INTERVIEW 2 1 PRESENTATION OF NATIXIS 5 Presentation of Natixis1.1 6 History and links with BPCE1.2 8 2016 Key figures1.3 10 Natixis’ businesses1.4 12 Natixis and its shareholders1.5 28 2 CORPORATE GOVERNANCE 33 Corporate Governance at March 1, 20172.1 34 Additional information on the directors’ 2.2 positions 36 governance Management and oversight of corporate 2.3
Compliance and reputational risk, legal risks3.9 173 Other risks3.10 179 At-risk exposures3.11 184 4 OVERVIEW OF THE FISCAL YEAR 187 Management report at December 31, 20164.1 188 Post-closing events4.2 200 Information concerning Natixis S.A.4.3 200 5 FINANCIAL DATA 203 Consolidated financial statements and notes5.1 204 Statutory Auditors’ report on the consolidated 5.2 financial statements 349 Parent company financial statements 5.3 and notes 351 Statutory Auditors’ report on the parent 5.4 company financial statements 391 6 CORPORATE SOCIAL RESPONSIBILITY 393
commercial momentum, our teams’ steady commitment and our again this year, with a total of €8bn across 2016, driven by solid Natixis. Our core businesses displayed an increase in revenues year of our New Frontier strategic plan was very positive for particularly challenging context more broadly speaking, the third Despite a tough first quarter on the financial markets and a clients’ enduring trust, while also staging a rise in profitability.
distribute model, which reinforces new business volumes while result of our successful implementation of the originate-tocapabilities to build effective financing solutions for our clients as a approach that relies less on own capital. We can now boast greater solutions at Corporate & Investment Banking, based on this foundation of our business strategy, we expanded our range of With the roll-out of our asset-light model, which is the very reducing our risk-weighted assets.
for Corporate & Investment Banking, which we implemented confirmed the positive impact of our new organizational structure Markets, Global Finance and Investment Banking businesses especially standing out. Lastly, robust momentum in our Global platforms continued to expand rapidly, with our Asian platform 2015 and PJ Solomon in 2016. Meanwhile, our international
digital focus. Services businesses, which continue to develop with a strong networks this year, particularly through our Specialized Financial We unlocked further synergies with all the various Groupe BPCE
“The extensive transformation of all our businesses strategic goals out to 2020.”
busy electoral schedule and a number of uncertainties surrounding conditions, particularly in the United States and Europe, with a announce our new strategy goals for the next three years, from completion. 2017 will also be an important year for us as we will continue to actively implement our strategic plan right until its full 2017 will be the last year of New Frontier for Natixis, and we will matter of energy transition in all our business lines. will also further continue our efforts to address the important all of Groupe BPCE’s payment solutions entities within Natixis. We announced the creation of a single business line bringing together Banking and M&A, and Payments. With this goal in mind, we
Transformation and Business Efficiency plan, which involves In the last quarter of 2016, we launched our ambitious march on with the transformation of our business model in 2017, wealth of opportunities offered by new digital trends. We will agile and more efficient, and poised to take full advantage of the together within the company, with the aim of making us ever more organizational structure and an analysis of the way we work program involves an in-depth review of our business and generate €250m in savings each year from end-2019 onwards. This significant investment in new technologies, and will enable us to significant capital investment: Asset Management, Investment stepping up the expansion of businesses that do not require
Our challenge for the years ahead will be to keep Natixis resolutely plan to be announced in November 2017. basis, and this goal will be the focus of our forthcoming strategic on its current path of growth and profitability on a sustainable
ASSET MANAGEMENT Natixis Global Asset Management 20 asset management companies (Natixis Asset Management, LoomisSayles, Harris Associates, Harris associates, AEW…) applying multiple investment approachs : “Multi-boutique” structure with around twenty management companies with multiple investment approaches
PRIVATE BANKING Banque Privée 1818 Natixis Private Banking Luxembourg and Belgium
Non-life insurances Car insurance, home insurance, home and leisure accidents insurance, health insurance, legal protection insurance and means of payment insurance 1 PRESENTATION OF NATIXIS
(1) Market shares : 21,6% in customer savings deposits, and 20,7% in customer loans (Source : Banque de France Q3 2016).
With over 16,000 staff in 36 countries, we are the international fi nancing, investment management, insurance and fi nancial services arm of Groupe BPCE, the second-largest banking group in France(1).
We endeavor to ensure our day-to-day behavior and business activities are consistent with our responsibility to society and the environment. We encourage the development of renewable energies, strive to reduce our direct impacts on the environment and support solidarity initiatives.
(Ixis CIB) and Ixis Asset Management (Ixis AM): Caisse d’Epargne, notably Ixis Corporate & Investment Bank Banques Populaires and various subsidiaries of the Groupe Natixis was formed in 2006 through the combination of Natexis contribution in July 1999 of the operating activities of the Natixis Banques Populaires itself was created from thea
Crédit National, founded in 1919 and which had acquired a following a capital increase largely taken up by retail investors; Populaire held 79.23% of Natexis Banques Populaires founded in 1946. At December 31, 2000, Groupe Banque 100% stake in Banque Française du Commerce Extérieur, d’Epargne (CNCE) as part of the transformation of the Groupe were then contributed to the Caisse Nationale des Caisses of the Caisse des Dépôts. The Ixis CIB and Ixis AM businesses Ixis CIB and Ixis AM were originally part of CDC Ixis, itself parta
Natixis was formed by the execution of the following contributions: each Caisse d’Epargne et de Prévoyance; and cooperative investment certificates (CCI) issued since 2004 by service banking businesses, as well as a share of the subsidiaries and shareholdings in corporate, investment and CNCE’s contribution to Natexis Banques Populaires of certaina
SNC Champion, a vehicle set up by the Banque Fédérale des the contribution to Natexis Banques Populaires bya and which had previously been acquired by SNC Champion remaining Caisses d’Epargne CCIs not contributed by CNCE Banques Populaires (BFBP) and the Banques Populaires, of the from Sanpaolo IMI.
Groupe BPCE created by Law No. 2009-715 of June 18, 2009, The underlying principles of BPCE, the central institution ofa
On August 6, 2013 Natixis sold all the cooperative investment move to simplify Natixis’ structure. banks and Caisses d’Epargne. This transaction was part of a certificates (CCIs) that it held internally to the Banque Populaire
Groupe BPCE is the No. 2 banking group in France through its
investment, cash management, financing and insurance. of products and services, including solutions for savings, et Outre-mer, Groupe BPCE offers its customers a broad range Natixis, Crédit Foncier, Banque Palatine and BPCE International With the 15 Banque Populaire banks, 17 Caisses d’Epargne, covering all banks affiliated with it.
FINANCIAL SOLIDARITY MECHANISM1.2.2 guarantee fund should prove insufficient, BPCE would call on (in call for funds); (iii) if BPCE’s regulatory capital and this mutual (subject to the amounts which would be used in the event of a networks, and which is increased through an annual contribution
Caisses d’Epargne. would be requested from all Banques Populaires and three guarantee funds should prove insufficient, additional sums total and; finally (iv) if calls on BPCE’s regulatory capital and these d’Epargne networks’ own guarantee funds of €900 million in equal proportions) both the Banques Populaires and Caisses
BPCE financial solidarity mechanism. Thus, in the event Natixis an institution affiliated with BPCE, is covered by the Groupe liquidity and solvency of Groupe BPCE. Natixis, in its capacity as central institution, take any measures necessary to guarantee the Financial Code (Code monétaire et financier), BPCE shall, as the jointly by the Banques Populaires and Caisses d’Epargne December 31, 2016 totaled €362.6 million in assets provided use the mutual guarantee fund created by BPCE, which at duty as a shareholder; (ii) should this prove insufficient, it would support using its own regulatory capital in accordance with its encounters financial difficulty, (i) BPCE would firstly provide
It should be noted that the guarantee funds referred to above
French banking regulator, which may request that it be used if activated at the initiative of the BPCE Executive Board or the consist of a Groupe BPCE internal guarantee mechanism deemed necessary.
* Pro forma data, see section 4.1.1 “Methodology” for exceptional ite ms and Appendix to 4.1.3 “Consolidated results”. ** Reported fi gures including non-recurring items. Excluding non-recurring items, 2016 ROE of 13.1%, 2015 ROE 12.1%, 2014 ROE of 11.3%.
Independent directors 1PRESENTATION OF NATIXIS2016 Key figures 11REGISTRATION DOCUMENT 2016 - Natixis
Natixis’ businesses1.4 financial services arm of Groupe BPCE, the second biggest bank Natixis is the international corporate, investment, insurance and in France.
Natixis operates in three key regions: the Americas (29% of net
France, while seeking new inroads in international growth. networks in the financial savings and Private Banking segments in the positioning of the Banque Populaire and Caisse d’Epargne markets where it operates. The division also strives to strengthen
Asset Management: a global player global distribution platform and overseeing the financial and consistency of asset management operations by developing a Management holding company. It ensures the overall These businesses fall under the Natixis Global Asset
Asia-Pacific and, more recently, Latin America and Canada. key positions in Europe (chiefly in France) and expanding in increased in 2016), around 2,000 of whom are in the US, holding Combined, the entities have about 3,700 staff (headcount and investment service companies in Europe, the US and Asia. strategic management of over 20 specialized asset management
the sale of Natixis Global AM’s interests in Snyder and CGM was development of the “DEFI” financial savings project. In the US,
In keeping with the reversal of the inflow trend in the second half
Management, with a growing assets-under-management amount inflows, 2016 proved a mixed bag for Natixis Global Asset of 2015, and this after nearly three years of strong commercial and shrinking inflows.
effects (+€33 billion) and a negative net outflow effect factors: positive foreign exchange (+€12 billion) and market management was due to the combined effect of three key on a constant euro basis. The €30 billion increase in assets under €831.5 billion versus €801.1 billion in 2015, an increase of +2% Global assets under management rose to a record high of
Latin America and Asia-Pacific. business in North America, as well as Europe, the Middle East, for the asset management firms, and covers mostly the retail the global distribution platform. Its purpose is to collect assets Management are supported by all the regional components of Asset management firms affiliated with Natixis Global Asset
2016 was a year of contrasts for the global platform as well as for asset management firms. The persistent growth in the distribution of high added-value “alternative” products by affiliates reflects their marketing efforts in this specialist area.
In France, the distribution platform was significantly improved in 2016 by the DEFI project, which aims to substantially increase the Banque Populaire and Caisse d’Epargne network’s sales of asset management solutions from Natixis Global Asset Management’s European affiliates.
Natixis Asset Management, the biggest of these companies by AuM, contributed to this momentum, as did the smaller asset managers: AEW Europe, H20 Asset Management, Mirova, Dorval AM.
These companies posted strong activity, backed by high-quality expertise, product performance and the support of the distribution teams, and are also making headway with international clients, with an increasingly significant share of sales directed abroad. Accordingly, in 2016 there was a marked increase in the percentage of Natixis Asset Management and its subsidiaries' AuM stemming from international sources.
VEGA Investment Managers (€5.8 billion): funds of funds and fund selection;j
Dorval Finance (flexible portfolio management) and H20 Asset Management (global macro alternative investment
Natixis Asset Management (NAM) and its subsidiaries make up one of the leading asset managers in Europe. The company offers proven expertise in the main asset classes and portfolio management styles. It also provides privileged access to the complementary expertise of VEGA Investment Managers (specializing in fund selection and fund of funds management), management) from London.
In Europe, increasing the sales of asset management companies internationally, developing synergies with other Natixis activities and businesses, and helping to boost the Group's financial savings (DEFI project) remain major priorities. DEFI (DEvelopment of FInancial Savings) aims to boost financial savings inflows in France, primarily through life insurance, by significantly increasing the percentage of unit-linked policies (financial savings are currently focused on guaranteed or protected vehicles). To this end, a new range of investment solutions was created that brings together select funds from asset management firms affiliated with Natixis Global Asset Management. DEFI also has a digital component, LEA (Active Savings), a flexible digital tool for account managers and clients.
All of Natixis’ European asset management companies provide a full range of products and services covering all traditional asset classes, as well as expertise in areas offering high added value. They have received numerous awards for investment performance, for the unique features of their investment funds and for their commitment to sustainable development.
In contrast, the assets under management of Loomis and Sayles (fixed income and equity), Vaughan Nelson IM (equity) and AEW Capital Management (real estate assets) increased. In addition, NGAM Canada, acquired in 2014, launched its activity on the Canadian retail market with support from the US distribution teams.
The group’s US asset management companies directly provide distribution services in its areas of expertise for institutional clients in the United States. In the retail banking segment, they enjoy the strong support of the distribution platform, which provides asset management products, advisory and structuring
LBOs/Growth capital, Advisory/Funds of funds) through a multi-affiliate structure that provides access to the complementary areas of expertise of six independent, international asset management companies.
Private Equity companies at end-2016 (assets under management in billions of euros): Naxicap Partners (€2.4 billion): majority or minority LBOs, private equity in the SME segment primarily in France;j
The Private Banking teams bring together the full range of expertise to address all aspects of financial planning, from wealth engineering, corporate advisory, credit facilities and club deals (individual investors grouping together to buy an asset of their choice). For its asset management offering, Private Banking works with its company VEGA Investment Managers (€6 billion in AuM). With a five-star rating from
Gestion in the Wealth Fund category by Gestion de Fortune magazine and its partner Quantalys. This outstanding performance recognizes VEGA Investment Managers’ active management based on meticulous and responsive stock selection.
The Private Banking business focuses on three customer segments: the wealth management customers of the Groupe BPCE banking network, some 640 independent wealth
management advisors with access to a wide range of investment products and services via the Sélection 1818 distribution platform, and direct clients, mainly introduced by
In 2016, Banque Privée 1818 maintained its strong sales momentum with net inflows of nearly €1.5 billion.
growing needs of their customers in the areas of Private Banking and wealth management. It offers a vast array of services: delegated management, a selection of UCITS, a real estate offering, corporate advisory services, and life insurance
In 2016 Banque Privée 1818 garnered considerable success in family business market.
the area of corporate advisory services. For the fourth year in a row, the team also maintained its ranking as a market leader in the “best investment bank for managerial team support” category, bestowed by Décideurs magazine, thus consolidating its role as a management advisory services provider on LBO deals. It has also succeeded in expanding this expertise to the
With €6.2 billion in assets under management at end-2016 and 638 active IWMAs, Sélection 1818 won two awards: the Editors’ Choice award in the banking platform category at the
Despite difficult and highly competitive business conditions, Sélection 1818 collected gross inflows of €946 million.
1.4.1.3 Insurance products, primarily distributed by the Banque Populaire banks until December 2015, were rolled out in the Caisse d’Epargne
Natixis' "Assurance" offering provides a wide range of insurance products for retail customers, independent professionals and, to a lesser extent, corporate clients. Life insurance and retirement network on January 1, 2016 as part of the “Millevie” product available to retail customers through the Banque Populaire and range. The personal protection insurance business recorded consistent growth. It features a wide variety of solutions distributed by the Groupe BPCE networks, ranging from death benefit, work cessation and dependency products to payment protection insurance. In fact, personal protection insurance products were rolled out in the Caisses d’Epargne in 2016, while payment protection insurance was rolled out in the Crédit Foncier network. Lastly, car and home insurance products
Natixis Assurances’ total revenue from direct sales exceeded €8.0 billion in 2016, including premiums generated by associate company BPCE IARD.
Personal insurance substantial increase (+37% versus 2015) boosted by the Caisse d’Epargne network’s sales of the new range of products, which totaled €1,839 million for the savings segment and €3 million for individual personal protection insurance. Assets under management rose by 8.4%.
insurance (+10%), primarily due to the positive impact of the Hamon Act (three new policies for each terminated contract in auto insurance, two new policies for each terminated contract in
The digital transformation of the business continued in 2016, with an increase in the percentage of policies taken out using electronic signatures and/or through remote sales.
At December 31, 2016, the Corporate and Investment Banking (CIB) core business comprised 2,987 employees (FTEs) in 29 countries around the world. 53.5% of the employees were located in France, and 46.5% internationally.
Banking services. Natixis draws on the technical expertise of its teams and its renowned research department to develop solutions adapted to the specific needs of each and every client.
In fixed income, credit, forex, commodities and equity markets, Natixis offers its corporate and institutional (both private and public sector) clients and Groupe BPCE network clients a wide range of investment, financing and hedging products that tie into its research expertise.
with videos, tutorials and quizzes, helping them improve the quality of their commercial operations. The bank also offers private banks a real-time pricing tool for the primary market (E-MAPS), as well as a portfolio management tool for the
Natixis received a number of prestigious awards in 2016, underlining the dynamism and expertise of its equity derivatives
Solutions include the launch of new products on new market indices (Euronext, STOXX, FTSE Russell, Standard & Poor’s and Solactive), and solutions incorporating systematic strategies for equity portfolio hedging. The insurer support platform was also recognized for the second consecutive year by UK-based teams. It was named Most Innovative Investment Bank for Equity Derivatives by The Banker magazine (Investment Banking Awards 2016). This international recognition illustrates the bank’s ability to generate solutions consistent with the market environment, evolving regulations and client needs.
