanent differences consist of capital gains taxed under the long-term scheme and tax-exempt earnings of foreign subsidiaries in Luxembourg, Belgium and the United States. In 2015, permanent differences also included the impacts of the SBT and SRF, both of which are nondeductible expenses. Tax amortization of goodwill in the United States generated a deferred tax liability in 2015 and therefore had no impact.
(d) Of which tax savings of €14 million resulting from the offset of previously unrecognized tax losses against 2015 profi ts (€61 million at December 31, 2014).
Consequently, no provisions were recognized in the fi nancial statements in respect of this audit at December 31, 2015 since the company believes it has a solid basis to challenge the tax authorities’ position.
Share of gains and losses recognized directly in the equity of associates recycled to income (2) 13
Revaluation of available-for-sale fi nancial assets (120) (125) (245) 422 (66) 356
The entity is organized around three core business lines: V Corporate & Investment Banking, which advises businesses, institutional investors, insurance companies, banks and public sector entities and offers them a diversified line of financing solutions as well as access to the capital markets. Its duties are threefold: to strengthen the bank’s customer orientation, to serve as a meeting place between issuers and investors and to roll out the “Originate to Distribute” model to optimize the rotation of the bank’s balance sheet via active management of the loan book; V Investment Solutions, which includes Asset Management, Insurance, Private Banking and the Private Equity for third party clients business line that resulted from the spin-off of Natixis Private Equity in 2010; V Specialized Financial Services, which includes Factoring, Lease Financing, Consumer Credit, Guarantees, Film Industry Finance, Employee Benefits Planning, and Payment and Securities Services. These services are the key growth drivers for the retail banking business of Groupe BPCE.
This organizational structure was confi rmed as part of Natixis’2014-2017 Strategic Plan, “New Frontier”.
In 2011, Coface refocused on its core business lines (credit insurance and factoring in Germany and Poland), grouped under Coface.
Non-strategic activities (primarily service activities) stemming from Coface have been grouped under Corporate Data Solutions and are now managed directly by Natixis’Finance Department.
It is structured into two sub-divisions with complementary objectives: V Coverage & Advisory, whose missions are to develop customer relationships and contribute to strengthening synergies between Natixis’business lines. It includes M&A Advisory Services, Primary Equity, Vanilla Finance and Coverage. Coverage, in partnership with all of Natixis’ business lines, designs innovative, tailored solutions designed to meet the specific requirements of each of its customers - from vanilla finance to the most sophisticated arrangements; V The Financing & Global Markets Department, which combines: R Global Markets, which includes the Equity, Fixed Income, Credit, Currency, Commodities and Global Structured Credit and Solutions business lines,
Together, these specialized asset management companies enable the Group to provide a full range of expertise meeting demand from all customer segments. Coverage of the various customer segments is optimized by the organization of distribution around the NGAM Distribution platform and the business franchises developed over the long term by the Asset Management companies, mainly with various client groups. The management companies continue to handle distribution via the shareholder retail banking networks in France; V Insurance: Natixis Assurances is a holding company for various operating insurance subsidiaries. In March 2014, in accordance with the plan to develop the bancassurance model, Natixis
Coface’s non-core activities (service activities mainly) were grouped under Corporate Data Solutions at the beginning of 2013. The main entities are Ellisphere, Midt factoring and Altus.
Assets at fair value through profi t and loss 177,127 12,807 0 62 130 1,513 191,639
Available-for-sale fi nancial assets 2,681 39,693 1,655 2,551 2 6,091 52,673
Loans and receivables due from banks 47,109 1,329 1,582 479 0 20,964 71,462
Available-for-sale fi nancial assets 1,448 38,237 1,531 2,355 2 1,244 44,816
Held-to-maturity fi nancial assets 0 2,757 0 7 0 0 2,763
Financial liabilities at fair value through profi t and loss 219,476 511 0 16 0 620 220,622
Net income for the period (group share) 372 394 495 11 72 1,344
Net income for the period (group share) 288 279 472 (15) 114 1,138
The following table sets out the exposure of all of Natixis’fi nancial assets to credit risk. This exposure does not take into account guarantees, sureties, credit default swaps, collateral on OTC fi nancial instruments, the impact of netting agreements and other credit enhancements. It corresponds to the net value of the fi nancial assets on the balance sheet, after taking all impairments into account (individually or collectively assessed).
5 FINANCIAL DATAConsolidated fi nancial statements and notes (in millions of euros)
Financial assets at fair value through profi t and loss (excluding variable-income securities) 153,418 0 0 153,418 213,638
The reclassifi cation of consolidated accounting volumes as gross exposure and exposure at default with respect to prudential credit risk (presented in Section 3.4 of Chapter 3 , “Risk Management and Capital Adequacy”) involves the following key operations: V exclusion of equity-accounted insurance companies in the prudential scope; V exclusion of exposure classified in the trading scope; V inclusion of all netting agreements on market transactions; V restatement of factoring positions to take into account exposure to the risk of default and a position in risk dilution; V application of a credit-equivalent conversion factor on financing and guarantee commitments.
TOTAL EXPOSURE AND IMPACT OF GUARANTEES 221,778 4,846 (2,374) 224,250 1,485 47,802 236,798 5,303 (2,456) 239,645 1,850 43,893
TOTAL EXPOSURE AND IMPACT OF GUARANTEES 12,671 36,615 49,287 13,150 32,592 45,742 10.2.3 Breakdown of individual and collective provisions by geographic area
(in millions of euros) Provisions as at 01.01.15 Additions (+) Reversals (-) Translation adjustments Provisions as
(in millions of euros) Provisions as at 01.01.2014 Additions (+) Reversals (-) Translation adjustments Provisions as at 12.31.2014
The disclosures on the management of market risk, overall interest rate risk, liquidity risk and structural foreign exchange risk required under IFRS 7 are presented in sections 3.6 and 3.8 of Chapter III, “Risk Management and Capital Adequacy”.
11.1 Headcount * Full-time equivalent current employees of Natixis at the reporting date.
Regarding the plan approved by the Board of Directors on February 10, 2016, as these allocations had not yet formally been carried out at the reporting date, these expenses have been estimated using best available estimates of inputs at the reporting date. These inputs relate to the share value and dividend assumptions.
Coface has had share-based compensation plans in place since 2014. As the impact of these plans is not material for Natixis, the characteristics of these plans are not outlined in the paragraphs that follow.
Year of plan Grant date Initial number of units granted* Acquisition dates Number of units acquired by benefi ciaries Fair value of the indexed cash unit at the valuation date (in euros)
Liabilities in respect of these awarded benefi ts are hedged, in full or in part, by plan assets comprised mainly of outsourced insurance contracts managed by French insurers specializing in retirement. The insurers carry the longevity risk once the annuities are liquidated. Plan assets are invested in the insurers’general funds, which, for the most part, generally consist of bonds. The insurers are subject to French prudential standards and regulations.
a) Amounts recognized on the balance sheet at December 31, 2015
Effect of ceiling on assets 13 0 0 0 13 0 0 0 0 0
Actuarial liabilities at start of period 656 228 53 103 1,040 527 206 47 100 880 o/w amounts paid out in respect of plan liquidation (12) (3) (2) (22) (39) (1) 0 0 0 (1)
Changes recognized directly in non-recyclable equity (80) (23) 0 0 (104) 99 21 0 0 120
Revaluation adjustments - past-experience effect (15) 1 0 0 (14) 9 (0) 0 0 8
Actuarial liabilities at end of period 596 218 55 116 985 656 228 53 103 1,040
Changes recognized directly in non-recyclable equity (11) 0 (11) 17 0 17
Total Quoted on an active market (in %) Not quoted on an active market (in %)
Total revaluation adjustments at start of period 273 28 301 163 9 172
Total revaluation adjustments at end of period 207 5 211 273 28 301
Total revaluation adjustments at start of period 84 0 84 64 0 64 o/w effect of ceiling on assets 0 0 0 0 0 0
Obligations in respect of other long-term employee benefi ts are accounted for using the same actuarial valuation method as that used for post-employment defi ned-benefi t obligations, except for revaluation adjustments, which are taken directly to profi t and loss.
