Uncertainties related to Brexit On June 23, 2016, the UK decided to leave the European Union (Brexit) following a referendum. After Article 50 of the Treaty on European Union was triggered on March 29, 2017, the United Kingdom and the 27 other member countries of the European Union gave themselves two years to prepare for the country’s effective withdrawal. This deadline was postponed three times, ultimately falling on January 31, 2020. A transition period then took place until December 2020, during which future trade agreements for goods and services were negotiated while the European rules in force continued to apply.
On December 24, 2020, the United Kingdom and the European Union signed an exit agreement, enabling the transition period to close with a framework for future business relations. However, this agreement did not concern Financial Services, so Natixis applied from January 1, 2021 the measures prepared for an exit without agreement, without significant impact on its activities. Both parties (United Kingdom and European Union) have set three months, until March 31, 2021, to negotiate specific rules for the financial sector. Natixis closely monitors the results of these negotiations in order to incorporate them, where applicable, in the assumptions and estimates used in the preparation of the consolidated financial statements. Lastly, the non-recognition of British CCPs by European regulations is not a risk in the short term, as ESMA announced the September 21, 2020 an extension of the equivalence period to
Uncertainties related to the application of certain provisions of the BMR European Regulation (EU) 2016/1011 of June 8, 2016 on indices used as benchmarks (“the Benchmarks Regulation” or “BMR”) introduces a common framework aimed at guaranteeing the accuracy and integrity of indices used as benchmarks in financial instruments and financial contracts or to measure the performance of investment funds within the European Union.
The purpose of the Benchmarks Regulation is to regulate the provision of benchmarks, the provision of data underlying benchmarks, and the use of benchmarks, within the European Union. It provides for a transition period for administrators, who have until January 1, 2022 to be approved or registered. After this date, the use by entities supervised by the EU of benchmarks whose administrators are not authorized or registered (or, if they are not located in the EU, are not subject to equivalent or otherwise recognized or approved regulations) will be prohibited. Under the BMR, interest rate benchmarks Euribor, Libor and Eonia have been designated as critical.
With respect to Libor, at this stage, “risk-free rate” alternatives were defined for the GBP, USD, CHF, and JPY Libor. However, work is still under way to define the terms of transition to these rates. Legislative solutions are also being considered at the European level, in the United Kingdom and in the United States, for contracts referenced at the Libor rate, which would not have been renegotiated at the end of the transition period.
Net earnings/(loss) attributable to shareholders (in millions of euros) (a) (19) 1,758
Average number of ordinary shares outstanding over the fiscal year 3,155,436,359 3,152,619,870
Average number of treasury shares outstanding over the fiscal year 4,116,402 2,446,353
Average number of shares used to calculate earnings/(loss) per share 3,151,319,957 3,150,173,517
Number of potential dilutive shares resulting from stock option plans and bonus share awards (b) 8,765,186 7,988,464
At December 31, 2020, negative interest on financial assets is presented under “Interest and similar expenses”; negative interest on financial liabilities is presented under “Interest and similar income”. At December 31, 2019, negative interest on financial assets was included in “Interest and similar income” to show a net balance; negative interest on financial liabilities was recorded under “Interest and similar expenses”.
Financial assets and liabilities at amortized cost 2,485 (1,418) 1,067 3,452 (2,683) 769
Financial assets to be valued at fair value through profit or loss 66 66 56 56
At December 31, 2020, the negative interest on financial assets and liabilities amounted to -€146.9 million and €231 million respectively.(a)
The method of accounting for fees and commissions received in respect of services or financial instruments depends on the ultimate purpose of the services rendered and the method of accounting for the financial instruments to which the service relates. The main accounting principles applying are presented in Note 5.18.
As of December 31, 2019, Coface contributed -€126.8 million to net commissions (+€59.1 million in income and -€185.9 million in expenses, primarily (c) categorized as “Other”).
Net gains/(losses) on financial assets and liabilities excluding hedging derivatives 1,021 2,004
Net gains/(losses) on financial assets and liabilities under the fair value option (660) (3,714)
in losses recorded following the sale of financial assets at amortized cost (versus -€7 million at December 31, 2019) and €1 million in gains related to the sale of debt securities at amortized cost (versus -€3 million at December 31, 2019).
At December 31, 2020, net gains or losses resulting from the derecognition of instruments at amortized cost include -€13 million
Other related income and expenses 227 (194) 33 221 (167) 54
Of which insurers’ contribution to the small business solidarity fund as part of the COVID-19 crisis amounted to -€13.9 million as of December 31, 2020.(a)
Operating expenses mainly comprise payroll costs, including wages and salaries net of rebilled expenses, social security expenses and employee benefits such as pensions (defined benefit plans), and expenses relating to share-based payment recognized in accordance with IFRS 2. A breakdown of these expenses is provided in Note 11.
Provisions for impairment of financial assets (1,372) 567 (3) 7 (801) (872) 561 (9) 4 (316)
Unimpaired financial assets – 12-month expected credit losses (118) 90 0 0 (27) (74) 61 0 0 (13)
Unimpaired financial assets – Lifetime expected credit losses (395) 321 0 0 (73) (244) 266 0 0 22
This item also includes any impairments recorded in respect of proven default risks associated with counterparties of OTC instruments, booked as financial assets at fair value through profit or loss equal to €32.6 million as of December 31, 2020.
Including -€145.6 million concerning the gain or loss on the disposal of Coface and -€47.6 million on H2O recorded in fiscal year 2020 (a) (see Note 1.2 Significant events). Including €697.1 million for the sale of the SFS business lines and -€14.7 million for the disposal of Natixis Brasil.(b)
= Consolidated taxable income/(loss) 721 2,809 x Theoretical tax rate (b) 32.02% 34.43%
These assets and liabilities are measured at fair value at the reporting date, with changes in fair value, including interest, recognized in the income statement under “Net gains or losses on financial instruments at fair value through profit and loss”, except for: interest on hedging derivatives and non-SPPI instruments recordedV as interest income and expenses in the income statement; and changes in fair value attributable to own credit risk on financialV liabilities designated at fair value through profit or loss, recorded in other comprehensive income as “Revaluation of own credit risk on financial liabilities at fair value through profit or loss”.
Derivatives not eligible for hedge accounting (c)* 53,664 0 0 53,664 52,792 0 0 52,792
The criteria for classifying financial assets at fair value through profit or loss if they do not meet the SPPI criterion used by Natixis are provided in Note 5.1.2.(a) Only in the case of an accounting mismatch as defined by IFRS 9 (see Note 5.1.5).(b) The information presented takes into account the impact of offsetting carried out in accordance with IAS 32 (see Note 7.3).(c) Amounts restated in relation to the financial statements published in 2019 (see Note 5.4).*
Conditions for classification of financial liabilities under the fair value option Financial liabilities are designated at fair value through profit or loss when this choice provides more pertinent information or when the instruments incorporate one or more significant and separable embedded derivatives (see Note 5.1.5).
The use of the fair value option is considered to provide more pertinent information in two situations: where there is an accounting mismatch between economicallyV linked assets and liabilities. In particular, the fair value option is used when hedge accounting conditions are not met: in such cases, changes in the fair value of the hedged item automatically offset changes in the fair value of the hedging derivative; where a portfolio of financial assets and liabilities is managed andV recognized at fair value as part of a documented policy of asset and liability management.
Less than 1 year 1 to 5 years 6 to 10 years Over 10 years Total
Hedging of interest rate risk Hedging of interest rate risk 31/12/2020 31/12/2019
Hedged portion still to be deferred Carrying amount of which revaluation of the hedged portion
Financial assets at fair value through other comprehensive income 10,570 185 10,407 28
Financial assets at amortized cost 8,444 211 2 11,247 184 1
Loans and receivables due from banks 6,547 169 2 7,909 154 1
The asset and liability fair value of the hedging derivatives is presented in net terms.(a)
Amount of OCI for CFH transactions (3) 2 (4) (5) 36 (32) 7 5
for which the settlement/delivery is carried out by the sameV custodian whose services make it possible to connect, at the same settlement date, the contracts concluded with the same counterparty and whose maturity and currency are identical.
As of December 31, 2020, OTC derivatives handled with the clearing houses LCH Clearnet Ltd, Eurex Clearing AG and CME Clearing are not subjected to accounting offsets in the sense of IAS 32, but rather a daily liquidation (application of the “Settlement to Market” principle, as provided by those three clearing houses so that margin calls are now considered a routine liquidation of derivatives, rather than security deposits as before).
Loans and receivables due from credit institutions 7,812 5,057 2,755 3,036 1,100 1,936
Financial liabilities designated at fair value through profit or loss 162,866 17,705 145,161 203,577 47,826 155,751
Amounts due to credit institutions 14,186 5,057 9,129 7,988 1,100 6,888
Including guarantees given in the form of securities.(a) Amounts non restated in relation to the financial statements published in 2019 (see Note 5.4).*
The tables below show, for each class of instrument, changes over fiscal year 2020 in accounting items and impairments and provisions related to financial assets at fair value through recyclable other comprehensive income.
Financial assets at fair value through recyclable other comprehensive income at 31/12/2020
Variations linked to changes in credit risk parameters (excluding transfers) (76) 0 (0) (76) 0
Changes in contractual cash flows not giving rise to derecognition 0 0
Contracts fully repaid or sold during the period (653) 0 (653) 0
For financial reporting purposes, the fair value of financial and non-financial instruments has been broken down in accordance with a fair value hierarchy that reflects the observability of the models and parameters used to make these assessments (see Note 5.6). The three levels of the fair value hierarchy are presented below.
Financial assets to be valued at fair value through profit or loss 4,368 1,167 1,996 1,205 4,415 1,313 1,793 1,308 o/w debt instruments in the form of securities 1,703 1,011 124 568 1,865 1,091 127 647
Derivative instruments not eligible for hedge accounting (negative fair value) 49,897 713 47,707 1,477 59,718 674 57,146 1,898
The data regarding the fair value measurements for the insurance activities are presented in Note 8.4.4.
Level 2 fair value comprises instruments other than those mentioned in Level 1 fair value and instruments measured using a valuation technique incorporating inputs that are either directly observable (prices) or indirectly observable (price derivatives) through to maturity. This mainly includes: Simple instruments Most OTC derivatives, swaps, credit derivatives, forward rate agreements, caps, floors and plain vanilla options are traded in active markets, i.e. liquid markets in which trades occur regularly. These instruments are valued using generally accepted models (discounted cash flow method, Black & Scholes model, interpolation techniques), and on the basis of directly observable inputs. For these instruments, the extent to which models are used and the observability of inputs has been documented.
Instruments measured using Level 2 inputs also include: securities that are less liquid than those classified as Level 1,V 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; securities not listed on an active market whose fair value isV determined on the basis of observable market data. E.g. use of market data published by listed peer companies or the multiple method from techniques commonly used by market participants; Greek sovereign debt whose fair value is classified as Level 2;V
mutual fund units whose NAV is not determined and published onV a daily basis, but are subject to regular reporting or offer observable data from recent transactions; debt issues measured under the fair value option where theV underlying derivatives are classified in Level 2.
Issuer credit risk is also considered as observable. 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, 2020, as on 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.
The main models for determining the fair value of these instruments are described below by type of product: equity products: complex products are valued using:V
The main models used for equity products are local volatility, local volatility combined with the one-factor Hull & White (H&W1F) model, as well as the Local Stochastic Volatility (“LSV”) models.
The LSV Model is based on joint diffusion of the underlying asset and its volatility (two factors in total), with a local volatility function (called a “decorator”) in order to be consistent with all of the vanilla options; fixed-income products: fixed-income products generally haveV specific characteristics which justify the choice of model. The valuation of the payoff will take into account all underlying risk factors.
The HW1F model makes it possible to model the yield curve with a single Gaussian factor and one calibration of the vanilla rate options.
The HW2F model makes it possible to model the yield curve with two factors and one calibration of the vanilla rate options and spread-option instruments.
structured or representative of private placements, held by theV insurance business line; hybrid interest rate and currency derivatives and credit derivativesV that are not classified in Level 2; loans in the syndication process for which there is no secondaryV market price; loans in the securitization process for which fair value isV determined based on an expert appraisal; investment property whose fair value is obtained using aV multi-criteria approach based on the capitalization of rents at the market rate combined with a comparison with market transactions; instruments with a deferred day-one margin;V
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 firms, and in accordance with the European Capital Requirements Regulation (CRR) 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 3.2.5 of Chapter [3], “Risk factors, risk management and the Pillar III report”.
Under IFRS 9, day-one profit should be recognized only if it is generated by a change in the factors that market participants would consider in setting a price, i.e. only if the model and parameters input into the valuation are observable.
If the selected valuation model is not recognized by current market practices, or if one of the inputs significantly affecting the instrument’s valuation is not observable, the trading profit on the trade date cannot be recognized immediately in the income statement. It is taken to income on a straight-line basis over the life of the transaction or until the date the inputs become observable. Any losses incurred at the trade date are immediately recognized in income.
Credit Securitization swaps Discounted cash flow expected based on the underlying portfolio’s early redemption assumption
Financial assets and liabilities at fair value measured using Level 3 7.5.1 of the fair value hierarchy
Amounts non restated in relation to the financial statements published in 2019 (see Note 5.4).* The flows presented under the “Reclassifications in the period” columns of the above table are determined on the basis of outstanding transactions at December 31, 2020.(a) Corresponds mainly to the effect of changes in presentation of option premiums payable or receivable (see Note 5.4).(b)
Financial liabilities under the fair value option through profit or loss 9,368 (21) 422 4,627 (5,376) (556) 505 61 (272) 8,758 o/w securities under the fair value option 9,366 (20) 422 4,627 (5,376) (556) 503 61 (272) 8,754 o/w other financial liabilities under the fair value option 2 (0) 2 4
TOTAL FINANCIAL LIABILITIES RECOGNIZED AT FAIR VALUE 12,075 158 153 5,447 (6,326) (794) 667 (205) (367) 10,809
Financial assets to be valued at fair value through profit or loss 1,490 50 35 (0) 32 (298) 3 (5) (4) 6 1,308 o/w debt instruments in the form of securities 862 18 28 0 (265) 4 647
Financial assets designated under the fair value option 0 (0) 0 o/w debt instruments in the form of securities (0) 0 o/w equity instruments o/w loans and receivables
Financial assets at fair value through other comprehensive income 48 1 26 256 (2) (8) (0) 321 o/w debt instruments in the form of securities o/w loans and receivables
Other financial liabilities held for trading 1,176 37 (37) 1,161 (1,526) (2) 809
Restatement of the deferred margin on financial instruments7.5.2 The deferred margin covers only financial instruments eligible for Level 3 of the hierarchy. It is calculated after determining the valuation adjustments for uncertainty as described in Note 5.6. The outstanding non-amortized amount is recognized on the balance sheet under “Financial instruments marked to market on the income statement” less the market value of the related transactions.
Financial assets at fair value through profit or loss 1,019 101 522 323 306 230 495 455
Financial assets to be valued at fair value through profit or loss 0 0 0 3 o/w debt instruments in the form of securities 0 0 0 o/w loans and receivables 3
Financial liabilities held for trading 44 0 162 238 12 199 598 403
Debt instruments in the form of securities at amortized cost 1,930 1,983 890 1,092 1,558 1,609 686 923
Amounts due to credit institutions 84,408 84,502 84,440 62 71,928 72,174 71,949 225
Variations linked to changes in exchange rates 80 0 1 0 1 0 82 0
New originated or acquired contracts 24,286 (0) 3 (0) 24,289 (0)
Variations linked to changes in credit risk parameters (excluding transfers) (6,976) (0) (154) (2) 1 (0) (7,129) (2)
Variations linked to changes in exchange rates (570) 0 (58) 0 (1) 1 (629) 1
Gross carrying amount excluding insurance company contributions, i.e. €257 million at December 31, 2020 and €558 million at December 31, 2019.(a) Corresponds to outstanding loans with the SFS division’s retail banking entities in the amount of €14,734 million at January 1, 2019.(b) Corresponds to the assets of H2O classified as non -current assets held for sale at December 31, 2020.(c)
Value adjustments for credit losses (209) (1,171) (1,380) (119) (1,255) (1,375)
Reconciliation table for loans and receivables due from customers at amortized cost
New originated or acquired contracts 16,918 (17) 1,386 (13) 0 0 0 0 18,304 (30)
Changes in contractual cash flows not giving rise to derecognition 225 1 38 (2) (3) (5) 0 0 259 (6)
Variations linked to changes in credit risk parameters (excluding transfers) 874 4 573 (9) 378 (367) 107 4 1,933 (368)
Changes in contractual cash flows not giving rise to derecognition 0 0 0 0 0 0 0 0 0 0
Of which €525 million corresponds to outstanding loans with the SFS entities sold to BPCE at January 1, 2019.(a) Including a reclassification of outstandings from bucket 2 to bucket 1, linked to the abandonment of the downgrading criterion for a sector as a reason for moving to bucket 2 in the second quarter. The impact is estimated at (b) €2.8 billion at the date of completion of this modification.
Including -€337.4 million in outstandings partially or fully derecognised, in exchange for a recognition as “unrecoverable losses on receivables”, and still subject to enforcement measures.(c) Of which -€2,346 million corresponds to Coface’s contribution as of December 31, 2019, now treated using the equity method.(d)
Assets and commitments restructured due to financial difficulties7.6.2.1 The following table lists the financial assets (excluding assets held for trading) and financing commitments subject to amendments to original contract terms or refinancing constituting a concession granted due to the debtor’s financial situation (see Note 5.1.3).
Variations linked to changes in credit risk parameters (excluding transfers) (223) (5) (53) 2 (4) 5 (1) (269) (10)
Contracts fully repaid or sold during the period (385) (60) (444)
Financial assets provided as security against liabilities7.7.1 The table below shows, inter alia, the carrying amount of: the underlying assets of the covered bond issues;V
Financial assets transferred7.7.2 The tables below show financial asset transfers according to the amendment to IFRS 7, which distinguishes two categories of transferred assets: transferred financial assets that are not, partially or wholly, derecognized, and transferred financial assets that are fully derecognized, for which Natixis maintains continuing involvement.
They are kept on the asset side of the consolidated balance sheet because virtually all of the benefits and risks are maintained, since the securities must be returned to Natixis (unless Natixis defaults).
Securitization assets for which the counterparties to the associated debts have recourse only to the transferred assets
Fully derecognized transferred financial assets for which continuing involvement 7.7.2.2 is maintained
At December 31, 2020 (as at December 31, 2019), there was no material impact from continuing involvement in a securitization vehicle maintained by Natixis.
Financial assets received as security and able to be sold or reused as security7.7.3 This heading covers financial assets received as security under financial guarantee agreements with the right to reuse the assets in the absence of any default on the part of the owner of the guarantee.
The fair value of the financial assets received as security that Natixis may sell or reuse as security was €219 billion at December 31, 2020, versus €234 billion at December 31, 2019.
“Technical” delinquencies, meaning those related to incidents occurring in the collection process and unrelated to the counterparty’s financial situation, are not included.
Payment arrears at 31/12/2020 Payment arrears at 31/12/2019 days > 90 days ≤ 180 days > 180 days ≤ 1 year > 1 year Total
Other sources of deferred tax through profit or loss (169) (141)
Sources of deferred tax on recyclable OCI (734) (194) 10 (745) (7) 164
TOTAL SOURCES OF DEFERRED TAX 2,870 1,196 438 2,612 1,388 616
(in millions of euros) 31/12/2020 31/12/2019 Legal carry forward period Max. recognition period
This heading corresponds to technical accounts, details of which are given below: Other assets7.9.1
Of which €190 million in contract assets (accrued income) at December 31, 2020 versus €231 million at December 31, 2019.(a) Of which €843 million in trade receivables at December 31, 2020 versus €1,058 million at December 31, 2019.(b) Coface contributed €256.2 million to “Accruals and other assets” as of December 31, 2019.(c) Amounts restated in relation to the financial statements published in 2019 (see Note 5.4).*
Of which for intangible assets:(a) - €235 million at December 31, 2020 and €244 million at December 31, 2019 for the Asset & Wealth Management division; - €91 million at December 31, 2020 and €91 million at December 31, 2019 for the Corporate & Investment Banking division; - €164 million at December 31, 2020 and €172 million at December 31, 2019 for the Insurance division (excluding investment property); - €159 million at December 31, 2020 and €139 million at December 31, 2019 for the Payments division; - €16 million at December 31, 2020 and €4 million at December 31, 2019 for the Corporate Center; - €67 million at December 31, 2019 for Coface.