Most Innovative Equity Borrower (award for Group 2) and Best Equity Borrower Globally, EMEA, Asia and Americas (Group 2 rated by Group 2). [Note: The survey distinguishes between Group 1 and Group 2 based on the quality and volume of global
Fixed income, credit, forex, commodities and treasury markets are located in Europe (Paris, London, Milan, Madrid and Frankfurt), the Middle East (Dubai), Asia (Singapore, Tokyo, Hong Kong and Taipei) and the Americas (New York, Houston
In a complex and volatile market environment marked by negative interest rates, in 2016 Natixis reaffirmed its ability to keep its market risks and expenses under control, reduce its use of equity capital and grow for the benefit of its increasingly international client base.
now play a central role, shifting the model from a flow approach to a solutions platform. The focus is now on designing innovative and simple solutions that are better adapted to the needs of clients, thereby strengthening long-term working relationships.
Natixis also operates in Moscow, Shanghai and Dubai, and develops its offering in local and sovereign debt, as well as in the currencies of these countries, to offer a complete range of fixed income, credit and forex solutions.
In the first quarter of 2016, and in accordance with the provisions of the French law of July 26, 2013 on the separation and regulation of banking activities, the repos and collateral management market-making activities were transferred to the Securities Financing Group business line within Fixed Income.
Research is an integral part of Natixis’ commercial strategy. Every day, the Research Department publishes analyses to guide clients in their investment decisions and contributes to creating financial solutions tailored to clients’ needs.
Global Finance handles the origination, arrangement and syndication of structured financing, as well as portfolio management for all the vanilla and structured financing that forms the foundation of the O2D value chain. This new business line was created to reinforce distribution through a resolute focus on the interests of different categories of investors.
In 2016, Natixis boasted strong positions and was ranked No. 3 bookrunner for real estate finance in the EMEA region (source: Dealogic), No. 10 arranger globally in project financing (source: Thomson Reuters) and the leading arranger of renewable energy infrastructure financing in the EMEA region and fifth in the world (source: IJ Global).
Natixis’ offering in aviation, export and infrastructure finance combines its advisory expertise in financial, arrangement, structuring, agent and distribution services. The team is developing optimized financing solutions in both the banking and institutional markets.
In energy and commodities, Natixis provides global sector-specific coverage for all parties, as well as the arrangement, structuring and distribution of loans specific to challenging due to the low prices of many commodities, Natixis consolidated its energy and commodities franchise in a highly selective manner by supporting its long-standing clients with their financing needs. Trade finance activities demonstrated these markets: pre-export financing, transactional facilities, borrowing base financing, reserve-based lending, etc. In 2016, Natixis opened a representative office in Geneva to be closer to its clients and expand its origination platform. The bank also joined the Essdocs digital platform (electronic bills of lading for ship transport). In a sector environment that remains strong resilience. For example, Natixis renewed a borrowing base of $3 billion for Trafigura, set up a $1.67 billion RCF for Gunvor, financed the Ghana Cocoa Board’s cocoa campaign amounting to $1.8 billion and financed the Oyu Tolgoi copper and gold mine in Mongolia.
acquisition of a portfolio of nine hotels in Germany by Event Hotels/FDM Management, financing for the acquisition of office properties by Cegereal Group for a total of €525 million, acquisition of Grandi Stazioni by Antin, ICAMAP and Borletti) as well as in the United States ($750 million in financing for the construction of a residence in New York by Extell Development, $285 in financing for the acquisition of seven hotels in Manhattan by Cindat Capital Management Limited and Hersha Hospitality Trust, financing of 13 health facilities located in New Jersey, New York and Florida in the amount of $91.5 million, etc.). In Europe, in a continuation of the policy to reduce liquidity consumption, over €2 billion in assets were booked within Pfandbriefbank with existing issuances exceeding €1 billion. Following several past issuances of under €100 million, it issued its first Pfandbrief public bond in the amount of €250 million with a 10-year maturity and at interest rates below that of the Euribor in 2016. In 2016, Natixis securitized a total of $1.9 billion in CMBS (commercial mortgage-backed security) transactions in the United States, a more competitive market experiencing strong pressure on spreads. Natixis also offers warehousing services, an area in which it is one of the top players. It assisted Fortress and A10 Capital with the issuance of their CLOs (collateralized loan obligations) in the amounts of $250 million and $160 million, respectively.
them manage their transactional activities (payments and receipts, reporting), in France, Europe or internationally.
clients who already had a tiered interest-bearing current account with Natixis and wanted to invest their cash surpluses for more than one month at an enhanced rate.
Furthermore, in partnership with Bank of China, GTB launched the Africa to China offering that allows Natixis’ banking correspondents to initiate trade payments in RMB (Renminbi) to mainland China.
Investment Banking strengthen dialog with clients by offering them the best possible combination of solutions to meet their financing needs. It encompasses the activities of acquisition and strategic finance, financing on the primary markets for bonds and equities, financial engineering applied to holdings (Strategic Equity Transactions). With the restructuring of the CIB, these
Natixis is a world-class player in acquisition and strategic finance, with over 20 years of global experience in this sector. Following on from 2015, 2016 saw very strong activity. Natixis performed very well, both in France and internationally, in major
In corporate acquisition financing, Natixis arranged large-scale cross-border deals by working with Chinese group ChemChina on two acquisitions in Europe: that of Swiss agrochemical company Syngenta (the largest transcontinental transaction conducted by a Chinese company, with Natixis acting as landmark operations in Italy (acquisition of Artsana by Investindustrial and the financing of ACS Dobfar, a private pharmaceutical group specializing in antibiotics), as well as Spain and Northern Europe.
Globally, it also arranged several leveraged buyouts for investment funds: Natixis finalized the financing for the acquisition of Foncia by Bridgepoint, and of Eurazeo, Artsana (Italy) by Investindustrial and Academic Colleges Group by Pacific Equity Partners, marking the revival of this business in Australia. It also continued its impressive growth in Scandinavia
As a key player on the market for euro-denominated bonds, Natixis’ expertise is renowned among all issuer categories, including corporate clients, financial institutions, and sovereigns/supranationals/agencies. Notably, it led a bond issue (€3 billion) across three tranches for Sanofi, the first company to achieve a negative yield on such a long maturity (three years). The deal was named Europe Investment-Grade
In the Asia Pacific region, the bank led several major transactions, including the issuance of the first euro-denominated covered bond by Singapore-based bank UOB, the perpetual bonds of Aluminium Corporation of China (as joint global coordinator) and China Aluminium International Engineering Corporation and the first euro-denominated bond by ChemChina Group (as joint global coordinator), issued by CNCR Capital Limited and secured by Chemchina.
Natixis continued developing its expertise in US dollar issues, particularly in the Middle-East (Tunisia, Lebanon and Morocco) and in Asia, with its first US dollar-denominated issue for Chinese company Chalco ($500 million). It also acted as co-bookrunner in a senior bond issue for Springleaf ($1 billion) in the United States.
High Yield: Natixis continued its growth on this market with aa €650 million issue for FNAC; Euro PPs: Natixis acted as arranger in a €35 million issuancea by CA Animation; OAT French Treasury bonds: Natixis was co-lead manager ina the issue of European inflation-linked OATs for the French government (€4 billion); Global Medium Term Notes range (RegS/144A): Natixis wasa the sole arranger for this $10 billion program for Egypt.
The Equity Capital Markets (ECM) business provides clients with tailored advisory services for all transactions that affect their capital structure: IPOs, capital increases and convertible or exchangeable bond issues. ECM is also developing advisory services for carrying out public tenders or exchange offers. At the same time, the team maintains a corporate broking business that offers clients intermediation services for
22 REGISTRATION DOCUMENT 2016 - Natixis increases with preferential subscription rights (PSR) (source: Bloomberg).
In 2016, Natixis conducted a number of landmark transactions including capital increases for Air Liquide as bookrunner and joint lead manager (€3.3 billion) and a non-dilutive convertible bond issue for LVMH as global coordinator and associate bookrunner ($600 million) in France. It also conducted its first capital increase in the United Kingdom as MLA/bookrunner, supporting Phoenix Group with the acquisition of Abbey Life (£735 million).
This advisory business line focuses on the analysis of financial structures and financing and rating strategies. It aims to define the most appropriate equity and debt-based financing solutions importance. The rating advisory expertise is applied to analyze and optimize the impact of major events on clients’ ratings, and even extends to assisting clients with obtaining their first rating.
internationally. Adding to the expertise already present in Italy, Furthermore, Natixis has developed its operations in Asia and in Spain following the acquisition in late 2015 of 360 Corporate Finance (renamed Natixis Partners España), in June 2016 the bank finalized the acquisition of 51% of Peter J. Solomon Company (PJSC) in the United States. PJSC specializes in providing independent advisory services to listed and unlisted companies on M&A and capital structure and restructuring transactions. The New York-based company also has well-established sector expertise in distribution, oil and gas and infrastructure. Its integration allows Natixis to establish global M&A advisory franchises in the commodities and infrastructure sectors, with the formation of teams focused on these sectors. These teams already work in close collaboration with local experts in commodities and infrastructure financing.
By encouraging cooperation among the international teams, the bank is expanding support for French clients’ international operations and assisting international investors wishing to establish themselves on our domestic markets (for example, Asian companies that invest in France or the United States).
In 2008, Natixis established the GAPC division structure (Gestion Active des Portefeuilles Cantonnés – Workout Portfolio Management) in order to (i) isolate the assets that were most impacted by the crisis and that were no longer deemed to fit the new strategic direction of Natixis, and (ii) progressively sell these assets by means of active management, ensuring the proper balance between speeding up the return of capital and the resale price of the assets.
Pursuant to the terms of this financial guarantee, in the event of non-payment confirmed on the scheduled contractual payment date of sums due in respect of any of the assets in the guaranteed portfolio, Natixis will be paid by BPCE from the first euro up to 85% of the amount due. The payment will be made 15 years.
Specialized Financing offers retail, professional and corporate customers a range of services designed to optimize their cash management or support their investment projects: factoring,
Caisse d’Epargne networks was included in the 2014-2017 “Growing Differently” plan. This is a key focus for Specialized
In line with Groupe BPCE’s “Together” project, the goal of further increasing synergies with the Banque Populaire and
With nearly 2,200 new contracts signed this year, Natixis Factor affirmed its leading position and consolidated its historical development strategy: supporting companies, from professionals to major corporate clients. Its client satisfaction rate was 91% in the four rounds of surveys conducted in 2016.
builders and real estate developers, guarantees to property managers and real-estate agents.
market, issuing some 12,000 guarantees with a volume of over €6 billion. It guaranteed the completion of nearly 16,000 individual homes in France. CEGC is also present on the
On November 30, 2016, CEGC entered into a partnership with Cautialis to acquire Cautialis’ customers, and will ensure complete business continuity. The partnership strengthens CEGC’s position as a multi-market operator in sureties and financial guarantees.
Equipment leasing in mainland France, overseas territories, Spain and Italy recorded a 21% increase with €2.2 billion in new leases. Front Lease, an equipment-leasing sales tool integrated into advisor workstations, contributed to this significant increase in the number of new leases.
7,700 new orders in long-term vehicle leasing and posting growth of 24% compared to 2015.
Natixis Lease continued to roll out its offer in the Banque Populaire banks and Caisses d’Epargne, recording more than 1.4.3.4 Consumer Finance
It provides the full range of consumer finance expertise for Groupe BPCE banks: design and marketing, network coordination, credit scoring, management and carrying of loans (revolving credit), collections and litigation. Despite a very restricted consumer financing backdrop during the year, Natixis
At December 31, 2016, outstanding loans stood at €20.7 billion, up 10% year-on-year, consolidating the Company’s No. 3 spot on the French market (source: annual reports, Natixis Financement survey).
These solid performances allowed the Caisses d’Epargne and Banque Populaire banks to gain market share, highlighting the effectiveness of the model developed by Natixis Financement
Operating through the Natixis Coficiné subsidiary and holding market-leading positions in France and Europe, Natixis finances the full range of audiovisual professions and entertainment venues.
The collective pension plan (Perco) has consistently posted robust growth since inception, particularly in the corporate and institutional client segments. The number of Perco accounts increased by 9% year-on-year, with a 31.3% market share of distributed by the Banque Populaire and Caisse d’Epargne networks, delivered another strong performance with over 15,500 new contracts. In order to optimize the client experience, Natixis Interépargne placed listening to companies and Perco clients as well as the co-creation of new services at the heart of its innovation approach. Firmly committed to the digital transformation of its processes and offerings, Natixis Interépargne offers Perco clients a comprehensive range of
Payment vouchers, such as Chèque de Table®, Apetiz® and CESU Domalin®, issued by Banque Populaire banks, Caisses d’Epargne and Natixis posted stable growth and an increase of 8% to €1,056 million in the total equivalent amount, mainly to companies and local authorities.
In 2016, Titres Cadeaux, a joint venture with La Banque Postale, continued its development by expanding the scope of its CA DO Carte multi-brand prepaid gift vouchers. Sales of So Chic gift boxes increased. A new website was launched, enabling individual customers to manage their card account. In 2016, issues of CA DO Chèque and CA DO Carte came to an equivalent amount of €120.3 million.
CHANGE IN THE NUMBER OF COLLECTIVE PENSION ■ PLAN (PERCO) CLIENTS
Natixis Payment Solutions processes and oversees cash and sales payment flows of Banque Populaire banks, the Caisses
With close to 20% market share, placing it third among payments processors in France (source: GIE CB April 2016), Natixis Payment Solutions processed nearly 7.2 billion mass transactions in 2016.
for companies, professionals and individuals and has an active policy of launching new products. Natixis Payment Solutions managed over 22 million cards and processed some 4.1 billion
Natixis also offers an online exchange solution, the online client range (OIC). This was developed as a white label for integration into each banking institution’s environment, with the addition since 2014 of a mobile solution that clients can use to manage their securities accounts using any device: a computer, mobile phone or tablet.
France and abroad, Coface offers credit insurance solutions aimed at protecting companies against the risk of financial default by their purchasers. It also strives to help its clients assess and anticipate risks, allowing them to make informed decisions. Coface thus offers comprehensive, detailed risk analysis of countries, sectors and companies around the world. This analysis draws on its unrivaled global network through which it offers its services in 100 countries.
At the Coface Board of Directors’ Meeting of January 15, 2016,
Coface presented its new strategic plan, Fit to Win, at its first Investors Day held on September 22, 2016 in London. The purpose of the plan is to position Coface as the most agile partner in the sector, while shifting towards a more effective
Fit to Win will be run over a three-year period and has the ambition to restore Coface’s financial performance by way of three operational transformation drivers: reinforce its risk management expertise and the quality of(a) information – particularly emerging market information; improve operational efficiency within its client-focused(b) business model; and value creation rather than growth.
In exchange for the transfer, Coface received compensation corresponding to a one-off gain of €75 million before tax, recognized in its financial statements for the fiscal year ended 2016 results owing to strict expense control, the cost ratio net of reinsurance was 31.9%.
the capital ratio required to cover insurance and factoring risks remained high at around 150% (2)at December 31, 2016, and
The new Solvency II supervisory regime came into effect on January 1, 2016. Calculated according to the standard formula, within the Company’s target range of 140%-160%.
Coface is fully focused on the execution of its Fit to Win strategy, and the effects of the initiatives already in place should start to bear fruit.
Coface’s priority in 2017 will be to continue the implementation of its strategic plan, while remaining mindful to adapt to the risk environment.
Based on the wins of the operational efficiency measures already in place under the Fit to Win plan, Coface forecasts cost savings of €10 million in 2017; restructuring investments and expenses should total €21 million in 2017.
Coverage ratio estimated according to interpretation of the standard Solvency II formula. Unaudited.(2)
Calculated using the number of shares at December 31 of the year in question and after paying out the proposed dividend for the fiscal years (b)
The Natixis individual shareholder relations and communication platform has three main access points: a toll-free shareholder number (from a landline in France:a 0800 41 41 41) is available Monday to Friday from 9 a.m. to 6 p.m. The interactive voice response system provides information on the share price, the Company’s financial calendar, the highlights of the latest results, and the upcoming events of the Shareholders’ Club. Information officers are also on hand to provide a personalized response to shareholders; a dedicated e-mail address (actionnaires@natixis.com),a managed directly by the Individual Shareholder Relations team, enables individual shareholders to send questions to Natixis; the website (www.natixis.com):a provides information on Natixis,j provides a comprehensive archive of the Company’s pressj releases, calendar and financial news in the “Investors & Shareholders” section, includes all editorial content and documents for shareholdersj in the “Shareholder Corner”.