Total Total Supplementary pension benefi ts and other End-of-career awards Long-service awards Other g) Main actuarial assumptions at December 31, 2015
Rate of increase in healthcare costs 4.20% 4.40% 5.00% 4.30% 4.50% 5.00%
Rate of increase in salaries (incl. Infl ation) 3.07% 2.58% 2.70% 3.46% 2.57% 2.16% 2.18% 3.04%
Rate of increase in healthcare costs (incl. Infl ation) 4.34% 4.42%
- 1% change in rate of increase in healthcare costs (5.81)% (5.63)%
+ 1% change in rate of increase in salaries and income (incl. infl ation) 15.49% 12.29% 9.04% 17.34% 12.70% 9.52%
- 1% change in rate of increase in salaries and income (incl. infl ation) (12.96)% (10.57)% (7.98)% (13.72)% (10.96)% (8.14)%
Total subscribed amount (in millions of euros) €23.6m €40.2m €2.1m €45m
Market participant’s borrowing rate (fi ve years) 6.72% 5.47% 5.47% 4.45%
At December 31, 2015, Natixis recorded an immaterial expense for the discount given upon subscription to employee stock options under the Company employee savings plan, measured taking into account the fi ve-year lock-up period applicable to the issued securities.
12.3 Equity instruments issued 12.3.1 Undated deeply subordinated notes and preference shares
Deeply subordinated notes amounted to €1.213 billion at December 31, 2015.
Under this contract, this service provider is mandated to intervene in Natixis’treasury shares with a view to increasing transaction liquidity and the trading of Natixis shares so as to avoid price gaps unjustifi ed by market trends.
This authorization is based on the eleventh resolution of the General Shareholders’Meeting of May 19, 2015. It authorizes Natixis to acquire, at a maximum price of €10 per share, a number of shares not exceeding 10% of the shares making up the capital of Natixis.
Pursuant to this contract, Natixis holds 1,922,887 shares representing €10 million as at December 31, 2015.
A fi nancial guarantee is a contract that requires the issuer to compensate the holder of the contract for any loss that the holder incurs because a debtor fails to make payment when due. The exercise of these rights is subject to the occurrence of an uncertain future event.
The amounts shown represent the nominal value of the commitment undertaken: (in millions of euros) 12.31.2015 12.31.2014
The following financing commitments fall within the scope of IAS 39: V commitments classified as financial liabilities at fair value through profit and loss. If an entity has a practice of reselling or securitizing loans immediately after they are issued, these loans are accounted for in accordance with IAS 39 as from the date the loan commitment is undertaken; V commitments which are settled net (i.e. sold); V commitments which result in a loan granted at below-market interest rates.
5 FINANCIAL DATAConsolidated fi nancial statements and notes NOTE 15 OTHER INFORMATION
Present value of minimum lease payments receivable 2,013 5,163 3,202 10,378 1,999 5,204 3,402 10,605
Minimum payments receivable under irrevocable leases 33 85 19 137 38 122 23 183
Finance leases Unsecured residual value accruing to lessor 862 8 870 599 14 613 15.1.2 Leases as lessee
Assets at fair value through profi t and loss 11,778 3,678 7,231 16,911 4,477 8,607
Amounts due to credit institutions 81,401 850 980 90,243 2,537 1,143
Net fee and commission income 17 (309) (3) (12) (271) 4
Income and expenses from other activities (40) 7 (12) (27) 3 (14)
In 2015: the members of the Audit and Risk Committee received a fi xed payment of €3,000 (€17,000 for its Chairman) and a variable portion of €1,000 per Board Meeting, per person; the members of the Appointments and Compensation Committee received a fi xed payment of €2,000 (€15,000 in 2015 for its Chairman) and a variable portion of €1,000 per Board Meeting, per person (€2,000 for its Chairman) and the members of the Strategic Committee received a variable portion of €2,000 and the Chairman of the Strategic Committee received a fi xed portion of €12,000.
(b) The amounts shown at 12.31.2015 and 12.31.2014 represent the total amount of compensation paid or delivered to the members of the Senior Management Committee in 2015 and 2014 respectively. The fi gures shown for 2014 were restated on that basis.
5 FINANCIAL DATAConsolidated fi nancial statements and notes Compensation of executive corporate officers
The table below shows the compensation paid in the fi nancial year.
Furthermore, the Board of Directors meeting of February 19, 2014 authorized the potential implementation of a non-compete clause in the event the CEO leaves offi ce. The Board of Directors meeting of February 18, 2015 authorized the renewal of this agreement.
In the event a severance payment is made to the CEO, the total amount of this indemnity and the non-compete indemnity may not exceed a ceiling of twenty-four months of monthly reference compensation. The Board of Directors will have to decide whether or not to apply the provisions of the non-compete clause at the time the CEO leaves offi ce.
The following table shows a reconciliation between insurance companies’fi nancial statements as presented and how they would translate into the banking format. It also shows the consolidated contribution by insurance companies in banking format.
Tranche B corresponds to the fraction of annual compensation between €38,040 and €152,160.
Change in fair value of investments carried at fair value through profi t and loss 116 116 116 116
Change in fair value of investments carried at fair value through profi t and loss 309 309 309 309
Income and expenses net of reinsurance transfers 117 117 117 117
Consolidated fi nancial statements and notes 15.3.2 Insurance company contributions to the consolidated income statement
Depreciation, amortization and impairment on property, plant and equipment and intangible assets (43) (51)
After-tax income from discontinued activities or activities currently being disposed of
The comparisons to December 31, 2015 and December 31, 2014 presented in all the notes to the updated 2015 registration document were not restated for this change due to their amount with respect to the impacted lines of the fi nancial statements.
The accounting treatment of tax amortization of goodwill recognized on the 2000 acquisition of sub-group Nvest by Ixis Asset Management was reviewed over the period.
Consequently, under IAS 12.51 which takes into account the method used to settle/recover the value of the related assets to measure deferred tax assets and liabilities, the accounting treatment applied up to now in Natixis’consolidated fi nancial statements was to use the tax rate applicable to long-term capital gains.
This change had no impact on the amount of prudential capital, as the deferred tax liability recorded was fi ltered from its shareholders’equity in the same way as the related goodwill.
Shareholders’equity (group share at December 31, 2014 would thus have amounted to €18.448 billon versus a reported amount of €18.872 billion.
The mandate of Mazars was renewed by the shareholders at the General Shareholders’Meeting of May 2012, for a term of six years ending as of the General Shareholders’Meeting called to approve the 2018 fi nancial statements. The mandate of Deloitte & Associés was renewed by the shareholders at the General Shareholders’Meeting of May 2010, for a term of six years ending as of the General Shareholders’Meeting called to approve the 2016 fi nancial statements. KPMG Audit was appointed in replacement of Salustro Reydel by the shareholders at the General Shareholders’Meeting of May 2010, for a term of six years ending as of the General Shareholders’Meeting called to approve the 2016 fi nancial statements.
V Deloitte & Associés – 185, avenue Charles-de-Gaulle – 92524 Neuilly-sur-Seine Cedex represented by signatory partners JoséLuis Garcia and Jean-Marc Mickeler; V KPMG Audit, Département de KPMG SA – 1 cours Valmy – 92923 Paris La Défense Cedex, represented by signatory partner, Jean François Dandé; V Mazars – Immeuble Exaltis 61, rue Henri-Régnault – 92075 La Défense Cedex, represented by signatory partners Michel Barbet-Massin and Emmanuel Dooseman.