Including Coface, which is now treated under IFRS 5 and under the equity method: -€242 million on property, plant and equipment and -€220.5 million on (a) intangible assets.
At December 31, 2020 and December 31, 2019, Natixis did not have any assets obtained by taking possession of guarantees on its balance sheet.
Furthermore, goodwill on entities consolidated using the equity method amounted to €1.2 million at December 31, 2020.
Of which +€42.1 million in goodwill recorded on the acquisition of Massena Partners. In addition, a goodwill adjustment of -€1 million for MV Crédit was made (a) within the one-year allocation period.
Coface contributed €1,538.7 million to “Debt securities” as of December 31, 2019.(a) The fair value of debt securities is presented in Note 7.5.4.
Subordinated debt differs from advances and bonds issued in that it is repaid after all senior and unsecured creditors, but before the repayment of participating loans and securities and deeply subordinated securities. Subordinated debt is valued at amortized cost.
Including €251 million for the insurance entities at December 31, 2020, versus €640.3 million at December 31, 2019. Coface contributed €389.3 million to (a) “Subordinated debt” as of December 31, 2019. Subordinated debt issue agreements do not incorporate a clause providing for early redemption in the event that the covenants are not observed.(b)
(in millions of euros) 01/01/2019 Issues Redemptions Translation adjustments Changes in scope Other (a) 31/12/2019
Of which €503.4 million of provisions at December 31, 2020 for Madoff fraud exposure (see Section 3.2.9 of Chapter [3] “Risk factors, risk management (a) and Pillar III”). Mainly corresponds to the impact of the actuarial valuation of defined benefit plans, the change in the accounting classification of the time savings account, (b) now considered as a long-term benefit (+€86.1 million) and the removal of the contribution from Coface at December 31, 2019 for -€102.3 million.
Of which €551 million of provisions at December 31, 2019 for Madoff fraud exposure (a) (see Section 3.2.9 of Chapter [3] “Risk factors, risk management and Pillar III”). Of which €10.5 million of provisions for restructuring costs at December 31, 2019 in respect of the Coface plan.(b)
Cash and amounts due from central banks 31 0 31 21 0 21
Financial assets at fair value through other comprehensive income 1 1 0 1 9 1 13 1 0 0 1 9 1 12
Available-for-sale financial assets 0 1 3 12 28 8 52 0 0 3 13 25 10 51
Amounts due to credit institutions 28 10 17 24 1 4 84 17 14 12 24 3 2 72 o/w secured debt
The table below shows the financial instruments by index to be transitioned as part of the index reform (see Note 6.22). The data presented are taken from the ALM management databases and concern financial instruments with a maturity exceeding December 31, 2021, taking into account the following conventions: financial assets and liabilities excluding derivatives are presentedV on the basis of their nominal value (outstanding capital), excluding provisions, with the exception of fixed-rate securities (excluding issues) which have been deferred, including valuation; derivatives are presented on the basis of their notional value atV December 31, 2020; repurchase agreements are broken down by Eonia, Euribor andV Libor indices before accounting offsetting; for derivatives comprising a borrowing leg and a lending leg, eachV exposed to a reference rate, the two legs have been reported in the notes to the financial statements to effectively reflect Natixis’ exposure to the reference rates on these two legs; demand financial assets and liabilities are excluded from theV exposures presented, as their maturity was considered to be prior to December 31, 2021.
LIBOR – London Interbank Offered Rate – GBP Reformed Sterling Overnight Index Average (SONIA) 799 0 173,887
LIBOR – London Interbank Offered Rate – JPY Tokyo Overnight Average (TONA) 158 1,025 134,070
Natixis opted to continue applying the provisions set out in IAS 39 for insurance entities (see Note 1.1.1).
insurance and reinsurance liabilities, including amounts due toV policyholders; derivative instruments held by Insurance businesses;V
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”.
changes in net inflows, which result from the commercial appeal ofV policies and the propensity of policy holders to renew their contracts; available reserves and own resources within companies to holdV assets for a period compatible with changes in liabilities and consistent with market cycles.
Change in unearned premium income (41) (41) 0 0 (41) 0 0 0 (41)
Revenues and income from other activities 0 0 0 0 0 0 0 0 0
Change in fair value of investments carried at fair value through profit or loss 362 307 56 0 362 0 0 0 362
Other recurring operating income and expenses (179) 0 (50) (128) (179) 0 0 0 (179)
Revenues and income from other activities 161 138 23 0 161 0 0 0 161
Amortization of portfolio values and related items 0 0 0 0 0 0 0 0 0
The fair value of investment property, for which the valuation techniques are described in Note 5.7, is classified in Level 3 of the fair value hierarchy of IFRS 13.
Changes in fair value give rise to the symmetrical recognition of a deferred profit-sharing reserve equal to 87% of the related base amount on average at December 31, 2020, compared with 89% at
Derivative instruments not eligible for hedge accounting (positive fair value) 17 15 2 0 19 14 5 0 o/w credit derivatives
Financial assets designated under the fair value option through profit or loss 22,190 16,631 4,040 1,519 21,055 15,289 4,480 1,286 o/w debt instruments in the form of securities 1,684 89 77 1,517 2,046 98 663 1,285 o/w investments backed by unit-linked policies 16,495 13,508 2,986 1 18,224 15,065 3,159 0
Available-for-sale financial assets 51,939 42,774 6,239 2,925 51,391 43,317 5,279 2,795
Financial assets at fair value through profit or loss 1,286 (12) (2) 0
Financial assets designated under the fair value option through profit or loss 1,286 (12) (2) 0 o/w debt instruments in the form of securities 1,285 (12) (2) 0 o/w investments backed by unit-linked policies 0 0 0 0
TOTAL FINANCIAL ASSETS RECORDED AT FAIR VALUE 4,081 (16) (5) (14)
Financial assets at fair value through profit and loss – Trading 1,238 87 (3) 0
Financial assets designated under the fair value option through profit or loss 513 160 0 0 0 0 31 o/w debt instruments in the form of securities 512 160 31 o/w equity instruments o/w investments backed by unit-linked policies 1 0
Other available-for-sale securities 279 351 317 401 825 685 0 572 o/w debt instruments in the form of securities 279 351 317 99 544 685 572 o/w equity instruments 302 280
Coface contributed €16.7 million to “Loans and receivables due from banks” as of December 31, 2019.(a)
Of which €11,089 million for guarantee deposits made for the acceptance of reinsurance treaties, compared with €11,666 million at December 31, 2019.(a) Coface contributed €59.2 million to “Loans and receivables due from customers” as of December 31, 2019.
Technical reserves relating to financial contracts with a discretionary profit sharing feature 19,561 20,161
Due to banks and customer deposits8.5.2 The information about debts due to banks and customer deposits required by IFRS 7 is presented in Note 7.13.
Debt securities8.5.3 The information about debt securities required by IFRS 7 is presented in Note 7.14.
Subordinated debt8.5.4 The information about subordinated debt required by IFRS 7 is presented in Note 7.15.
Excluding €6,312 million in mutual funds classified as available-for-sale assets at December 31, 2020 versus €5,994 million at December 31, 2019.(a) Coface contributed €2,447.3 million to the total fair value as of December 31, 2019.
Subsequent to the sale of the retail banking activities to BPCE S.A., finalized on March 31, 2019, the organizational structure was divided into four business divisions: Asset & Wealth Management, which includes the AssetV Management activities of Natixis Investment Managers, the wealth management business and employee savings plans; Corporate & Investment Banking, which advises businesses,V 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 focus, 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; Insurance, which is Groupe BPCE’s single platform for theV distribution of personal insurance and non-life insurance products; Payments, which provides the Banque Populaire/Caisse d’EpargneV bank customers and direct customers with payment tools, infrastructures and services.
The activities of Private Equity (a proprietary activity retained until it is put into run-off, and portion of sponsored funds) and Natixis Algérie, which are still considered non-strategic, are being added to the Corporate Center.
Together, these specialized Asset Management companies enableV 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 a shared platform and the business franchises developed over the long term by the Asset Management companies. Since the start of 2014, Private Equity companies for third party clients have been transferred to Natixis Investment Managers and a sponsoring vehicle was set up to monitor Natixis’ commitments in the funds. The teams have extensive expertise in equity financing for generally unlisted, small and medium-sized enterprises in France and Europe via sponsored equity holdings. This business line covers the Private Equity segments for third party investors, such as Private Equity deals (top-line funding for mature companies), venture capital (new, innovative companies) and funds of funds.
Corporate & Investment Banking advises businesses, institutional investors, insurance companies, banks and public sector entities and offers them a diversified line of customized financing solutions, as well as access to Capital Markets.
In early 2018, CIB changed the way it presents the earnings and analysis of its financing activities with the creation of three new business lines based on four key sectors defined in the New Dimension plan: the Energy & Natural Resources sector, which comprises TradeV Finance, origination and structuring of structured commodity finance; the Real Assets business line which brings together originationV and structuring in three sectors: Infrastructure, Aviation and Real Estate & Hospitality; the Distribution & Portfolio Management business line, whichV comprises syndication and structured and vanilla finance portfolio management.
The Equities, Fixed Income, Credit, Forex, Commodities and Global Structured Credit & Solutions businesses remain part of the Global Markets business line, while short-term Trade Finance and the development of the flow offering are combined under Trade & Treasury Solutions.
Lastly, subsequent to the sale of the retail banking operations to BPCE S.A., the Corporate & Investment Banking division now includes the Film Industry Financing business line, which is operated via Coficiné, a subsidiary specializing in structured loans for film and audiovisual activities in France and Europe.
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 Assurances acquired PPI and casualty insurance subsidiary BPCE Assurances, which it now wholly owns. It offers a full range of individual and group life insurance, personal protection insurance, and property & casualty insurance products for the Banque Populaire and Caisse d’Epargne networks. These diversified, customized solutions are designed for retail and small business customers, farmers, companies and non-profits.
Payments9.4 etc. As part of the "New Dimension" plan, this business line is working towards becoming a “pure player” in the European payments segment and accelerate its digital transformation. Payments recently acquired several start-ups specializing in electronic payment and e-commerce, namely: Payplug, S Money, Dalenys and Comiteo.
It also includes the net income from the bank’s portfolio of equity investments that does not fall under the activity of a division, as well as the proprietary Private Equity activities (retained until it is put into run-off) and those of Natixis Algérie.
This information is determined based on the accounting principles applied in accordance with IFRS as adopted by the European Union at December 31, 2020.
Of which Coface: - share of net income of companies accounted for under the equity method: -€47 million (-€57.5 million of impairment on the value of equity-accounted investments and +€10.5 million in euros in respect of operating income for 2020); - other: -€145.6 million corresponding to the gain on disposal of 29.5% (see Note 1.2.1).
The two sectors “Financial investments” and “Corporate Center” have been grouped into a single “Corporate Center”.
This information is determined based on the accounting principles applied in accordance with IFRS as adopted by the European Union at December 31, 2019.
Of which short -term cash:(b) - net banking income: €114 million; - expenses: -€65 million; - gross operating income: €49 million; - provision for credit losses: €0 million; - pre-tax profit: €49 million.
Change between December 31, 2019 and December 31, 2018.(a) Of which for Asset Management:(b) - net banking income: €3,511 million; - expenses: -€2,253 million; - gross operating income: €1,258 million; - provision for credit losses: -€6.5 million; - pre-tax profit: €1,257 million.
Of which short -term cash: Net banking income: €114 million;(c) - expenses: -€65 million; - gross operating income: €49 million; - provision for credit losses: €0 million; - pre-tax profit: €49 million.
Of which €1,535 million excluding the net revenues of the XVA desks, which can be broken down into €1,118 million in net revenues for FICT and €417 million for Equities.(a)
Financial assets at fair value through other comprehensive income 515 4,169 10 8,499 13,194
Financial assets at fair value through profit or loss* 2,076 227,466 4 22 (766) 228,802
Loans and receivables due from banks and similar items at amortized cost 935 26,004 265 440 20,471 48,115
Deposits and loans due to banks and similar items 986 42,594 2,114 (198) 26,431 71,927
Financial assets at fair value through profit or loss* 2,076 227,466 4 22 (136) (630) 228,802
Financial assets at fair value through other comprehensive income 365 3,764 4 1 7,942 12,076
Loans and receivables due from customers at amortized cost 4,461 60,367 (336) 11 2,916 3,670 71,089
Deposits and loans due to customers 2,597 12,781 (43) 103 1,228 13,819 30,485
(in millions of euros) France Other EU (a) North America Other OECD Other Total
Financial assets at fair value through profit or loss 166,032 8,797 19,461 15,814 274 210,378
Financial assets at fair value through other comprehensive income 8,984 234 (11) 20 3,967 13,194
Customer loans and receivables at amortized cost 32,872 9,382 15,166 80 10,439 67,939
(in millions of euros) France* Other EU* North America Other OECD Other Total
Net income for the period – Group share 657 517 505 14 203 1,897
Financial assets at fair value through other comprehensive income 8,270 265 (7) 2 3,546 12,076
Customer loans and receivables at amortized cost 33,590 10,752 15,354 7 11,386 71,089
The information on capital adequacy required under IAS 1 is presented in Section 3.3.1 of Chapter [3] “Risk factors, risk management and Pillar III”.
Risk profile10.2.1 This table aims to present (excluding contributions from insurance impairments and provisions. The credit risk categories are companies) the breakdown by credit risk category of the various represented by the IFRS 9 probability of default ranges associated accounting outstandings eligible for IFRS 9 provisioning (broken with the central scenario (see Note 5.3). down into Stages S1, S2 and S3), and the corresponding
PD scale PD scale 0.00 to < 0.05 0.05 to < 0.10 0.10 to < 0.15 0.15 to < 0.25 0.25 to 0.00 to < 0.05 0.05 to < 0.10 0.10 to < 0.15 0.15 to < 0.25 0.25 to
Loans and receivables due from credit institutions and similar items at amortized cost 44,146 122 166 3 2 29 2 2 1 0 0 29 44,434
Loans and receivables due from customers at amortized cost 60,268 2,663 1,051 1,109 633 3,596 113 39 17 20 19 1,172 67,939
0.00 to <0.15 0.15 to <0.25 0.25 to <0.50 0.50 to <0.75 0.75 to <2.50 2.50 to <10,0 10.00 to <100,0
Loans and receivables due from banks at amortized cost 29 (29) - 48 (48) 0
Customer loans and receivables at amortized cost 3,596 (1,172) 2,424 600 552 3,072 (1,255) 1,817 298 945
Assets impaired after their origination/acquisition (Stage 3) or on their origination/acquisition (POCI).(a) Gross carrying amount.(b) Carrying amount in the balance sheet.(c)
Market risk, overall interest rate risk, liquidity risk and structural 10.3 foreign exchange risk
Short-term employee benefits11.2.1 This item includes wages and salaries paid within twelve months of the end of the reporting period in which the related services were rendered, employee incentives and profit-sharing, meeting the definition of short-term benefits under IAS 19R “Employee Benefits”. In accordance with this standard, short-term benefits are expensed in the period in which the employees render the services giving rise to such benefits.
The expense corresponding to the short-term plan is recorded in full in the financial statements for fiscal year 2020 for an amount of -€11 million compared to -€28 million at December 31, 2019.
Retention and performance plans settled in cash Deferred retention and performance bonuses paid in cash are awarded to some staff. These bonuses are subject to a continued service requirement and performance criteria. In terms of accounting treatment, they are recorded under “Other long-term employee benefits”. The estimated expense is based on an actuarial estimate of the probability of these conditions being met. The expense is recognized over the vesting period. The amount recognized in respect of fiscal year 2020 was: Year of plan Grant date Acquisition date Expense for 2020
The insurers also manage the asset/liability strategy for the portion of the benefit liabilities that they cover.
374 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 a) Amounts recognized on the balance sheet at December 31, 2020 The amount of the recognized provision on the liability side of the balance sheet corresponds to the value of the actuarial liabilities under the defined benefit plans, less the market value of the assets to hedge these benefit liabilities.
Fair value of separate assets (a) (33) (29) 0 0 (62) (32) (28) 0 0 (61)
Actuarial liabilities at start of period 622 238 54 127 1,042 526 215 51 144 936 o/w amounts paid out in respect of plan liquidation (16) (5) 0 0 (21) (11) 0 0 0 (11)
Revaluation adjustments on other long-term employee benefits 0 0 (0) 0 (0) 0 0 4 2 5
Changes recognized directly in other comprehensive income with no recycling 34 2 0 0 36 95 19 0 0 114
Revaluation adjustments – past-experience effect 12 (3) 0 0 9 15 (5) 0 0 10
Changes associated with non-current assets held for sale (a) (21) (36) (9) (3) (68) 0 0 0 0 0
Changes recognized directly in other comprehensive income with no recycling 47 2 49 50 1 51
Revaluation adjustments – Return on assets 47 2 49 50 1 51
Changes associated with non-current assets held for sale (a) (1) (1) (2) 0 0 0
Corresponds to Coface treated for accounting purposes under IFRS 5 and under EM since early 2020.(a) In 2019, Institution de Prévoyance Austerlitz was transformed into an Institution de Retraite Professionnelle Supplémentaire (IRPS – complementary occupational pension scheme), with the result that the contracts hedging (b) part of Natixis’ pension commitments were classified as plan assets.
Changes associated with non-current assets held for sale (0) (0) (0) 0 0 0
Fair value of assets at end of period 33 29 62 32 28 60
In 2019, Institution de Prévoyance Austerlitz was transformed into an Institution de Retraite Professionnelle Supplémentaire (IRPS – complementary occupational pension scheme), with the result that the contracts hedging (a) part of Natixis’ pension commitments were classified as plan assets.
376 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 d) Composition of plan assets 31/12/2020 31/12/2019
TOTAL REVALUATION ADJUSTMENTS AT START OF PERIOD 328 30 358 233 12 245
Revaluation adjustments over the period 18 2 20 95 17 112
Corresponds to Coface treated for accounting purposes under IFRS 5 and under EM since early 2020.(a)
TOTAL REVALUATION ADJUSTMENTS AT END OF PERIOD 166 5 171 129 3 132 o/w effect of ceiling on assets 1 0 1 1 0 1
Total revaluation adjustments at start of period 7 6 13 38 5 43 o/w effect of ceiling on assets 0 0 0
Total revaluation adjustments at end of period 8 7 15 7 6 13 o/w effect of ceiling on assets f) Analysis of expenses for the period The annual payroll costs recognized in respect of defined-benefit plans consist of: the costs of services rendered, representing rights vested byV beneficiaries over the period; past service costs, arising from possible plan changes orV curtailments as well as the effects of possible plan settlements; the net interest cost reflecting the impact of unwinding theV discount on the net obligation.
TOTAL EXPENSE FOR THE FISCAL YEAR (2) 13 5 19 34 53 g) Main actuarial assumptions at December 31, 2020 The amount of the provision for post-employment defined-benefit plans is calculated on an actuarial basis using a number of demographic and financial assumptions.