At the General Shareholders’ Meeting, there is a dedicated “Shareholders’ Club” stand aimed at Club members and at all shareholders requiring information on joining the Club or on Natixis.
These members are themselves individual shareholders of 12 members who represent Natixis’ individual shareholders. The CCAN is an advisory body and sounding Board composeda
The Committee is in charge of all aspects of financiala communication tools at their disposal. communication to individual investors, and in particular the
Committee members outside of meetings, the cybersecurity Economic Research. Finally, in order to facilitate the work of presented a digital tool for making contributions. project lead for Natixis Information Systems Security video presentations are available on the website. All the topics discussed, reports of meetings and members’a
approve the 2015 financial statements was attended by some the Board members were also present, including the Aside from Chairman François Pérol and CEO Laurent Mignon, chairpersons of the various Special Committees.
(more than 200). meeting. The meeting agenda was based on these responses
After the screening of a film on the economic environment, highlights of 2015, and the results for the first quarter of 2016. Laurent Mignon presented the financial statements and 2014-2017 strategic plan.
gave the floor to Compensation Committee Chairman, Nicolas de After presenting Natixis' corporate governance, François Pérol detailed the compensation of the CEO and the regulated Tavernost, who presented the work of the Committee and population.
Internet Voting (VPI) led to a significant increase in the overall The Q&A session lasted nearly an hour. The introduction of powers): +83% (compared to the meeting of May 2015). With an number of shareholders that issued instructions (votes and 83.94% quorum, all resolutions were adopted.
team won two awards in the SBF120 category (excluding CAC40): At the awards ceremony for Best Shareholder Relations organized by Le Revenu Group, Natixis’ Shareholder Relations shareholder services and digital communications. The Grand Trophée de Bronze for Shareholder Relations. This award is based on three themes: Shareholders’ Meetings,j
environment and any other information that would assist in statements, etc.), road shows, conference calls and one-on-one events (publication of annual, interim and quarterly financial releases, presentations, etc.) as well as any other additional interviews. The materials used in these meetings (press governance, Annual General Shareholders’ Meeting, etc.) are information (financial calendar, regulated information, corporate
sources is used: formal informational meetings during major resources to analysts and investors. To this end, a variety of The Investor Relations Department provides information and investors throughout the year at roadshows or conferences
Diego, New Port Beach, Montreal, Tokyo, Hong Kong, etc. Geneva, Boston, New York, San Francisco, Los Angeles, San
Relations Department by e-mail at investorelations@natixis.com. Institutional investors and analysts can contact the Investor
on Natixis’ risk profile (“regulated” categories of staff) 82 bodies Compensation for members of management 2.4.3.
Internal control procedures relating 2.5.6 to accounting and financial information 104
OF DIRECTORS 109 work on the internal control and risk management procedures implemented by Natixis, including information regarding the mandates of This section is an extract from the Chairman of the Board’s report on the Board’s composition, the preparation and organization of its directors and their compensation.
Chairman of the Board of Directors – Chairman of the BPCE Management Board
Pierre-Henri Denain – CIB - EMEA Europe (excl.France), Middle East, Africa)
Matthieu Duncan – Asset Management and Private Banking - Natixis Asset Management
Anne Sallé-Mongauze – SFS - Compagnie Européenne de Garanties et Cautions
2 CORPORATE GOVERNANCECorporate Governance at March 1, 2017 34 REGISTRATION DOCUMENT 2016 - Natixis aTUTUtURUR MOF TOF TaTHTHrE E cBOBOhOAROAR1D OO,,OFOF2DIDI0RERE1CTCT7OROR CNNoaarttpixixoxisxisrs s aGGtGoGoeovovGververornrnvnanaennrccnceceae ae anatatcMMeMM2.12.12.1
Insurance divisions in 2003 and Chairman of the Executive Committee in became CEO in charge of the Life and Financial Services and Credit worked for more than 10 years in various positions at Banque Indosuez, A graduate of HEC and the Stanford Executive Program, Laurent Mignon in London, then AGF in 1997 as Chief Financial Officer. He was appointed from the trading floor to corporate banking. In 1996 he joined Schroeders
LLC (since 06.08.2016) Management, Coface SA (since 11.22.2012), Peter J. Solomon Company
(b) 2019 AGM called to approve the financial statements for the year ended 12.31.2018.
First appointed: AGM of 04.30.2009 Chairman of the Board of Directors
François Pérol has been Chairman of the BPCE Management Board since
Permanent Representative of BPCE Maroc, Member of the Board ofa Banque Centrale Populaire (1) (since 2012)
Permanent Representative of BPCE, General Partner of SCAa ECUFONCIER (since 2011)
Member of the Board of CNP Assurances (1) (since 04.21.2009)a of offices held Compliance with rules governing the number AFEP-Medef code: compliant French Monetary and Financial Code: compliant
BPCE – Permanent Representative Daniel Karyotis (until 05.01.2016) Chief Executive Officer of Banque Populaire Auvergne Rhône Alpes (since 10.11.2016)
Member – Audit Committee (until 05.01.2016) First appointed: Board Meeting of 01.28.2013
Member – Risk Committee (until 05.01.2016) First appointed: Board Meeting of 12.17.2014
A member of the Management Board and Chief Executive Officer of
Palatine. February 2007, he became Chairman of the Management Board of Banque
(formerly BP des Alpes) (since 10.11.2016) Chief Executive Officer of Banque Populaire Auvergne Rhône Alpesa
Member of the BPCE Management Board – Finance, Risk anda Operations (from 12.01.2012 to 05.01.2016)
Supervisory Board of GCE Capital Banque Palatine, Member of the Permanent Representative of a
First appointed: Board Meeting of 05.09.2016 in 2016 Attendance rate Board of Directors: Audit Committee: Risk Committee: Strategic Committee: 2004 in the Inspection Générale des Finances (French General school for civil servants, Marguerite Bérard-Andrieu began her career in
A graduate of the Paris Institute of Political Studies (Science Po) and the University of Princeton, and a former student of the prestigious ENA
Affairs Departments and Corporate Secretariat. Executive Officer in charge of the Group Finance, Strategy and Legal Since May 2016, she Member of the BPCE Management Board and Chief governance, legal affairs, and economic and social policy. Key advisory skills: expertise in banking and M&A strategy, corporate
Foncier (since 05.01.2016), Banque Palatine (from 08.30.2012 to Permanent representative of BPCE, Member of the Board of: Crédita
Member of the Board of SCOR SE (1) (since 04.30.2015), Havas SA (1)a 05.11.2016) (since 05.10.2016), Maison France Confort (1) (from 05.15.2013 to
Member of the Supervisory Board of Permanent Representative of BPCE, a
Meilleurtaux (2) (since 10.18.2012) Chairman of the Board of Directors of a
International Trading SAS Permanent Representative of Issoria a of the SAS (until 07.31.2013), then Chairman
Attendance rate in 2016 Board of Directors: 100% Strategic Committee: 100%
Associés in 1981. In 1984 he joined the General Council of the Colmar Bar d’Aptitude a la Profession d’Avocat – CAPA) and joined the firm Cahn et
July 2009) Member of the Supervisory Board and Audit Committee of BPCE (sincea of offices held Compliance with rules governing the number AFEP-Medef code: compliant French Monetary and Financial Code: compliant
Alain Condaminas has a degree in Economic Sciences and a DESS in l’Aveyron, followed by another with Banque Populaire In 2003 he oversaw the merger with Banque Populaire du Tarn et de
Resources Department, and subsequently as Head of Operations. In 2001 Toulouse-Pyrénées as Head of Production, supervising the Human in 1984. In 1992, he began working at Banque Populaire Banking and Financial Techniques. He joined the Banque Populaire Group he became Chief Executive Officer of Banque Populaire Quercy-Agenais.
(IPBP) (since 06.03.2016) (since 06.03.2016), Institution de Prévoyance des Banques Populaires Caisse Autonome des Retraites des Banques Populaires (CAR-BP)
(c) 2020 AGM convened to approve the financial statements for the year ending 12.31.2019. (2) Company outside Groupe BPCE.
First appointed: Board Meeting of 05.11.2011 Member (d) – Audit Committee (until 12.13.2016)
Laurence Debroux was Chief Financial and Administrative Officer of the JCDecaux Group from 2010 until 2015, before joining Heineken NV in
Officer of JCDecaux (2) (since 2010) Chief Financial & Administrative Member of the Executive Board – a
Holding SAS (2) (since May 2011) 09.07.2011), JCDecaux Bolloré Aéroports de Paris SAS (2) (since Member of the Board of: Média a
Member of the Supervisory Board a 11.30.2011) of Médiakiosk SAS (2) (since
(1) Listed company. (2) Company outside Groupe BPCE. (b) 2019 AGM convened to approve the financial statements for the year ending 12.31.2018. * Chairman until 02.10.2016.
Strategic Committee: Warburg France, followed by Société Marseillaise de Crédit. In 1990 he Denizot began his career at Crédit du Nord before moving on to SG Graduate Business School), and a degree in Accounting Studies, Alain With a degree in Agricultural Economics from IAE de Paris (Sorbonne
Risks Committee of BPCE, Alain Denizot was a non-voting Member. as a Member of the Supervisory Board and a Member of the Audit and
Key advisory skills: expertise in financial management, risks, development and insurance.
Committee Chairman of the Compensation Committee and Member of the Audit Chairman of the Board of Directors of SIA Habitat (since 12.06.2016),a pour la Solidarité (FCEs) (from 12.16.2015 to 10.18.2016) Member of the Board and Treasurer of: Fondation Caisses d’Epargnea 10.13.2010), FNCE, Habitat en Région (until 12.14.2016), Erilia (since Member of the Board of: Natixis (since 2015.05.19), Natixis Factor (sincea 06.20.2016)
France Europe (until 09.19.2016) Nord Pas de Calais (from 06.29.2011 to 03.08.2016), Immobilière Nord Permanent Representative of CENFE, Chairman of: Savoirs pour Réussira
Immobilier SA (since 06.17.2014) Permanent Representative of CENFE, Member of the Board of Hainauta
Permanent Representative of CENFE, Member of the Supervisory Boarda of IT-CE (since 12.31.2011)
Chairman of SAS Euroissy Parc (from 04.24.2015 to 09.19.2015) Permanent Representative of Immobilière Nord France Europe,a
Permanent Representative of CENFE, Member of the Board of Finovama (from 12.24.2014 until 09.19.2016)
06.26.2011) Holding Promotion (since Member of the Board of: CE a
ended 12.31.2018. (1) Listed company. (2) Company outside Groupe BPCE. * Member of the Appointments Committee until February 9, 2017. (b) 2019 AGM called to approve the financial statements for the year
Address: 91 cours des Roches - Noisiel 77424 Marne-La-Vallée Cedex 2
the Banque Populaire Group in 1987 in the Internal Audit Department. In
A graduate of the Sup de Co Nice business school, Sylvie Garcelon joined
Deputy CEO in charge of Finance, Risks and Subsidiaries. 2010. Sylvie Garcelon joined CASDEN Banque Populaire in April 2013 as M.A. Banque in 2006, and then Chairman of the Management Board in
formerly Banque Monétaire et Financière) (since April 2013) Chief Executive Officer of Bureau du Management Financier (BMF –a
Term expires: 2019 AGM (b) and ratified at the OGM of 05.20.2014 First appointed: co-opted by the Board of Directors on 02.19.2014
economic fabric. Key advisory skills: entrepreneurial experience, knowledge of the regional
Franche Comté (since 06.22.2000) and then Chairman (since 2010) Member of the Board of Directors of Banque Populaire Bourgognea 05.22.2015) Member of the Supervisory Board and Risk Committee of BPCE (sincea 09.13.2016) 09.13.2016), Natixis Global Asset Management (from 02.14.2012 to Member of the Board of: Banque Palatine (from 02.14.2014 toa
(until 11.15.2016) Associate member of the Chamber of Commerce and Industry of Yonnea
Member of the Board of SA HLM Brennus Habitat (since 06.16.2014)a of offices held Compliance with rules governing the number AFEP-Medef code: compliant French Monetary and Financial Code: compliant
Offices held in previous fiscal years of Sens (since 2009) Judge with the Commercial Court a
Chairman and Chief Executive Officer of Havas Édition Électronique before Customer Prospection and Development at Havas in Paris. She was the
She joined Nexity in 2002, where she held the positions of Secretary
Executive Officer of the Distribution Division until 2011. Executive Officer of Nexity-Franchises in 2006, and then Deputy Chief General and Director of Development, before being appointed Chief
September 2016) Member of the Supervisory Board of Foncia Holding (untila
(from September 2011 to Chief advisor at Kea & Partners (2) a
(1) Listed company. (2) Company outside Groupe BPCE. (b) 2019 AGM called to approve the financial statements for the year ended 12.31.2018. * Chairman since 10.02.2016.
In 1999, she became the founding Director of local savings company SLE de Cannes before being elected as Chairman of this same local savings company in 2009. She first sat on the Steering and Supervisory Committee
Member of the Steering and Supervisory Board of Caisse d’Epargnea Côte d’Azur (since 2009) and then Chairman (since April 2015)
Member of the Supervisory Board and Risk Committee of BPCE (sincea 05.22.2015)
Member of the Board of: CE Holding Participations (formerly CE Holdinga Promotion) (since 09.09.2015)
Member of the Board of: IMF Créa-Sol (2) (since July 2013)a
(b) 2019 AGM called to approve the financial statements for the year ended 12.31.2018. (2) Company outside Groupe BPCE.
Independent Director First appointed: co-opted by the Board of Directors on 11.12.2009 and ratified at the CSM of 27.05.2010 Term expires: 2019 AGM (b)
With a degree from the École Polytechnique, Bernard Oppetit forged his career with the Paribas group from 1979 to 2000, first in Paris, then New York and, finally, London.
Member of the Advisory Board of a Ondra Partners (2) (since 2009) (until September 2013)
Stéphanie Paix Chairman of the Management Board of Caisse d’Epargne Rhône-Alpes
A graduate of the IEP de Paris with a DESS in corporate tax law from the
Permanent Representative of CERA, Member of the Supervisory Boarda of IT-CE (since 12.31.2011)
d’Epargne (FNCE) (since 2012), Habitat en Région (since 2012), le Club du Musée Saint-Pierre (since 2012), Fondation entrepreneurs de la Cité (since 2014), GIE BPCE IT (since 07.16.2015), ERILIA (since 06.03.2016)
Permanent Representative of CERA, Treasurer of Fondation Belema (since May 2013)
Chairman of the Supervisory Board of Rhône Alpes PME Gestion (sincea 03.13.2012)
Immobilier, i-BP Portzamparc, Association des BP pour la Création d’Entreprise (from 2008 to
the Supervisory Board of: Atlantique Mur Régions, Ouest member of Crédit Maritime Atlantique (from 2008 to 01.30.2012)
Croissance, Member of the Board of BP Développement (from 2010 to 01.30.2012)
Representative of FNBP, Chairman a of the Association Française de la
Member of the Board of BPCE a Achats (from 06.15.2010 to 03.15.2012)
Representative of CERA, member a of the Board of Directors of: (until 02.16.2015)
years and was partner in charge of the insurance and banking sectors.
In 2005 he was also named Chairman of the School Council of his alma mater, HEC.
Member of the Board of FCC (1)(2) a (Spain) (since 05.27.2010) (until 09.22.2014)
Chairman of the Board of a Directors of Transalpina di Energia (2) (from02.08.2010 to 05.24.2012)
Member of the Board of South a Stream Transport AG (2)
Member of the Board of Thales (2) a (since 12.23.2014) (until 05.13.2015)
Member of the Board of a Fennovoima Ltd (2) (Finland) (until November 2015)
Philippe Sueur Chairman of the Steering and Supervisory Board of Caisse d’Epargne Île-de-France
Paris XIII – Nord. As Mayor of Enghien-les-Bains since 1989, Philippe Sueur has also held various elected positions such as Regional Councillor until 2011, Councilor at Large for the Val d’Oise region since 1994, and was Vice-Chairman of CG95, the Val d’Oise regional council, between 2001 and and Institutional History. He began his career in 1974 as a Lecturer before becoming a Full Professor at Université d’Amiens and then at Université de Paris III – Sorbonne Nouvelle and Paris-Nord. From 1992 to 2002 he was Dean of the Faculty of Law, Political and Social Science at Université
Key advisory skills: Recognized academic authority, extensive knowledge of local and regional authorities.