The Statutory Auditors were paid the following amounts in return for their duties: (in thousands of euros)
Change (%)Amount % Amount % Amount % Amount % Amount % Amount % Amount % Amount %
Independent audit, certifi cation and examination of the separate and consolidated accounts 6,276 46% 7,197 38% (13)% 3,402 76% 3,332 73% 2% 3,106 70% 3,247 74% (4)% 12,784 57% 13,776 50% (7)%
5 FINANCIAL DATAConsolidated fi nancial statements and notes 16.1 Entity operations by country at December 31, 2015
Market making on secondary debt market FC 100 100 100 100 France
NATEXIS US FINANCE COMPANY LLC (13) Issuing vehicle 0 0 100 100
NATIXIS PFANDBRIEFBANK AG (1) Credit institution FC 100 100 100 100 Germany
NATIXIS FUNDING UK LLP (1) Issuing vehicle FC 100 100 100 100 Luxembourg
Natixis Structured Inssruance Issuing vehicle FC 100 100 100 100 Luxembourg
Natixis US MTN Program LLC (8) Issuing vehicle FC 100 100 0 0
Management of venture capital mutual funds FC 100 100 100 100 France
Cube Infrastructure Managers (formerly Natixis Environnement et Infrastructures Luxembourg) * (24)
Central corporate treasury - Asset Management FC 100 100 100 100 Luxembourg
AEW Europe German Branch Retail FC 100 60 100 60 Germany
AEW Europe Italian Branch Retail FC 100 60 100 60 Italy
NGAM S.A., Italy branch Retail FC 100 100 100 100 Italy
Mutual fund holding 1818 IMMOBILIER Real estate operations FC 100 100 100 100 France
BPCE Vie (formerly – ABP VIE) * Insurance FC 100 100 100 100 France
COFACE HOLDING AMERICA LATINA Financial data FC 41 41 41 41 Mexico
COFACE POLAND CMS Financial data FC 31 31 31 31 Poland
COFACE RUS INSURANCE COMPANY Credit insurance FC 41 41 41 41 Russia
COFACE SEGURO DE CREDITO MEXICO Insurance FC 41 41 41 41 Mexico
COFACE DANMARKBRANCH (COFACE KREDIT) Insurance FC 41 41 41 41 Denmark
Credit insurance and related services FC 41 41 41 41 Hong Kong
** French subsidiaries whose individual prudential oversight is performed based on Group consolidated ratios in accordance with the provisions of Regulation (EU) No. 575/2013 of the European Parliament and of the Council of June 26, 2013 relative to prudential requirements applicable to credit institutions and investment fi rms.
(2) Newly consolidated entities after thresholds were exceeded in the fi rst quarter of 2015.
(8) Newly consolidated entities after thresholds were exceeded in the second quarter of 2015.
(11) The assets of Providente were fully transferred to Natixis Private Equity on August 3, 2015.
(16) Share buyback following uneven subscription of capital decrease on September 30, 2015.
In our opinion, the consolidated fi nancial statements give a true and fair view of the Group’s assets and liabilities and fi nancial position, and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.
The Group recognizes impairment of assets and provisions to cover the credit and counterparty risks inherent to its activities (Notes 5.1, 5.2, 5.3, 6.5, 6.16.1 and 7.7 to the consolidated fi nancial statements). We reviewed the control procedures relating to the monitoring of credit and counterparty risk, the assessment of non-recoverability risks, and the calculation of the corresponding individual and collective impairment charges and provisions.
The Group is updating its measurement of intangible assets and goodwill carried in its consolidated balance sheet (Notes 2.5, 5.8, 6.10 and 6.12 to the consolidated fi nancial statements). We reviewed the methodology used to perform this work as well as the main assumptions and parameters.
12 Due to central banks 12 Due to banks 147,629 197,845 16 Provisions for risks and other expenses 2,660 2,704
Equity excluding fund for general banking risks 15,811 15,693 19 Regulated provisions and investment subsidies 9 11
Commitments given to customers 23,452 20,210 35 Commitments on securities 7,792 6,068 35 Other commitments given 19,469 20,532
5 FINANCIAL DATAParent company fi nancial statements and notes NATIXIS COMPARATIVE SEPARATE INCOME STATEMENTS
See note No. Year ended December 31 2015 2014 23 Interest and similar income 4,609 4,419 23 Interest and similar expenses (3,775) (3,252)
26 Net gains/(losses) on trading portfolio transactions 932 876 27 Net gains/(losses) on transactions on securities held for sale 180 (49)
Write-down, amortization and impairment of property, plant and equipment and intangible assets (38) (72)
Gross operating income 1,239 1,553 30 Provision for credit losses (165) (201)
Operating income 1,074 1,352 31 Net gains/(losses) on fi xed assets (81) (202)
NOTE 5 BONDS, SHARES AND OTHER FIXED AND VARIABLE-INCOME SECURITIES 350
NOTE 7 INFORMATION ON SHAREHOLDINGS EXCEEDING THE DISCLOSURE THRESHOLD FOLLOWING INVESTMENTS IN FRENCH COMPANIES DURING THE YEAR 351
NOTE 22 STATEMENT OF ASSETS, LIABILITIES AND COMMITMENTS RELATED TO MANAGEMENT OF PUBLIC PROCEDURES 364
NOTE 27 GAINS/(LOSSES) ON SECURITIES HELD FOR SALE AND SIMILAR 366
NOTE 39 ESTABLISHMENTS AND OPERATIONS IN NON-COOPERATIVES STATES OR TERRITORIES WITHIN THE MEANING OF ARTICLE 238-0A OF THE FRENCH GENERAL TAX CODE 372
Natixis’ separate fi nancial statements have been prepared and are presented in accordance with regulation No. 2014-07 of the Autorité des Normes Comptables (ANC- French accounting standards setter) dated November 26, 2014 relating to the fi nancial statements of companies in the banking sector and regulation No. 2014-03 dated June 5, 2014 relating to the French General Accounting Plan (PCG - Plan comptable général).
Loans for which there is an identifi ed credit risk, regardless of any guarantees, that makes it probable that Natixis will be unable to recover all or part of the amount owed by the counterparty under the terms and conditions of the loan agreement, are considered to be non-performing. This corresponds to loans for which an event of default as defi ned in Article 178 of the European regulation dated June 26, 2013 relating to prudential requirements applicable to credit institutions has been identifi ed. In particular, loans that include payments over three months overdue are classifi ed as nonperforming loans.
When the initial payments of a loan turned non-performing become regular again, the loan in question can be reclassifi ed as a performing loan.
Loans accelerated by the lender and loans classifi ed as nonperforming for more than one year for which a write-off is planned are deemed to be irrecoverable.
The reversal of the effect of discounting on impairments of nonperforming loans associated with the passage of time is recognized under “Interest and similar expenses” on the income statement.
Specifi c case of receivables restructured due to the debtor’s fi nancial situation
Where there is a risk of partial or total non-recovery of loans or of borrowers breaching their covenants, impairment charges or provisions corresponding to the amount of the probable loss are recognized on the income statement under “Provision for credit losses”. Impairment is assessed quarterly on a case-by-case basis taking into account an analysis of the risk and available collateral. In accordance with banking regulations: V accrued interest due on loans to borrowers subject to legal proceedings is deducted from the interest account in which it was initially recorded. If the interest is subsequently recovered, it is credited to this line upon collection; V interest on non-performing loans three or, where applicable, six or nine months overdue is also written down in full by deduction from the interest account in which it was initially recorded;
Impairments on non-performing loans covering risks carried on the asset side of the balance sheet are deduced from the assets in question.
Loans on the watch list, for which a Basel default has been identifi ed, are written down collectively by sector unless they are already subject to specifi c write-downs.
Securities are, in accordance with Book II - Title 3 “Accounting treatment of securities transactions” of regulation No. 2014-07 of the ANC, classifi ed according to: V their type: government securities (treasury bills and similar securities), bonds and other fixed-income securities (negotiable debt securities and interbank market instruments), shares and other variable income securities; V the economic purpose for which they are held, into one of the following categories: held for trading, held for sale, held for investment, other long-term securities, investments in associates and investments in subsidiaries and affiliates.
The applicable classifi cation and measurement rules are as follows: V Securities held for trading: securities that are originally bought or sold with the intention of reselling or repurchasing them in the short term, and securities held as part of a market-making operation. Securities bought or sold for the purposes of the specialized management of a trading portfolio are also classed as securities held for trading. To be eligible in this category, these securities must, when initially recognized, be traded on an active market with easily obtainable prices representing actual and regularly occurring market transactions on an arm’s length basis.
On acquisition, securities held for trading are recognized at the price paid including any accrued interest. Transaction costs are recognized in expenses.
V Securities held for sale: securities which are not classified in any other category are considered as securities held for sale.
They are valued at year end at the lower of their carrying amount and their market value. Unrealized losses give rise to the recognition of an impairment loss, whose calculation factors in gains from any hedging transactions conducted. Unrealized gains are not recognized.
5 FINANCIAL DATAParent company fi nancial statements and notes V Investment securities, shares in affiliates and other longterm securities: R Other long-term securities: investments made by Natixis in the form of securities, with the intention of forging lasting professional relationships and creating a special relationship with the issuing company, but without any infl uence over the management of the corporate entities in which investments were made due to the low percentage of voting rights held.
R Investments in associates: investments that give Natixis signifi cant infl uence over the corporate bodies of the issuing companies and investments of strategic importance for the development of Natixis’ operations.