Discount rate (excluding Time Savings Account) 0.16% 1.34% 2.35% 0.40% 1.43% 3.11%
Rate of increase in healthcare costs 2.40% 0.00% 3.90% 2.42% 0.00% 3.90%
+1% change in growth rate of salaries and income (incl. inflation) 10.35% 12.41% 8.84% 11.39% 12.24% 8.03%
(1)% change in growth rate of salaries and income (incl. inflation) (8.58%) (10.60%) (7.80%) (9.93)% (10.20)% (7.14)%
The capital increases carried out over the fiscal year 2020 correspond to the allocation of free shares to certain Natixis employees, as part of the share-based Loyalty and Performance Plans (PFP) for 2017 and 2018 and the Long Term Incentive Plan 2016 (LTIP).
Natixis’ main capital management objectives are to ensure that the group meets the capital requirements imposed by its external environment and maintains an adequate rating to support its activity and maximize shareholder value.
Natixis adapts the management of its capital structure in line with changes in economic conditions and in the risk profile of its operations. Its objectives, policies and procedures remained unchanged in 2020.
In accordance with IAS 32, issued financial instruments are classified as debt or equity depending on whether or not they incorporate a contractual obligation to deliver cash to the holder.
The conversion of these debt instruments into equity instruments had generated a gain of €418 million recognized in income on
Management of the liquidity contract12.3.2 Natixis entered into a liquidity contract with an independent service provider, and in accordance with the Compliance Charter established with the French Financial Markets Association (Association des Marchés Financiers) on September 23, 2008, approved by the Autorité des Marchés Financiers on October 1, 2008.
The capital and/or performance guarantees given by Natixis to certain UCITS are recognized as derivatives and are measured at fair value in accordance with the provisions of IFRS 13.
Fully sold, called or matured commitments (3,983) 1 (468) 2 (1) 0 (0) 0 (4,452) 2
Gross carrying amount excluding insurance company contributions, i.e. €14 million at December 31, 2020 (versus €1,544 million at December 31, 2019).(a) Mainly comprising guarantees given to UCITS now recognized as derivatives.(b) Including an amendment made on December 31, 2020 concerning guarantee commitments in the form of letters of credit granted by the New York branch. (c) In 2019, these guarantees were presented for an amount net of guarantees received from other participants. The impact is of €2,930 million on commitments classified as stage 1 and of €252 million on commitments classified as stage 3.
Variations linked to changes in credit risk parameters (excluding transfers) 4,173 (10) (1,804) (28) (82) 10 7 (0) 2,293 (29)
Variations linked to changes in exchange rates (1,637) 1 (276) 3 (2) 0 (0) 0 (1,916) 4
Gross Bucket S1 exposures comprise outstandings with the retail banking entities of the SFS division sold to BPCE.(a) Including the exit of Coface.(b)
Impact on income of leasing transactions as lessee14.1.1 The net amount of rights-of-use relating to lessee leases amounts to €898 million as of December 31, 2020 (€1,023 million as of December 31, 2019) of which €897 million (€1,011 million as of December 31, 2019) relating to property leases (see Note 7.10).
The lease liabilities in respect of lease contracts as lessee came to €1,011 million (€1,164 million at December 31, 2019) and are recognized under “Other liabilities” (see Note 7.9.2).
Impact on the income statement of lease agreements recognized in the balance sheet (216) (247)
Income from subleases on right-of-use assets14.1.2 When Natixis subleases all or part of an asset for which it has taken out a lease, the subleasing contract is subject to a substance-based analysis, similar to the approach taken by the lessors.
Income earned on these contracts is recorded in exactly the same way as it is by the lessor, i.e. under “Income from other activities”, in the case of operating leases (see Note 6.6), and under “Interest income”, in the case of finance leases (see Note 6.1).
Non-discounted lease liabilities (before deduction of financial expenses) 40 11 50 100 186 339 352 1,079 43 16 59 119 213 451 343 1,244
The following table presents future cash outflows not included in the measurement of lease liabilities at December 31, 2020 for leases not yet commenced but representing commitments undertaken by Natixis.
Present value of minimum lease payments receivable 11 8 6 4 1 0 30 14 9 7 4 2 0 36
Minimum payments receivable under irrevocable leases 47 40 33 28 22 64 234 64 49 41 34 29 94 311
Customer loans and receivables at amortized cost 201 135 135 319 267 120
Deposits and loans due to banks and similar items 60,743 926 241 121 46,359 1,002 1,726 102
Liabilities related to insurance policies 0 2 77 0 0 81
In 2020 and 2019, compensation paid to members of the Board of Directors included a fixed portion (€8,000 per person) and a variable portion (€2,000 (a) per Board Meeting, per person). Members of the Audit Committee and the Risk Committee received a fixed payment of €3,000 (€17,000 for its Chairman) and a variable payment of €1,000 per meeting and per person (€2,000 for its Chairman). The members of the Appointments Committee and the Compensation Committee received a fixed payment of €2,000 (€15,000 for its Chairman) and a variable payment of €1,000 per meeting and per person (€2,000 for its Chairman). The members of the Strategic Committee received a variable payment of €2,000 and the Chairman of the Strategic Committee received a fixed payment of €12,000. The amounts shown represent the total amount of compensation paid or delivered to the members of the Senior Management Committee.(b)
Of which a family allowance of €1,625 in 2020 and €2,384 in 2019.(a) Corresponding to the value of the shares on the allocation date, for a fair value of €73,116 for 2020 and €79,587 for 2019.(b) Including a family allowance of €670 and a vehicle allowance of €3,710 in 2020.(c) François Riahi, Chief Executive Officer until August 3, 2020, Nicolas Namias Chief Executive Officer from August 4, 2020.(d)
Natixis’ Chief Executive Officer receives the retirement benefits plan offered to senior management officers (“hors classification”): For François Riahi:V
The amount of severance pay is equal to: Monthly Reference Compensation x (12 months +1 month per year of seniority).
The Chief Executive Officer will not receive contract termination payment in the event of gross negligence or willful misconduct, if he leaves the Company at his initiative to take another position or changes his position within Groupe BPCE, or exercises his right to retire.
Furthermore, in line with the provisions of the Afep-Medef corporate governance code, the right to a benefit is contingent on meeting performance criteria and requirements, as verified by the Board of Directors where appropriate.
Non-compete indemnity The non-compete agreement is limited to a period of six months and carries an indemnity equal to six months of fixed compensation, as in force on the date on which the CEO leaves office.
On February 11, 2021, the Board of Directors decided the following: The payment of the non-compete compensation is excluded when the executive officer asserts his pension rights. In any event, no non-compete compensation may be paid beyond age 65. It is also specified that the non-competition benefits must be paid in installments during its term.
At its meeting of February 11, 2021, the Board of Directors elected to adopt the recommendation of the Compensation Committee at the time of the reassessment of the financial conditions of François Riahi's departure. As a result, the Board noted that the payment of the contract termination payment to François Riahi was illegal, and therefore decided to request its repayment.
The mandate of Deloitte & Associés(1) was renewed by the shareholders at the General Shareholders’ Meeting of May 2016, for a term of six years ending as of the General Shareholders’ Meeting called to approve the 2022 financial statements.
Services other than the certification of accounts include: assistance with ensuring the compliance of mechanismsV implemented amounting to €2.5 million; tax audits, primarily performed outside the European Union,V amounting to €0.7 million; technical assistance assignments amounting to €0.6 million;V
the issue of comfort letters in the amount of €0.2 million.V
Deloitte & Associés – 6, place de la Pyramide, 92908 Paris La Défence Cedex, represented by signatory partner Charlotte Vandeputte.(1) PricewaterhouseCoopers Audit – 63 rue de Villiers 92208 Neuilly-Sur-Seine Cedex, represented by signatory partner Emmanuel Benoist.(2)
NATIXIS INVESTMENT MANAGERS, LLC (FORMERLY NATIXIS INVESTMENT MANAGERS, LP) Holding company
NATIXIS INVESTMENT MANAGERS US HOLDINGS, LLC (FORMERLY NATIXIS US HOLDINGS INC) Holding company
NATIXIS INVESTMENT MANAGERS INTERNATIONAL HONG KONG LIMITED (formerly OSTRUM AM HONG KONG LTD) Asset Management
Net banking income, pre-tax income, tax and headcount by country 16.2 at December 31, 2020
(in millions of euros) Profit or loss before taxes, including operating taxes Profit or loss before tax Corporate income tax
NATIXIS Pfandbriefbank AG Credit institution FC 100 100 100 100 Germany
Azure Capital Securities Pty Ltd (u) Fund management and Equity Capital Markets FC 53 53 52 52 Australia
Azure Capital Limited (u) Holding company FC 53 53 52 52 Australia
NATIXIS AUSTRALIA PTY Ltd Fin. Institution FC 100 100 100 100 Australia
TREZ COMMERCIAL FINANCES LIMITED PARTNERSHIP (b) Real-estate finance 100 100 Canada
NATIXIS SECURITIES AMERICAS LLC Brokerage FC 100 100 100 100 United States
NATIXIS FUNDING** Market making on secondary debt market FC 100 100 100 100 France
NATIXIS IMMO DEVELOPPEMENT Residential real estate development FC 100 100 100 100 France
Vermilion Partners (UK) Limited Holding company FC 51 51 51 51 United Kingdom
Vermilion Partners LLP M&A advisory services FC 51 51 51 51 United Kingdom
Natixis Holdings (Hong Kong) Limited Holding company FC 100 100 100 100 Hong Kong
Vermilion Partners (Holdings) Limited Holding company FC 51 51 51 51 Hong Kong
Vermilion Partners Limited Holding company FC 51 51 51 51 Hong Kong
DF EFG3 Limited Holding company FC 100 100 100 100 Cayman Islands
NATIXIS JAPAN SECURITIES CO, Ltd Fin. Institution FC 100 100 100 100 Japan
NATIXIS STRUCTURED ISSUANCE Issuing vehicle FC 100 100 100 100 Luxembourg
NATIXIS Zweigniederlassung Deutschland Fin. Institution FC 100 100 100 100 Germany
NATIXIS DUBAI Fin. Institution FC 100 100 100 100 United Arab Emirates
NATIXIS LONDON Fin. Institution FC 100 100 100 100 United Kingdom
Natixis IM Canada Holdings Ltd Holding company FC 100 100 100 100 Canada
AEW SENIOR HOUSING INVESTORS II INC. Asset Management FC 100 100 100 100 United States
AEW Value Investors Asia II GP Limited Asset Management FC 100 100 100 100 Jersey
AEW Senior Housing Investors III LLC Asset Management FC 100 100 100 100 United States
EPI SLP LLC Asset Management FC 60 60 60 60 United States
LOOMIS SAYLES DISTRIBUTORS, INC. Distribution FC 100 100 100 100 United States
Loomis Sayles Operating Services, LLC (m) Asset Management FC 100 100 United States
NATIXIS INVESTMENT MANAGERS HOLDINGS, LLC (f) Holding company 100 100 United States
Mirova US LLC Asset Management FC 100 100 100 100 United States
Thematics Asset Management (q) Asset Management FC 50 50 50 40 France
Vauban Infrastructure Partners (i) Asset Management FC 61 61 81 81 France
AEW EUROPE ADVISORY LTD Asset Management FC 60 60 60 60 United Kingdom
AEW EUROPE CC LTD Asset Management FC 60 60 60 60 United Kingdom
AEW EUROPE LLP Asset Management FC 60 60 60 60 United Kingdom
AEW UK INVESTMENT MANAGEMENT LLP Asset Management EM 50 30 50 30 United Kingdom
AEW Promote LP Ltd Asset Management FC 100 60 100 60 United Kingdom
H2O Asset Management LLP Asset Management FC 50 50 50 50 United Kingdom
H2O Asset Management Corporate member Asset Management FC 50 50 50 50 United Kingdom
Mirova Natural Capital Limited (formerly Mirova-Althelia Limited) Asset Management FC 100 100 100 100 United Kingdom
Arctic Blue Capital Ltd (x) Asset Management 50 29 United Kingdom
PURPLE FINANCE CLO 2 Securitization vehicle FC 100 100 71 71 Ireland
Arctic Blue Capital Management Ltd (x) Asset Management 50 29 Cayman Islands
AEW EUROPE SARL (formerly AEW Luxembourg) Asset Management FC 60 60 60 60 Luxembourg
Loomis Sayles Alpha Luxembourg, LLC (cc) Asset Management FC 100 100 Luxembourg
Thematics AI and Robotics Fund (k) (aa) Asset Management 47 47 Luxembourg
Thematics Subscription Economy Fund (bb) Asset Management FC 57 57 Luxembourg
Prometheus Wealth Management SAM Asset Management FC 50 25 50 25 Monaco
Flexstone Partners SARL (formerly Euro Private Equity) Asset Management FC 84 84 84 84 Switzerland
Natixis Investment Managers S.A., Belgian Branch (p) Distribution FC 100 100 Belgium
Mirova Natural Capital Limited, France office (formerly Mirova-Althelia Limited, France office) Asset Management FC 100 100 100 100 France
Natixis Investment Managers S.A., Italian Branch Distribution FC 100 100 100 100 Italy
DNCA Finance Milan branch (h) Asset Management FC 100 85 92 79 Italy
Loomis Sayles & Company, LP, Dutch Branch (cc) Distribution FC 100 100 Netherlands
NATIXIS Private Equity Private Equity FC 100 100 100 100 France
VEGA INVESTMENT MANAGERS Mutual fund holding company FC 100 100 100 100 France 1818 IMMOBILIER Real estate operations FC 100 100 100 100 France
Massena Partners S.A. Asset Management and investment advisory services FC 98 98 98 98 Luxembourg
Massena Wealth Management SARL Asset Management and investment advisory services FC 98 98 98 98 Luxembourg
NATIXIS INTERÉPARGNE** Employee savings plan management FC 100 100 100 100 France
SCI DUO PARIS Real-estate management EM 50 50 50 50 France
AAA ACTIONS AGRO ALIMENTAIRE Insurance investment mutual fund FC 37 37 42 42 France
OPCI FRANCEUROPE IMMO Insurance investment mutual fund FC 55 55 53 53 France
SELECTION PROTECTION 85 (1) Insurance investment mutual fund 28 28 France
SELECTIZ PLUS FCP 4DEC Insurance investment mutual fund FC 54 54 53 53 France
MIROVA EUROPE ENVIRONNEMENT C Insurance investment mutual fund FC 36 36 34 34 France
TITRES CADEAUX Service vouchers offers FC 100 100 100 100 France
DALENYS FINANCE (formerly RENTABILIWEB FINANCE)* Holding company FC 100 100 100 100 Netherlands
DALENYS TECHNOLOGIES (formerly RENTABILIWEB TECHNOLOGIES)* Online service FC 100 100 100 100 France
COFACE CHILE S.A. (a) Insurance EM 42 42 42 42 Chile
COFACE DO BRASIL SEGUROS DE CREDITO (a) Credit insurance and related services EM 42 42 42 42 Brazil
COFACE HOLDING AMERICA LATINA (a) Financial data EM 42 42 42 42 Mexico
COFACE ITALIA (a) Holding company EM 42 42 42 42 Italy
COFACE POLAND FACTORING (a) Factoring EM 42 42 42 42 Poland
COFACE SERVICES AUSTRIA (a) Receivables management and data EM 42 42 42 42 Austria
COFACE UK HOLDING (a) Holding company EM 42 42 42 42 United Kingdom
COFACE UK SERVICES LTD (a) Receivables management and data EM 42 42 42 42 United Kingdom
COFACE RATING HOLDING (a) Receivables management and data EM 42 42 42 42 Germany
COFINPAR (a) Credit insurance and related services EM 42 42 42 42 France
FIMIPAR** (a) Buyback of receivables EM 42 42 42 42 France
SEGURO BRASILEIRA CE (a) (o) Credit insurance and related services 42 42 Brazil
VEGA FCT (a) Securitization fund EM 42 42 42 42 France
COFACE GK Forsikring AS (n) (a) Credit insurance EM 42 42 Norway
COFACE IRELAND – SUCC (COFACE EUROPE) (a) Credit insurance and related services EM 42 42 42 42 Ireland
COFACE BELGIUM – SUCC (COFACE EUROPE) (a) Credit insurance and related services EM 42 42 42 42 Belgium
COFACE PORTUGAL – SUCC (COFACE Europe) (a) Credit insurance and related services EM 42 42 42 42 Portugal
COFACE SWITZERLAND – SUCC (COFACE S.A.) (a) Insurance EM 42 42 42 42 Switzerland
COFACE ISRAEL (a) Credit insurance EM 42 42 42 42 Israel
COFACE DANMARK-SUCC (COFACE KREDIT) (a) Insurance EM 42 42 42 42 Denmark
COFACE ARGENTINA – SUCC (COFACE EUROPE) (a) Credit insurance and related services EM 42 42 42 42 Argentina
COFACE CANADA – SUCC (COFACE EUROPE) (a) Credit insurance and related services EM 42 42 42 42 Canada
COFACE HUNGARY – SUCC (COFACE AUSTRIA) (a) Insurance EM 42 42 42 42 Hungary
COFACE POLAND – SUCC (COFACE AUSTRIA) (a) Insurance EM 42 42 42 42 Poland
COFACE ROMANIA INSURANCE – BRANCH (COFACE AUSTRIA) (a) Insurance EM 42 42 42 42 Romania
COFACE TECHNOLOGIE – ROMANIA (a) Data services EM 42 42 42 42 Romania
COFACE CZECH INSURANCE – BRANCH (COFACE AUSTRIA) (a) Insurance EM 42 42 42 42 Czech Republic
COFACE SLOVAKIA INSURANCE – BRANCH (COFACE AUSTRIA) (a) Insurance EM 42 42 42 42 Slovakia
COFACE PKZ (a) Credit insurance EM 42 42 42 42 Slovenia
COFACE HONG KONG – SUCC (COFACE EUROPE) (a) Credit insurance and related services EM 42 42 42 42 Hong Kong
COFACE ECUADOR – BRANCH (COFACE EUROPE) (a) Credit insurance and related services EM 42 42 42 42 Ecuador
COFACE BULGARIA (Branch) (a) Insurance EM 42 42 42 42 Bulgaria
COFACE AUSTRIA (a) Holding company EM 42 42 42 42 Austria
COFACE GREECE – BRANCH (COFACE EUROPE) (a) Credit insurance and related services EM 42 42 42 42 Greece
SCI ALTAIR 1 Real estate operations FC 100 100 100 100 France
NATIXIS FONCIÈRE S.A. (formerly SPAFICA) Real estate investments FC 100 100 100 100 France
Change in registered company name in 2020.* French subsidiaries whose individual prudential oversight is performed based on Group consolidated ratios in accordance with Article 7 of Regulation (EU) No. 575/2013 of the European Parliament and of the Council ** of June 26, 2013 relative to regulatory requirements applicable to credit institutions and investment firms.
Entity absorbed by Natixis Investment Managers US Holdings, LLC on January 1, 2020.(d) In the first quarter of 2020, NIM simplified the organizational structure of the AM holding companies in the United States. As part of this transaction, NATIXIS INVESTMENT MANAGERS, LP was transformed into a limited (e) liability company (LLC), then renamed Natixis Investment Managers, LLC.
Entity absorbed by Natixis Investment Managers, LLC on January 1, 2020.(f) Entity absorbed by NATIXIS ASG HOLDINGS, INC on March 15, 2020.(g) During second quarter of 2020, DNCA managers exercised the put options on a portion of their DNCA Finance and DNCA Management shares within the buyback window scheduled for 2020. Following these transactions, (h) Natixis IM’s ownership stake in DNCA Finance and its subsidiaries reached 85%, while the stake in DNCA Management reached 100%. Vauban IP was cofounded in late 2019 by its partner-managers (who owned 18.6% of the capital) and Natixis IM (owing 81.4% of the capital) as a spin-off of Mirova's Infrastructure business. During the first quarter of 2020, (i) the share held by the partner-managers grew by 20%, reaching the target ownership structure of the transaction. This lowered Natixis IM's share in Vauban from 81.4% to 61.4%. Dorval Finance: the structure's managers exercised their put options and redeemed shares at the end of the first quarter of 2020. Following these transactions, Natixis IM's ownership stake and control of Dorval became (j) 88.72%.