Vice-Chairman of the Steering and a Supervisory Board of Caisse d’Epargne Île-de-France (since 2008) (until 04.29.2014)
Independent director First appointed: OGM of 07.31.2013 Term expires: 2017 AGM (a)
A graduate of the IEP in Bordeaux and holder of a DES in public law, Nicolas de Tavernost began his career in 1975 with the cabinet of
Member of the Supervisory Board of Ediradio SA (RTL/RTL2/FUNa RADIO) (since 2002)
Permanent Representative of M6 Publicité, member of the Board ofa Directors of: Home Shopping Service SA (since 2013), M6 Diffusion SA (since 2013), M6 Editions SA, M6 EVENEMENTS SA (since 03.15.2012)
Permanent Representative of Métropole Télévision, member of thea Board of: SASP Football Club des Girondins de Bordeaux, Société Nouvelle de Distribution SA, Extension TV SAS, C. productions SA (since 10.21.2012)
Bordeaux SAS (since 2001), M6 Interactions SAS (since 2001), M6 Web SAS (since 2001), M6 Foot SAS (since 2001), TCM DA SAS (since 06.27.2013), Mandarin Cinéma (since 07.22.2016)
Permanent Representative of C.Productions SA, Member of the Boarda of M6 Films SA (since 01.01.2015)
Member of the Board of: GL Events SA (1) (since May 2008)a
Volunteer member of the Board of the endowment fund RAISEa (since 11.22.2013)
Member of the Board of: Home a Shopping Service (2) (HSS) (since 2001 to 2012), Extension TV(2) (Série Club) (since 2001 to 2012) and Société Nouvelle de Distribution (2) (SND) (from 2002 to 2012)
Member of the Board of TF6 a Gestion SA (2) (since 2001)
Permanent Representative a of M6 Publicité, Chairman of: M6 Créations SAS (since 09.15.2014) (until 01.02.2015)
The information it contains takes into consideration, in particular, report on corporate governance and director compensation, and
and a Management Board to a French société anonyme with a Board of Directors.
Since the Combined Shareholders’ Meeting of April 30, 2009,a Natixis changed its form of governance from a French société anonyme (a public limited company) with a Supervisory Board requirement in terms of control, responsiveness and foresight in Company management.
Following the merger of Banque Fédérale des Banques Populaires (BFBP) and Caisse Nationale des Caisses d’Epargne (CNCE) that resulted in the creation of BPCE, Natixis has been partly owned by BPCE since August 1, 2009. As of December 31, 2016, BPCE held a 71% stake in Natixis.
SUMMARY TABLE ON COMPLIANCE WITH AFEP-MEDEF CODE RECOMMENDATIONS: R IMPLEMENTATION OF THE “APPLY OR EXPLAIN” RULE
“At least two-thirds of the Audit Committee members must be independent.”
Committee in charge of compensation (Articles 16.1 and 17.1 of the Code)
Natixis’ independent directors sit on more than three Special Committees, at the risk of diluting the quality of those Committees’ work, in light of the resulting composition (50% independent, 50% non-independent), and the Committee is chaired by an independent director. Like the Audit Committee, following the AFEP-Medef code recommendations on the composition of the Appointments Committee and the Compensation Committee to the letter would require that
The number of independent directors on the Natixis Appointments Committee and Compensation Committee is not greater than half the total number of members, as recommended by the AFEP-Medef Corporate Code. They have a balanced increased workload. That is why Natixis promotes a balance of directors within the Committees, which are, additionally, always chaired by an independent director.
Session of the Board of Directors held of the Code) without the executive directors (Article 10.3 or “in-house” directors, [...] at which the meeting once a year [...] without the executive management.” future of the company’s executive
[...], and the participants shall reflect on the respective performance shall be carried out
It must be noted that Natixis does not have an executive director: Laurent Mignon is the Chief Executive Officer of Natixis but not executive director.
Philippe Sueur; Françoise Lemalle and Stéphanie Paix and Alain Denizot and four members from the Caisses d’Epargne, namelya
Catherine Pariset and Bernard Oppetit, Henri Proglio and five independent members namely Anne Lalou,a
Catherine Pariset was co-opted by the Natixis Board of Directors is Chairman of Henri Proglio Consulting. Nicolas de Tavernost is
at its meeting on December 14, 2016 and is released of her
Board of Directors). the Board’s Internal Rules (see 2.3.1.2 – Role and Powers of the in which the independent directors perform director duties, and whether or not the business relationship between the companies
whether these relationships are of a nature to affect the any situation of dependency on Natixis, and finally gauge
63REGISTRATION DOCUMENT 2016 - Natixis commitments and the weight of Natixis compared to the total banking, trade or consulting relationships; the volume of indebtedness; and the Company’s liquidity requirements.
and parameters including: the length, degree and nature of the To carry out this work, Natixis analyzes a range of indices, criteria directors exercise their executive duties or corporate offices, “reference banker” for the companies in which its independent
Based on this review, it determined that Natixis is not the these companies.
the last five years with BPCE, Natixis or any of its Has not held any salaried positions or corporate offices in subsidiaries
Is not a major customer, supplier, or corporate or not derive a significant portion of business from the investment banker to the Company or the Group; does
Has not been a Board member of the Company for more than 12 years
of Natixis or BPCE Is not a Board member representing a major shareholder OK OK OK OK OK
Does not receive and has not received any significant other than director’s fees, including participation in any additional compensation from the Company or Group
four years at the Combined Shareholders’ Meeting of May 19, The term of office for Natixis directors was reduced from six to the General Shareholders’ Meeting but also to any new terms of 2015. This change applies not only to terms of office renewed at
Since April 30, 2009, the Board of Directors has been chaired by
In order to follow the AFEP-Medef code’s recommendation that balanced re-appointment of directors, Natixis instituted an action reappointing large numbers of directors at once and promote the staggered compared to those of the other members. plan in 2012. Thus, the terms of office of four directors will beterms of office be staggered in such a way as to avoid
General Shareholders’ Meeting of May 24, 2016. Natixis is six female directors out of a total of 15, i.e. 40%, since its
Copé-Zimmermann Act, and with the relevant recommendations therefore in compliance with the provisions of the
of December 14, 2016, set a gender parity target to maintain a the Appointments and Compensation Committee, at its meeting minimum of 40% women within the Board of Directors.
Article 3 of the Compliance Charter for members of the Board of recommendations of the AFEP-Medef code and the provisions of
French Prudential Supervisory Authority for the Banking and when at least two-thirds of the directors are present or sent out at least 15 days prior to the Board Meeting and credit institution may not be chaired by the Chief Executive represented. As a reminder, the Board of Directors of a functions.
Officer from among the directors or otherwise, whom it may of substituting one for another.
Article 16 of the bylaws, appoint five individuals, in charge of Directors may, in accordance with the conditions defined in
Deputy Chief Executive Officers may be dismissed at any respect to third parties as the Chief Executive Officer.
Committees to deliberate on those issues submitted for may, at the proposal of the Chairman, set up its owne)
determines the structure and powers of these Committees, examination by the Board itself or its Chairman. It which conduct their activities under its responsibility.
L.823-19) and the French Monetary and Financial Code the provisions of the French Commercial Code (Article adopts and revises the general principles of the Companyf) compensation policy and controls its implementation.
65REGISTRATION DOCUMENT 2016 - Natixis regards to the Company’s regulated staff. compensation policy with current regulation, particularly with It issues an opinion on the compliance of Natixis’
prudent management of the Company, specifically the the supervisory mechanisms to guarantee the effective and interest; separation of duties and the prevention of conflicts of shortcomings; corrective measures have been taken to remedy any reviews the governance provision as set out inh)
without the prior agreement of the Board of Directors. The Chief Risk Officer may not be relieved of his duties
CEO’s executive responsibilities. As such, he may attend any expertise to the Chief Executive Officer, while respecting the organization, and, at the CEO’s request, he may represent meeting that addresses subjects related to Natixis’ strategy and
Chairman of the Board of Directors provides his support and In addition to the duties attributed by law and the bylaws, the
Natixis in its relationships with the Group’s major partners to promote business relationships.
In addition, the Chairman of the Board of Directors sees to participating in actions carried out in that arena.
maintaining the quality of the relationships with shareholders, by ensures that the Board spends the required time on its duties. discussion that is conducive to constructive decision-making. He operation of the Board runs smoothly, by creating a climate of Finally, the Chairman of the Board of Directors sees to it that the
following provisions: February 9, 2017, particular attention should be drawn to the Among these Internal Rules, which were last amended on authorization: circumstances requiring the Board of Directors’ priora the extension of Natixis’ activities to a new core businessj not currently exercised by the Company; the appointment or dismissal of the CEO or, wherej applicable, one or more Deputy CEOs; in excess of €100 million, in the event that the Group’s any acquisition or increase in shareholdings, as well as anyj by Natixis or any of its main subsidiaries, involving an amount investments, divestments or the formation of joint ventures structure is modified; is involved.
“independent”: criteria used to qualify members of the Board of Directors asa interest with the management, Company or Group. compromise their freedom of judgement or create a conflict of management, Company or Group of a nature liable to An independent director is a person who has no ties with the may not: Accordingly, an independent member of the Board of Directors within the last five years, be or have been:j an employee or executive corporate officer of Natixis,j an employee, executive corporate officer or director of aj company consolidated under the Company, an employee, executive corporate officer or director ofj BPCE or of a company consolidated by BPCE; five years) holds a directorship; corporate officer of Natixis (currently or within the last which a designated employee of Natixis or an executive Natixis holds a directorship either directly or indirectly, or in be an executive corporate officer of a company in whichj be a customer, supplier, investment or corporate banker:j that is material for Natixis or the Group,j or for which Natixis or the Group represents a significant portion of such person’s business; have a close family relationship with a director of Natixis orj the Group; five years; have been a Statutory Auditor of Natixis within the lastj after a period of 12 years; than 12 years; The status of independent director falls away have been a member of Natixis’ Board of Directors for morej receive variable compensation in cash or in shares, or anyj performance-linked compensation from Natixis or the Group.
Directors is examined by the Appointments Committee (the The independent status of each member of the Board of prepares a report for the Board (see summary table, above); composition and role of which are described below), which
(Company and Group), directors participating in a Board consolidated financial statements and management reports deemed present for the purposes of quorum and majority.
Directors’ work, the Internal Rules specify that, at least once a operation, an account of which will be included in Natixis’ year, an agenda item will be devoted to evaluating the Board’s
C Compliance charter for members of the Board of Directors application of corporate governance principles and best practices The purpose of this Charter is to promote the effective by the directors of Natixis.
any other binding texts. regulations, bylaws, Internal Rules and this Charter, as well as
Before assuming office, every one of Natixis’ directors must incumbent upon him, such as those resulting from laws or ensure that he is familiar with the general or specific obligations contained in this Charter.
Article 4: Professionalism and Efficiency operating procedures, specifically during the Board’s periodic recommendations that he feels will improve the Board’s evaluation.
work of the Board and Special Committees. He makes A director contributes to the collegiality and efficiency of the the guidance and control duties are accomplished in accordance with the laws and regulations in force.
Together with the other members of the Board, he sees to it that
Inside Information financial instruments, and which, if it were made public, would one or more issuers of financial instruments, or to one or more relevant financial instruments or on the prices of related be likely to have a significant influence on the prices of the that has not been made public, relating directly or indirectly to (MAR)): “Inside information is any information of a precise nature Financial Markets Authority), the Market Abuse Regulation
Parliament and Council (together with the delegated and In accordance with Regulation 596/2014 of the European regulation of the Autorité des Marchés Financiers (AMF – French enforcement regulations of Article 621-1 of the general derivative financial instruments.”
Committee Meetings must refrain from: Natixis, the directors and any individual attending Board or related to this information, and (ii) the use of the or for a third party, directly or indirectly, financial instruments inside information if the person using the recommendation or recommendations or inducements of a person in possession of possession of such information to buy or sell, for themselves covering (i) the use of inside information by a person in performing or attempting to perform any insider trades (thesea inside information); inducement knows, or ought to know, that it is based upon
67REGISTRATION DOCUMENT 2016 - Natixis information received, another person to perform any inside trades; or recommending or inducing on the basis of any insidea unlawfully disclosing inside information;a issued, directly or indirectly, on its own behalf or on behalf of performing any transactions on the financial instruments it hasa made public; another, on or off the market, before that information has been
Natixis, unless it is within the normal context of performing his disclosing that information to any third party, including withina duties; the basis of that information.
securities issued or to be issued by Natixis, as well as the rights This duty to refrain concerns shares and any investment
The duty to refrain also applies if inside information is held on the come to hold a stake. securities of listed companies in which Natixis holds or may
These same recommendations are valid for all listed companies of his work with the Board.
Permanent Insiders permanent access to inside information held by the issuing on account of the nature of their functions or position, has entity. Directors are individually informed that they are on this list
AMF. A permanent insider is any individual or legal entity who, directors on the list of permanent insiders made available to the by a letter from the Head of Compliance with a return receipt.
Reporting obligations date of the transaction and in accordance with the conditions set Natixis and the AMF within the three business days following the out by the MAR Regulation.
Each director must declare any trading in Company shares to persons as defined by the MAR Regulation.
an independent director is affiliated with an entity initiating a new competitor for the transaction in question; or when a director or question must inform the Chairman of the Board of Directors [or business relationship), the director or non-voting director in financing bank, or the partner bank or financing bank of a Natixis a director is affiliated: with the partner bank or the supplier’s or non-voting director is directly or indirectly involved (e.g. when
Directors and/or the Special Committees of which he is a topics on the agenda of the Board or the Special Committees. member, provide the information critical to useful action on the within the appropriate time, that the Chairman of the Board of Each director must become familiar with and must request, attending, where necessary, the training modules provided by In addition, all directors must receive training including by the Company (see paragraph 2.3.1.5).
Natixis’ rules, he must notify the Chairman of the Board of own reasons or for any other reason including those specific to are found, suffer the personal consequences with respect to Directors, seek measures to remedy the situation, and, if none
Should one of Natixis’ directors no longer be in a position to perform his duties in compliance with the Charter, either for his
In particular, it sets out the procedure to be followed, from the
information system compatible with Natixis' information system, relate to technical adjustments to make the counterparty's
(see Statutory Auditors' special report in Chapter 7 "Legal EuroTitres, partly to specific developments to secure migration reviewed all related party agreements that have been authorized At its meeting of February 9, 2017, the Board of Directors an impact over the period. Based on the criteria used for its initial by the Board over previous fiscal years, which continued to have company and, on the other hand, another company in which this shareholders having a greater than 10% voting right in a
The attendance rate was nearly 92% for the year as a whole The Board of Directors held a total of eight meetings in 2016.
At least four days before a Board Meeting, each director receives website, for review and analysis of the issues to be addressed. in principle a file listing the items on the agenda, via a secure relevant. At each meeting, he reviewed the economic issues and to ask him any questions that they deemed to be environment and benchmarks, as well as business conditions.
enabling the Board members to hear his opinion on important The Chief Executive Officer attended all meetings, thereby and when required, one or more business-line heads were The Chief Finance and Risk Officer, Corporate Secretary and, as meetings. The Central Works Council representatives also invited to provide further information on subjects raised in attended the meetings.
The main topics addressed by the Board of Directors in 2016 were as follows: and commitment position Natixis’ financial, cash statements (parent company and consolidated) Review of the quarterly and half-yearly financial statements and approval of the annual financial a
Review and approval of 2017 budgeta Economic and benchmark reviews/Business review/life of the stocka Review and approval of press releasesa Adoption of the Board’s management reporta Adoption of the Board of Directors’ report on the use of capital increase authorizationsa
Risk management and ratification of its Internal Rules Establishment of a US Risk Committee in accordance with the US regulation, the Dodd-Franck Act, a
Submission of the work by the Audit Committee, the Risks and the US Risk Committeea Reports on terms for exercising internal control and on measuring and monitoring riska Update of the Risk Appetite Statement and Risk Appetite Framework indicatorsa Review of the Audit reforms and its impact on Natixisa non-compliance risks, approval of the Business Continuity Plan which is an integral part of Natixis’ control governance system, monitoring of aggregate limits by risk type, monitoring of risk management program
Authorization of the signature of various related party agreementsa guidelines Implementation of the process set out in Article L.2323-7-1 of the French Labor Code on strategic a
Capital increase reserved for members of the Mauve 2016 savings plana Information on the capital increases following the allocation of free shares of February 2012, a February 2013 and November 2013 Review of strategic plan and strategic projectsa Equity stake in Peter J. Solomon and in PayPluga
For the 2014 fiscal year, Natixis decided to review monitoring of out between 2010 and 2013. decisions made as a result of the in-depth assessments carried
This assessment covered six areas: the composition of the Board of Directors;a the duties and work of the Board of Directors;a the organization and operation of the Board of Directors;a relations/interaction within the Board of Directors and witha Management; specialized committees;a the individual contribution of the directors.a
Every member of the Board of Directors completed a individual interview lasting approximately one hour. questionnaire prepared by the outside firm as part of an assessment report, presented as a summary to the meeting of The results of these interviews were included in a detailed the Board of Directors held on February 9, 2017.