The DCF method for measuring future cash fl ows is based on the establishment of business plans prepared by the management of the subsidiaries in question and approved by Natixis’ senior management. The discount rate on future cash fl ows is the result of: R an average rate of return on an investment deemed to be riskfree; R an average credit spread on the market in which the subsidiary is listed; R an average beta as refl ected in a sample of equivalent companies.
Treasury shares held for distribution to employees are classifi ed as held for sale and follow the corresponding rules.
In line with applicable accounting principles, a specifi c amortization schedule is defi ned for each signifi cant component of an item of property, plant and equipment which has a different useful life or is expected to consume future economic benefi ts differently from the item as a whole. For buildings comprising business and investment property, the following components and depreciation periods are applied: V Land: non-depreciable; V Non-destructible buildings (of historical importance): nondepreciable; V Walls, roofs and waterproofing: 20-40 years; V Foundations and framework: 30-60 years; V External rendering: 10-20 years; V Equipment and installations: 10-20 years; V Internal fixtures and fittings: 8-15 years.
These transactions are carried out for four purposes: V micro-hedging (hedging of specific transactions or positions); V macro-hedging (overall asset and liability management); V speculative position-taking; V specialized management of a trading portfolio.
Expenses and income arising from forward fi nancial instruments used to hedge and manage Natixis’ overall interest rate risk are recognized over the period of the position. Unrealized gains and losses are not recognized.
5 FINANCIAL DATAParent company fi nancial statements and notes For non-hedging activities, positions in a class of option or forward contract are marked to market at the reporting dates. Changes in market value are recognized directly on the income statement. However, for instruments traded on over-the-counter markets, gains or losses are recognized on the income statement only upon settlement of these transactions, without effect on the potential setting aside of provisions for the net risk incurred over the life of the instrument.
V “Post-employment benefits” such as pensions, other supplementary retirement benefits applicable to the banking industry, end-of-career awards and other contractual benefits payable to retirees. Natixis distinguishes between two types of post-employment benefits: R defined-contribution plans, which mainly consist of the social security basic pension scheme and the supplementary schemes Agirc and Arco, under which an entity has no obligation to pay a specifi ed benefi t amount. Contributions paid under defi ned contribution plans are expensed in the corresponding period; R defined-benefit plans under which Natixis has a legal or constructive obligation to pay a specifi ed benefi t amount are valued and funded.
R differences between the actual return and expected return on plan assets,
The annual payroll costs recognized in respect of defi ned-benefi t plans consist of: V rights vested by beneficiaries over the period; V the interest cost reflecting the impact of unwinding the discount on the obligation; V the expected return on plan assets; V amortization of actuarial gains and losses and past service costs; V the effects of plan curtailments and settlements.
1.12 Guarantee mechanism for the assets of the former GAPC hive-off vehicle
On November 12, 2009, an arrangement was made by BPCE to protect a portion of the portfolios of the former GAPC (1) hive-off vehicle with retroactive effect at July 1, 2009. With this guarantee mechanism, Natixis was able to free up a signifi cant portion of its equity allocated to segregated assets and to protect itself against the risk of loss from these portfolios subsequent to June 30, 2009. This protective arrangement was based on two mechanisms: V a sub-participation in terms of risk which acted as a financial guarantee on 85% of the nominal value of assets recognized as “securities held for investment”, “securities held for trading”, “securities held for sale” and “receivables”. Under this guarantee, Natixis is protected from the very first euro in default up to 85% of the default amount; V two total return swaps (TRS), one in euros and another in dollars, which transferred to BPCE 85% of the profit or loss recognized as from July 1, 2009. The instruments hedged by these TRS were mostly represented by “securities held for trading” and to a lesser extent by “securities held for sale”. At the same time, Natixis bought an option from BPCE which, if exercised, would allow it to recover in 10 years’ time any net positive performance by the portfolio in exchange for payment of a premium.
Natixis SA sold its branch representative offi ce in Vietnam to BPCE International et Outre-Mer through a transfer agreement dated September 29, 2015. This disposal did not have a material impact on Natixis’ income at December 31, 2015.
Provisions for non-performing loans amounted to -€65 million at December 31, 2015, compared with -€101 million at December 31, 2014. Provisions for irrecoverable loans at December 31, 2014 totaled €35 million.
The amount of perpetual subordinated loans totaled €648 million at December 31, 2015 versus €348 million at December 31, 2014.
Restructured loans as defi ned in Note 1 amounted to €181 million in performing loans at December 31, 2015 versus €262 million at December 31, 2014.
Restructured loans as defi ned in Note 1 recorded as nonperforming or irrecoverable loans amounted to €1,615 million before impairment at December 31, 2015 versus €1,985 million at December 31, 2014. The amount after impairment amounted to €1,167 million at December 31, 2015 versus €1,402 million at December 31, 2014.
Receivables eligible for refi nancing with the Banque de France and/or the European Central Bank amounted to €1,929 million at December 31, 2015 versus €2,132 million at December 31, 2014.
(b) Of which securities loaned for €11,525 million at December 31, 2015 versus €3,856 million at December 31, 2014.
The total amount of securities held for investment sold before maturity, at their net carrying amount, totaled €10 million in 2015.
For fi scal year 2014, no securities held for investment were sold before maturity.
Transfers of securities between categories: There were no transfers of securities between categories in 2014 or 2015.
Unrealized capital gains and losses in the investment portfolio: (in millions of euros) 2015 2014
(a) The main change in the 2015 fi scal year was the disposal of FIDEPP securities for €44 million.
(c) The main change in the 2015 fi scal year was the charge to provisions of Nexgen Financial Holdings Ltd securities for €31 million.
The table below was drawn up in accordance with the provisions of Article L.247-1 of the French Commercial Code: Number of shares at 12.31.2015
5 FINANCIAL DATAParent company fi nancial statements and notes NOTE 8 DISCLOSURES CONCERNING SUBSIDIARIES AND ASSOCIATES
Article L 233 - 15 et R 123 - 197 du Code de commerce
COFACE SA 1 place Costes et Bellonte - CS20003 92276 Bois-Colombes L 786,241 EUR 415,294 EUR 41.24%
NATIXIS ALGERIE IMMEUBLE EL KSAR - ZONE D’AFFAIRES MERCURE - LOT 34/35 BAB EZZOUAR 16311 ALGER NL 10,000,002 DZD 9,664,073 DZD 100.00%
NATIXIS Pfandbriefbank AG Im Trutz Frankfurt 55 D-60322 Frankfurt am Main NL 55,000 EUR 183 EUR 100.00%
NATIXIS FACTOR 30 AV PIERRE MENDES FRANCE 75013 PARIS NL 19,916 EUR 183,678 EUR 100.00%
NATIXIS FONCIERE 30 AV PIERRE MENDES FRANCE 75013 PARIS NL 685 EUR 62,857 EUR 99.99%
NATIXIS FUNDING 30 AV PIERRE MENDES FRANCE 75013 PARIS NL 67,555 EUR 1,623 EUR 100.00%
NATIXIS INTEREPARGNE 30 AV PIERRE MENDES FRANCE 75013 PARIS NL 8,891 EUR 18,574 EUR 100.00%
NATIXIS LEASE 30 AV PIERRE MENDES FRANCE 75013 PARIS NL 267,242 EUR 188,838 EUR 99.81%
NEXGEN Financial Holding Ltd 12 Lower Leeson Street Dublin 2 Dublin NL 100,000 EUR (59,271) EUR 100.00%
NATIXIS FUNDING UK Cannon Bridge House - 25 Dowgate Hill London EC4R 2YA NL 225,514 USD 5,464 USD 100.00%
NATIXIS GLOBAL ASSET MANAGEMENT 21 Quai d’Austerlitz 75013 PARIS NL 169,400 EUR 3,642,092 EUR 100.00%
NUSHI 399 BOYLSTON ST 13TH FLOOR MA 02116 BOSTON Etats-Unis d’Amérique NL 1,227,285 USD 3,228,810 USD 15.00%
(2) For these lines, details of shareholder’s equity, revenue and income correspond to the most recent audited data (at December 31,2014).