Information on entities that are exclusively controlled, jointly controlled or significantly influenced, and controlled structured entities that are not included in the consolidation scope, are available on the Natixis website at: Non-consolidated investments at December 31, 202017.2
Directly or indirectly.(a) Information on equity and income is that of the last fiscal year as adopted by the General Shareholders’ Meeting (December 31, 2019).(b)
In our opinion, the consolidated financial statements give a true and fair view of the assets and liabilities and of the financial position of the Group over the past fiscal year, and of the results of its operations for the year then ended, in accordance with International Financial Reporting Standards (IFRS) as adopted by the European Union.
Our responsibilities under these standards are further described in the “Statutory Auditors’ responsibilities for the audit of the consolidated financial statements” section of our report.
These assessments are made in the context of the audit of the consolidated financial statements taken as a whole and the formation of our opinion expressed above. We do not provide a separate opinion on specific items of the consolidated financial statements.
At December 31, 2020, the Natixis Group recognized two disposal transactions in accordance with IFRS 5 “Non-current assets held for sale and discontinued operations”: on February 25, 2020, with the signature of a sale agreement toV Arch Capital concerning 29.5% of the share capital and voting rights of Coface; on November 5, 2020, with the announcement of negotiationsV regarding the sale of H2O, followed by the signing of the final memorandum of understanding on January 29, 2021.
The Natixis Group recorded the impacts of these disposals in its financial statements at December 31, 2020.
As part of its financing activities within the Corporate & Investment Banking division, Natixis is exposed to credit risk in respect of loans and receivables and financing commitments given to customers.
In the context of a pandemic marked by a high degree of uncertainty, Natixis made the following changes in 2020: an adjustment of the macroeconomic scenarios to take intoV account the effects of the health crisis on the calculation of the IFRS 9 provisioning parameters; a methodological refinement relating to the inclusion of theV segment aspects in the assessment of credit risk.
Our work was adapted to take account of changes in risk and the increased degree of uncertainty. We appreciated the relevance of the internal Natixis control system and in particular its adaptation to the crisis.
Impairment of outstanding loans in stages 1 and 2 Our work mainly consisted in: assessing the Natixis control system covering:V
the classification of outstandings in stage 1 or 2 according to theV indicators used to define the significant deterioration in credit risk, validation of internal models;V
assessing the appropriateness of the parameters used in theV calculation of impairments at December 31, 2020, in particular the methodological changes and adjustments of the macroeconomic scenarios aimed at taking into account the effects of the Covid-19 pandemic; performing counter calculations on a sample of contracts.V
Impairment of outstanding loans in stage 3 We evaluated the design and tested the effectiveness of the key controls put in place by the Natixis Group in particular those related to: the identification of indicators of impairment (such as past-dueV payments, restructuring, etc.) and the counterparty rating process; the classification of exposures in stage 3;V
In addition, we carried out a credit review over a sample of files selected based on materiality and risk criteria, particularly files exposed to the business sectors most affected by the health crisis. In this review we: took note of the latest available information on the situation ofV counterparties whose risk has increased significantly; performed independent analyses of the assumptions used and theV estimates of provisions drawn up by management based on information provided by the institution and external data; verified that estimated impairment allowances were correctlyV recognized.
Finally, we checked that the provisions thus measured were correctly recorded and verified the related disclosures in the notes to the consolidated financial statements.
documenting and periodically reviewing the observability criteriaV used to classify complex financial instruments in the fair value hierarchy and taking into account the impacts on Day-One Profit.
The valuation impacts related to the health crisis, particularly on equity products, were taken into account in our work with particular attention to the estimates used by Natixis (determination of valuation parameters and adjustments).
Please refer to Notes 5.22 and 8.5 to the consolidated financial statements for more details.
The estimate of the ability to generate future taxable profits within this period requires the exercise of judgment on the part of management, including in developing tax business plans, to justify the recognition of deferred tax assets.
At December 31, 2020, €1,196 million was recorded on Natixis’ consolidated balance sheet under deferred tax assets, including €758 million in tax loss carryforwards.
Please refer to Notes 5.22 and 7.8 to the consolidated financial statements for more details.
As part of its development, Natixis recognized goodwill on the assets side of its consolidated balance sheet, corresponding to the difference between the acquisition price of the companies acquired and the fair value of the identifiable assets and liabilities assumed at the date of acquisition.
In the context of the health crisis, which is a source of uncertainty regarding future cash flow projections, Natixis reassessed the earnings forecasts for its business lines as part of its impairment tests at December 31, 2020.
Goodwill recorded on the balance sheet at December 31, 2020 amounted to €3,533 million.
The impacts of the health crisis (reassessment of business line profit forecasts) were taken into account in our work, with a special focus on the estimates used by Natixis.
Lastly, we examined the appropriateness of the information provided in the notes to the consolidated financial statements closed at December 31, 2020 on impairment tests and sensitivity analyses.
Format of the consolidated financial statements intended to be included in the annual financial report
As specified in Article L.823-10-1 of the French Commercial Code, our statutory audit does not include assurance on the viability of the Company or the quality of management of the affairs of the Company.
As part of an audit conducted in accordance with professional standards applicable in France, the Statutory Auditor exercises professional judgment throughout the audit.
412 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 obtains an understanding of internal control relevant to the audit inV order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control; evaluates the appropriateness of accounting policies used and theV reasonableness of accounting estimates and related disclosures made by management in the consolidated financial statements; assesses the appropriateness of management’s use of the goingV concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report. However, future events or conditions may cause the Company to cease to continue as a going concern. If the Statutory Auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the consolidated financial statements or, if such disclosures are not provided or inadequate, to issue a qualified opinion or a disclaimer of opinion; evaluates the overall presentation of the consolidated financialV statements and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation; considers sufficient and appropriate to express an opinion on the consolidated financial statements. The Statutory Auditor is responsible for the direction, supervision and completion of the audit of the consolidated financial statements as well as for the opinion expressed about those statements.
obtains audit evidence regarding the financial information ofV persons or entities included in the scope of consolidation that he
We also provide the Audit Committee with the declaration provided for in Article 6 of Regulation (EU) No. 537/2014, confirming our independence within the meaning of the rules applicable in France such as they are set in particular by Articles L.822-10 to L.822-14 of the French Commercial Code and in the French Code of Ethics for Statutory Auditors. Where appropriate, we discuss any risks to our independence and the related safeguard measures with the Audit Committee.
See Note No. Off-balance sheet items – Commitments received 2020 2019
Commitments received from banks 8,937 9,402 36 Commitments on securities 7,702 8,480 36 Other commitments received 7,726 13,950
See Note No. Year ended December 31 2020 2019 13 Due to central banks, postal cheque accounts 13 Due to banks 119,541 99,615 23 o/w institutional operations: 8 17 Provisions for risks and other expenses 2,021 2,264
Equity excluding fund for general banking risks 17,606 17,463 20 Regulated provisions and investment subsidies 2 2
See Note No. Off-balance sheet items – Commitments given 2020 2019
Parent company financial statements and notes 415NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
27 Net gains/(losses) on trading portfolio transactions 968 1,534 28 Net gains/(losses) on transactions on securities held for sale (256) 43
Write-down, amortization and impairment of property, plant and equipment and intangible assets (80) (79)
Non-recurring income 20 Funding/reversal of funding for general banking risks and regulated provisions 0 0
Gains or losses on investment Note 28 and similar portfolio transactions
Foreign exchange transactions and foreign Note 37 currency loans and borrowings
Parent company financial statements and notes 417NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Natixis announced on February 25, 2020 that it had signed a sale contract with Arch Capital Group (an insurer and reinsurer in the United States) for 29.5% of the share capital and voting rights of Coface, at a unit price per share of €10.70. This price was revised on August 28, 2020 to €9.95 per share. The completion of the deal is contingent on approval from regulatory authorities. All of these were obtained in early February 2021 (see Note 3 Post-closing events).
The rapid global spread of the Covid-19 pandemic led most of the affected countries to impose lockdown measures on their populations during the year 2020, thereby heavily reducing business, which led to a worsening of the economic situation of numerous business sectors as well as a major disruption to financial markets.
Economic support measures1.2.1 Measures to support the economy were taken during the fiscal year 2020 involving credit institutions.
covers a percentage of the principal, interest and related costs still owed on the debt until it reaches maturity, unless it is called in earlier upon the occurrence of a credit event.
The government guarantee is considered an integral part of the terms of the contract and is taken into account in the calculation of any impairment. The guarantee fee paid when the loan is granted by Natixis to the French State is recognized in income over the initial term of the SGL and is presented under “Interest and similar income”.
As of December 31, 2020, Natixis had granted 86 SGL applications for an outstanding amount of €2,503 million, and the associated guarantees received from the State amounted to €2,269 million.
For this reason, the individual granting of moratoria or other concessions did not always lead to those loans being classified as “Restructured loans for which a concession has been granted” (see Note 2.1).
418 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 - due to a stressed market environment that generated significant fluctuations, the “volatility” factor was also remarked for all of the transactions involved.
Natixis’ separate financial statements have been prepared and are presented in accordance with regulation No. 2014-07 (amended) of the Autorité des Normes Comptables (ANC – French accounting standards authority) dated November 26, 2014 relating to the financial statements of companies in the banking sector and regulation No. 2014-03 (amended) relating to the French General Accounting Plan (PCG – Plan comptable général).
At December 31, 2019, negative interest was presented net of positive interest on financial assets and liabilities, respectively; the presentation of conditional derivatives purchased or sold withV a staggered or paid premium.
Non-performing loans are receivables for which an event of default has been identified as defined in Article 178 of Regulation (EU) No. 575/2013 and the provisions of Regulation (EU) No. 2018/1845 of the European Central Bank on the threshold for assessing the significance of arrears on credit obligations, applicable no later than December 31, 2020. The definition of defaulted loans is specified by: the introduction of a relative threshold and an absolute threshold,V to be applied to payment arrears to identify default situations; clarification of the criteria for the return to sound outstandings withV the imposition of a probationary period (12 months for restructured assets and three months for other assets); and the introduction of explicit criteria for classifying restructured loansV as default.
Specific impairments and provisions Where there is a risk of partial or total non-recovery of loans or of borrowers breaching their covenants, impairment charges (for non-performing loans) or provisions (for off-balance sheet commitments) corresponding to the amount of the probable loss are recognized on the income statement under “Provision for credit losses”. These impairments and provisions are assessed quarterly on a case-by-case basis taking into account an analysis of the risk and available collateral.
Interest corresponding to the remuneration of impaired loans and receivables or to the reversal of the effect of discounting is recognized as interest income.
Provisions for non-specific credit risk Financial assets that have not been assigned their own specific credit risk are included in groups of assets with similar risk characteristics. The composition of these portfolios of similar assets is based on two criteria: geographical risk and sector risk.
any group of assets showing objective evidence of impairment. Assets belonging to that group, which are subsequently specifically identified as impaired (specific risk), are removed from the collective write-down calculation base.
Each group of assets is assessed for objective evidence of impairment based on observable data indicating a likely decrease in the estimated recoverable cash flows for that group of assets. A collective write-down in the balance sheet liabilities is taken against
Provisions for geographic risk are primarily based on each country’s internal rating, incorporating different parameters and indicators (political situation, performance of the economy and economic outlook, banking system situation, etc.). Calculation of the impairment loss is based on a correlation table between the internal rating and provisioning rate, with a revision to the rate allocated to a provisioning scale possible.
Securities are, in accordance with Book II – Title 3 “Accounting treatment of securities transactions” of regulation No. 2014-07 of the ANC, classified according to: their type: government securities (treasury bills and similarV securities), bonds and other fixed-income securities (negotiable debt securities and interbank market instruments), shares and other variable income securities; the economic purpose for which they are held, into one of theV following categories: held for trading, held for sale, held for investment, other long-term securities, investments in associates and investments in subsidiaries and affiliates.
In the case of a securities borrowing transaction, the borrowed securities are recorded in the trading securities category with a corresponding liability to the securities debt to the lender for an amount equal to the market price of the securities borrowed on the date of borrowing. Borrowed securities (including borrowed securities that have been loaned out) are presented in the balance sheet as a deduction from the debt representing the value of the borrowed securities.
They are reported on the balance sheet at their purchase price, excluding acquisition costs. Any difference between the purchase price (excluding accrued interest) and the redemption price is recognized in income over the remaining life of the securities.
an average credit spread on the market in which the subsidiary isV listed; an average beta as reflected in a sample of equivalent companies.V
Income, value adjustments and proceeds on disposal of securities portfolios are recognized as follows: income from variable-income securities is recognized as and whenV received or when the payment has been subject to a resolution at a General Shareholders’ Meeting; income from fixed-income securities is recognized based on theV accrual method;
Parent company financial statements and notes 421NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com value adjustments and proceeds from the disposal of securitiesV are recognized under different headings depending on which portfolio they belong to: under “Net revenues” for securities held for trading and securitiesV held for sale, as a provision for credit losses on fixed-income securities in theV portfolio of securities held for sale or for investment when adjustments in value relate to counterparty risk exposure, under net gains/(losses) on fixed assets:V
Reclassifications from the “securities held for trading” to the “securities held for sale” and “securities held for investment” categories and from “securities held for sale” to “securities held for investment” are permitted in exceptional market circumstances requiring a change in strategy or when the securities in question have ceased to be tradable on an active market since their acquisition.
The regulation allows banks to sell all or part of the securities reclassified as “held for investment” if the following two conditions are met: the transfer was motivated by exceptional circumstances;V
Natixis has carried out no such transfers in its separate financial statements.
As soon as they are in a condition to be used by Natixis in the manner in which they are intended, fixed assets are depreciated or amortized over their estimated useful lives on a straight-line or declining balance basis when this better reflects the economic amortization/depreciation. The residual value of the asset is deducted from its depreciable or amortizable amount when it can be measured reliably.
non-destructible buildings (of historical importance):V non-depreciable; walls, roofs and waterproofing: 20 to 40 years;V
Other items of property, plant and equipment are depreciated over their estimated useful lives, generally between five to ten years.
The notional amount of these instruments is recorded off the balance sheet for internal monitoring and regulatory purposes, but is not included in the published statement of off-balance sheet items. Details for these instruments are provided in the notes.
These transactions are carried out for four purposes: micro-hedging (affected hedge);V
Expenses and income arising from forward financial instruments used to hedge and manage Natixis’ overall interest rate risk are recognized on a prorata basis. Unrealized gains and losses are not recognized.
The presentation of premiums on options whose payment is due or ultimately has been modified as of December 31, 2020 (see Note 2).
They fall into four categories: “Short-term benefits” including salaries, social security contributions, annual leave, employee profit-sharing, incentive plans, top-up contributions and variable compensation payable in the 12 months after they are attributed, are expensed in the period in which the corresponding services were rendered.
“Termination benefits” are granted to employees upon the termination of their employment and prior to retirement. A provision is accrued for these benefits.
“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: defined-contribution plans, which mainly consist of the socialV security basic pension scheme and the supplementary schemes Agirc and Arrco, under which an entity has no obligation to pay a specified benefit amount. Contributions paid under defined-contribution plans are expensed in the corresponding period; defined-benefit plans under which Natixis has a legal orV constructive obligation to pay a specified benefit amount are valued and funded.
In accordance with recommendation No. 2013-02 of the Autorité des Normes Comptables (ANC – French accounting standards authority) on rules for measuring and recognizing retirement and similar commitments, dated November 7, 2013 (which allowed the partial adoption of revised IAS 19 as adopted by the European Union in June 2012), Natixis chose to maintain the corridor method approach in the individual financial statements.
Parent company financial statements and notes 423NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Under this method, Natixis does not recognize the portion of net cumulative actuarial gains and losses that is lower than the greater of (i) 10% of the present value of the defined-benefit obligation and (ii) 10% of the fair value of any plan assets at the end of the previous reporting period. The portion of actuarial gains and losses outside the 10% corridor is therefore recognized over the average remaining working lives of the employees participating in the relevant plan.
The amount recognized as a provision in the balance sheet represents the present value of the obligation under defined-benefit plans at the closing date: minus any past service cost not yet recognized in income;V
Cash-settled plans indexed to the share price give rise to the recognition of a payroll expense that is measured taking account of the share price on the balance sheet date and the likelihood of satisfying performance and/or service requirements. Where a service requirement exists, the calculated expense is recognized on a straight-line basis over the vesting period. When no service requirement exists, the expense is recognized immediately as a debt. The latter is then remeasured at each reporting date taking into account performance criteria and any changes in the value of underlying shares.
However, exchange differences relating to institutional operations are recognized under accrual accounts.
Directive No. 2014/59/EU (BRRD – Bank Recovery and Resolution Directive) which establishes the framework for the recovery and resolution of banks and investment firms and Regulation (EU) No. 806/2014 (SRM Regulation) established the introduction of a resolution fund as of 2015. In 2016, this fund became a Single Resolution Fund (SRF) between the member States participating in the Single Supervisory Mechanism (SSM). The SRF is a resolution financing mechanism available to the resolution authority (Single Resolution Board). The latter may use this fund when implementing resolution procedures.
Due to additional contributions, the corporate tax rate used to calculate the expense payable for the year was 32.02% for France. Applicable local corporate tax rates were used for foreign subsidiaries.
Parent company financial statements and notes 425NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
At December 31, 2020, Natixis applied for the first time ANC regulation No. 2020-10 amending the presentation of securities loans on the balance sheet (see Note 2).
This project, which would result in the repositioning of activities equivalent to 209 jobs, also confirms Porto’s position as a center of excellence and expertise.
The strategic review of the equity derivatives activity also confirmed its importance for Natixis and repositioned it on strategic clients while reducing the level of risk. The implementation of this announcement would lead to the elimination of 36 jobs.
On February 9, 2021, BPCE S.A. announced its intention to acquire the shares in the capital of Natixis S.A. that it did not hold, i.e. around 29.3% as at December 31, 2020, and to file a simplified takeover bid with the French Financial Markets Authority (Autorité des Marchés Financiers – AMF).
This transaction had no impact on the parent company financial statements of Natixis at December 31, 2020.
Cash, postal cheque accounts and balances with central banks 24,526 15,858
Restructured loans as defined in Note 1 recorded as non-performing or irrecoverable loans amounted to €1,444 million before impairment at December 31, 2020 versus €1,093 million at December 31, 2019. The amount after impairment amounted to €1,010 million at December 31, 2020 versus €744 million at December 31, 2019.
Provisions for non-performing loans totaled -€1,404 million at December 31, 2020 versus -€991 million at December 31, 2019 (of which -€174 million at December 31, 2020 versus -€189 million at December 31, 2019 relating to provisions for irrecoverable loans).
Receivables eligible for refinancing with the Banque de France and/or the European Central Bank amounted to €114 million at December 31, 2020 versus €715 million at December 31, 2019.
Financial instruments not listed on active markets, recognized in short-term investments, trading securities and investment securities, represented an amount of €19,212 million at December 31, 2020.
Natixis applied for the first time on December 31, 2020 ANC regulation No. 2020-10 of December 22, 2020, amending ANC regulation No. 2014-07 specifically as regards the presentation of securities loans on the balance sheet. This change consists in presenting under “Other liabilities”, the debt representing the securities borrowed, less the value of the securities borrowed (classified as trading securities on the balance sheet) and the value of the securities borrowed that have been loaned out (also classified as trading securities on the balance sheet). The impact of these changes is presented in Note 2.16.
The main changes during 2020 related to:(a) - the valuation of NYBEQLLC for -€26 million; - the exit of VEV for -€12 million.