According to the report, the directors have a very positive view structure whose directors are committed and hard-working. of Natixis' Board of Directors, which they see as a high-level of Directors perform better than the other boards they sit on. A large majority of the Board's directors think that Natixis' Board improve the running of the Board.
was suggested to pursue efforts to improve the conciseness of Lastly, on matters of the Board's organization and operation, it 2.3.1.5 Board member training
In 2015, Natixis expanded its existing training program for Board the existing one for members of the BPCE Supervisory Board. members. The resulting training program is also consistent with
Meetings. It is organized into modules spread over the course validate technical or complex matters discussed at Board financial matters, risk management, directors’ liability (civil, of the year and covers various issues including accounting and carry out their duties. This training takes the form of a deeper give Board members the necessary knowledge and skills to current topics, memos related to economic, accounting, examination of issues related to the business lines or other a training program provided as and when needed, designed toa business lines/departments.
corporate governance site, the provision of e-learning on regulatory, compliance, legal and other issues posted on the members’ participation in certain events held by Natixis targeted subjects (money laundering, fraud, etc.), and Board attended one or more of these training sessions.
various training programs offered by Natixis. Ten Natixis directors For the 2016 fiscal year, ten sessions were held as part of the
deliberations, Natixis’ Board of Directors surrounded itself with a To assist in its review process and prepare some of its number of Special Committees.
Compensation Committee into two independent Committees, in Committee, and to split the existing Appointments and and Compensation Committee were split between the Likewise, the duties previously assigned to the Appointments
independent director. Committee and a Strategic Committee, each chaired by an
Since the 2015 fiscal year, Natixis’ Board of Directors has held
Committee, a Compensation Committee, an Appointments five Special Committees: an Audit Committee, a Risk
During 2016, the Audit Committee comprised five members: As of March 1, 2017, these members were: Bernard Oppetit until February 9, 2017) Catherine Pariset (position previously held by Chairman
Two of the five members are independent members (Ms. Pariset and Mr. Oppetit).
Until February 9, 2017 the Committee was chaired by independent member Mr. Oppetit. Since then, Ms. Pariset now chairs the Committee.
Two-thirds of the Audit Committee are not independent recommendations in Section 2.3 of this chapter). summary table on compliance with AFEP-Medef code to represent the different components of the Company’s main members, as recommended by the AFEP-Medef code, in order
CASDEN Banque Populaire, and as such possession solid Officer, a position she holds at BPCE. Ms. Garcelon is CEO of the accountancy and finance, as well as in auditing. Mr. Oppetit financial experience. Ms. Lemalle has extensive knowledge in companies.
Halberstadt; member of the Audit Committee, to replace Catherine member of the Audit Committee, to replace Daniel Karyotis. on May 9, 2016, Marguerite Bérard-Andrieu was appointed aj
B Role and powers and its operating procedures, the latest version of which was Natixis’ Audit Committee has internal rules specifying its powers approved by the Board of Directors on February 9, 2017.
The remit of the Audit Committee also includes: report, etc.) and making recommendations to guarantee the (preparing the financial statements, the management integrity of this information; monitoring the process of preparing financial informationa financial statements, as well as Natixis’ draft budgets and annual consolidated financial statements and annual individual in advance to allow their presentation Natixis’ Board of material off-balance sheet commitments, with sufficient time monitoring the statutory audit of the quarterly, half-yearly anda reports; Directors, as well as the half-yearly and annual management monitoring the effectiveness of the internal control and riska preparing and processing accounting and financial information; management systems with regards to the procedures for accordingly, the Committee must: independence conditions by which they are bound; ensuring the Statutory Auditors’ adherence to thea the share of those fees in the net sales of the firms and ensure that the fee amount paid by Natixis and the Group, orj independence of the Statutory Auditors, networks, does not, by its nature, undermine the establish the rules governing the services that the Statutoryj services other than the certification of the financial Auditors may provide and governing the authorization of statements; monitoring the Statutory Auditors’ performance of their duties;a the appointment of Statutory Auditors or auditing firms; the submitting a recommendation to Natixis’ Board of Directors fora selection procedure arranged by Natixis; recommendation of the auditing firm is made following a reviewing the Statutory Auditors’ work schedule, the results ofa thereof; their audits and recommendations, and any follow-up action basis with regards to commercial relations between Natixis or issuing its opinion on the report presented to it on an annuala forming Groupe BPCE.
one or more of its subsidiaries, and all or some of the entities performance of its duties; reporting on the results of the reporting regularly to the Board of Directors on thea certification of the financial statements, the way in which this the role it played in this process. Any difficulty encountered is duty contributed to the integrity of the financial information and reported without delay.
72 REGISTRATION DOCUMENT 2016 - Natixis documents and information it needs to perform its duties. The The Company’s CEO provides the Audit Committee with any following list is not exhaustive: documents prepared periodically by the Company; parent and consolidated financial, accounting, and regulatorya summary reports by the Company’s Statutory Auditors;a any audit reports concerning the Company;a accounting policies and methods applied within the Company;a projected parent and consolidated results at the end of March,a June, September and December; consolidated budgets and financial statements of the maina
C Work of the Audit Committee in 2016 members’ attendance rate was 76% for the year as a whole (vs. The Audit Committee met six times in fiscal year 2016. Its appears in Section 2.2 of this chapter (see directors’ individual Each director’s attendance at the Audit Committee’s meetings fact sheets).
At least four days before a Committee Meeting, each director received a file via a secure website containing the items on the addressed.
Depending on its agenda, the Audit Committee also benefited for Natixis.
Department and the comments of the Statutory Auditors Committee is sent a copy of the reports of the Finance
Review of the quarterly and half-yearly parent company and consolidated financial statementsa Review of 2017 budgeta Statutory Auditors’ assignmenta Compensation policy of NGAM (US and Asia)a Monitoring the size of the balance sheeta
Two of the five members are independent members (Ms. Pariset enhanced understanding of Natixis’ risk management and The Chairman and the members of the Risk Committee have an over the course of their professional careers. internal control as a result of their extensive expertise gained
Over the course of the 2016 fiscal year, and in compliance with management of risks relating to “joint US activities”.
twice as the US Risk Committee, the first meeting taking place in the US regulation, the Dodd-Frank Act, the Risk Committee met the Risk Committee, and is tasked with monitoring the July 2016. The US Risk Committee has the same members as
Now, under the Natixis Board of Directors’ responsibility, the Risk Committee’s core duties are: to advise the Board of Directors on the bank’s overall strategya and risk appetite, both current and future; and by the Head of Risk Management.
implementation of that strategy by the Executive Managers to assist the Board of Directors when it checks thea
Company’s CEO; management systems; to monitor the effectiveness of the internal control and riska prudent management of the Company, specifically the supervisory mechanisms to guarantee the effective and separation of duties and the prevention of conflicts of interest; and controlling the implementation by de facto directors of the to assist the Board of Directors in determining the guidelinesa to review, pursuant to its remit, whether the prices of productsa risk strategy. If these prices do not correctly reflect the risks, it and services proposed to clients are compatible with Natixis’
November 3, 2014 on internal control of banking sector once a year, pursuant to Article 253 of the Order of businesses, payment services, and investment services; of Internal Audit at Natixis; to give its opinion on the appointment or dismissal of the Heada
Résolution, ACPR – French Prudential Supervisory Authority for (specifically the Autorité de Contrôle Prudentiel et de end, a summary of reports by the Internal Audit Department on the Banking and Insurance Sector) are followed up on; to that
Audit Department and by regulatory and supervisory authorities to see to it that the findings of assignments by the Internala which also receives all reports from the regulatory and Natixis and its subsidiaries is made to the Risk Committee its subsidiaries; supervisory authorities (specifically the ACPR) on Natixis and to address Natixis’ annual internal audit program, includinga
Committee at least one week prior to its approval. audits of subsidiaries, with this program being presented to the deemed appropriate by the Committee and after consulting the At the proposal of the Chairman, the Risk Committee may, if
Natixis Head of Internal Audit, the BPCE Head of Internal Audit, to shed light on the work of the Risk Committee, as well as the subsidiaries or the Chairman of its Risk Committee*) who is able
The Risk Committee met eight times in fiscal year 2016. Its members’ attendance rate was 67% for the year as a whole (vs.
fact sheets). appears in Section 2.2 of this chapter (see directors’ individual Each director’s attendance at the Risk Committee’s meetings received in principle a file via a secure website containing the At least, four days before a Committee Meeting, each director to be addressed.
In 20 the Risk Committee’s duties focused on the following items in particular: management Internal audit and risk liquidity and operational risks and insurance risk) Review of the monthly consolidated risk monitoring scorecard (regular updates on credit, market a
Review of the provisions of the Ministerial Order of November 3, 2014 and of the Risk Appetite a Framework indicators Review of the risk model governancea Meeting on the US Risk Committeea Review of the Chairman’s draft report on the work of the Board and on Internal Control in 2015a Review of Natixis’ exposure to the Energy sectora Presentation of reports on internal control and risk measurement and monitoringa Meetings on the stress tests (EBA and internal)a Presentation of the final results of internal stress testsa Presentation of the proposed audit program for 2017a Presentation on the risks of the Insurance business lines and their oversighta Risk control procedures in place in the Asset Management business linea Presentation of mandatory risk matters in 2017a Review of Natixis and BPCE Internal Audit assignments conducted during fiscal year 2016a and BPCE Monitoring implementation of recommendations made by the Internal Audit Departments of Natixis a
Presentation of the follow-up letters from the ECB and the ACP addressed to Natixis, and Natixis’ a response to these letters
As of March 1, 2017, those members were as follows: Nicolas de Tavernost Chairman
Messrs. Proglio and de Tavernost). The number of independent Three of the six members are independent (Ms. Lalou and 2016.
No change was made to the Compensation Committee ina since January 1, 2017.
The role of Natixis’ Compensation Committee is to prepare the the Internal Rules, the latest version of which was approved on Committee’s powers and operating procedures are detailed in
Shareholders’ Meeting; the compliance of Natixis’ compensation policy witha employees addressed in French Law No. 2013-672 on the French Ministerial Order of November 3, 2014, as well as for
The Compensation Committee reviews proposals related to the reserved for Natixis employees, and, where applicable, plans for employee savings plan, including plans for a capital increase
Natixis’ CEO provides the Compensation Committee with any ensure it is fully informed.
Deciding on the fixed compensation of the Chief Executive Officer for fiscal year 2016a Deciding on the fixed compensation of the Chairman of the Board for fiscal year 2016a Deciding on the variable compensation of the Chief Executive Officer for fiscal year 2015 and paid in a
Officer for fiscal year 2016 Deciding on the criteria to be applied in calculating the variable compensation of the Chief Executive a pay”) Consulting with shareholders on the individual compensation of executive corporate officers (“say on a
Variable compensation budget and structure for the “regulated” population for fiscal years 2015 and a
Analyzing the procedures for the capital increase reserved for employees (Mauve 2016)a
March 1, 2017, these members were: The Appointments Committee is made up of six members. As of
Stéphanie Paix (position previously held by Alain Denizot until February 9, 2017)
AFEP-Medef corporate governance code. It has a balanced half the total number of members as recommended by the chaired by an independent director) (see summary table on composition (50% independent, 50% non-independent and is
Committee’s work. Natixis’ CEO is involved as required with the Appointments by Henri Proglio.
B Role and powers as well as the effectiveness of the Board of Directors. The
Directors, the latest version of which was approved on are described in detail in the Internal Rules of the Board of Appointments Committee’s powers and operating procedures
The Committee’s primary remits are: issuing an opinion and, upon request from Natixis’ Board,a appointment of a CEO and, when appropriate, one or more making proposals and recommendations to the Board on the
procedures are made public; Natixis’ target and policy as well as the implementation useful recommendations to the Board; regard to the remits that are assigned to it, and submitting all composition and effectiveness of the Board of Directors with periodically, at least once a year, assessing the structure, size,a skills and experience of the Board of Directors, both periodically, at least once a year, assessing the knowledge,a individually and collectively, and reporting this to it; periodically scrutinizing the policies of the Board of Directorsa thereon.
(see directors’ individual fact sheets). Committee’s meetings appears in Section 2.2 of this chapter Each director’s attendance at the Appointments & Compensation
Composition of the Special Committees of the Board of Directorsa Selection of the new independent director to replace Laurence Debrouxa Reappointment of three directors whose term of office was due to expirea
Evaluating the Board of Directors’ work in 2016a Evaluating the knowledge, skills and experience of directors, both individually and collectivelya Evaluating the balance and diversity of knowledge, skills and experience that the Board members a have, both individually and collectively
Gender parity Deciding on a policy and targets for a balanced representation of men and women on the Board of a Directors.
A Organization the Board of Directors and members of the Senior Management The Strategic Committee meets once a year. The members of
independent director, from its inception in 2011 until The Strategic Committee was chaired by Laurence Debroux, an
B Role and powers thoroughly examining the global strategy of Natixis and its The scope of responsibility of the Strategic Committee relates to
In 2016 Natixis’ Strategic Committee met to review four matters: the new 2018-2020 strategic plan; the implementation of the New Frontier plan and the launch ofa
decision of April 30, 2009 to separate the offices of Chairman of management, in accordance with the Board of Directors’ The Chief Executive Officer is responsible for the Natixis’ senior
Mr. Mignon’s term of office was renewed by Natixis’ Board of the financial statements for the fiscal year ending on after the 2019 General Shareholders’ Meeting called to approve
Jean Raby (Investment Solutions – Asset Management and Secretariat), François Riahi (Corporate & Investment Banking),
Company’s success (see members of the Executive Committee, of certain business lines and support functions essential to the
Executive Managers (“Dirigeants effectifs”): Laurent Mignon, and Financial Code, Natixis’ Board of Directors appointed two
In this context, the Executive Managers are authorized to department, controlled entity or subsidiary of Natixis. request and accept all useful information from any division,
Management Committee. Senior Management responsibilities to members of the Senior option of substituting one for another. In this regard, in 2010 and including signing authority, which resulted in the delegation of 2011 Natixis overhauled its entire system of delegating authority,
Directors may appoint one to five Deputy Chief Executive On the Chief Executive Officer’s recommendation, the Board of
Chief Executive Officer. Officers from among the directors or otherwise to assist the
Executive Officer. the same powers with respect to third parties as the Chief
Committee in 2016 Work of the Senior Management 2.3.3.3 with a Board of Directors, a Senior Management Committee was Following Natixis’ conversion into a French société anonyme
Management Committee undertook the de facto implementation After its official launch at the end of 2013, the Senior of the New Frontier strategic plan in all Natixis business lines.
approved all the strategic operations carried out by Natixis, More generally, the Senior Management Committee studied and such as the acquisition of a majority holding in Peter J. Solomon before presenting them to the Company’s Board of Directors,
In this context, the Senior Management Committee studied the and SFS and supervised various plans projects or initiatives. opportunities for external growth in asset management, M&A
PayPlug. Company, the merger of AEW and Ciloger, and the acquisition of cooperation with the networks.
oversaw the project to merge all Natixis’ Payment activities Natixis, as part of the “Assurément#2016” project. It also
Committee was attentive to continuing the development of trade dedicated to Groupe BPCE. In addition, the Senior Management
The Senior Management Committee regularly examined the meetings throughout the year. It studied the half-yearly and Company’s business development and results during its quarterly financial statements, before they were presented to the communications for the Company.
Board of Directors, and was involved in defining financial appointment of senior executives and managers, as well as all negotiations and the compensation review policy, the significant projects or investments. In addition, it examined and management decisions and reviewed and approved the budget The Senior Management Committee approved the main approved the terms and conditions governing mandatory annual after in-depth communication with the business lines. It also reorganization of the Corporate & Investment Banking business. approved several restructuring projects, including the management, risk management and compliance measures Finally, the Senior Management Committee monitored the risks, as well as the consequences of audits.
EGMs are convened each time there are decisions concerning a transaction affecting the share capital. change in the bylaws, notably in the event of a financial
EGM) on the same date under the same notice of meeting. CSMs combine the two previous types of meetings (OGM and
Pursuant to Article R.225-85 of the French Commercial Code, account (pursuant to paragraph seven of Article L.228-1 of the those shareholders who can prove their shares are in a custody held by their authorized intermediaries, no later than two accounts held by the Company or in the bearer share accounts local time hereinafter referred to as D-2), may attend the working days before the date of the meeting (by midnight Paris intermediary acting on their behalf, either in the registered share French Commercial Code) in their name or in the name of an meetings.
shareholder, a partner with whom the shareholder has a civil partnership, or any other individual or legal entity of his choice)
For holders of registered shares, such entry in the account by D-2 is sufficient to enable them to attend the meeting.