Average purchase price Amount sold or canceled Sale price Average sale price
INTERBANK AND SIMILAR TRANSACTIONS 147,629 197,845 * o/w repurchased securities 45,902 79,432 o/w accrued interest 185 223
5 FINANCIAL DATAParent company fi nancial statements and notes NOTE 13 CUSTOMER TRANSACTIONS
(in millions of euros) 01.01.2015 Charges Reversals Translation adjustments Other 12.31.2015
Provisions for impairment deducted from assets (1,597) (457) 511 (40) 31 (1,552)
(in millions of euros) 01.01.2014 Charges Reversals Translation adjustments Other 12.31.2014
Provisions for impairment deducted from assets (1,863) (498) 807 (56) 13 (1,597)
Investments in subsidiaries and affi liates (196) (28) 1 (1) (224)
5 FINANCIAL DATAParent company fi nancial statements and notes NOTE 17 HEADCOUNT AND EMPLOYEE BENEFITS
Expected return on plan assets 2.20% 1.70% 1.30% 1.80% 1.26% 1.00%
Total net obligation at January 1 74 93 29 103 299 71 78 26 97 272
Expected return on plan assets, gross (3) (3) (4) (1) (5)
Actuarial gains and losses on benefi t obligations (36) (20) (1) (15) (72) 18 7 1 13 39
Total net obligation at December 31 33 81 29 93 236 74 93 29 103 299
5 FINANCIAL DATAParent company fi nancial statements and notes NOTE 18 SUBORDINATED DEBT
(in millions of euros) Revaluation reserve for depreciable fi xed assets Provisions for investment Accelerated depreciation
At December 31, 2015, the share capital was composed of 3,128,127,765 shares, each with a par value of €1.60. All shares confer the same rights on their holders, except for treasury shares, which have no voting rights.
The capital increase in fi scal year 2015 corresponds to the allocation of 3,114,520 free shares to certain Natixis employees, within the scope of Retention and performance plans, and the subscription of 8,505,624 shares relating to the share issue reserved for employees under the employee shareholding plan.
5 FINANCIAL DATAParent company fi nancial statements and notes NOTE 21 TRANSACTIONS WITH SUBSIDIARIES AND AFFILIATES
Financing commitments given to: Guarantees provided on behalf of: Under Article 1124-61 of regulation No. 2014-07 on transactions between related parties, Natixis has no additional information to disclose, since these transactions are either excluded from the reporting scope (wholly-owned subsidiaries), or entered into under normal market conditions.
(1) Of which -€204 million in interest expense on subordinated debt at December 31, 2015 versus -€197 million at December 31, 2014.
5 FINANCIAL DATAParent company fi nancial statements and notes NOTE 26 GAINS/(LOSSES) ON TRADING PORTFOLIO TRANSACTIONS
Net provisions for reversals of risks and other expenses (b) 26 43
Depreciation, amortization and impairment of property, plant and equipment and intangible assets (38) (72)
5 FINANCIAL DATAParent company fi nancial statements and notes NOTE 31 NET GAINS/(LOSSES) ON FIXED ASSETS
Fee and commission income and expenses 274 37 180 37 528 254 49 153 34 490
V of other instruments 6,175 7,339 o/w macro-hedges 365,918 366,055 o/w isolated open positions 368 361
Bonds and other fi xed-income securities 8,833 3,958 3,647 3,775 0 20,213
Article L. 511-45 of the French Monetary and Financial Code and the Ministerial Order of October 6, 2009, require banks to disclose in a note to their fi nancial statements their establishments and operations in States and territories that do not have an administrative assistance agreement with France aimed at countering fraud and tax evasion, which provides access to banking information.
These obligations form part of the global struggle against territories that are non-cooperative on tax matters based on the work of various OECD working groups and summits, and are also part of the fi ght against money laundering and the fi nancing of terrorism.
R COMPANY FINANCIAL PERFORMANCE OVER THE LAST FIVE YEARS (ARTICLES 133, 135 AND 148 OF THE FRENCH DECREE ON COMMERCIAL COMPANIES)
Income before tax, depreciation, amortization and provisions (72,975,180.54) 861,041,488.98 2,259,385,434.57 738,855,652.86 872,230,135.57
Social security and other employee benefi ts 334,569,060.30 364,133,590.12 365,395,752.03 389,150,406.91 349,581,989.26
Statutory Auditors’ report on the parent company fi nancial statements 5.4 Statutory Auditors’ report on the parent company financial statements
The company fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these fi nancial statements based on our audit.
We conducted our audit in accordance with the professional standards applicable in France; those standards require that we plan and perform the audit in order to obtain reasonable assurance on whether the parent company fi nancial statements are free of material misstatements. An audit involves performing procedures, using sampling techniques or other methods of selection, to obtain audit evidence about the amounts and disclosures in the annual fi nancial statements. An audit also involves assessing the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made, as well as the overall presentation of the fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.
We have no matters to report as to the fair presentation and the consistency with the fi nancial statements of the information given in the Board of Directors’ management report, and in the documents addressed to shareholders with respect to the fi nancial position and the parent company fi nancial statements.
6 CORPORATE SOCIAL RESPONSIBILITYStrategic outlines and organization of the sustainable development policy 6.1 Strategic outlines and organization of the sustainable development policy
Mindful of its social and environmental responsibility, Natixis structures its CSR (corporate social responsibility) policy on three areas of focus: V incorporating social and environmental considerations in its business activities: the policy better identifies and manages the CSR risks of the projects Natixis finances and seizes opportunities for development in the green growth and responsible investment sectors; V minimizing its direct impact on the environment: it reduces Natixis’ resource consumption, waste production and carbon emissions and manages supplier relationships responsibly; V driving social progress through its Human Resources policy: it covers career management, hiring, training, compensation, labor relations and safety.
Natixis’ CSR strategy and operational practices are guided by a set of international agreements and consultations within the banking industry, including: V the United Nations Global Compact since 2007; V the Carbon Disclosure Project (CDP) since 2007; V the Principles for Responsible Investment (PRI) since 2008; V the Equator Principles since 2010.
Natixis’ CSR policy is managed by a CSR team that reports to the Communication and CSR division, the Head of which is a member of Natixis’ Executive Committee.
The CSR team works alongside some 20correspondents from Natixis’ various businesses (Corporate & Investment Banking, Investment Solutions and Insurance, Specialized Financial Services, Support Departments) and in collaboration with BPCE’s Sustainable Development division.
Rated by various extra-fi nancial rating agencies, Natixis recorded solid performances in social, environmental and governance areas, improving on the last rating established in 2014 and earning its way onto the major CSR indices (Euronext Vigeo – Eurozone, Stoxx Global ESG Leaders, etc.).
This major event built up the right momentum to encourage stakeholders to step up their energy transition initiatives. The involvement of fi nancial institutions, fully aware of their role and of the economic opportunities offered by green growth, was a powerful driving force.
Natixis has long been committed, alongside its customers, to the development of a sustainable global economy. Through its various global business lines, it has a range of expertise covering all the priorities of corporate responsibility.
Central to discussions held during the COP 21 in France in November 2015, the development of renewable energies is one of the main drivers for helping countries to reduce their greenhouse gas emissions and progress towards a safer, more centralized and more energy-effi cient source of power. The Paris agreement has reaffi rmed the need to increase the share of renewable energies in the energy mix worldwide by overcoming the longstanding dichotomy between developed countries and developing countries.
By 2030 renewable energies should make up 54% of new electricity production capacity worldwide. According to the European Renewable Energy Observatory, the global installed capacity of wind power increased eightfold between 2004 and 2014, going from 47 GW to 371 GW. The global installed capacity of solar energy totaled 177 GW after close to 40 GW were installed in 2014. Renewable electricity is also becoming an economic reality in several countries throughout the world. As a result, some countries may in the short term be able to achieve grid parity with conventional GHG-generating energy sources such as coal and gas.
Natixis confi rmed its leading position in offshore windfarm fi nancing through its involvement in the fi nancing of three projects in 2015: the Nordsee 1 windfarms (332 MW) and Veja Mate (402 MW) in Germany, and the Galloper project (336 MW) in the UK. Natixis played several key roles in the swift execution of these deals, the total fi nancing of which was approximately €4,456 million.
The Marcona (32 MW) and Tres Hermanas (97 MW) windfarms are located in the south of the country and were commissioned in April 2014 and December 2015 respectively. These are the fi rst two windfarms in operation in the country and are of major strategic importance to Peru, as it targets a total installed windfarm capacity of 500 MW.