NATIXIS Marco 47 QUAI D’AUSTERLITZ 75013 Paris NC 700,119 EUR 10,513 EUR 100.00%
Coface S.A. (b) 1 place Costes et Bellonte – CS20003 92276 Bois-Colombes C 304,064 EUR 876,308 EUR 42.20%
NATIXIS WEALTH MANAGEMENT 115 RUE MONTMARTRE 75002 Paris NC 129,048 EUR 86,676 EUR 100.00%
NATIXIS JAPAN SECURITIES CO., LTD. 1-11-1, MARUNOUCHI, CHIYODA-KU Tokyo 100-6226 NC 18,000,000 JPY 277,827 JPY 100.00%
NATIXIS INNOV 47 QUAI D’AUSTERLITZ 75013 Paris NC 150,060 EUR 5,849 EUR 100.00%
Natixis Pfandbriefbank AG Im Trutz Frankfurt 55 D-60322 Frankfurt am Main NC 120,000 EUR 9,272 EUR 100.00%
NATIXIS PAYMENT SOLUTIONS 30 AV PIERRE-MENDÈS-FRANCE 75013 Paris NC 53,559 EUR 132,485 EUR 100.00%
NATIXIS INTERÉPARGNE 30 AV PIERRE-MENDÈS-FRANCE 75013 Paris NC 8,891 EUR 18,576 EUR 100.00%
Interbank and similar transactions 119,541 99,615 * o/w repurchase agreements 40,178 31,009 * o/w accrued interest 51 101
Customer transactions 100,132 119,320 * O/w repurchase agreements 67,381 86,803 * O/w accrued interest 27 97
Parent company financial statements and notes 435NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
(in millions of euros) 01/01/2020 Charges Reversals Translation adjustments Other 31/12/2020
Investments in subsidiaries and affiliates (261) (117) 10 0 5 (363)
Expected return on plan assets 0.78% 2.90% 0.50% 1.56% 2.96% 0.50%
Future salary increases are estimated by grade based on a constant population and a three-year average. At December 31, 2020, this average (including inflation) was 2.28%, the same as at
Unrecognized actuarial gains and losses 28 (10) (2) 3 19 0 (22) (2) 1 (23)
Total net obligation at January 1 65 21 32 66 184 39 29 32 89 189
Expected return on plan assets, gross (3) (3) (6) (2) (3) (5)
Plan amendments recognized over the period (10) 1 (9) 3 3
Recognized actuarial gains and losses over the period 12 1 13 3 2 5
Actuarial gains and losses/return on plan assets 3 3 (10) (10)
Change in actuarial gains and losses not recognized (10) 2 0 0 (8) 31 11 2 2 46
Unrecognized actuarial gains and losses 6 (8) (2) 2 (2) 28 (10) (2) 3 19
TOTAL NET OBLIGATION AT DECEMBER 31 42 26 34 117 219 65 21 32 66 184
Parent company financial statements and notes 439NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
At December 31, 2020, the share capital was composed of 3,155,951,502 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 fiscal year 2020 corresponds to the allocation of 2,873,020 bonus shares to certain Natixis employees, within the scope of Retention and performance plans.
Statement of assets, liabilities and commitments related Note 23 to the management of public procedures
Parent company financial statements and notes 441NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
At December 31, 2019, negative interest was presented net of positive interest on financial assets and liabilities, respectively.
Parent company financial statements and notes 443NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Depreciation, amortization and impairment of property, plant and equipment and intangible assets (80) (79)
Net income from investment and trading portfolio transactions 591 78 (2) 36 9 712 1,862 (294) 2 (3) 9 1,576
Establishments and operations in non-cooperative Note 39 States or territories within the meaning of Article 238-0A of the French General Tax Code
Monitoring of Natixis’ subsidiaries and branches in non-cooperative countries forms an integral part of Natixis’ risk monitoring process overseen by the Risk function. This process involves: local Risk Officers/functions that have a functional link to theV central Risk division; specific reporting procedures that respect local constraints butV also comply with overall risk requirements.
Income before tax, depreciation, amortization and provisions 1,061,747,058.72 1,058,912,618.73 1,610,377,425.74 2,205,278,559.53 369,564,682.90
Income after tax, depreciation, amortization and provisions 1,621,448,753.36 1,678,182,285.17 1,834,308,793.77 2,242,111,898.15 142,691,880.31
Income after tax, but before depreciation, amortization and provisions 0.45 0.42 0.60 0.74 0.18
Our responsibilities under those standards are further described in the Statutory Auditors' responsibilities for the audit of the financial statements section of our report.
We conducted our audit engagement in compliance with the independence rules applicable to us, for the period from January 1, 2020 to the date of our report and in particular we did not provide any services that are prohibited under Article 5(1) of Regulation (EU) No. 537/2014 or under the French Commercial Code or the French Code of Ethics (code de déontologie) for Statutory Auditors.
Without calling into question the opinion expressed above, we draw your attention to the points set out in Note 2 to the financial statements concerning the changes in the presentation of option premiums and securities borrowings.
Statutory Auditors’ report on the parent company financial statements 451NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Receivables due from customers represented €124,144 million at December 31, 2020. Individual impairment losses amounted to €675 million at
Please refer to Note 1, to the paragraph 1 of Note 2, and to Notes 5 and 31 to the parent company financial statements for more details.
We evaluated the design and tested the effectiveness of the key controls put in place by Natixis, in particular those related to: the identification of indicators of impairment (such as past-dueV payments) and the counterparty rating process; the classification of exposures as non-performing;V
In addition, we carried out a credit review over a sample of files selected based on materiality and risk criteria, particularly files exposed to the business sectors most affected by the health crisis. In this review we: took note of the latest available information on the situation ofV sensitive and non-performing counterparties; performed independent analyses of the assumptions used and theV estimates of provisions drawn up by management based on information provided by the institution and external data; verified that estimated impairment allowances were correctlyV recognized.
We also verified the information detailed in the notes on impairment of customer loans and receivables.
Provisions for litigation and other risks amounted to €1,011 million at December 31, 2020 (see Note 17 to the parent company financial statements).
We took note of the status of ongoing proceedings and the main risks identified by Natixis, including through regular discussions with management (and more specifically Natixis’ Legal, Compliance and Tax Departments) and by reviewing the documentation made available to us.
In the context of the health crisis and its effects on the financial markets, certain market parameters were adjusted with significant effects, notably on the valuations of equity products, in particular during the first half of 2020, as described in Note 1.2.4.
We considered financial instruments not quoted on an active market to be a key audit matter due to the material nature of the exposures and the use of judgment in determining fair value and the effects of the health crisis.
Financial instruments not listed on active markets are broken down into Government securities and equivalent, receivables due from credit institutions and transactions with customers. Please refer to Note 1, to paragraphs 1 and 2 of Note 2, and to Notes 4, 5, 6, 27 and 28 to the parent company financial statements for more details.
the determination of the main valuation adjustments, as well asV the value adjustments made.
We carried out these checks with the assistance of our valuation specialists, with whom we also carried out independent valuations by examining, on a sample basis, the assumptions, methodologies and models used to estimate the main valuation adjustments at
We have no matters to report as to the fair presentation and the consistency with the financial statements of the information given in the management report of the Board of Directors and in the other documents on the financial position and the financial statements provided to shareholders.
The fair presentation and the consistency with the financial statements of the information relating to payment terms mentioned in Article D.441-6 of the French Commercial Code leads us to make the following observation: as indicated in the management report, this information does not include banking transactions and related transactions, as your Company considers that they do not fall within the scope of information to be reported.
Format of the parent company financial statements intended to be included in the annual financial report
Responsibilities of management and those charged with governance for the parent company financial statements
The Audit Committee is responsible for monitoring the financial reporting process and the effectiveness of internal control and risk management systems and, where applicable, the General Inspection of procedures for preparing and processing accounting and financial information.
Statutory Auditors’ responsibilities for the audit of the parent company financial statements
We submit a report to the Audit Committee which includes in particular a description of the scope of the audit and the audit program implemented, as well as the results of our audit. We also make it aware, when appropriate, of any significant weaknesses we have identified in the internal control system in terms of procedures for preparing and processing accounting and financial information.
Internal control procedures relating to accounting and financial information 455NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
As a listed company, Natixis prepares separate consolidated financial and regulatory statements, although the sub-group it leads has been included in Groupe BPCE’s consolidated financial statements since July 1, 2009.
The reliability of these processes is based on the following core principles: the definition, in coordination with BPCE, and dissemination of theV accounting and regulatory principles applicable to Natixis subsidiaries and branches, including the analysis and interpretation of new standards published during the period; the documentation and oversight of the different stages in theV preparation of these reports; audit trails justifying all published accounting and managementV data, based on the individual contributions made by each entity and restatements made centrally; a first and second line of defense (LOD1 & LOD2) includingV management and monitoring processes as well as first-level and second-level control systems. All of these contribute to the security of accounting and financial information (corporate and statutory accounts, tax returns, prudential and regulatory reporting); support and appropriate training for the accounting and regulatoryV reporting teams of those consolidated entities that use the consolidation and data collection tools so that best practices are shared across the Company.
The preparation of the consolidated financial statements also relies on: the use of a direct consolidation method, rolled out throughout theV Group, allowing for the analysis and control of the consolidation packages of each consolidated company via a formal review process; preparation of consolidated financial statements on a quarterlyV basis. This allows for greater control over financial reporting within tight time frames; reporting and reconciliation of intra-group transactions at M-1 andV then at M, where M is the reporting month, thus increasing the number of reconciliations and contributing to the preparation of quarterly statements; use of an automated control process for individual informationV provided by the consolidated entities through the use of consolidation packages that incorporate accuracy and consistency checks, which must be complied with before the data can be transmitted; individual analysis of all entries impacting consolidatedV shareholders’ equity and the preparation of supporting documents for taxes, including proof of deferred taxes, for each consolidated entity, thus contributing to the substantiation of consolidated shareholders’ equity.
correct processing of specific transactions in line with the relevantV principles; verification of financial information (notes to the financialV statements, items of financial communication); adjustment of anomalies identified at the time of these controls asV well as the corresponding analyses and documentation.
For prudential and regulatory reporting, permanent and periodic controls apply to the completion and monitoring of: accuracy and veracity checks, such as the management/financialV account base reconciliation processes, as the management data used for preparing reports can come from various sources; controls of the traceability and completeness of data, throughoutV the various reporting preparation processes; compliance and presentation controls in respect of the regulatoryV requirements specific to each reporting process; quality controls of the data (in accordance with the BCBS 239V program) needed to produce the reports and the quality of the attributes entered into the databases used, allowing the proper breakdown of accounting or management data; consistency checks between published reports, where possibleV and relevant.
It also draws on: the application of the principles defined by BPCE, which specify inV particular the scopes subject to a two-level control process and which provide for centralized management within the Finance, Risk or Compliance Departments, operated by a dedicated function (e.g. permanent financial supervision-LOD2); the implementation of an approach to manage and supervise theV LOD2 financial control teams, in a sector-based approach; two types of tasks. The first is operational and consists ofV performing and reviewing first-level controls, as well as any additional second-level controls (for closing periods or as part of periodic assignments). The second is organizational and involves overseeing and adapting the system; formalized documentation as part of the “Accounting and financialV information quality control framework” drawn up by Groupe BPCE. This includes procedures that describe in detail the organization of the system; risk mapping showing the nature, frequency of occurrence andV responsibilities by level of control across all scopes (accounting and regulatory) and showing the risks covered by each control (accounting and regulatory audit assertions, BCBS 239 assertions and assertions related to the law on the fight against corruption); a risk-based approach, enabling the permanent financial controlV teams to guide and determine the frequency of their controls with regard to the quality of the internal control processes.
Internal control procedures relating to accounting and financial information 457NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
In 2020, the highlights of the accounting and financial control environment included: maintaining a tight schedule for preparing the various financialV reports despite the health context related to Covid-19; permanent adaptation of production and control processes, takingV into account the constraint of remote working, which made it possible, with the use of a robust IT infrastructure and the use of new communication tools, to maintain the quality of the financial information, reinforcing the control system and the integration of new reporting required by the regulator; the announcement of the proposed sale of Coface which ledV Natixis to treat the entire scope under the equity method and in accordance with IFRS 5 since the first quarter of 2020; the continuation of large-scale projects to streamline theV information systems used for market and financing transactions (front- and back-office systems), and the migration of the associated software, which continued in 2020; the continuation of a project to streamline and pool data input byV setting up a data lake shared by all overview functions (Risk, Accounting and Ratios, Financial Oversight and Financial Management). Using a data lake, the project allows the direct generation of certain reports, integrates processes such as intra-group management, granular analysis of provision for credit losses items and developing new controls by cross-referencing data; the continuation of the project to roll out the Group’s targetV management tools within the Asia-Pacific and US platforms, with the scope of financing continued to roll out in Asia; the adaptation of production processes relating in particular to theV new FINREP 2020 reporting, the new definition of default implemented in the fourth quarter, the establishment of a daily LCR to meet the regulator's expectations; the continuation of projects related to changes in standards suchV as IFRS 17 in the accounting field, which will concern all Insurance entities, and in the CRR2 and Basel 3 Revised regulatory field; strengthening of accounting and financial information controls,V particularly regarding manual inputs, measures implemented by the state to support French companies in the current economic climate, anti-corruption and tax avoidance regulations; the implementation of the digitization initiatives launched in 2019,V notably through the deployment of a new expense report management tool in the first half-year, the implementation of a centralized tool for managing and monitoring financial statements in the second half-year as well as the deployment of a tool for reporting the results of first- and second-level controls rolled out within the scope of Natixis S.A. during the second half-year; the reinforcement of local control system monitoring processesV and support for Permanent Financial Control officers, particularly internationally on all European, American and Asian BGC platforms, and in France for the Life Insurance business.
Business ethics and safety6.3 471 Protection of customers and investors 471
Managing environmental, 6.5 social and governance risks 503 Incorporating ESG criteria in financing 6.5.1 operations and investments 503
Employee engagement6.7 521 Human Resources policy 6.7.1 and diversity management 521
As a significant player in the financing of the economy, Natixis intends to play a role in the transition to sustainable development and, as its business model illustrates (see p. 8-9) through its business lines, contributes to creating value for all its internal and external stakeholders. It has made ESR one of the main levers of its New Dimension strategic plan (2018-2020) and defined the search for sustainable impact as one of the three constitutive elements of its corporate culture, alongside entrepreneurial spirit and collective intelligence.
It involves taking into account the social and environmental risks associated with the Company’s activities, while being a powerful lever for performance and development: by fostering strategic dialog with customers and promoting the development of innovative offers, ESR enables Natixis to support the transition of economic agents to a more sustainable model.
employees’ commitment, management of direct impacts on the environment, responsible purchasing policy, solidarity initiatives
(2) Environmental impact of the bank balance sheet rated by the Green Weighting Factor methodology excluding the financial sector (CIB scope). (3) Share of renewable energies in the project financing of the electricity production sector in the portfolio. (4) Potential for global warming induced by Natixis Assurances general fund investments (70% of the portfolio, alignment methodology developed by Mirova). (5) Percentage of the total amount of RWA rated “Dark brown” under the Green Weighting Factor methodology. (6) Amount of coal exposure taking into account non-dedicated corporate outstandings and project financing at the end of 2020. (7) % decrease in kWh / FTE between 2018 and 2020. (8) Within the wider leadership circle (Natixis Purple Leaders). (9) Employees who signed a teleworking amendment at the end of 2020. (10) Employees who took part in the salary or one-off donation of time.
Since 2017, the ESR Department has benefited from strengthened governance, with the creation of a dedicated department reporting directly to a member of the Executive Management Committee.
At the end of 2020, Natixis introduced a new governance structure for its ESR policy. To ensure the supervision of environmental and social issues by the Board of Directors, an ESR Committee has been created with the following skills: reviewing the Group’s ESR strategy and commitments;V
monitoring the actions taken by Natixis to reduce its own footprintV and that of its financing and investment activities; monitoring employee awareness-raising actions;V
The department works with the support of a network of around 200 ESR correspondents in all business lines and functions. The correspondents from Natixis’ business lines (Corporate & Investment Banking, Asset & Wealth Management, Insurance, Specialized Financial Services) take part in business forums aimed at developing ESR in the business lines, while correspondents from the support departments (Real Estate and Logistics, Human Resources, Compliance, etc.) are involved in projects to incorporate sustainable development in the Company’s operations.
In this context, the Corporate & Investment Banking business line has established a Green & Sustainable Hub. This operational hub comprises experts who help issuers and investors all around the world by offering them solutions and expertise in green and sustainable financing. Its expertise extends to all asset classes: the structuring and origination of loans, and investment solutions, in partnership with the business lines, which have appointed Green Captains, and in coordination with the ESR Department. The GSH provides training throughout the year so that the “Green Captains” improve their skills in sustainable finance.
Lastly, to mobilize more broadly, Natixis has been organizing training and awareness-raising sessions on sustainable development issues in recent years. This approach will be strengthened in 2021 with the deployment of a mandatory training module for all employees.
Natixis’ ESR strategy is based on a set of international agreements and consultations within the banking industry, including: the United Nations Global Compact since 2007;V
Leader in solidarity asset management in favor of job creation and access to accommodation for people in need
Employee health monitoring and medical coverage, numerous initiatives to promote quality of life at work
Support for caregivers and research work in the context of the COVID-19 health crisis
Creation of “30% Club Investor Group” (Ostrum, Mirova) to promote gender equality on the SBF120 governing bodies
Programs to ensure gender equality within the company and strategic objectives related to the proportion of women in leadership circles
Support of the association UN Women to develop the women’s economic empowerment.
Preservation of water resources with the “Sustainable ambition” product combining green bond with “Water & Ocean” index and the “Water” strategy of Thematics in asset management.
Partnership with the NGO Action Against Hunger for the construction of wells in rural communities in Liberia
Largest social bonds ever issued (for Unédic and Cades) in response to the COVID-19 crisis
Mobility plan and travel policy to reduce the impact of transport
Waste reduction (paper, cups), reuse of IT equipment and furniture, integration of social and environmental criteria in our purchases
“Land Degradation Neutrality Fund”, dedicated to neutrality in terms of land degradation
Exclusion of financing in the coal, oil, shale gas and tar sands industry
Requests for proposals and calls for tenders Responsible Supplier Relationship Charter CRS clauses in contracts
Answers to questions Meetings Maintaining a regular dialog on sectoral issues
Supporting chairs Relations with Grandes Écoles and universities Campus Awards Receiving interns, including co-op students
Natixis is rated by various ESR rating agencies and has recorded solid performances in social, environmental and governance areas,
Natixis has applied Groupe BPCE’s risk rating policy, based on the ESR risk analysis methodology established by the Group Risk, Compliance and Permanent Control division, which established: a breakdown of ESR risks according to the following types:V governance, products and services, internal operations. These risks were identified in terms of regulations, industry practice, ESG rating agencies’ assessment criteria and requests from clients and investors; a methodology for ranking the risks by their frequency and severity;V
Other ESR risks – particularly related to HR policies or our direct impact on the environment – are not listed in the Risk Appetite System but have been positioned in the gross ESR risk matrix (before risk management systems), depending on their severity and probability of occurrence.
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O th er n on -p rio rit y ris ks * Related to our financing and investment activities.
The gross risks matrix highlights the ten major risks presented below, which are managed with a set of risk management systems, with associated key performance indicators.
Other environmental risks (pollution, harm to biodiversity, etc.) relating to our activities
The Compliance Function’s preventative actions – advice, raising awareness and training – are a key driver to improving Natixis’ management (a) of compliance risk.
The Code of Conduct was approved by the Natixis Senior Management Committee and by the Board of Directors. It applies to all individuals employed on a permanent or temporary basis at Natixis, or in an entity at least 50% owned by Natixis, whether in France or abroad. Suppliers and contractors are also required to comply with the rules applicable to each Natixis entity, in accordance with the principles of the Code of Conduct.