Shareholders’ Meeting by conference call or electronic transmission under the terms and conditions set by the
In line with the provisions of Article L.225-105 of the French Commercial Code, one or more shareholders holding the means of registered letter with acknowledgement of receipt. items or draft resolutions on the agenda of the meeting by
Conditions for exercising 2.3.4.5 voting rights exceptionally in the case of granting double voting rights to any fully paid-up shares for which a registered entry for two years
In line with the provisions of Article 25 of the bylaws, and each member of the meeting has a right to as many votes as they hold or are represented by shares.
under the same shareholder name is demonstrated under Article L.225-123 Paragraph 3 of the French Commercial Code,
this percentage, must notify the Company, by registered letter with acknowledgement of receipt, of the number of voting rights
possess recognized business expertise acquired through their positions as executives of banks or large industrial companies or by the corporate officers of Natixis is included in this document. The brief summary of their curriculum vitae shows that they all
confer benefits according to the terms of such an agreement and that might by their nature compromise the independence of there are no service agreements binding members of the Board of Directors or Senior Management to the Company that could
BPCE. Moreover, Natixis maintains business relationships with its shareholder and Board member BPCE. Natixis considers that shareholder BPCE, as well as salaried employees of Groupe Members of the Natixis Board of Directors include Natixis’ main the independent members of the Board are not of a nature liable to affect the impartiality of their judgement.
Banking relationships between Natixis and the Groups chaired by is directly or indirectly interested and in what capacity. The director or non-voting director in question must abstain from question must inform the Chairman of the Board of Directors as soon as he has knowledge of such a plan, and inform him that he partner bank or financing bank of a Natixis competitor for the transaction in question), the director or non-voting director in directly or indirectly involved (e.g. when a director is affiliated: with the partner bank or the supplier’s financing bank, or the planned transaction in which a director or non-voting director is
Directors must refrain from acting in conflict of interest with Natixis or the companies it controls. Specifically, when there is a he does not participate in the Board’s deliberations, or in voting on the plan in question, and the section of the minutes relative to the plan in question is not submitted to him.”
81REGISTRATION DOCUMENT 2016 - Natixis at Natixis Description of the compensation policy 2.4
Natixis’ compensation policy is a key driver for implementing Company strategy. The policy aims to offer competitive levels of lines and employees.
compensation budgets are defined according to the annual economic performances generated by the business lines, include the aforementioned economic factors referred, other qualitative analytical aspects such as competitor practices, ability to meet its regulatory capital obligations. The definition of overall budgets, and their breakdown by business line, also business line’s performance or the development stage of the business lines in question.
The compensation system for risk control and compliance staff, of the system for the business lines whose transactions they validate or control.
The Risk Department and the Compliance Department are also involved in any decisions to reduce or eliminate deferred variable year by the Internal Audit Department. The compensation policy is also independently reviewed each
The compensation policy applicable to Natixis’ regulated employees is aligned with the general compensation principles
Ministerial Decree and Order of November 3, 2014. The scope of employees covered is defined in accordance with Delegated adopted by Natixis and those set forth by Directive 2013/36/EU (CRD IV), enacted into French law in the French Monetary and of staff 2016 scope of regulated categories 2.4.2.1 qualitative criteria based on the employee’s position, level of responsibility and authority to make material binding
commitments on behalf of the bank in terms of credit or market
64 employees identified based on quantitative criteria: Employees whose total gross compensation allocated during the already been identified using qualitative criteria.
conditions of payment of variable compensation are submitted to the Compensation Committee, then validated by the Board of compensation is awarded.
the three fiscal years following the year in which the variable fraction of variable compensation is subject to conditions and deferred over time. This payment is divided evenly over at least
Above a given threshold (€100k for the euro zone), payment of a represents at least 40% of the variable compensation granted and 70% for those receiving the highest amounts of variable
compensation. The vesting period for this component of deferred deferred and conditional component of variable compensation awarded and the non-deferred portion of the variable compensation awarded to employees who are members of regulated categories of staff. This rule applies to both the compensation. Variable compensation awarded in the form of shares or similar instruments represents 50% of variable
83REGISTRATION DOCUMENT 2016 - Natixis 2016 COMPENSATION STRUCTURE FOR REGULATED CATEGORIES OF STAFF - RECORD OF PAYMENTS■
Fixed compensation Fixed compensation Fixed compensationFixed compensation variable compensation when this compensation is awarded.
compliance rules is systematically taken into consideration when awarding annual variable compensation.
specifically required to meet predetermined annual objectives in terms of risks and compliance: adherence to risk and
Guaranteed variable compensation is not authorized, except when hiring outside Groupe BPCE. In such cases, the guarantee
Finally, the variable components granted to all regulated defined by regulations.
General Shareholders’ Meeting approves a higher percentage, which in any case may not exceed 200%. On May 19, 2015, variable component at 100% of the fixed component of total compensation for regulated categories of staff, unless the
This threshold allows Natixis to maintain the necessary flexibility between variable compensation and real performance, and to of staff received variable compensation ranging from 100% to 200% of their fixed compensation.
Finally, Natixis applies variable compensation governance mechanisms to the Front Office employees of its capital market capping of variable compensation in relation to fixed compensation.
of any kind for the Chairman of the Board of Directors
Compensation and benefits 2.4.3.2 of any kind for members directors’ fees for the 2016 fiscal year subject to the terms and conditions set out below.
The members of the Board of Directors of Natixis received of May 19, 2015). 36th resolution of the Combined General Shareholders’ Meeting
The overall annual budget for directors’ fees to be allocated to members of the Board of Directors is €650,000 (see the
Directors’ fees are granted according to the following rules: Members of the Board of Directors:a office), fixed portion: €8,000 per year (prorated to the term ofj meetings, variable portion: €2,000 per meeting, capped at sevenj i.e. €22,000 maximum in total; Members of Special Committees:a
Members of the Audit Committee: office), fixed portion: €3,000 per year (prorated to the term ofj meetings, variable portion: €1,000 per meeting, capped at sixj
Chairman: fixed portion: €15,000 per year (prorated to the term ofj office), variable portion: €2,000 per meeting, capped at fourj meetings,
Members of the Compensation Committee: office), fixed portion: €2,000 per year (prorated to the term ofj variable portion: €1,000 per meeting, capped at fourj meetings,
Chairman: fixed portion: €15,000 per year (prorated to the term ofj office), variable portion: €2,000 per meeting, capped at twoj meetings,
Strategic Committee:j one meeting Chairman: variable portion: €12,000 per meeting, capped at
Groupe BPCE, the portion of directors’ fees going to BPCE directors (including that of the Chairman) is granted and paid to BPCE and not to the directors.
Compensation and benefits 2.4.3.3 of any kind for Laurent Mignon of Natixis
(net revenues [4.2%], net income Group share [12.5%] and cost/income ratio [8.3%]) and 45% based on the financial
Strategic criteria the target variable compensation: set by the Natixis Board of Directors, upon the recommendation of the Compensation Committee, at €951,792, i.e. 99.14% of
The amount of variable compensation for fiscal year 2016 was €342,304 will be paid in 2017, 50% of which will be indexeda to the Natixis share price; in 2018, 2019 and 2020, provided that the employment and performance conditions are met.
of the vesting period will be subject to a lock-in period ending with the termination of the office as Chief Executive Officer of the allocated shares will be lost. Furthermore, 30% of the shares delivered to the executive corporate officer at the end following free performance share allocations in respect of previous fiscal years: As a reminder, the executive corporate officer received thea
At its February 18, 2015 meeting, Natixis’ Board ofj Directors granted 27,321 free performance shares to the period of four years. Chief Executive Officer of Natixis, subject to a vesting granted 31,955 performance shares to the executive corporate officer of the Company.
share grants in favor of the Chief Executive Officer during the fiscal year cannot exceed twice his fixed gross annual
RULES FOR DETERMINING VARIABLE COMPENSATION R OF THE CHIEF EXECUTIVE OFFICER FOR 2017
At its meeting on February 9, 2017, and on the advice of the Compensation Committee, for fiscal year 2017 the Board of policy.
Chief Executive Officer’s annual variable compensation for 2017 were approved by the Board of Directors on February 9, 2017
As a reminder, the CEO is prohibited from using hedging or
Other benefits work. In 2016, benefits in kind related to this plan amounted to €15,895.
implementation of a scheme to maintain compensation for a period of 12 months in the event of temporary incapacity to that he would benefit from similar social protection as the other members of BPCE’s Management Board, with the
Directors approved a change to the personal protection insurance and supplemental health insurance of CEO Laurent Mignon, so
As a reminder, at its February 10, 2016 meeting, the Board of
It should be noted that, at its February 19, 2014 meeting, the Board of Directors approved a change to its agreement on agreement. These obligations and agreements were submitted to a vote by the shareholders and approved during the Ordinary severance payment, and the establishment of a non-compete reappointment.
General Shareholders’ Meeting of May 20, 2014 (fifth resolution). At its February 18, 2015 meeting, the Board of Directors
the sum of the fixed compensation paid in respect of the last calendar year in activity and the average variable compensation
on meeting performance criteria and requirements, such as net income, Group share, ROE and the cost/income ratio reported for corporate governance code, the right to a benefit is contingent
and carries an indemnity equal to six months of fixed compensation, as in force on the date on which the CEO leaves
In accordance with the recommendations of the AFEP-Medef code, upon the departure of the Chief Executive Officer, the
non-compete indemnity, if applicable, received by the Chief Executive Officer is capped at twenty-four (24) months of the
All of these commitments were approved by the General was re-appointed as Chief Executive Officer. Shareholders’ Meeting on May 19, 2015 when Laurent Mignon
In the tables below: the expression “amounts due or granted” refers to compensation and benefits allocated to directors in connection with their dutiesa over the year, irrespective of the payment date; the expression “amounts paid” refers to compensation and benefits actually paid to directors in connection with their duties over thea year, irrespective of the date of allocation.
strictly positive. As this condition was met for the 2016 fiscal year, the portion relating to the three previous periods was paid deferred portion of variable compensation granted to Laurent Mignon is that Natixis’ net operating income should be €984,113 in variable compensation, the components of which are broken down below. The performance condition for the
Compensation paid to Laurent Mignon in 2016 was composed of €802,969 in fixed compensation and fringe benefits and the amounts actually paid is correlated: the cash portion is correlated to the market capitalization at the Euribor rate, and the portion indexed to the Natixis share price is correlated to the change in the share price.
Deferred cash compensation for fiscal year portion of variable similar instruments
Deferred securities or compensation for fiscal year portion of variable variable compensation
Deferred cash portion of for fiscal year variable compensation instruments portion of securities or similar
Benefits in kind in respect of BPCE (company car, housing, other) 0 0 N/A N/A
In respect of BPCE and its subsidiaries 2,400 2,400 13,391.67 12,191.67
In respect of BPCE and its subsidiaries 9,900 10,500 7,500 7,500
Variable compensation for fiscal year 2015, of which €200,596 (50%) paid in 2016 and the balance (50%) deferred over three years in equal shares of €66,865. The final (5) allocated amount in 2017 will be €74,608 (after application of an index ratio).
Amount paid in 2015 for the variable compensation for fiscal year 2014, i.e. €206,511, and for the deferred portion of the variable compensation for fiscal year 2013, i.e. (6) €77,075.
Variable compensation for fiscal year 2016, of which €112,667 (50%) paid in 2017 and the balance (50%) deferred over three years in equal shares of €37,556.(7)
Variable compensation for fiscal year 2016, of which €278,850 (40%) paid in 2017 and the balance (60%) deferred over three years in equal shares of €139,425. (9)
Amount paid in 2016 for the variable compensation for fiscal year 2015, i.e. €330,983, for the deferred portion of the variable compensation for fiscal year 2014, i.e. (10)
€189,470, for the deferred portion of the variable compensation for fiscal year 2013, i.e.€212,146 and for the deferred portion of the variable compensation for fiscal year allocated amount in 2017 will be €184,655 (after application of an index ratio). Variable compensation for fiscal year 2015, of which €330,983 (40%) paid in 2016 and the balance (60%) deferred over three years in equal shares of €165,491. The final (11)
€190,762, for the deferred portion for fiscal year 2012, i.e. €110,207 and for the deferred portion for fiscal year 2011, i.e. €90,844. Amount paid in 2015 for the variable compensation for fiscal year 2014, i.e. €340,743, for the deferred portion of the variable compensation for fiscal year 2013, i.e. (12)
Valuation of options according consolidated financial statements to the method adopted for the granted during the
No subscription or call options were granted in fiscal year 2016.
No subscription or call options were exercised in fiscal year 2016.
TABLE NO. 6R Free shares granted to each executive corporate officer
to each executive corporate officer by Meeting during the period the issuer and by all Group companies Plan date
Free shares awarded to Laurent Mignon by Natixis and every Natixis group company for his duties as CEO of Natixis. Indicated valuation based on grant price.(a)
No free shares became transferable for Laurence Mignon in fiscal year 2016.
non-transferable during the entire term of office of the Chief Executive Officer. Note: the 90 free shares granted by the Board of Directors at its November 6, 2013 meeting and delivered March 1, 2016 are
AMF TABLE NO. 9R Subscription or purchase options granted to the top ten non-director employees and options exercised by them
Plan of allocation, to the top ten salaried employees of the issuer and of any company included Options granted during the fiscal year by the issuer and any company included in the scope in this scope holding the highest number of options granted 0 n/a n/a the highest number of options purchased or subscribed the period, by the top ten salaried employees of the issuer and of these companies holding Options held in respect of the issuer and the companies referred to above, exercised during 0 n/a n/a 0 n/a n/a
AMF TABLE NO. 10R Record of the award of free shares for each executive corporate officer shares awarded Information on free Shareholders’
Total number awarded (a) of free shares o/w number allocated to: Share vesting date
All vested shares are subject to a lock-in requirement for the full term of office.(b)
30% of vested shares are subject to a lock-in requirement for the full term of office.(c)
30% of the vested shares are subject to a lock-in requirement for the full term of office as Chief Executive Officer of Natixis or any other executive office at Natixis,(d) including as a Member of the Natixis Senior Management Committee.
Payments or benefits due, or likely or change of office (b) to be due, as a result of the termination Consideration paid relative to a non-compete clause (b)
Officer of Natixis to Laurent Mignon, Chief Executive approval. For Natixis, this recommendation concerns the submitted to Natixis’ General Shareholders’ Meeting for compensation of Laurent Mignon.
the components of the compensation due or granted to each In accordance with the AFEP-Medef corporate governance code, executive corporate officer in respect of fiscal year 2016 must be
95REGISTRATION DOCUMENT 2016 - Natixis commitments procedures to related-party agreements and due or granted in respect of the Components of compensation subject to approval or have been fiscal year ended which are
[12.5%] and cost/income ratio [8.3%]) and 45% is based on the financial performance
[11.25%] and Return on Tangible Equity [11.25%]); of Natixis (net revenues [11.25%], net income Group share [11.25%], cost/income ratio asset-light model, synergies with the BP and CE networks, and managerial individual strategic targets (30%) related to the continued development of the a related to the digital transformation of Natixis and its businesses.
performance. Each of these three criteria is given a weighting of 5%, while 15% is variable compensation, which in 2016 was €960,000.
Annual variable compensation can represent a maximum of 156.75% of the target
Committee and the Board of Directors, the amount of variable compensation was calculated as follows: in respect of BPCE quantitative criteria: €177,985, or 74.16% of the target;a in respect of Natixis quantitative criteria: €428,207, or 99.12% of the target;a in respect of strategic criteria: €345,600, or 120% of the target.a i.e. 99.14% of the target variable compensation: The amount of variable compensation for fiscal year 2016 was therefore set at €951,792 €342,304 will be paid in 2017, 50% of which will be indexed to the Natixis share price;a €609,488 will be deferred over three years, 50% of which will be indexed to the Natixis a share price, and will be paid by third in 2018, 2019 and 2020, provided that the employment and performance conditions are met.