Natixis Lease subsidiary Natixis Energéco is an active support of renewable energies in mainland France and overseas territories. In 2014, Natixis Energéco was ranked the No. 1 French bank by number and amount of fi nanced transactions (source: IJ Global).
Two months after the promulgation of the directives of the law on crowdfunding, Natixis Energéco implemented them to arrange the fi nancing of the Mauges onshore windfarm in Maine et Loire. This project is unique on account of its shareholdership of farmers, business owners and individuals from the same region. The investment was also made possible via the crowdfunding platform developed by Banque Populaire Atlantique and illustrates the necessary involvement of local stakeholders in the development of the renewable energy sector. It is also a fi ne example of the synergies between Natixis and the Banque Populaire and Caisse d’Epargne networks.
In addition to fi nancing, Mirova, the investment fi rm of Natixis Asset Management, and specialized in responsible investment, managed three funds dedicated to fi nancing renewable energy projects. Accordingly, for the last 14 years Mirova has contributed to the construction of approximately 1,000 MW in new windfarm, solar PV and hydro projects in France, as well as other European countries like Sweden.
Natixis places a high value on extra-fi nancial criteria 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.
Natixis’ Corporate & Investment Banking division boasts one of the industry’s largest research teams, combining analysts, economists and strategies in the top international marketplaces.
In the asset management business, Mirova (subsidiary of Natixis Asset management dedicated to responsible investment) offers committed management aimed at linked value creation and sustainable development. Mirova has some 50 multi-disciplinary experts: specialists in thematic investment management, engineers, fi nancial and ESG analysts, specialists and experts in socially-conscious fi nance and project fi nancing. It offers investors solutions that create value in the long term from a fi nancial, environmental, economic and social point of view.
Two SRI analysts in Global Markets Research were ranked No. 1 and No. 6 for SRI “sell-side” analyst respectively for their in-depth coverage of ESG (environmental, social and governance) issues.
Mirova stands out for its asset management analysis which draws fully on SRI research and corporate governance. Two Mirova ESG analysts were recognized for the quality of their analyses on the challenges and opportunities companies face. Mirova also features in the ranking of the asset managers who make the biggest contribution to the larger SRI debate.
The aim of this approach is to improve the factoring in of extrafi nancial criteria in investment decisions and on a broader scale. This is in accordance with the recommendations of major international standards, such as the United Nations Principles for Responsible Investment (UN-PRI), of which Natixis AM has been a signatory since 2008.
V ESG integration and exclusion: 80 portfolio managers and analysts have received training on extra-financial matters, and ESG integration committees have been set up for each specialized unit (Fixed Income, Equity). An exclusion policy applies to issuers operating in controversial armament sector, or who have gone against the principles of the United Nations Global Compact and/ or the OECD Guidelines for multinational enterprises.
V Voting policy and commitment aimed at encouraging issuers to improve their practices by giving us the floor at general shareholders’ meetings and by initiating constructive dialog at these meetings: 187 (2) issuers are involved in commitment initiatives and the vote is exercised on 99.5% of the eligible universe of issuers.
In the run up to the Conference of Parties in Paris (COP 21), Mirova bolstered its commitment to the fi ght against climate change.
2015 key events An innovative methodology for measuring portfolios’ carbon footprint
Mirova called upon the expertise of Carbone 4 to co-develop a methodology and decision-making tool for assessing company’s contribution to reducing global greenhouse gas (GHG) emissions.
6 CORPORATE SOCIAL RESPONSIBILITYStrategic outlines and organization of the sustainable development policy Mirova also offers investment documentation on the fi ght against climate change: V the EUROFIDEME 3 funds, launched in 2014, enable European institutions to invest in companies/projects in the renewable energy sector. It joined the existing range consisting of the
Mirova and the United Nations Convention to Combat Desertifi cation (UNCCD) signed a partnership to structure the fi rst global fund with an aim to reach land degradation neutrality: the LDN fund (Land Degradation Neutrality).
Created in 1994 partnership with investment firm France Active, the “Insertion Emplois” product range is made up of three funds with complementary risk/reward profiles. They had nearly €369 million in assets under management at the end of 2015. In addition to direct subscriptions, these mutual funds derive inflows from life insurance products, institutional investor equity and employee savings plans.
(1) Finansol 2015 “Zoom sur la fi nance solidaire” survey, based on solidarity investment AuM at end-December 2014.
(4) Finansol 2015 “Zoom sur la fi nance solidaire” survey, based on solidarity investment AuM at end-December 2014.
(5) 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).
Various solutions for reducing energy consumption have been implemented, including systems for remotely managing heating systems, low-energy lighting and building envelope upgrades. A call for tender was made for the installation of LED lights for all the warehouses managed in Europe. In 2015 LED lights were installed in 37 out of 42 renovations, representing energy-saving measures.
In the international UNPRI evaluation, AEW Europe was ranked in Category A, i.e. in the 25% of top-performing companies in a sample of 163 international peers assessed on the basis of PRI criteria.
And, in the latest Global Real Estate Sustainability Benchmark (GRESB) survey, Logistis, AEW UK Core Fund, ERAFP, PBW 1 and PBW 2, fi ve funds managed by AEW Europe, were awarded the Green Star 2015 ranking for their environmental performances.
Natixis’ Private Equity business invests in unlisted SMEs. It comprises six asset management companies specializing in growth capital in France (Naxicap Partners and Alliance Entreprendre), in venture capital (Seventure Partners) and in funds of funds (EuroPE for Europe, Caspian-PE for the United States and Eagle Asia Management for Asia).
Euro Private Equity is a signatory of the United Nations Principles for Responsible Investment (PRI) and defi ned its own governance criteria and strives to respect socially responsible investment criteria. As a responsible investor, Euro-PE is committed to making its portfolio managers aware of ESG criteria and encouraging them to observe them. Accordingly, over 30% Euro-PE’s portfolio managers have signed the PRI. At end-2015, 80% of Euro-PE’s AuM integrated ESG criteria and respect the responsible investment charters of its clients (France Investment programs or dedicated mandates). The portfolio showed annualized revenue growth of over 20% and created over 16,000 new jobs.
6 CORPORATE SOCIAL RESPONSIBILITYStrategic outlines and organization of the sustainable development policy V In June 2015 Mirova launched the Mirova Green Bond – Global mutual fund, one of the first 100% green bond mutual funds and the first bond fund to receive the Fonds Vert Novethic 2015 certification. Accordingly, over 20% of Mirova’s bond strategies comprise green bonds.
For more information on Natixis Compliance, see Chapter 2, “Corporate Governance”, section 2.5.3 and Chapter 3, “Risks and capital adequacy”, section 3.9.1.
As a signatory of the Equator Principles since 2010, Natixis applied a market methodology recognized by 83 adhering banks and fi nancial institutions. The purpose of the methodology is to assess the E&S risk of projects to be fi nanced and to rate the quality of the management systems set up by Natixis’ client to manage, minimize and resolve as best as possible the generated impacts.
Such transactions include acquisition fi nancing transactions not associated with an investment program, fi nancing that is, by nature, for multiple purposes, transactions involving portfolios of assets too large for a dedicated assessment, or certain kinds of assets.
Therefore, before making a loan decision, and in the interest of having a sustainable relationship with its client, the objective is to make the business lines aware of any situation that may be harmful to its reputation and, if applicable, consider the actions to be carried out.
The number of transactions that have been subject to an assessment, E&S risk monitoring and/or reputational risk analysis over the last two years is 123. The breakdown is represented below: ■ NUMBER OF TRANSACTIONS BY REGION – 2015
For the most sensitive sectors, CSR policies for internal use were established and integrated into the Risk Policies of the business lines working in the sectors in question.
CSR policies are now in place in the following sectors and in accordance with the main ideas below: V Defense: management of transactions via a set of very precise criteria applicable to all transactions, covering the nature of equipment and the eligibility of importing and exporting countries. These criteria are an addition to Natixis’ exclusion policy (see next inset); V Nuclear: adherence to the strictest international safety regulations (IAEA, etc.), technological reliability, and demonstration by the host country and operator to control and operate its nuclear function; V Energies/Mines: selection of operators demonstrating an ability to responsibly manage the impacts of their activities in accordance with international standards (IFC), specifically those of the oil, gas and mining industries applicable to onshore and offshore extraction practices; V Palm oil: traceability and adherence with current best practices and standards.