A dedicated Committee, the Global Culture and Conduct Committee, monitoring matters pertaining to the rules of conduct, including is responsible for governance of conduct-related matters. It is updates to the Code and deciding on individual or operational cases. chaired by the CEO and comprises members of the Natixis Senior An escalation process is also in place to consult the Committee if Management Committee. The Committee is governed by a charter required.
that describes its duties and how it functions. The Global Culture and Conduct Committee is responsible for all matters concerning the Natixis Code of Conduct and its application by all subsidiaries and direct branches. It is in charge of overseeing and regularly
Finally, the Code of Conduct and the policies and procedures that complement its principles does not have a rule for every situation: it is the responsibility of each individual to exercise his or her personal judgment with regard to their duties and to demonstrate meticulous professional ethics.
notification within 15 business days of the date of acknowledgementV of whether the information reported is eligible for further investigation; notification within three months of the date of acknowledgementV of the steps taken to process the information reported or, if this process has been completed, the action taken (or not taken) based on the information.
The procedure provides protection to the whistleblowers (who may in no circumstances be subject to disciplinary action or legal proceedings in respect of the report, provided they have acted impartially and in good faith) and ensures the information is treated appropriately and in with full confidentiality, in accordance with the applicable regulations.
The whistleblowing system is based on an overall policy which represents the minimum standard to be applied throughout Natixis. Each entity, subsidiary and branch office must adapt the overall policy to its activities and its own local regulations.
The protection of customers and investors is an integral part of internal processes, particularly in the context of the review and validation of new products and new activities.
For more information on these various topics, please refer to Chapter [3.2.8.3] “Non-compliance risks”.
Natixis is determined to act with integrity and in compliance with its regulatory obligations in the fight against corruption, money laundering and the financing of terrorism.
The Financial Security Department reports to the Compliance Department and manages the anti-money laundering and counter-terrorist financing (AML-CTF), corruption and fraud prevention framework, and ensures that Natixis and its branches and subsidiaries comply with financial sanctions and embargoes.
In accordance with the regulations, Natixis (like the other entities of the BPCE Group) has the means to detect atypical transactions adapted to their risk classification, making it possible to carry out, if necessary, the strengthened examinations and the necessary declarations to Tracfin (treatment and action against illegal financial circuits) in the shortest possible time. The Group’s risk classification includes the issue of “at-risk” countries, whether in terms of money laundering, terrorism, tax fraud or corruption.
The risks of interruption or operational failure of Natixis ‘or third-party information systems or breaches of Natixis’ information systems due to fraudulent activities are recognized as material risks that could have a significant impact on the financial trajectory, strategic or reputational of Natixis.
In terms of information systems security, Natixis has a specific department attached to the Compliance Department, the Information Systems Security and Business Continuity Department (ITSS-BC). To prevent the risk of cybercrime, which is a priority given the increasing sophistication of cyber-attacks, the ISS-BC Department has set up two lines of defense, shared between the IT Department and the ISS-BC Department, as well as a risk mapping, an extensive ISS awareness program for all employees. For more information, refer to Chapter [3.2.8.5] “Non-compliance risks - Technological risks”.
In 2018, Natixis adopted the Charter for Responsible Lobbying and Advocacy Activities with respect to Governmental Bodies and Officials, which is available on its website : ( /natixis/en/our-code-of-conduct-rep_95743.html).
This year, the major cross-cutting issues that have largely occupied public affairs concerned green finance, in close collaboration with the Group. This year, the public affairs team responded to 13 consultations on this issue on behalf of the Group.
Natixis implements control systems to ensure that its transactions comply with tax laws and regulations.
In general, Natixis maintains professional relations and cooperates with all the tax authorities in the countries in which it does business.
In addition, Natixis includes tax evasion in its anti-money laundering system (refer to Chapter [3.2.8.4] Financial security).
Business line contributions to green and sustainable growth 473NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
In line with the sustainable development objectives of its New Dimension strategic plan, all of Natixis’ business lines develop innovative financial products and services designed to service its clients’ environmental and social ambitions. 2020 marked the implementation of Natixis’ major commitments in the fight against climate change with the implementation of the Green Weighting Factor in the credit process, in the preservation of natural capital with the first year of implementation of its commitments, and finally in the Principles for Responsible Banking with the first year of reporting.
issues for a just transition. In this context, Natixis has been able to support its clients in innovative and historic transactions, including the first structured product combining a social bond and a climate index and the structuring of historical social issues.
2020 has been strongly impacted by the COVID-19 crisis, showing the importance of integrating social issues alongside environmental
In 2021, Natixis intends to consolidate its leading role in sustainable finance innovation by expanding the range of sustainable finance products and services offered to Corporate & Investment Banking clients, launching new investment solutions in its Asset Management affiliates, and developing sustainable investments and products for its insurance business. Offering clients investment and financing solutions that generate positive impacts and thus effectively address the Sustainable Development Goals is a key priority.
Installed capacity of projects financed during the year 7.8 GW 6.5 GW
Natixis uses the Sustainable Development Goals as a reference benchmark for measuring progress achieved by governments and framework for all the initiatives stemming from its commitment to private sector companies, including financial institutions. society. The 17 sustainable development Goals for 2030 are the 2020 KEY EVENT
A growing number of Natixis’ Asset Management companies observe 6.4.1.1 the Principles for Responsible Investment (PRI)
In 2020, Natixis Investment Managers, which groups the expertise of 24 affiliate Asset Management companies around the world and ranks among the world’s biggest asset managers (more than €1,100 billion in assets under management at 31/12/2020), pursued its pledge to take Environmental, Social and Governance (ESG) issues
The Principles for Responsible Investment (PRI) were published by the United Nations in 2006 as a voluntary commitment encouraging institutional investors and asset managers to incorporate ESG in the management of their portfolios. In 2020, 3,038 signatories with $103.4 trillion in assets under management had adopted the PRI(1).
Mirova and Natixis Assurances named leaders by PRI In 2020, Natixis Assurances and Mirova were named the reward for the work carried out by Mirova since among the most advanced players in the field of 2016 on the calculation of the carbon footprint of its sustainable finance. In 2020, the PRI identified a group investments. For its part, Natixis Assurances confirms of 36 leaders, comprising 16 institutional investors (4% its status as a pioneer in terms of climate commitment. of total PRI signatories) and 20 Asset Management Its objective of devoting 10% of its investments to green companies (1% of total signatories), including Mirova assets was exceeded in 2019 and 2020: its investments and Natixis Assurances. This announcement is notably rose to almost 15% during fiscal year 2020.
Natixis’ commitment to the Principles for a Responsible Banking Sector 6.4.1.2 (PRB)
Signatory banks will publicly acknowledge their positive and negative social, environmental and economic impacts. The banks agreed to set public targets to address their main negative impacts and to step up their positive impacts in order to contribute to the sustainable development Goals (SDGs) and align with the Paris Agreement on climate change. Natixis actively participates in several working groups within the UNEP FI, in particular to co-construct impact measurement tools, whether at the level of the portfolio or the corporate clients. Natixis is committed to measuring the impact of its activities on all of the SDGs in 2021.
As part of its commitment to the PRB, Natixis also joined the United Nations Collective Commitment to Climate Action, which sets out concrete and time-bound actions that banks will take to support the energy transition. Accordingly, Natixis undertook to: align its portfolios to reflect and finance the low carbon,V climate-resilient economy required to limit global warming to well-below 2°C, striving for 1.5°C; take concrete action, within a year of joining, and use its products,V services and client relationships to facilitate the economic transition required to achieve climate neutrality; be publicly accountable for its climate impact and progress onV these commitments.
The implementation of the Green Weighting Factor (GWF) will enable Natixis to meet these targets [see section 6.4.2.1 GWF: an innovative solution for a greener loan book].
Alignment1. 6.1.1 Strategic pillars of ESR 6.1.4 Contribution to the sustainable development Goals (SDGs) 6.4.1 Sustainable growth: financing the transformation in society 6.4.2.1 GWF: an innovative solution for a greener loan book
Impact and definition of objectives2. 6.4.2.1 GWF: an innovative solution for a greener loan book 6.4.3.1 Natixis’ biodiversity commitments 6.4.1 Sustainable growth: financing the transformation in society
Governance and culture5. 6.1.1 Strategic pillars of ESR 6.4.1 Sustainable growth: financing the transformation in society 6.4.2.1 GWF: an innovative solution for a greener loan book 6.7.1.7 Compensation policy
Different levels of ESG criteria are available in the investment strategies applied by fund managers: responsible investment(1): inclusion of ESG criteria in research,V without these criteria having a systematic impact on decision-making and investment strategies, and implementation of an active shareholding policy; sustainable investment(2): the investment strategy is based onV ESG issues, aiming to align values, financial outperformance or societal impact through investment (e.g. exclusions, best-in-class or best-in-universe strategies, ESG themed investment); impact investing: strategy that addresses societal challenges,V such as those defined by the United Nations sustainable development Goals.
Two other classifications, which can be found in the aforementioned categories, allow to further detail these strategies: ESG themed investment: strategy focused exclusively on ESGV themes; Certification: funds certified by recognized third parties (the FrenchV SRI label, Greenfin, Finansol, Febelfin, LuxFlag ESG, Nordic Swan EcoLabel, FNG Siegel).
NIM supports affiliates in the deployment of their ESG approach and has allocated seed capital to strategies incorporating ESG issues as a priority. Currently, around a third of seed money is invested in ESG strategies. NIM also launched in 2020 a working group focused on ESG integration, co-led by Ostrum AM, allowing affiliates to share best practices.
Business line contributions to green and sustainable growth 477NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
The scope of reporting is extended from year to year. Some affiliates calculating a carbon footprint do not yet report in the non-financial performance report.*** Assets under Management (“AUM”): assets under management, as reported by affiliates, may include notional outstandings, distributed outstandings, gross **** outstandings, assets of entities held as minority interests and other types of assets managed or sub-delegated by affiliates of Natixis Investment Managers but not included in the consolidated regulatory reporting of Natixis Investment Managers. As a result, the sum of assets by affiliate listed above does not exactly match the total assets of Natixis Investment Managers.
The merger of Ostrum AM and La Banque Postale AM (LBPAM) created the European leader in rate and insurance management in September 2020, with €447.9 billion in assets under management. Ostrum AM systematically includes ESG aspects in its analysis when they are deemed material. Ostrum AM’s responsible investment approach applies to all its investments in sovereign assets from emerging and developed countries and over 90% of its debt investments. This process applies to €410 billion in assets under management, representing 92% of its total assets under management.
In addition, Ostrum AM has deployed sustainable management for 21% of its assets under management, according to various strategies: Best in class & Positive screening: selection of the best ratedV issuers from an investment universe that excludes issuers with a high ESG risk profile; Best in universe: selection of issuers from all sectors with the bestV ESG performance in the investment universe; Bespoke strategies: strategies co-built with clients for theirV dedicated funds or discretionary mandates to match their ESG philosophy as closely as possible.
Ostrum obtained the SRI certification of two money market funds in 2020, bringing certified loans to 9.5% of total outstandings, with 25 labeled funds.
In addition, in 2020 Mirova won two awards at the 35th edition of the Corbeilles: the Corbeille d’Or Management Company and the Long Term Management Company Corbeille. The Corbeilles (baskets) distinguish the institutions whose funds achieve the best financial performance over time.
Business line contributions to green and sustainable growth 479NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Ossiam, a specialist in quantitative management of index tracker funds and Exchange Traded Funds (ETFs), applies ESG criteria to five of its funds and one separate account totaling €868 million (22% of assets under management). €611 million of assets under management are labeled SRI, i.e. 15.7% of assets under management.
The integration of ESG (sustainable investment management) criteria into the strategies is carried out by implementing a combination of approaches: exclusions (controversial activities, tobacco, coal, etc.);V
All new strategies developed by Ossiam are now analyzed to take ESG criteria on Board as additional market data.
Thematics AM, an Asset Management company dedicated to innovative thematic equity strategies, incorporates an ESG approach at all stages of its investment process across all of its historical strategies, i.e. 64% of assets under management (€1.9 billion): definition of investment universe: specific exclusions are applied toV each thematic fund in addition to exclusions relating to sector policies. For example, companies producing plastic water bottles are excluded from the Water investment strategy and companies with military contracts are excluded from security and artificial intelligence & robotics funds; selection: ESG criteria are one of the four risk categories analyzedV to select the best risk/reward opportunities; investment: thresholds that take ESG scores into account are usedV to fine tune positions.
Dorval Asset Management, a recognized player in the field of flexible strategies and European equities, integrates ESG criteria into all the investment processes of its open-ended funds (responsible investment management), for which the SRI certification took place in 2020. Internal and external ESG research is integrated at several levels in the construction and management of investment funds. Integrated into the macro analysis and the sector approach, it participates in the definition of the eligible investment universe, contributes to the construction of portfolios and guides the selection of securities around a proprietary non-financial rating methodology.
Loomis Sayles, an American diversified asset manager, takes ESG criteria into account in its fundamental research by modeling long-term business opportunities and challenges, by identifying industrial and sector risks, and by using various methods to assess the ESG challenges of issuers (including engagement with corporate management teams). Each investment team determines how to weight all investment criteria, including ESG criteria, according to its investment philosophy and process. ESG risks and opportunities arise from factors such as the strength and strategy of an issuer’s management, the use of human and natural resources, as well as regulatory and political considerations.
Business line contributions to green and sustainable growth 481NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
WCM has been methodically developing its ESG approach for over a decade: when sustainability criteria are selected carefully and implemented throughfully, they can be used to lower risks and improve investment results. WCM goes beyond the financial statements and consider industry-specific ESG criteria that impact long-term financial results. A business with a competitive advantage that is mutually beneficial to multiple stakeholders is far more durable, often able to grow well beyond expectations. All funds incorporate these principles, and three specific ESG strategies were launched in 2020: two within mutual funds (non-US and emerging markets) and one as part of a global equity mandate.
Flexstone, a Private Equity player, relies on a systematic formalized ESG analysis throughout its investment process. In 2020, Flexstone worked on the evolution of this ESG analysis grid by adding new indicators, and taking into account priority SDGs in the evaluation of each investment. Flexstone also published its first overall ESG policy in 2020 following the merger of its three entities(1).
In 2018, Flexstone Partners was created following the merger of three private investment entities: Caspian Private Equity, Euro-PE, and Eagle Asia Partners.(1)
A Private Equity player Seventure Partners is aware of its responsibility to direct its investments towards projects, companies or sectors that present fewer ESG risks and that support the development of a more sustainable economy. Under the guidance of the ESG Steering Committee, ESG issues have been integrated into the investment policy, in particular by: defining a responsible investment policy that excludes sectors withV high ESG risks; systematically analyzing ESG risks prior to each investment andV throughout the duration of the relationship; having a pragmatic approach to the ESG challenges and objectivesV of the investments in terms of their size and development challenges; engaging in a systematic dialog on ESG with the managers of theV portfolio companies.
To assess the ESG performance, the Equity Management Team of AEW Capital Management has developed a proprietary ESG rating system based on measurable environmental indicators (energy and water consumption, carbon intensity, waste management), governance indicators (diversity, independence of the Board of Directors, compensation of the CEO) and social performance assessed by third-party non-financial rating agencies.
Vauban Infrastruture Partners, an affiliate specializing in infrastructure investments, invests for the long term to create sustainable value. Its investments mainly concern the energy transition (urban heating networks, charging stations for electric vehicles), social services (hospitals, schools), mobility (trams, high-speed train lines) and access to digital technology (roll-out of fiber optic networks). ESG issues are systematically analyzed for all assets using a proprietary methodology and this analysis is carried out in line with the SDGs.
NIM International, which acts as a services and fund distribution platform, offers its clients a range of solutions combining the requirement of financial performance with robust extra-financial analysis. The ESG approach is applied according to the management activities: for assets under management delegated to affiliates, the ESGV approach is that of the affiliate in charge of management; for assets managed by NIM Solutions the ESG approach is basedV on two pillars: responsible investment skills developed by several affiliates, and the rigorous selection of this expertise by the NIM Solutions teams; for the structuring activity (proposal of tailor-made investmentV solutions), when client constraints allow it and while maintaining performance, ESG considerations are integrated: in particular the selection of ESG indices and funds as sub-existing and carbon footprint offset services.
proprietary qualitative analysis (including ESG experience of theV investment team, ESG integration in the investment process of the underlying funds, voting practices).
In 2020, NIM Solutions launched a range of three SRI-labeled ESG funds (Natixis ESG Conservative, Natixis ESG Moderate and Natixis ESG Dynamic). This range gives clients access to all the socially responsible expertise of NIM affiliates in the form of funds of funds, whereas this type of offer is very rare on the market (only two funds of funds were previously labeled SRI).
environment: CO2 emissions, electricityV consumption, waste recycling, social: quality of employer-employee communications,V employment of people with disabilities, employee training, governance: transparency of executive compensation,V fight against corruption, increasing the gender balance on Boards of Directors.
Ongoing constructive dialog is established with the companies in which the fund managers invest to encourage them to take better account of environmental, social and governance issues in their strategic planning.
After performing preinvestment ESG audits, Naxicap Partners operational support is offered to these companies, whether systematically includes an ESG clause in its shareholders’ conducted by the Naxicap ESG team or by external service providers. agreements. This clause includes a commitment to implement a detailed action plan and provide regular information and responses to ESG questionnaires (120 indicators). In addition, Naxicap Partners works with the management of the companies in its portfolio to establish a plan to reduce greenhouse gas emissions and adapt to climate change. In 2020, Naxicap set up a ESR Committee to assess the degree of progress of the ESG action plans and the support needs of portfolio companies. This systematic and regular review of the portfolio aims to better target short- and long-term equities and to provide investment teams with an ESG mapping of the companies in the portfolio. Depending on the results and where applicable, more
In terms of voting policy, the Asset Manager regularly participates in General Meetings of companies in which the investment vehicles under management have holdings. Failing this, Naxicap Partners grants powers to other shareholders of the Company for the purpose of representing it.
Except at Seeyond, and only for certified funds at DNCA.(1) Except at Thematics AM, and only for index funds at Seeyond.(2) /
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Natixis is also a confirmed leader in responsible company savings amount to more than €3.5 billion. With total assets of over plans in France with SRI-certified assets under custody with Natixis €8.9 billion, Natixis’ market share exceeds 25.5% in SRI and 27.2% in Interépargne amounting to €7.6 billion. Solidarity-certified funds solidarity investments in France.
Promoting responsible investment in its product offering being one of Natixis Interépargne’s strong commitments, the FCPE offering was supplemented in 2020 by two funds: the Selection Mirova Environnement fund, launched in June 2020,V which offers savers the opportunity to invest in European companies developing solutions to the challenges of the environmental transition (in line with a global warming scenario of up to 2°C) and participating in the program creating sustainable growth; the Selection Thematics Water fund, launched in September 2020,V whose objective is to invest in companies in the water sector: supply, pollution control, infrastructure.
The Insertion Emplois Dynamique fund receives the “Relance” label Mirova’s Insertion Emplois Dynamique fund, which was launched in 1994, was one of the first solidarity-based “90/10” funds dedicated to job creation in France. The solidarity allocation (10% of assets) finances structures with a positive social impact across the country in conjunction with France Active, while the equity allocation (90% of assets) has invested since 2014 in listed companies planning to create jobs in France over 3 years, based on analysis performed by Mirova.
Mirova and France Active step up their actions in support of socially responsible companies For 25 years, France Active and Mirova have worked the Mirova Solidaire fund. In addition to its financial together to make the development of SSE companies commitment, Mirova is preparing an ambitious possible. Faced with the specific needs of these recovery and recapitalization program with France entrepreneurs in this period of crisis, France Active is Active. Thanks to the establishment of an ad hoc expanding its offer to companies wishing to relaunch partnership, Mirova will be able to co-invest on a themselves via its Relaunch Pact, specific to this phase regular and structured basis alongside France Active with the Solidarity Breakdown Loan, endowed with Investissement, via the Mirova Solidaire and Insertion €30 million. Mirova contributes €1 million at zero Emploi Dynamique funds.