Based on the positive opinion of the Compensation Committee, and as approved by a
The Chief Executive Officer of Natixis is thus aligned with the relative performance of annually: if Natixis’ annual TSR is higher than the median TSRs of the institutions in the Natixis stocks and the consistency of this performance. Relative performance is tested vested. For each year where the annual TSR is lower than the median, a penalty of 20% EuroStoxxBank index for four consecutive years, 80% of the allocated shares will be will be applied. Moreover, if the relative performance of Natixis’ TSR measured over the
It should be noted that, at its February 19, 2014 meeting, the Board of Directors establishment of a non-compete agreement. These undertakings and agreements were approved a change to its agreement relating to a severance payment and the
Rules for calculating severance payment: The Monthly Reference Compensation is equal to one-twelfth of the sum of the fixed compensation paid in respect of the last calendar year of employment and the average variable compensation paid over the last three calendar years of employment.
negligence or willful misconduct, if he leaves the Company at his initiative to take over the two years preceding the departure. Satisfaction of these criteria will be verified performance conditions, such as net income Group share, ROE and the cost/income ratio by the Board of Directors as necessary.
governance code, the right to severance pay is subject to a number of criteria and Furthermore, in accordance with the provisions of the AFEP-Medef corporate
The non-compete agreement is limited to a period of six months and carries an the CEO leaves office.
Natixis’ employees. Mignon received payment of a family allowance, in accordance with the plan in force for
Healthcare protection insurance scheme/personal compensation for a period of 12 months in the event of temporary incapacity to work.
BPCE’s Management Board, with the implementation of a scheme to maintain Mignon, so that he would benefit from similar social protection as the other members of
97REGISTRATION DOCUMENT 2016 - Natixis of Directors on internal control and risk Report of the Chairman of the Board 2.5 management procedures
Natixis’ internal control system as applied to its different Code. Its purpose is to provide a summary presentation of the effects of climate change and the Company’s measures to business activities. It also reports on the financial risks relating to reduce these effects through a low-carbon strategy in all aspects of its business.
Directors, are responsible for implementing the whole of Natixis’ The Executive Managers, under the supervision of the Board of charge of the Risk Management, Permanent Control and internal control system. As such, they designate the persons in assignments.
Executive Managers, of all significant risks, risk management The Board of Directors is regularly kept informed, by the policies and changes made thereto.
Department, establishes the information systems security (ITSS-BC) function, which reports to the Compliance and business continuity policies and verifies that they are correctly applied,
Local second-level permanent and periodic control functions and extends to all business lines and subsidiaries within Natixis.
Functions Coordination Committee (CFCC), which is chaired by The overall internal control system is coordinated by the Control
Corporate Secretary. It is attended by the Chief Finance and Risk the Natixis Chief Executive Officer or his substitute, the
Risk Committee * Accounting review performed by the Finance Department. Proper application of accounting procedures checked by Compliance.
Natixis’ internal control system. First-level permanent controls are an essential component of are responsible for: departments under managerial supervision. These departments These controls are carried out by operational or functional checking that transaction processing procedures are adhereda to and compliant; justifying account balances for active accounts relating to thea transactions they execute.
Operational staff carry out their transactions in compliance with: risk processes (such as the procedure governing the credit the charters and procedures that govern and structure Natixis’a charter for measuring, controlling and managing operational decision process, the market risk management charter, the risks, the charter for managing compliance risks, etc.); managers in Natixis’ foreign operations and organizing the charter formally defining areas of responsibility for countrya relations with Heads of the business lines represented locally; the Compliance Manual, which was updated ina principles applicable to Natixis staff. In particular, this covers February 2015, and which sets out all the main Compliance professional ethics, confidential information and inside conflicts of interest, anti-money laundering, embargoes, information, market abuse, information systems security and business continuity.
control is performed by: their own transactions (level 1.1 controls), a separate level 1.2 To complement the controls carried out by operational staff on transactions carried out; operational management, which takes a second look ata department responsible for executing the transaction, which a functional department that is independent of the operationala
The Compliance Department organizes the first-level control helps each operational and functional department define and mechanism for operational risk, particularly compliance risk. It controls are centralized in a dedicated tool that is used to update the controls they are responsible for. The first-level the end of December 2016, 2,078 controls were reported consolidate results, identify areas at risk and produce reports. At
The Compliance Department’s main responsibilities are to:a in conjunction with the legal function; ensure a legal and regulatory watch relating to compliance,j control and reporting risks. These standards are devised in define standards and methods for assessing compliance,j interests take priority, and to prevent conflicts of interest order to ensure market integrity and that customers’
management) as well as to counter money laundering and (including independence in third-party account terrorist financing; establish and maintain a compliance risk map;j ensure the execution of second-level permanent controlsj application of procedures); In 2016, 2,419 second-level (including controlling compliance with standards and the controls were performed; as well as significant changes to existing products. activities, structures, processes, products and transactions, within the New Product Committees; This opinion is accompanied by a right of veto or appeal issue a written compliance opinion regarding all newj intervene in an advisory role in order to support activitiesj standards; with a view to ensuring security and compliance with
BPCE’s senior management. prepare regular summary reports, notably for Natixis’ andj
This “direct” link is reflected in: Natixis’ Chief Compliance Officer being required to issuej of a subsidiary’s Compliance manager; prior approval for the secondment, appointment or removal performance and career advancement reviews; Natixis’ Chief Compliance Officer participating in annualj
At Natixis, the Code of Conduct refers to the set of rules employees when providing investment services. These rules applicable to the professional conduct expected of our are set out in the general regulation of the Autorité des Marchés
To define these rules, ensure that they are fully known to all
Compliance management, oversees the system for combating The Financial Security Department, which reports to subsidiaries. In addition to this standing supervisory task, the money laundering, terrorist financing and fraud at Natixis and its initiatives on behalf of some business lines.
The key achievements in 2016 included: analyzing and implementing the ACPR and Tracfin jointa guidelines, issued in November 2015; European Directive on combating money laundering; preparing the application, at the end of 2016, of the fourtha linked to the “Panama Papers” affair; vigilance with respect to tax fraud and the assessment worka
Norkom and Actimize, used to detect unusual transactions; improving the operating rules for mechanisms, namelya embargoes, and in particular the changes to the embargo monitoring transactions with respect to EU and USa against Iran.
payment fraud were maintained. More specifically, an action Vigilance and measures to counter social engineering-type debt and B2B fraud.
plan was defined to combat increasing instances of SEPA direct capital markets activities is subject to close monitoring and Regarding the fight against fraud, the risk associated with
investigation and resolution mechanism is in place, employing Concerning the risk of information leakage, a specific control, legal and HR functions as necessary. the expertise of fraud and IS security experts as well as the
Natixis’ information assets, identify risks (relating to information Department, which is organized as a function, are to protect where applicable, a remediation plan to be put in place, to availability, integrity, confidentiality and traceability), to request, the overall crisis set-up in working order. To meet these provide expertise and advice to the business lines and to keep provide cross-business functions. It also works closely with objectives, the department draws on its own resources to
Continuity Planning) or with the IT Department. correspondents (Head of ITSS and the Head of Business
migrated BGC Worldwide to the Sanaga V2 BCP management In 2016 the function maintained its test and drill program and the new CMMP (Crisis Mobile Memo Pocket) tool for crisis unit software on June 15. In addition, it continued the deployment of members – a crisis kit for smartphone and tablet that has been
pass rate of the evaluation test. Some 5,200 staff have completed the training so far, i.e. a 99%
entities. These were supplemented with 116 tests and drills Second-level permanent controls on BCP were performed on 30 staff). carried out in 2016 (including a “Telework” test involving 600
Its core duties are to: Bank’s strategy, and the application, regular updating and propose a risk appetite system for Natixis in line with thea close monitoring of the system; measure risks and approve risk taking (models, reports, limits, define methods and standards that make it possible toa standards and the regulations; limit authorizations) in compliance with Groupe BPCE’s workflow and Committees, for which the Risk function provide a second opinion on business-line cases based ona undertakes preparation and supervision and acts as secretary; set out supervision and risk monitoring procedures at thea individual and consolidated level; provide information to the Natixis Board of Directors and Riska Committee based on summary information and one-off analysis; produce risk reports for the Senior Management Committee,a the business lines, BPCE and regulatory authorities.
information, refer to Chapter 3 “Risk Management” of the progress to strengthen the work of the Corporate Secretariat In 2016 the Risk Management function made significant models as well as the function’s control architecture. and thus consolidate the governance and management of risk validate internal risk models. The team reviews advanced Creation of an independent team, delegated by BPCE, toa models specific to Natixis. This validation is a necessary step market risk and counterparty risk models, as well as LGD
that precedes all model authorization or extension requests made to the supervisory authorities.
102 REGISTRATION DOCUMENT 2016 - Natixis second-level monitoring of the Risk Division’s processes, Creation of a permanent risk control team in charge of thea
Identifying and analyzing credit issuance risks counterparty credit risk. It conducts this counter-analysis using a The Risk Management Function is responsible for analyzing group, including all information relevant and useful for formalized credit file for each counterparty and beneficiary decision-making purposes: information regarding the customer, its business and itsa environment; analysis, country risk and sovereign risk analyses, etc.; external data: ratings allocated by rating agencies, sectora guarantees; internal data regarding commitments, collateral anda effects of the proposed transactions on profitability and a summary of all the credit risks incurred by Natixis and thea regulatory ratios.
Officer or by any person whom he authorizes to that end. They out formally and granted individually by the Chief Executive credit rating, and the nature and duration of the commitment. are sized according to the counterparty’s category and internal the facility under consideration satisfies the different criteria set Furthermore, these authorizations can be exercised only when out in the risk policy of each sector and activity.
Credit risk management requires a risk rating, an LGD and commitment or transaction monitoring procedures in accordance with the Ministerial Order of November 3, 2014.
Natixis uses the advanced internal ratings based approach for managing credit risks (decision-making, monitoring, etc.). each counterparty and each commitment for the purposes of applicable to the asset classes held jointly.
exposure to credit risk and most of that of its subsidiaries.
business lines concerned, etc.), and examines major breaches they arise and reported immediately to the Risk Division and the Cases showing deterioration in the level of risk are identified as counterparty watch list, specific provisioning and alert business line concerned, in accordance with both the procedures.
Specific provisions quarter and covers all the Bank’s business lines. It reviews all The Natixis Watch List and Provisions Committee meets once a provisions or adjustments to existing provisions, and decides on non-performing loans under watch that may give rise to the amount of provisioning necessary.
This Committee is organized by the Risk Division and chaired by
using analysis and close monitoring of business sectors and The search for objective evidence of impairment is undertaken refine the results of this review.
countries. When necessary, an expert opinion is sought to based on an analysis performed by the Risk Division as part of Industries and countries subject to provisions are determined special monitoring activities.
The charter defines: the principles and system for managing Natixis’ market risks;a allocated and monitored; the conditions under which market risk limits are examined,a
Market Risk Department and the Natixis Market Risk the respective roles of the business-line front offices, thea
Natixis’ Market Risk Committee meets once a month and is chaired by the Chief Executive Officer or his duly appointed
The Committee Chairman is the only person authorized to rule delegate, a member of the Senior Management Committee.
approves the pricing models (pricers) used by front officea and the Market Risk Division).
mechanism described in the Natixis market risk regulation Procedures specify the operational breakdown of the system as well as the two decision-making levels (front office charter. They also describe in detail the limit authorization relevant operational staff and managers. A global market risk Special reports on each business line are sent daily to the front office managers.
report is also distributed daily to senior management, BPCE and and structural foreign exchange Overall interest rate, liquidity 2.5.5.3 risks
Committee”). This Committee is chaired by the Chief Executive Asset/Liability Management Committee (the “ALM
Financial Management and BPCE’s Head of Asset/Liability and Central Bank Collateral Management Pool, the Head of
The structural balance sheet risks of Natixis are managed and monitored on a consolidated basis under the authority of the
Committee’s decisions; standards to the ALM Committee and executes the central bank collateral management pool since 2011 is aimed Natixis’ contribution to the BPCE/Natixis single treasury anda at refinancing all business lines in accordance with the the ALM Committee delegated by the Financial Management established rules and limits, and executing the decisions of
Committee; that have been documented and approved by the Group ALM
The Operational Risk function, led by the Operational Risk Department is responsible for monitoring and managing risks arising from failures attributable to operating procedures, employees and internal systems or arising from outside events.
104 REGISTRATION DOCUMENT 2016 - Natixis designed to know, control and reduce Natixis’ operational risks, staff as described in the operational risk policies and procedures validated by the Natixis Operational Risk Committee are in compliance with Groupe BPCE standards.
The duties and organization of Operational Risk Department procedures for detecting, analyzing and measuring such risks: Operational risk knowledge relies on the application of recording incidents via a network of Operational Risk Officersa across all business lines and support functions; process; investigating serious incidents including an escalationa qualitative and quantitative mapping of potential risks;a links with other control functions;a establishing key risk indicators and environmental variables ofa a predictive nature.
The Operational Risk function is rolled out globally on a matrix basis according to activity and location. It also raises employee
Committee, a specialized body that oversees operational risk policy, monitors Natixis’ exposure and makes final decisions on
Risk Officer, with the Head of the Operational Risk Department divisions’ Heads of Operational Risk and the data and methods officer.
They closely manage each business line’s operational risk exposure. These Committees are organized according to the also maintaining constant efforts to increase the security of procedures through action plans which are regularly followed up
Operational Risk function governance has served to accompany change and reorganization in the banking business lines, while at all levels of the Company.
Specific risks related 2.5.5.5 to the Insurance and Asset Management activities
The entities of the Insurance (CEGC, Natixis Assurances and Coface) and Asset Management activities bear the primary accuracy and completeness of the data used to control and monitor their risks.
The Finance Department prepares Natixis’ consolidated financial statements and all consolidated regulatory reports (including developed and administered by Natixis S.A. solvency and liquidity ratios) using the tools and databases
financial and regulatory statements, although the sub-group it leads has been included in the BPCE consolidation group autonomous, but linked to BPCE’s processes.
In this regard, the processes for preparing the consolidated financial statements and regulatory reporting are operationally
provision of support and appropriate training to the accountinga and regulatory reporting teams of those consolidated entities
a final level of control carried out by the Internal Audita
For accounting, permanent and periodic controls apply to the completion and monitoring of: management/financial account reconciliation procedures (outstandings and income statement), clearing of suspense accuracy and veracity checks, such as thea items, and more generally the justification of all accounts; consistency checks through analytical reviews;a checks that income and expenses are allocated correctly;a verification that the presentation complies with accountinga rules; relevant principles; correct processing of specific transactions in line with thea verification of financial information (notes to the financiala statements, items of financial communication); adjustment of anomalies identified at the time of thesea controls as well as the corresponding analyses and documentation.
systems in place throughout the consolidated Group. These controls are conducted using the various accounting to the completion and monitoring of: For regulatory reporting, permanent and periodic controls apply management/financial account reconciliation processes, as management data can come from various sources; accuracy and veracity checks, such as thea controls of the traceability and completeness of data,a throughout the various reporting preparation processes; compliance and presentation controls in respect of thea regulatory requirements specific to each reporting process; data; the quality of the attributes entered into the databases used, allowing the proper breakdown of accounting or management quality controls of the data needed to produce the reports anda possible and relevant.
For all these scopes, Natixis and its subsidiaries are continuing equip themselves with suitable audit trail tools. In this respect, Natixis’ Finance Department supervises, assists and monitors to upgrade their accounting and financial control procedures and the various controls performed by the subsidiaries.
It also draws on: the application of the principles defined by BPCE, i.e. thea scopes governed by the two-level control processes and implementing the coordination of the control teams; two kinds of assignments (operational or organizational) to bea carried out either as part of the account closing process or in periodic assignments; formalized documentation as part of the “Accounting anda financial information quality control framework” drawn up by Groupe BPCE. It includes procedures that describe in detail the organization of the system; risk mapping showing the nature, the frequency ofa occurrence and the responsibility of the different control levels across all scopes (accounting and regulatory); controls; departments, performed by the dedicated Regulatory and Accounting Review team, which also carries out second-level centralized oversight within the financial or accountinga a risk-based approach, enabling the Review teams to guidea and determine the frequency of their controls given the quality of the internal control processes.
In 2016, the highlights of the accounting and financial control environment included: a tighter timetable for publishing the various financial reports;a the continuation of a large-scale project to streamline thea information systems used for market transactions (front and continued in 2016; back office systems), and the migration of the associated software, which began in the second half of 2014 and
Accounting and Ratios, Financial Oversight and Financial Management); a new project to streamline and pool data input by setting upa shared data warehouses for all overview functions (Risk, tools that have been progressively used and phased in at Natixis since 2008; a new project to redo Natixis Factor’s overview systems toa enable the introduction within the subsidiary of specialized stronger prudential and fiscal controls;a enhanced monitoring of local control systems and support fora the Review officers, particularly those in the international CIB platforms.
Inspection and Natixis’ Internal Audit Department; ad hoc audit assignments conducted by BPCE’s Generala audits required by the Single Supervisory Mechanism in itsa role as banking regulator; control procedures.