This exclusion policy is taking into account by the decision-making bodies of ever activity (credit committee, investment committee, etc.), and is integrated in the policy defi ned for this sector by every one of the fi nancing and investment business lines.
With more than 18,000 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 adopted an environmental policy that rests on three pillars: managing buildings in an environmentally sustainable manner, combating global warming, and raising employee awareness.
The Real Estate and Logistics Department has introduced a total cost approach to its projects and investments that allows it to factor in the environmental impact of its activities. It is especially involved in setting up and monitoring environmental certifi cations, ensuring maximized energy consumption, waste treatment and building accessibility.
Energy consumption: electricity, heating and cooling utilities in offi ce buildings - excluding data centers (in MWh) 55,151 56,122 73,200
In 2016, efforts will be continued with the aim of further reducing energy consumption by 2% based on constant scope and weather conditions.
The people responsible for the management, operation and technical maintenance of the group’s buildings receive more indepth training in this fi eld. The systems for preventing environmental risks and pollution are notably used to conduct drills simulating the accidental spilling of pollutants in each building.
The main technical managers within the Real Estate and Logistics Department have also received training in Groupe BPCE’s regulatory and environmental charter, which specifi es the regulatory and environmental obligations to be observed for each type of outfi tting and improvement operation. This charter also contains standards relating to environmental certifi cations.
The Purchasing Department has undertaken a number of initiatives to better understand and qualify very small businesses (VSBs) and the innovative start-up environment in which they evolve.
This is because standard qualifi cation criteria for to suppliers and work practices which are by and large applied by the purchasing departments of large companies, make it diffi cult to enter into a balanced relationship with small structures.
The aim is to adapt our processes and methods to this ecosystem and to see these structures as opportunities rather than risks.
Natixis fi rmly believes that career management and the working environment are the key ingredients in building commitment as well as individual and collective effi ciency. Natixis positions itself as a responsible employer that is committed to supporting all its employees from the moment they are hired and over the course of their personal and professional development.
In addition to stepping up mobility and career management within the company, in summer 2015 Natixis launched its fi rst campaign of professional interviews. These meetings are a dedicated time for one-on-one discussion between managers and staff, and follows on from the professional training reform of March 5, 2014. The aim is for every employee to meet with their manager at least once every two years in order to review their current job, their plans, career aspirations and the actions they need to take to reach their goals.
The Human Resources teams stepped up their internal and external communication initiatives (focusing on diversity, career management and youth employment in France and abroad) to raise awareness, both inside and outside the company, on social engagement and diversity matters.
6 CORPORATE SOCIAL RESPONSIBILITYStrategic outlines and organization of the sustainable development policy 6.1.5 COMMUNITY OUTREACH
In the fi eld, Natixis has supported “Plan International”, an NGO, since 2005. Plan International is an association that implements prevention programs in Cameroon, Burkina Faso and Togo. Since 2012, the bank has been backing a mother and child healthcare program, including a major anti-malaria drive, led by Plan International targeting 18,000 children and 4,000 pregnant women in 52 villages in Togo. The communities covered by the program, with a population of more than 91,000 people, also benefi t indirectly from the program.
In 2015 the activities supported by the bank are aimed at educating families and improving the availability and quality of healthcare services for children under fi ve and pregnant women. Thanks to this support: V 310 community healthcare officers carried out awareness campaigns for their communities. They received training and could see to over 4,000 people; V 428 children under the age of five who were seen to had confirmed cases of malaria and were able to be treated; V 89 community healthcare officers were provided with diagnosis kits and anti-malaria medication.
According to estimations by the International Agency for Research on Cancer (IARC), which is part of the World Health Organization (WHS), cancer is one of the main causes of death worldwide, having caused 8.2 million deaths in 2012. The number of cancer cases is expected to rise from 14 million in 2012 to 22 million over the course of the next two decades (GLOBOCAN 2012, IARC).
Natixis supports three young research teams working on personalized medicine, also known as molecular medicine. In this way; Natixis’ partnership with the Fondation Gustave Roussy will step up cancer research and probably save several years spent defi ning new treatments.
Natixis was awarded the 2015 Digital HR Team Award for “HR Transformation” by Groupe RH&M for its “Questions & Requests” service.
Strategic outlines and organization of the sustainable development policy 6.1.5.2 Employee participation in solidarity-based initiatives
Since Natixis Asset Management has been a partner of “La Mie de Pain”, an association in the 13th district of Paris that has been working for more than 125 years to provide the disadvantaged with emergency housing and assistance with social and professional reintegration. The Company and its employees provide fi nancial aid to the association, organize collections, offering the benefi t of their skills by helping create the association’s Facebook page, and volunteering to distribute meals. In 2015 over 100 employees participated in 250 volunteer assignments by helping to provide meals to those cared for by the association.
In 2015 Natixis organized the fourth annual “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 Natixis intranet, is objective and fair. Four projects received fi nancial support from Natixis in 2015: “Association pour la promotion de Walaldé”, “Les Petites Gouttes”, “Action-Niger pour un Appui au Développement durable” and “À vue de truffe”. A fi fth prize, the “Coup de Cœur” special prize from the judges, was given to the New York Center for Autism Charter School.
2015 key event In 2015 Natixis organized two awareness campaigns for its staff: “Mars bleu” as part of the national colon cancer awareness month. On the program: conference on nutrition and a “neo-magician”.
The information in this document covers the 2015 fi scal year. The reporting period considered is one full calendar year, running from January 1 to December 31.
Natixis worldwide Natixis and all subsidiaries worldwide in which it holds at least a 50% stake 18,208 100%
Natixis France Natixis and its subsidiaries in France excluding fi nancial investments and affi liates 12,518 69%
Natixis International Natixis and its subsidiaries abroad excluding fi nancial investments and affi liates 1,991 11%
Natixis also believes that the information about land use is not relevant as, given the layout of its buildings, which are often multistory, their footprint is limited.
Natixis did not record any environmental provisions or guarantees in 2015.
Corporate & Investment Banking and GAPC (workout portfolio management) 2,849 2,701 3,366
(b) With respect to employees under contract, “FTE staff” incorporates workforce participation rates and subsidiary consolidation rates, but excludes employees on long-term leave: illness/workplace accidents of over 90 calendar days, leave lasting several months (maternity, sabbatical, etc.), time savings account (CET) balance in the case of retirement or early retirement.
Staff under permanent contracts (as a %) 97.3 97.5 97.5 * Figures restated (pro forma 2015) in accordance with the new defi nition of the scope.
* Figures restated (pro forma 2015) in accordance with the new defi nition of the scope.
Positions fi lled through internal transfers (as a %) 54.3 72.0
Rate of internal transfers between divisions (as a %) 25.4 23.1 * Excluding BPCE Assurances and BPCE APS
Voluntary employee profi t-sharing (in millions of euros)* 125.3 112.2 99.7
Within the Natixis France scope, the average amount paid per employee under the profi t-sharing plan in 2015 for fi scal year 2014 totaled €2,419, while the average amount paid for voluntary employee profi t-sharing totaled €5,188. In the same scope, the average amount of employer contributions paid per benefi ciary in the fi rst half of 2015 was €2,371 for the Company savings plan and €647 for the collective pension plan.
Part-time staff as a % of total headcount (a) 11.4 11.3 10.7
Absenteeism as a % of total headcount (b) 5.3 6.6 6.3
Natixis pursued several initiatives in 2015 to improve working conditions and the balance between private and professional life, including: V telecommuting: currently being rolled out within the company after being run at various “pilot” subsidiaries and business lines; V concierge services: these are available at Natixis Asset Management and Natixis Assurances; V parenting: in 2015 Natixis continued its program to help its employees find childcare solutions. The partnership with Babilou, resulting in the allocation of 50 nursery reservations in 2015 according to predominantly socio-economic criteria. This initiative complements the parenting options in place at the different entities (for example partial coverage of childcare costs was offered to over 1,500 NSA employees in 2015).
In June 2015 Natixis signed an agreement on telecommuting with all the representative union organizations.
It is applicable in France and is at the heart of Natixis’ HR policy on the quality of working conditions. It will be phased in until mid-2017, and every Natixis entity and department must indicate its specifi c terms of conditions of application.
On December 17, 2015, Natixis’ Senior Management Committee signed a charter entitled “15 work/life balance commitments” charter championed by the OPE (French observatory aimed at improving the balance between work and home life) at the initiative of the French Ministry of Women’s Right in 2013. This commitment draws on the commitment of the management teams to develop their managerial practices in the interest of a better work/life balance for all employees. It is also one of the fundamental steps of the “Work&Life at Natixis” framework supported by the Senior Management Committee.