The volume of social bonds issued in 2020 amounted to $142 billion, almost eight times more than in 2019, and 18 times more than in 2017 ($7.9 billion), the year in which the Social Bonds Principles were launched by the ICMA.
In 2020, Natixis participated in the arrangement of the issues of 55 sustainable bonds and social bonds, and supported Unédic, CADES, IBRD, IsDB and the Walloon Region in their social bond issues related to the COVID-19 crisis.
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This issue is now the largest social bond ever issued, for an amount of €5 billion on the basis of a historic order book for CADES, amounting to nearly €16 billion.
Natixis co-chaired the working group on Sustainability-linked Bonds objectives, characteristics of the obligation, reporting and Principles (SLBP) under the responsibility of the ICMA, defining the verification. These bonds can be used by issuers that play an tools to support clients in a long-term transition. These principles important role in the transition but are not able to issue green bonds define five essential components when issuing such bonds: selection or are reluctant to do so. They also make it possible to integrate the of key performance indicators, definition of sustainable performance entire corporate strategy and align it with the SDGs.
Natixis supports Enel with an innovative Sustainability-linked bond format Natixis acted as Joint Bookrunner for the launch of a energy”. The obligation is linked to the performance Sustainability-Linked Bond for Enel. This issue, which is indicator “percentage of renewable energy capacity part of this innovative format, was over-subscribed six installed”, the target being to reach 60% by times, with a total order book of £3 billion. The funds December 2022. If this target is not achieved, a 25 basis will be used to meet the SDG “Clean and affordable point increase in the coupon will be applied.
It therefore encourages financing solutions with the most positive impact (“green” transactions) and penalizes negative impact (“brown” transactions). All loans with a green color rating receive a discount of up to 50% in their weighted assets, while the weighting of loans with a negative impact on the climate and the environment is increased by up to 24%. It has proved to be a concrete way of triggering behavioural change amongst teams in order to develop sustainable finance.
credit risk assessment: the GWF is used to monitor the bank’sV overall climate transition risk as well as for projecting the balance sheet until 2050 as requested by the French banking regulator ACPR as part of an inaugural climate stress test exercise currently being completed; strategic dialogue with clients and the resulting sustainableV finance product structuring; active portfolio management, including distribution andV securitization; commercial strategic planning, including client tiering, priorityV setting and identification of sustainable finance opportunities. In 2020, an extensive screening exercice was completed to assess both the transition potential of existing clients’ business models as well as the opportunity to develop sustainable finance solutions for clients with exposures rated “brown”.
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These indicators have been monitored on a quarterly basis since mid-2020, and nearly 100% of the dedicated loan portfolio will be rated in the first half-year 2021.
This methodology is scalable, and may include the criteria of the European classification – or taxonomy – as the European Commission’s “Sustainable Finance Platform” progresses.
GWF distribution of the Corporate and Investment Banking balance sheet resulting from the impact analysis relating to 70% of the project scope at 31/12/2020
In 2020, CIB’s infrastructure financing teams arranged 19 new deals totaling €1.5 billion, representing installed capacity of 6,510.4 MW: 1 onshore wind farms with a total capacity of 119 MW;V
3 offshore wind farms with a total capacity of 1,839 MW;V
13 PV and concentrated solar power projects with a capacity ofV 2,138.4 MW; 1 hydroelectric facility with a capacity of 1,689 MW;V
Natixis sole coordinator of the green loan for the largest floating offshore wind farm in the world As part of the “Kincardine” project providing for the installed on semi-submersible floating structures and construction of a floating wind farm in the south-east will be the largest floating offshore wind farm in the of Aberdeen in Scotland, with an installed capacity of world. Thanks to the certification process carried out by 50 MW, Natixis acted as the sole coordinator of the Natixis, the project’s financing obtained the “Certified green loan to finance the project amounting to Climate Bond” label from the Climate Bonds Initiative £380 million. Kincardine is composed of six turbines (CBI).
Non-renewable energy: coal, oil, gas, nuclear €2.52bn €0.89bn €2.48bn €1.35bn €1.88bn €0.89bn
The portfolio breaks down as follows: Regional breakdown of the renewable energy portfolio (% of outstandings)
REDEN Development Chile Solar and Natixis secure financing for around twenty solar power plants in Chile During the year 2020, REDEN Development Chile Solar and Natixis successfully concluded a financing of $81.5 million for a planned portfolio of 100 MWp for around twenty solar power plants in Chile. Natixis acted as the sole lead arranger, hedging provider, credit card issuing bank and administrative agent, and provided a firm guarantee for 100% of transactions. This project is part of the country’s objective to achieve an installed electricity production capacity from solar and wind energy of 20% by 2025, and to strive for carbon neutrality in the long term.
Mirova launched its fourth renewable energy infrastructure fund, Mirova Eurofideme 4, in 2018. At the end of November 2019, Mirova finalized fundraising for €857 million, far exceeding its initial target, and closed the biggest renewable energy fund dedicated to the European market. In 2020, a strategic partnership was forged with Engie in the biogas sector and enabled the fund to be deployed more quickly than anticipated. The Mirova Eurofideme 4 fund acquired a 50% stake in Dana Gaz, which owns nine methanation units in operation (for an installed capacity of 17.5 MW), developed and built by Engie. The biomethane sector will contribute to the revival of a circular economy by recycling waste, creating jobs and supporting agriculture.
Building on its success with Fideme (2002), Eurofideme 2 (2009), Mirova Eurofideme 3 (2014) and Mirova Eurofideme 4 (2018), Mirova is working on the launch of a new generation of funds dedicated to financing the infrastructure of the energy transition. The Fund will continue the strategy of its predecessors by offering its investors renewable energy projects built in Europe, using proven technologies (wind, solar, hydraulic, biomass and heating networks) and through investments in minority partnerships or majority shares with manufacturers in the sector, or even direct equity investments. It will also continue to invest in storage capacities associated with renewable energy plants and in low-carbon mobility.
Launch of the Smart Cities fund Seven out of ten people will live in cities by 2050: finding solutions to the challenges of accelerated urbanizationV means meeting infrastructure needs, connecting the city of tomorrow and developing a sustainable city (in particular through access to electricity, air quality and waste collection).
The Smart Cities fund, developed by Ostrum and taken over by DNCA following the merger with LBPAM, invests inV a selection of innovative companies that contribute to the development of the city of tomorrow: smart buildings, digitization, green mobility and sustainable cities.
The specific market context in 2020 has led the real estate financing teams to position themselves more strongly on the financing of real estate project development. A total of seven sustainable property transactions were completed during the year: three sustainable loans (corporate loans), including two underV which Natixis was sutainability coordinator, and the modification of the terms of another existing corporate financing to include sustainable clauses; the signing of four green mortgage loans, including two for whichV Natixis was Sustainability Coordinator.
Number eight in the world for BPCE, Natixis’ parent company, among renewable energy infrastructure financing banks (source: IJGlobal’s infrastructure and project finance (1) league table report 2020).
492 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 participated in the assessment of the Global Real Estate Sustainability Benchmark (GRESB), which covers both environmental (measures to reduce the environmental footprint) and social (stakeholder relations and social impact of activities) topics). and governance (policies and procedures). Six of these funds obtained the Green Star level in 2020, showing an improvement in the rating compared to 2019, including one logistics fund which reached the Green Star 5* rating.
In addition, AEW CILOGER has set up since January 1, 2020 for buildings located in France, for which it manages the energy contracts, the supply of electricity and gas from 100% renewable sources, which will contribute to reducing the carbon footprint of the assets under management.
Italo Nuovo Trasporto Viaggiatori: innovative financing solution that meets its sustainable development Goals Natixis supported Italo – Nuovo Trasporto Viaggiatori, the leading private rail operator in Italy, in developing its sustainable ambitions by offering it an innovative financing solution.
This is the largest green loan ever made in the transport sector and the first to include sustainable development Goals in line with the Sustainability Linked Loan Principles.
As global coordinator, bookrunner and green coordinator, Natixis has structured a complete financing solution comprising: a syndicated sustainability-linked loan of €1.1 billion, whose interest margin will be indexed to sustainableV development indicators, in particular the number of passengers per km and CO2 emissions (including 900 million dedicated to the financing and refinancing of low-carbon rolling stock); a sustainability-linked interest rate swap with its own incentive mechanism.V
This incentive mechanism, extended to derivative transactions such as swaps, marks a new step forward in the field of sustainable finance.
Mirova factors in sustainable mobility by encouraging investments in securities issued by vehicle manufacturers and equipment suppliers that propose technical solutions to solve the challenge of offering more and more people mobility solutions while reducing the environmental and social impacts linked to transport.
The second concerned the minority stake of MEF4 in a company specializing in the installation and operation of charging infrastructures for electric vehicles (IRVE).
As part of the Eurofideme 4 fund, the MEF4 mobility package was launched, which has the possibility of investing up to 10% of the fund in low-carbon mobility. At the end of 2020, MEF4 had invested €11 million through two transactions. The first consisted in financing a fleet of electric car-sharing vehicles during a call for tenders by the City of Paris for the retrofit and operation of former Autolib terminals.
Green bond issuers undertake to use the funds raised to finance environmental performance such as energy efficiency, renewable projects with a positive impact on the environment. Unlike traditional energy, sustainable transport or water management. As of the end of bonds which can finance all the issuer’s activities, a green bond 2020, the green bonds market totaled $222.8 billion(1). finances traceable investments in measures to improve
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Natixis acted as Sole Green Structuring Advisor and Joint Bookrunner for Engie’s Green Bond: this transaction was over-subscribed for an amount of €2.5 billion, with an order book amounting to €9.5 billion at closing. This obligation will contribute to Engie’s ambition to become the world leader in supporting businesses and local authorities towards carbon neutrality. The funds will be used for renewable energy production, energy storage, transmission and distribution infrastructure, energy efficiency and CO2 capture.
Ostrum AM manages outstanding green bonds amounting to €11.5 billion, through its funds and mandates, i.e. a doubling of outstanding amounts following the merger with LBPAM.
In January 2020, Mirova supported the launch by Natixis Assurances of its first green bonds strategy, for an initial amount of €30 million, supplemented in July 2020 by a new Euro green bonds strategy. These two strategies propose a portfolio aligned with a global warming trajectory of less than the 2°C driven by the Paris Agreement. Natixis Assurances has entrusted Mirova with the management of a portfolio that should reach several hundred million euros.
Structuring of a first financing platform of the “Low carbon aluminum” type Natixis is committed to extending the scope of sustainable finance to all financing instruments, including trading activities. Thus, Natixis supported Trafigura in the design and structuring of a first financing platform of the “Low Carbon Aluminum” type of up to $500 million. This platform was designed to meet the growing demand from downstream manufacturers for low-carbon aluminum and to help upstream producers accelerate their transition to low-carbon technologies.
The environmental transition of many industries will largely rely on the creation of a low-carbon aluminum value chain from extraction to end use. This financing is the first step in this process, notably by mobilizing the key players in this value chain.
Structured solutions based on the indices developed since 2015 (1) have been proposed with innovatived forms – structured notes, green bonds and equity linked bonds – to meet the need for investment in sectors contributing to the energy and ecological transition with a range of solutions for both retail and institutional investors in different geographical regions.
ECO5 index: Euronext index launched in 2018, Climate Orientation, Solactive Climate and Energy transitions indexes.(1)
The Green Weighting Factor (GWF) created in 2019 will allow Natixis to decarbonize its balance sheet and gradually align the impact of its financing activities with the central aim of the Paris Agreement, i.e. to limit the global temperature rise to +2°C in relation to the pre-industrial era. Natixis intends to achieve this long-term objective while continuing to finance all economic sectors by increasing the presence of green solutions in its financing activities and helping its clients in the transition to lower carbon activities(1). Further work is currently underway to translate the color ratings resulting from the GWF methodology into a temperature trajectory. Natixis undertakes to use the GWF initiative to set climate impact targets for each of its banking activities. Climate impact targets will be defined with different time horizons (short, medium and long term) at bank level, and for each business line in 2021.
Natixis is contributing to the objectives of the Paris Agreement in all its financing and investment activities by applying its exclusion policies on the coal industry, tar sands, oil and shale gas exploration in the Arctic (see Chapter Chapter [6.4.3] Management of social and environmental risks).
As well as applying exclusion policies, several Natixis entities have also committed to aligning their investments with the goals of the Paris Agreement. NIM also helps its affiliates to better take into account climate issues in their strategies, in particular through a specific working group, co-led by Loomis Sayles, enabling affiliates to exchange best practices.
The integration of climate issues is key to Ostrum AM, a reflection on the carbon measurement of the portfolios was initiated in 2019, and a new methodology for alignment with the IPCC temperature scenarios was initiated in 2020, in order to be able to report to its clients on the impact of their portfolio. Dedicated training courses have been set up and the climate theme is systematically incorporated into direct discussions with company management. In addition, a TCFD report will be published in 2021.
On open-ended funds concerned by the carbon intensity measurement (i.e. 13% of assets under management), the carbon intensity of Ostrum’s portfolios amounts to 185.8 t/eCO2 per million euros of revenue at the end of 2020.
Using this method, Mirova estimates that the climate scenario for all its equity, bond and infrastructure portfolios stands on average at 1.5°C, compared with 3.5°C for the MSCI Europe index and 3.5°C for the MSCI World index(3).
Loomis Sayles has undertaken other substantive work on climate change, including the use of tools such as climate scenario analysis as recommended by the TCFD. Loomis engaged the consulting firm MANTLE314 for a second round of climate change-related projects, including an assessment of the next steps of its TCFD reports and a review of climate-related regulations.
Aware of the importance and urgency of the climate challenge, DNCA has factored climate issues into its investment approach with the conviction that the ecological transition is both a risk factor and a source of investment opportunities.
DNCA launches the DNCA Invest Beyond Climate fund DNCA places the climate issue at the heart of the management strategy of this SRI fund launched in April 2020, by applying a management methodology based on a two-level analysis: an analysis of Transition conducted on the way in which the Company decarbonises its own activities to achieveV a minimum trajectory of 2°C (carbon footprint on scopes 1, 2 and 3, brown share of revenue, alignment of 2°C according to SBT); an analysis of Contribution to measure the positive contribution made by the Company’s products and servicesV (green share of revenue, R&D spending or green capex, CO2 emissions avoided).
DNCA Invest Beyond Climate meets the requirements of the Paris Agreement by excluding companies with a negative green contribution and limiting the share of companies without contribution to 30%.
risks associated with the energy transition (measurement of coal,V oil or gas reserves); impact measurement (measurement of green energy productionV or impact investments).
Naxicap Partners has supported the International Climate Initiative to help achieve the objectives of the Paris Agreement since 2016. As a signatory, Naxicap has undertaken to: recognize that climate change has an impact on the economy,V presenting risks and opportunities for business; take climate issues into account throughout the investment period;V
In 2020, Naxicap published for the first time, for the fiscal year 2019, all the GHG emissions of its portfolio companies, including scope 3 which represents the majority of the impact of companies on the market climate. Emissions were estimated using an economic modeling tool developed by PwC, combining financial data and economic models and covering the entire value chain. Scopes 1, 2 and 3 were estimated for 88% of Naxicap Partners assets under management in 2019 for an average carbon intensity of 250 t of CO2/million euros invested.
The fight against climate change is a priority for AEW Capital Management and transition risks are integrated throughout the life cycle of an investment. This includes political and technological risks as markets around the world transition to a low-carbon economy. With respect to the portfolios for which the Company has metrics (these portfolios represented in 2019 approximately 44% of the Company’s overall US real estate portfolio on a market value basis), AEW expects to meet or exceed its target of a 1.5% year-on-year reduction of water and energy consumption, GHG emissions (scopes 1 and 2) and waste production by 2020.
Harris Associates takes into account climate risk on a case-by-case basis, depending on the exposure of individual companies to material risks related to climate change. For example, the likelihood of costs due to climate-related regulation is considered, as well as potential market growth opportunities in areas such as clean energy.
Since December 2020, NIM solutions has access to Trucost’s climate data to holistically support its clients in measuring and integrating climate criteria into their investments. This will be done through various services: portfolio analyzes through a climate prism, making it possible toV take stock of customer portfolios (carbon intensity, alignment with the Paris Agreement, physical risk, transition risk, etc.). This step enables customers to be supported in the implementation of their socially responsible policies; integration of climate criteria in the construction of supportV solutions (construction of strategic allocation or selection of investment vehicles, for example); investment solutions integrating clients ‘climate considerationsV through multi-asset class products, structured products and/or carbon offsetting products; extra-financial reports including the measurement of carbonV emissions, carbon intensities, portfolio temperature, allowing clients to have transparency about their investments from a climate perspective; a strong presence in methodological research and developmentV in this sector where the issues of convergence of standards and practices are essential. This will include the co-publication of a “White Paper” with Trucost on the issues of methodological consistency of a common analysis framework for alignment with the Paris Agreement for multi-class asset portfolios.
Natixis is aware of the major issue of the deterioration of natural capital and, as a bank, asset manager and insurer, is committed to taking concrete action to preserve it. The Earth is now facing an unprecedented mass extinction of living species: more than 60% of wild animal populations have disappeared in the last 40 years(1). One million animal and plant species are threatened with extinction out of the estimated eight million on the planet(2).
By making these commitments, Natixis includes biodiversity at the center of its ESR system, along with climate change. Aware that reducing its indirect impact is an important lever for contributing to the preservation of natural capital, Natixis places biodiversity at the heart of its discussions with all its customers and stakeholders. This approach is part of a more global action to support its customers in their environmental transition.
The impact and reporting measures are based in part on the Green Weighting Factor, an innovative mechanism for allocating the capital of each financing according to its impact on the environment, which Natixis introduced in September 2019.
Scope of activity (b) Achievements at the end of 2020 3. Measure impact Evaluate the impact of our customers (material sectors)
Operational since September 2020: 100% of new corporate V clients are covered. The existing customer portfolio is assessed according to the review schedule; for the most sensitive counterparties: in-depth analysis 2.
Natixis 0 plastic cups purchased directly by Natixis internationally (3.5 million cups avoided per year). Plastic water bottles in auditoriums and meeting rooms have also been eliminated. Cups managed by external service providers remain to be eliminated.
Train and raise awareness among our employees through the organization of workshops on collaborative vegetable gardens 10 workshops/year from 2020.V
Natixis 25 workshops and two open days for the three collaborative vegetable gardens were held in 2020.
Participation of Natixis and Mirova in the Taskforce on Nature related Financial risk and Disclosure
Natixis and Mirova have been selected to contribute to the Taskforce on Nature related Financial risk and Disclosure (TNFD), whose work will start in early 2021 for two years. The TNFD is the result of a partnership between the NCFA, the UNDP and the WWF, with the support of the British government. On the same model as the TCFD, but making it possible to extend to nature-related issues, the TNFD will provide a framework to meet the measurement and data needs of banks so that they can better understand dependencies and their impacts on nature.
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Through this mechanism, Tereos is committed to sustainable performance targets, through key indicators focusing on natural capital: annual reduction in water consumption per ton of sugar caneV processed; annual increase in sugar cane certification.V
Each year, Tereos will benefit from a reduction in the margin rate subject to achieving its sustainable performance targets. An independent audit will validate the achievement of these objectives.
First Sustainability-Linked loan for Touton, incorporating criteria related to natural capital Natixis acted as sole Arranger, Facility Agent and ESR coordinator to finalize the first Sustainability-Linked loan for its long-standing client Touton, specialized in the marketing and processing of commodities (cocoa, coffee and spices).
Sustainability objectives have been incorporated into this $91 million facility to support the implementation of a responsible supply chain: improved farming practices, and training in sustainable agriculture for communities;V
The GSH published a research report in 2020(3) on the theme of water with a threefold objective: decipher the main challenges and risks related to water;V
AEW CILOGER integrates biodiversity into its SRI policy and management practices. A biodiversity indicator is included in the ESG audit that it has developed. This makes it possible to assess the building’s initial performance and improve its management through a dedicated action plan. This indicator is used on three funds or mandates corresponding to 24% of the portfolio managed.
Specific actions are proposed to investors such as the definition of a biodiversity strategy for a warehouse portfolio and the integration of biodiversity into the Innov 2019 project.
On this occasion, studies were carried out to create or develop biodiversity in ten buildings. Greening projects are underway or planned.
Since 2017, Mirova has had a platform specializing in investment for change, and to protect local regions, biodiversity, soil and marine biodiversity conservation and natural capital. Mirova develops resources, with €510 million invested in natural capital. innovative investment solutions to mitigate and adapt to climate 2020 KEY EVENT
Mirova: launch of a consortium on biodiversity impact measurement AXA IM, BNP Paribas AM, Sycomore AM and Mirova have come together in a consortium to develop market standards in terms of biodiversity indicators.
This statement follows a call for expressions of interest for a biodiversity impact measurement suitable for investment. The consortium formed by Iceberg Data Lab and I Care & Consult was selected as the data provider. The tool, which is currently being expanded, will enable investors to integrate impacts on nature and biodiversity into their risk assessments and research. In addition, the transparency of the approach selected will positively contribute to the required convergence towards more standard and comparable indicators.
After supporting a first project in Peru in favor of agroforestry systems for small coffee producers, three land restoration projects in 2019, Mirova invested in three new projects in 2020: a social enterprise that helps local populations to plant. trees, an agroforestry project in Bhutan and a sustainable forestry company in Ghana and Sierra Leone.
The SOF is already committed to the financing of seven projects, in particular in 2020 the support for the development of Nextprotein (production of alternative insect-based proteins) or Recycling Technologies (supplier specializing in plastic recycling technologies).
Natixis launched in 2020 the first 100% sustainable BP and CE campaign, “Sustainable Ambition”, combining a green bond and the Water & Ocean index developed in 2019: the Green Bond aims to finance green buildings and is earmarkedV for loans from Groupe BPCE entities (development of new buildings or acquisition of existing buildings, renovation or improvement of energy efficiency); the Euronext Water & Ocean Europe 40 Index is composed ofV 40 European companies selected for their contribution to the preservation of water resources and the oceans (equipment and services contributing to the resolution of water-related problems, reduction of pressure on the environment water resources, management of water pollution risks).
AEW chairs the Circolab non-profit created in February 2018 to promote the circular economy in the construction and real estate sector and in particular to encourage the reuse of materials via various initiatives: publication of reuse guidelines, promotion of best practices, development of shared tools, creation of an ecosystem of real estate sector players. Circolab currently has around seventy members (public and private sector contracting authorities, construction firms, building materials manufacturers, project managers, and associations).
To support a more responsible economy, Thematics AM has developed a strategy on the subscription economy, which aims to invest in companies whose business model is based on subscription. In a rapidly changing world, this fund invests in companies that are benefiting from changes in consumption habits caused by: the emergence of digital technology, which favors the personalizationV and contractualization of subscriptions/desubscriptions; the changing desires of new consumers, who favor the experienceV rather than the ownership of a good; the contribution to a service approach by companies, based on theV functionality of their production and the sustainability of their approach.
As such, the fund is invested in listed companies that provide products or services on a subscription basis, thus promoting a more responsible economy. Launched in December 2019, the fund’s assets amounted to €148 million at the end of 2020.
Natixis Assurances is also committed to limiting the consumption of resources: when it comes to insurance of multimedia devices, Natixis Assurances favors repairs to replacement whenever possible. In the event of a replacement, the policyholder is offered a refurbished device rather than a new refit.
At the end of 2020, Natixis Assurances started a project on the use of re-used parts after a car accident, with the aim of developing a test in 2021 in conjunction with the networks of experts, garages and scrap recyclers.
Number of transactions analysed by the ESR Risk team 224 189 150
Percentage of assets most exposed to climate transition risk (a) 14.4% 17.9% 13.1%
Number of employees trained in ESR risks in business lines and support functions 1,240 na na
Percentage of the total amount of RWA rated "Dark brown" under the Green Weighting Factor methodology(a) Amount of coal exposure taking into account non-dedicated corporate assets and project financing (project financing: €71m for 2020)(b) Amount of coal exposure taking into account project financing only (c)
Environmental, Social and Governance (ESG) risks are factored into financing and investment activities as part of a global approach involving the business lines, the ESR Department and the control functions. The approach includes drafting and applying ESR policies in the most exposed sectors, determining excluded sectors, and assessing and monitoring ESG risks on transactions and counterparties using various tools and processes(1).
From October 2015, Natixis undertook to stop financing coal-fired power plants and thermal coal mining around the world. It also undertook to no longer provide general-purpose corporate financing to companies for which coal-fired power plants or thermal coal mines account for over 50% of their activity. This commitment, which was the subject of a sectoral policy covering financing, advisory and Capital Markets activities and other products and services, was strengthened in June 2019, with Natixis extending its exclusion criteria to all infrastructure projects (ports, railways and any other infrastructure or facility) linked to thermal coal. It also lowered the exclusion threshold, which now applies to financing or investing in companies deriving 25% or more of their business from coal-related activities (previously 50%).
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In December 2017, Natixis committed to discontinuing all financing of, or investment in, tobacco producers, wholesalers, and traders as well as tobacco product manufacturers.
In light of this commitment, Natixis published a detailed account of its tobacco sector policy in May 2018(1). This policy applies to Natixis, Ostrum and Natixis Assurances’ financing, investment and services activities.
Breakdown of the number of transactions reviewed by geographic area (2018-2020)
Details of the analysis and decision-making process, the resources used and full information on transactions audited in this way are available in the annual Equator Principles report (published before July 31 each year and available on the Natixis website(1)).
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In the interest of establishing lasting relations with its clients, the objective is to raise awareness among the business lines – before a credit decision is made – of all the situations that can give rise to reputational risk, and where necessary to consider appropriate measures. This analysis will be systematically applied when the screening solution described below is rolled out.
Deployment of an ESG risk training campaign To support the launch of the ESR Screening process, a far-reaching training and acculturation work was carried out throughout the year. In particular, an ESG risk training campaign was set up for target populations within the business lines and the Risk division.
In total, Natixis employees attended 1,501 hours of training on ESG risks in 2020.
Several additional projects were initiated at the same time, with the aim of establishing a duty of vigilance plan for Natixis employees at its own offices, and also for its purchases of products and services. Work was also begun to expand the due diligence procedures implemented in respect of the bank’s financing activities. As such, particular attention is paid to climatic risks: physical and transition risks (see Chapter [6.5.3]).
In 2017, Natixis participated in a joint initiative involving several French Banking and Insurance companies and signed the Responsible Purchasing Charter. The aim of the charter is to encourage the suppliers of the signatory banks to implement duty of vigilance measures as part of their overall ESR approach. The charter sets a series of commitments that both parties are required to observe, based largely on the basic principles of the United Nations Global Compact in the areas of human rights, working conditions, the environment and anti-corruption(1).
the supplier action plan must be implemented where ESR grade isV below average; monitoring of the supplier’s action plan.V
BPCE Procurement has provided training to familiarize the procurement and ESR functions with the system, in the form of morning procurement meetings, classroom-based lessons and specific duty of vigilance e-learning courses. 100% of BPCE Procurement buyers responsible for these procurement categories have received training.
6 2020 NON-FINANCIAL PERFORMANCE REPORTManaging environmental, social and governance risks 508 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
Internationally, the mapping prepared by the Human Resources Department was enhanced in 2020 with the collection of handbooks describing the rules applicable in the various Natixis sites. It is thus verified that the working conditions of Natixis employees comply with local regulations or improve them, particularly in terms of working hours and dismissal conditions.
The safety and security of Natixis’ employees and service providers are of vital importance. In 2019, the Security Department at Natixis in Paris rolled out solutions for all its offices focused on two major aspects: early warning and self-assessment.
For several years now, Natixis has addressed the human rights and environmental risks incurred by some of its financing activities, most notably by applying the Equator Principles for project financing or specific policies for sensitive sectors.
The environment and climate emergency is one of the biggest challenges facing the world’s economies and every one of us. The financial sector can and must spearhead the ecological transition by channeling funds into a sustainable economy. As a provider of financial solutions, Natixis has a role to play in this movement.
Measuring the climate change risks associated with our activities: local works
Since 2016, Natixis has been part of a working group to improve recognition of these risks: specifically, and in line with the Autorité de Contrôle Prudentiel et de Résolution (ACPR – French Prudential Supervisory Authority for the Banking and Insurance Sector), BPCE and Natixis participated in a working group addressing Article 173, Provision V of the Energy Transition for Green Growth Act of August 17, 2015, with a view to drawing up stress test scenarios. The working group reviewed the sectors most exposed to physical risk and to transition risk.
In 2019, Natixis took part in the banking sector discussions with the ACPR on two major topics: climate strategy and governance and climate risk metrics. These meetings allowed banks to present and compare their systems and will allow the ACPR to publish a guide to best practice in taking climate risk into account in the first quarter of 2020.
Over and above the GWF methodology described above, this initiative has raised awareness of the risks and opportunities associated with climate change among business line and risk management teams. Insofar as since September 2019 each loan file reviewed by the Credit Committee and covered by the initiative must be rated for its climate impact, in-depth discussions are held during the loan approval process on the consequences of climate change on the borrower’s activity. Further work is currently underway to translate the color ratings resulting from the GWF methodology into a temperature trajectory. Natixis undertakes to use the GWF initiative to set climate impact targets for each of its banking activities. Climate impact targets will be defined with different time horizons (short, medium and long term) at bank level, and for each business line in 2021.
Despite this, financial institutions lack the tools needed to analyze portfolio exposure to physical risks. Natixis has therefore committed to the ClimINVEST initiative launched by a consortium of European climate change experts, notably I4CE and Météo France, to produce ideas for such solutions.
Specific work was carried out in the area of real estate Asset Management: AEW Ciloger conducted a vulnerability assessment audit on nineV pilot buildings. Recommendations to improve the resilience of buildings were presented to investors as well as the impacts on the values of the buildings. The use of these audits will be proposed to investors and in particular their integration into the acquisition process. At the end of 2019, the Darwin project on physical and transition risks was launched, aiming to define a governance, a strategy and objectives related to all these risks, based on the TCFD framework. This project should be completed in early 2021; AEW Capital Management hired Four Twenty Seven, a companyV that assesses the physical impacts of climate change, to conduct a climate risk assessment (e.g. hurricane, typhoon, flooding, sea level rise, heat stress, etc.). This analysis is used to assess risks as part of the due diligence process and to budget for costs in order to improve the resilience of an asset if necessary. AEW will continue to bring on Board the remaining portfolio in 2021.
Direct impact: Each year, Natixis measures its carbon emissions and takes a number of measures to limit its own impact on the climate, namely: carbon neutrality of power consumption via renewable energyV supply contracts; energy-efficient buildings;V
Green Weighting Factor: To step up its transition to green finance, Natixis is developing a tool to gradually bring its financing activities into line with the Paris Agreement goals for the climate. Work is underway to define a temperature trajectory. Climate impact targets will be defined with different time horizons (short, medium and long term) at bank level, and for each business line in 2021.
Investment products helping to combat climate change: Natixis Investment Managers also finances renewable energy via the investment funds proposed by its affiliates. Natixis Assurances was supported by Mirova in January 2020 for the launch of its first Green bonds strategy, for an initial amount of €30 million, supplemented in July 2020 by a new Green bonds Euro strategy. These two strategies propose a portfolio aligned with a global warming trajectory of less than 2°C.
Exclusion of carbon-intensive issuers: since 2015, Natixis has ceased all financing and investments in the coal sector (exclusion threshold of 25% applicable to general purpose corporate financing see section [6.4.1]) and has also undertaken to stop financing oil sands and oil exploration in the Arctic (30% exclusion threshold applicable to general purpose corporate financing - see section [6.4.1]).
Energy consumption from renewable sources in France (in %) 100 100 100
Distance traveled by plane (in thousands of km) 4,302 27,441 33,790
Percentage of electric and hybrid vehicles in the vehicle fleet (in %) 20 15 9
For the purpose of managing its buildings and offices, Natixis has chosen to occupy buildings whose design and operation guarantee optimal environmental performance. The bank has 11 certified buildings (HQE (1), BBC (2), HPE (3) or BREEAM (4) certifications), covering a total surface area of 101,662 m2 (compared to 100,421 m2 in 2019). The two Natixis datacenters have ISO 14001 certification.
Given the high level of digitization throughout Natixis’ business lines, digital sustainability is a key challenge for Natixis. Information systems and technologies have a significant impact on the life cycle of the equipment they require: on the environment: loss of biodiversity, consumption of energyV and natural resources, greenhouse gas emissions, pollution; on society: accessibility of services and e-inclusion, transformationV of the business lines, working conditions in the supply chain.
Since 2018, Natixis has embarked on a Responsible Digital approach, which was strengthened in June 2019 with the signing of the Responsible Digital Charter with the INR (Institut du Numérique Responsable).
The Natixis IT Department structures its Responsible Digital policy around five fundamental principles in line with the charter: to optimize digital tools to limit their impact and consumption;V
This commitment is implemented within Natixis through actions structured around the three pillars: Green for IT aiming to reduce the impact of digital technology;V
Tech for good putting digital technology at the service ofV sustainable development goals.
Managing and containing growth in Natixis’ stock of IT equipment has been one of the key challenges facing the Infrastructures Department in recent years. The focus is on reducing the number of equipment and using equipment to its full potential. The use of technology such as virtual servers, resource overallocation and data compression means that infrastructure growth can now be absorbed without significantly increasing the number of devices required.
Since 2017, the optimization of the printer fleet has led to a reduction of nearly 37% in the number of devices used (individual and shared printers) at Natixis, and continued in 2020 with the elimination of an additional 150 printers an estimated reduction in greenhouse gas emissions of 51 TCO2e.
The Telephony IT team extends the period of use of employees’ professional smartphones by one year, thus increasing to three years of use (-58 TCO2e in 2020). In 2020, 4,800 computer screens were reused during a move, thus avoiding new acquisitions and the emission of 1,702 TCO2e.
The IT sectors and the Corporate & Investment Banking business lines benefited from the renewal of part of the computing grids to set up a more scalable and densified infrastructure based on more recent and more efficient manufacturer offers. This responsible digital scenario has reduced equipment greenhouse gas (GHG) emissions by 233 TCO2e and energy consumption by nearly 1,500 MWh per year.
Natixis aims to make digital services available to support the social and environmental challenges of Natixis’ businesses and its employees.
Through a digital footprint calculator for its equipment, Natixis has also introduced the enhancement of its IT standards with environmental data, thus enabling us to: evaluate the environmental impact of each project scenarioV (decision support, for example, between reuse and the acquisition of more efficient equipment); measure the impact of digital purchases on Natixis’ carbonV footprint; identify, for each business line, its virtuous optimization levers byV providing the aggregate footprint of its Information System.
The systematization of remote work made possible by IT during the health crisis Natixis has demonstrated its great resilience during the COVID-19 health crisis by adapting to this unprecedented situation: the infrastructures and the IT teams have ensured that employees can work remotely and easily. This adaptation is also due to the provision of mobile solutions (equipment and services) for employees and the introduction of remote working ahead of the health crisis.
The action plan drawn up for 2018, 2019 and 2020 concerned more than 20 Group companies and 26 buildings, i.e. 18,000 employees. It has enabled Natixis to implement new measures to reduce or optimize employees’ commuting and inter-site travel with the adoption of less polluting transport in terms of air quality or noise impact.
In 2020, travel between home and work and between sites was drastically reduced given the health situation and increasing numbers of employees are using bicycles.
Internationally, the Frankfurt and New York platforms have also set up bicycle parks for employees.
Even beyond the specific lockdown periods of 2020 when remote working was introduced, the deployment of remote working has accelerated, with 79% of employees on permanent employment contracts having signed an amendment to remote working at the end of 2020, i.e. more than 8,000 employees.
Natixis encourages its employees to use public transport, which is well established near its Île-de-France sites, and reimburses up to 60% of transport costs. Since 2018, Natixis has also reimbursed employee subscriptions to public bike-sharing services in full.
The survey’s diagnosis has already revealed several action levers that could be applied to encourage the use of modes of transport with lower impacts on the environment, in particular the bicycle (conventional and electric) with the development of parking infrastructure and implementation of a financial incentive.
Natixis has 325 company and service vehicles which traveled 4.4 million km in 2020 compared to 6.5 million km traveled in 2019, a decrease of 32%.
Under its Car Policy, Natixis selects more eco-friendly vehicles – in terms of both CO2 and particulate emissions.
Thus, the share of electric and plug-in hybrid vehicles in the car fleet continued to increase in 2020 with a total of 65 vehicles, i.e. 20% in 2020 compared to 15% in 2019. In 2020, more than half of the cars renewed were replaced by electric or plug-in hybrid vehicles.
In 2020, business travel by plane (-73%) and train (-84%) fell sharply compared to 2019, drastically impacted by the health crisis.
The Workplace Department managing Natixis’ Real Estate ensures optimum resource management by closely managing the various resources used: energy (electricity, heating and cooling utilities), water and paper. Each building it manages has a budget for energy consumption, which is monitored on a monthly basis.
Energy consumption per m2 of usable rented office space (in mwh) 0.14 0.16 0.18
In 2020, energy consumption fell by 12% year-on-year. Reported to the workstation or m2 of usable leasable area, we observed a further 13% decrease in energy consumption between 2019 and 2020. However, this decrease should be qualified by the COVID-19 health crisis.
International platforms have also taken actions to improve the energy efficiency of their buildings by: lighting with the use of motion sensors in Frankfurt, KazakhstanV and Milan, relamping in favor of LEDs or energy-saving light bulbs in Frankfurt, Istanbul, Kazakhstan and Moscow, automatic switching off of lights in Madrid and Milan; the optimization of air conditioning and air renewal systems inV Moscow and Kazakhstan.
With the widespread implementation of remote working linked to the COVID-19 pandemic, 300,000 kWh were saved in building 1251 in New York. This represents the equivalent of two months of consumption based on 2019 energy consumption.
The offices in Porto and Charenton-le-Pont (the largest Natixis office, + 40,000 m2) recorded energy savings of 24% and 16% respectively at the end of October, in less than a year of competition. Porto ranked fourth in the International category at the end of October 2020.
Likewise, since 2018, the Natixis building in Boston – USA, has been supplied with renewable electricity through the commitments of BXP, the building owner. Since 2020, Natixis in Germany has also sourced renewable electricity via a contract with Mainova. All international platforms are mobilized around the same objective.
Apart from electricity, the main energies used are cooling and heating provided by urban networks.
Practically all paper used by Natixis (96%) in France is sustainable forest management-certified (FSC certification(1)). Abroad, Natixis offices in Madrid, Milan and New York have been using recycled paper since 2018.
This internal consumption (reams, letterheads) has been steadily decreasing for several years, following employee awareness-raising initiatives, the deployment of laptops and the rise of remote working. In addition, Natixis has introduced multi-function shared printers and reduced their number (see Chapter [6.6.2] “Digital sustainability”).
Natixis France also encourages its employees to limit their printing through an individual bonus linked to a collective objective of reducing paper consumption.
The New York office also reduced its paper consumption by 74.72% in two years following the implementation of the EASY program in 2018 (see paragraph “Digital sustainability”) and as a result of the COVID-19 pandemic.
My Green Footprint Natixis enables each employee to track their individual paper consumption and CO2 equivalent via the My Green Footprint tool. This calculation is based on a global approach in life cycle analysis including the paper itself, but also the impact of the ink and the printer. This indicator will be enhanced in the coming years.