Employee representative bodies, created for the consolidated Natixis France scope, provide a forum for social dialog and guarantee that all staff are represented.
The agreement relating to union and collective bargaining rights within the consolidated Natixis France scope, signed in 2010 by Senior Management and the majority of the representative union organizations, provided the Natixis France with union coordinators, who are Management’s preferred points of contact in the employee dialog structure, and an integrated contractual bargaining body. They make it possible to negotiate collective bargaining agreements on issues of common interest that are uniformly applicable to all employees in France, in line with Groupe BPCE’s labor relations policy.
Amendment to the agreement on the Natixis employee savings plan allowing a capital increase for employees 02.17.2015 2015 profi t-sharing agreement 06.30.2015
The rate of “high stress levels” among the employee population measures 9.2%, which is virtually stable compared to previous years and lower than the average of companies covered by the observatory (12.6%). The number of work stoppages, measured on an annual basis to account for seasonal variations, has gone down 23% in three years. The decrease is equally signifi cant for company physician consultations linked to psychosocial risks.
Natixis S.A.’s Caen and Reims locations, and all eligible subsidiaries (50-employee threshold), have a CHSCT consisting of employee representatives who, in cooperation with Management and occupational healthcare services, play an active role in all areas that involve health, security and working conditions.
Frequency of workplace accidents (a) (by number per million hours worked) 6.66 7.16 7.24
Absentee rate for sick leave (including for occupational illness) (c) (as a %) 2.5 2.9 2.8
Pursuant to the Group succession planning agreement of January 20, 2015, and the employment agreement of September 13, 2013, training activities in 2014-2017 are centered on four main objectives: V supporting the major business line projects.
6 CORPORATE SOCIAL RESPONSIBILITYLabor information 2015 key events Opening of the Purple Academy
In 2015 the Purple Academy began an 18-month program for senior executives on how to apply the strategy and drive a sustainable performance.
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. With the support of a dedicated diversity and disability management team, and a network of contacts in the business lines, it has established a policy designed to capitalize on the diversity of profi les, experiences and skills in its employee base.
In 2015, Natixis continued to move ahead with its initiatives to promote diversity, based on three priority areas: V gender equality in the workplace; V retention of older employees; V the professional integration and retention of employees with disabilities.
In terms of training, some 40 female employees completed the “Réussir sa carrière au féminin” training program in 2015.
Moreover, Natixis’ Senior Management supports the WINN (Women in Natixis Network) - a network created in 2012 of women in executive positions.
Percentage of women management executives (as a %) (c) 23.5 21.5 19.1
Percentage of women executives (as a %) (a) 43.1 42.3 41.3
Percentage of women in the part-time workforce (as a %) (a) 90.9 91.5 91.0
As part of the employment agreement signed in September 2013, Natixis set up a generation contract that provides for various measures in favor of older employees, including a minimum hiring rate of staff over 45, access to subsidized part-time work for staff over 58, and skills volunteering with non-profi t organizations, to facilitate staff’s transition from active employment to retirement.
The percentage of employees over the age of 55 was 14.1% at end-2014 (versus 13.7% at end-2014).
In addition to participation in specialized recruitment forums, Natixis stepped up its measures to promote subcontracting to disabilityfriendly companies and substantially increased the number of invitations to tenders in this sector, primarily by renewing cocontracting, on-site service and supply contracts (see section 6.1.3).
6 CORPORATE SOCIAL RESPONSIBILITYLabor information 2015 key event Disabled Persons Employment Week
The central theme of this week-long event was sport, and staff were invited to conferences where they could meet two Paralympic champions, Cyril Moré and Ryadh Sallem. There were also initiation activities in table tennis, fencing, blowpipe and wheelchair rugby. A temporary deli was set up to taste and buy products made by ESAT (vocational rehabilitation center), and staff could enjoy a coffee at “sign-language cafe” after learning the basics of sign language.
Men Women - of 25 years 25-29 years 30-34 years 35-39 years 40-44 years 45-49 years 50-54 years 55-59 years 60-64 years 65 years and +
This chapter presents all the results of the programs and measures described in paragraph 6.1.2 “Managing our direct impact on the environment”. The 2015 environmental reporting scope consists of Natixis and its subsidiaries in France (excluding fi nancial investments and affi liates - see scopes in Chapter 6.2), i.e. 287,351 (1) m2 and 18,226 workstations.
(1) Including offi ce space managed by the Real Estate and Logistics Department and offi ce space managed by third-parties (owners or property managers).
The raw material used the most at Natixis is paper (reams, envelopes, desktop publishing, internal and external printouts, etc.). Virtually all the paper used is sustainable forest managementcertifi ed (FSC (1) and PEFC (2) certifi cations) and some is made from recycled fi bers.
Everyday consumption by employees (reams of paper, letterhead paper) is steadily falling. The Company’s printing systems have been optimized by streamlining the printer pool and rolling out multi-function printers confi gured to print on both sides throughout the group.
vouchers. Over the last three years, some 30 clients have opted for this more eco-responsible choice, making production less energy intensive, reducing waste, and generating savings on specifi c logistics (transport, storage, etc.) for approximately €7.5 million.
For the third year, Natixis ran its campaign to send the Notice of Meeting brochure for the General Shareholders’ Meeting electronically. 34% of shareholders agreed to receive the brochure online, which is the best ever acceptance among Parisbased issuers (source: Cliff 2015 survey).
Natixis Interepargne ran a similar campaign for its profi t-sharing and incentives sign-up form for Natixis employees. Over half of the staff population concerned agreed to receive the forms electronically.
Energy consumption per workstation (in MWh) excluding data centers 3.03 3.08 3.79
The 2015 carbon footprint assessment showed an increase in emissions between 2014 and 2015, chiefl y due to increased purchases. A carbon action plan has been in place since 2011 (see section 6.1.2.2).
6 CORPORATE SOCIAL RESPONSIBILITYEnvironmental information ■ RESULTS OF THE 2015 NATIXIS (FRANCE) GREENHOUSE
For the second year in a row, the “Mission Handicap” association organized temporary bicycle diagnostics workshops at two Natixis locations in partnership with the Maurice Pilod ESAT (vocational rehabilitation center). Under the name “Petits vélos de Maurice”, these workshops have employed disabled persons since 2004. Natixis employees were able to get free diagnostics of their bicycles (a complete check-up, tire pressure, chain lubrication, nuts and bolts, adjustments of brakes and gears, etc.).
Due to the performance of petrol-engine vehicles and a more restricted choice of engines, Natixis has raised its maximum authorized CO
As diesel engine vehicles are being replaced in favor of petrol-powered and/or hybrid electric vehicles, the average CO
Natixis’ fl eet has decreased from 116g in 2014 to 115g in 2015: Average CO
This includes rules on travel that have an environmental impact: V when 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 that its employees use “green taxis” (hybrid vehicles) for travel; 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 (conference calls, video conferences and web conferences). Use of these alternatives further increased at Natixis in 2015: 52,000 video conferences were held (compared to 43,000 in 2014).
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 to cover the worldwide scope has been tasked with applying these rules to travel booked by employees.
Many Natixis customers are impacted by the new climate regulations, including manufacturers in the infrastructure, steel and cement sectors. The implementation of mechanisms such as the EU Emissions Trading System forces them to limit their greenhouse gas emissions by making additional investments or buying GHG emission allowances on the market. The fi nancing solutions offered by Natixis in the energy sector already take the carbon factor into account.
6 CORPORATE SOCIAL RESPONSIBILITYSocial information 6.5 Social information 6.5.1 TERRITORIAL, ECONOMIC AND SOCIAL IMPACTS
As a signatory of the United Nations Global Compact, Natixis is committed to respecting 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 conditions for Natixis employees worldwide; V they are incorporated in Natixis’ responsible purchasing policy: supplier contracts and the rules and principles established by the Purchasing Department (invitations to tender, supplier sustainable development charter, contracts) contain clauses governing respect for human rights by suppliers and their subcontractors; V they are included within the framework of the Equator Principles’ application (see section 6.1.1.3), 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.
6 CORPORATE SOCIAL RESPONSIBILITYSocial and environmental information for international operations 6.6 Social and environmental information for international operations