Investment Firms Committee) in its decision of November 15, 2007, the BPCE General Inspection’s charter and Natixis’
BPCE’s General Inspection, in accordance with the principles approved by the CECEI (the French Credit Institutions and internal audit charter as revised in 2013. Also in accordance with these principles, the Internal Audit Department coordinates a global audit function.
processes audited as well as an appraisal of the risks arising from the relevant activities. They lead to recommendations to
Chairman and senior management as well as to the audited units. In addition, Groupe BPCE’s General Inspection receives a
and the Board of Directors. For the due diligence and follow-up audits it conducts, it makes use of the relevant work carried out
In addition to conventional audit assignments, the Internal Audit Department is also able to carry out ad hoc audits in order to
Natixis’ annual and multi-year audit plans are approved by its Chief Executive Officer and by BPCE’s General Inspection.
assignments on all risk classes to which Natixis’ activities are exposed. It devoted a growing share of its resources to assignments of a regulatory nature, by working with Natixis on to audit agreements entered into with them.
Internal Audit function by supporting internal transfers for more senior inspectors and improving the effectiveness of strengthening the organization and resources of Natixis’a the recruitment process; deepening the current relationship between the Internal Audita Department and the nine international and subsidiary audit pooling (IT, quants, etc.); teams by holding a plenary seminar with the entire function, and the continued development of specialized resource upgrading the skills of the Internal Audit teams by stepping upa the general and specialized tests used in the recruitment process; technical and professional training for inspectors, a more organized system for sharing knowledge, and the revamp of turnaround times for audit reports and recommendation follow-ups, and to systematically integrate the “client” focus improving the quality of audits, through efforts to reduce thea areas of the New Frontier strategy:
BPCE’s General Inspection. To this end, BPCE’s General Inspection and Natixis’ Internal Audit Department held seven meetings in 2016. These meetings provided a forum for evaluation (General Inspections Coordination Committee).
CLIMATE RISKS 2.5.8 2016 fiscal year Natixis is required to report on the risks linked to climate change and on its low-carbon strategy.
Pursuant to Article 173 of the energy transition act, as of the
includes the management of extreme weather events (e.g. storms, heatwaves, flooding of the Seine, etc.) that could affect
The environmental/climate risks linked to our business operations are progressively taken into account insofar as caused directly by climate change) and transition risks (exposure of certain sectors to the adjustments brought about by the
Natixis’ clients can they themselves be subject to climate risks: these include physical risks (exposure to physical consequences certain business lines.
In 2016 Natixis was part of a working group to improve the
Natixis has put in place a number of measures to limit its own impact on the climate, namely: consumption; energy-efficient buildings, in order to reduce its energya optimization of business travel and its vehicle fleet; a environmental criteria. responsible purchasing policies that incorporatea
In addition, Natixis draws on its investment and financing operations as its key means of action in the fight against climate all its business activities: Corporate & Investment Banking, change, both in terms of risk management and business opportunities. Natixis has put in place a low-carbon strategy for
Financing green growth: Natixis is a market leader ina renewable energy and sustainable infrastructure financing,
transition. The policy was the subject of a detailed publication that covered financing, asset management and insurance.
At the end of 2016 work was carried out to make CSR a cross-business factor of Natixis’ next strategic plan. As a result, should adopt a low-carbon requirement which will include governance and adapted resources.
CSR risks should be included in the company’s lending policies vis-a-vis the most sensitive sectors, and the business lines
PREPARED IN ACCORDANCE WITH ARTICLE L.225-235 OF THE FRENCH COMMERCIAL CODE
It is the Chairman’s responsibility to prepare, and submit to the Board of Directors for approval, a report on the internal control of the French Commercial Code, particularly in terms of corporate governance.
and risk management procedures implemented by the Company and containing the other disclosures required by Article L. 225-37
It is our responsibility: report on the internal control and risk management procedures relating to the preparation and processing of the accounting to report to you on the information contained in the Chairman’sa and financial information; and required by Article L. 225-37 of the French Commercial Code, it being specified that we are not responsible for verifying the to certify that this report contains the other disclosuresa fairness of these disclosures.
standards applicable in France. We conducted our work in accordance with the professional
INFORMATION CONCERNING INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES RELATING TO THE PREPARATION AND PROCESSING OF
OVERALL INTEREST RATE, 3.8 LIQUIDITY, STRUCTURAL FOREIGN EXCHANGE RISKS 159 Governance and structure3.8.1 159
This chapter presents information regarding risks and capital adequacy in accordance with the following regulatory requirements: IFRS 4, etc.); requirements in respect of accounting standards (IFRS 7,a
Task Force, EDTF). A table cross-referencing the EDTF's falls under the Statutory Auditors' certification of the consolidated financial statements. This information is identified
Risk Management Procedures (See Natixis 2016 registration document – Chapter 2, Section 2.5).
A detailed description of Natixis’ risk management systems is set adverse impact on Natixis’ operations, financial position or results.
Risks related to the macroeconomic 3.1.2.1 environment and the financial crisis may negatively affect the net revenues, profitability and financial position of Natixis
January 2016. This rebound loosened the grip on exporting economies, especially in emerging countries. However, by resulting lower growth in these countries weighed on the global economy as a whole.
US presidential election, the fixed income markets underwent a reversal towards the end of the year that saw yield curves highly focused on other major events such as the Brexit vote in the UK, the referendum on Senate reform in Italy, the Austrian
Aside from the ongoing uncertainty and instability of the economic situation, the financial and banking markets were
113REGISTRATION DOCUMENT 2016 - Natixis especially France (return of inflation, slowdown in consumer spending, profit erosion for companies with energy-intensive
The global economic outlook promises to remain mediocre for both 2016 and 2017, with an economic downturn in Europe and credit losses and adversely affect Natixis’ capital adequacy. Furthermore, election results in the euro zone (Germany, France, production lines) liable to have repercussions on provisions for solvency in euro zone countries.
The Brexit process is another big question mark. Its economic developments could potentially have a negative impact on the and political consequences remain uncertain, with the potential to trigger huge disruptions on the financial markets. Such
are subject to the approval and control of BPCE Natixis’ risk management policies and procedures granted to joint Natixis and Group BPCE customers as non-performing loans. BPCE’s own interests concerning risk
Risk Officer, as well as certain aspects of risk management such as the approval of credit limits and the classification of loans management may differ from those of Natixis.
Corporate & Investment Banking, Insurance, Asset Management and Specialized Financial Services activities: Natixis is exposed to risks intrinsically associated with its credit risk is the risk of loss on Natixis’ receivables due to aa debtor’s inability to honor its contractual obligations. It includes
(including sovereign risk) and risk associated with securitizations; counterparty risk inherent in market transactions, country risk investment banking activities; market risk is the risk of loss generated by any negativea fluctuations in market inputs impacting corporate and operational risk is the risk of losses due to inadequate or faileda internal processes, or due to external events, whether deliberate, accidental or natural occurrences; liquidity risk is the risk that Natixis will be unable to honor itsa commitments to its creditors due to the mismatching of maturities between assets and liabilities; structural interest rate and foreign exchange risks are defineda as the risk of loss triggered by interest rate fluctuations in the banking book or adverse movements in exchange rates in the scope of banking activities; provisions specific to banking and financial activities, including legislative or regulatory provisions, or in terms of professional and ethical standards; non-compliance and reputational risk (including legal anda tax-related risks) are generated by the failure to observe insurance risk is the risk to profits by any discrepancy betweena expected and incurred claims.
Risk and Business Continuity Risk Departments: resources and incident management processes. Oversight of cyber risk, based on strict management of information systems
The bank is constantly strengthening its data protection and the associated risks, is part of an integrated system involving the IS, Operational Risk, Information System Security interest rate levels due to the structure of their portfolios, consisting predominantly of floating-rate assets, to its rapid interest rate conditions: from a structural standpoint, Natixis’a banking operations have relatively low sensitivity to absolute
New strategy development of synergies with the Caisse d’Epargne and Banque Populaire networks.
Insurance division at the service of Groupe BPCE; and further the
Should Natixis decide to sell some of its operations, the selling price could be lower than expected and Natixis might continue to of liability guarantees or indemnities that it might have to grant to the buyers.
Pursuant to the IFRS standards and interpretations currently in determine provisions relating to loans and non-performing loans, provisions relating to possible litigation, and the fair value of force, Natixis is required to use certain estimates to prepare its financial statements, including accounting estimates to
methods by which they are determined should change under future IFRS standards or interpretations, Natixis may be exposed from brokerage and other fee-based businesses during market downturns
A market downturn is likely to lower the volume of transactions transactions. In addition, as management fees charged by Natixis to its customers are often based on the value or performance of that Natixis executes for its customers and in its capacity as a market maker, thus reducing net revenues from these reduce Natixis’ revenues from its Asset Management and Private Banking businesses.
Despite the risk management policies, likely to give rise to significant losses procedures and methods in place, Natixis may be exposed to unidentified or unanticipated risks effective in limiting its exposure to all types of market environments or all types of risk, including risks that Natixis has not been able to identify or anticipate. Furthermore, the risk
Natixis could suffer losses if any of the instruments and hedging on observation of historical market behavior and historical correlation analysis. For example, if Natixis holds a long position
Natixis may consider external growth or partnership opportunities from time to time. While Natixis closely reviews the companies it result, Natixis may have to assume unforeseen liabilities. Similarly, an acquisition or joint venture may not live up to plans to acquire and the joint ventures it plans to engage in, it is generally not feasible for these reviews to be exhaustive. As a venture partners may undermine the benefits sought by the joint venture.
profitability. This situation could also lead to the departure of key employees. Insofar as Natixis may feel compelled to offer its announced external growth operation or the failure to consolidate the new entity or joint venture is likely to materially affect Natixis’
employees financial incentives in order to retain them, this situation could also result in increased costs and an erosion of profitability. In the case of joint ventures, Natixis is subject to could subject Natixis to liability, losses or reputational damage. In addition, conflicts or disagreements between Natixis and its joint additional risks and uncertainties in that it may be dependent on systems, controls and personnel not under its control and which higher-than-expected costs. Natixis may also encounter difficulties in consolidating a new entity. The failure of an expectations, expected synergies may only be partly achieved (or not achieved at all), or the transaction may give rise to
France and in other areas of the world where it is firmly established. Heightening this competition is consolidation, more flexible regulation, or to other requirements relating to for Natixis and its competitors. New and more competitive competitors could also enter the market. Subject to separate or prudential ratios, these new market participants would be able to offer more competitive products and services.
The financial soundness and behavior on Natixis financial soundness of other financial institutions and market participants. Financial institutions are closely interconnected
Natixis’ ability to carry out its operations could be affected by the mainly as a result of their trading, clearing, counterparty and financing operations. The default of a sector participant, or mere rumors or questions surrounding one or more financial the future, could lead to additional losses or defaults.
institutions or the finance industry as a whole, have, in the past, led to a widespread contraction in liquidity in the market and, in
This risk would be compounded if the assets held as collateral by Natixis were unable to be sold or if their price was insufficient to its counterparties or customers fail to meet their commitments.
participants may have a highly detrimental impact on financial institutions due to interconnected nature of institutions operating cover all of Natixis’ exposure to loans or derivatives in default. In addition, fraud or misappropriation committed by financial sector
Natixis is exposed to several financial counterparties, such as clients with which it conducts transactions in the usual manner. Natixis is therefore exposed to a risk of insolvency should one of investment service providers, commercial or investment banks, mutual funds and hedge funds, as well as other institutional the liquidity of assets and make it more difficult to sell them, potentially giving rise to significant
An extended market decline may reduce losses intrinsically illiquid assets. Certain assets, such as derivatives generally valued using models rather than on the basis of the market price. Given the difficulty in monitoring changes in prices traded between banks, that are not traded on a stock exchange, regulated market, or offset through a clearing house are of these assets, Natixis could suffer unforeseen losses.
could threaten business levels or reduce liquidity in the market concerned. This situation would expose Natixis to significant
In some of Natixis’ businesses, a prolonged fall in asset prices losses were it unable to rapidly close out its potentially loss-making positions. This is particularly true in relation to
Any interruption or failure of Natixis’ information systems, or those of third parties, may result in lost business and other losses management, general ledger, deposit, transaction and/or loan processing systems. If, for example, Natixis’ information
Like most of its competitors, Natixis relies heavily on its adequately resolved.
such breakdowns or interruptions in its systems or in those of other parties will not occur or, if they do occur, that they will be transactions could also undermine its business development capacity. Natixis is also exposed to the risk of an operational the implementation of hedging transactions. The inability of Natixis’ systems to accommodate an increasing volume of failure or interruption by one of the clearing agents, foreign exchange markets, clearing houses, custodians or other financial intermediaries or external service providers it uses to execute or increasingly exposed to the risk of operational failure of its customers’ information systems. Natixis cannot guarantee that facilitate its securities transactions. With growing interconnectivity with customers, Natixis may also be
Unforeseen events may interrupt Natixis’ operations and cause substantial losses and additional costs infrastructure, or that of third parties with which it conducts business, and could also lead to additional costs (such as property, financial assets, market positions and key employees. Such unforeseen events may, additionally, disrupt Natixis’
Unforeseen events, such as a severe natural disaster, pandemic, losses insofar as they are not covered or are insufficiently covered by an insurance policy. These losses could relate to terrorist attacks or any other state of emergency, could lead to a sudden interruption of Natixis’ operations and cause substantial
any adverse change in the political, military or diplomatica environments creating social instability or an uncertain legal sectors, have a material impact on Natixis’ results the Banking, Insurance and Financial Services
Natixis is subject to the tax regulations in force in its various operations are managed locally, in accordance with national, regional and international tax rules, depending on the type of aims to create value in serving its customers by drawing on the synergies and sales capacities of its various entities. Its operation in question. Natixis reports transparently on its organizational structure and operations, and discloses its expense. Natixis observes the Code of Practice on Taxation for Banks.
revenues and the corresponding taxes on a country-by-country basis for greater clarity on the determining factors of its tax
The structuring of Natixis’ intra-group transactions and financial products sold to customers is rooted in Natixis’ own occasionally on authorizations or rulings by the tax authorities. There can be no assurance that the tax authorities will not seek interpretations of applicable tax laws and regulations, based on the opinions received from independent tax advisers and
Natixis’ profitability and business outlook could be adversely affected by reputational and legal risk regulatory action that has a potentially unfavorable outcome. Any damage caused to Natixis’ reputation could be accompanied by a financial sector to which Natixis is exposed, any decrease, restatement or correction of its financial results and any legal or loss of business likely to threaten its results and its financial position. Inadequate management of these issues could also give rise to additional legal risk for Natixis and cause an increase regulatory authorities.
Natixis’ reputation is essential in attracting and retaining its customers. The use of inappropriate means to promote and regulatory requirements, compliance issues, money laundering market its products and services and the inadequate management of potential conflicts of interest, legal and harmed by any inappropriate employee behavior, fraud or misappropriation of funds committed by participants in the laws, information security policies and sales and trading practices may damage Natixis’ reputation. Its reputation could also be
The EU directive for bank recovery and resolution (BRRD) and the Single Resolution Mechanism (defined below) as enacted into French law by a legislative decree dated August 20, 2015 (Order 2015-1024 of August 20, 2015, setting forth various write down Natixis securities or, in the case of debt securities, to convert them into equity.
Resolution authorities can write down or convert Natixis equity instruments if the issuing institution or group to which it belongs requires exceptional public assistance (with some exceptions). They must write down or convert equity instruments before default within a reasonable time), or becomes unsustainable or must be written down or converted in order of priority, so that Common Equity Tier 1 instruments are written down first, then launching resolution proceedings, or if such steps are necessary to ensure the institution remains sustainable. Equity instruments
Aside from bail-in powers, resolution authorities have been granted expanded powers so that they can implement other the Autorité de Contrôle Prudentiel et de Résolution (ACPR French Prudential Supervisory Authority for the Banking and
The resolution authorities are currently the Resolution College of the Council of July 15, 2014 establishing uniform rules and a uniform procedure for the resolution of credit institutions in the
Insurance Sector) and the Single Resolution Board established by Regulation (EU) No. 806/2014 of the European Parliament and framework of a Single Resolution Mechanism and a Single Resolution Fund (the “Single Resolution Mechanism”). Under the Single Resolution Mechanism, the ACPR’s Resolution College is responsible for implementing resolution plans in accordance with the instructions of the Single Resolution Board.
The resolution authorities’ use of the powers described above may lead to the write-down or conversion of all or some of the instruments. In addition, under certain market conditions, the interpretation held by market stakeholders regarding the debt and equity instruments issued by Natixis, or may significantly affect the resources available to Natixis to pay such value of debt and equity instruments issued by Natixis. existence of such powers may negatively influence the market
Board of Directors: - Audit Committee - Risk Committee * Risk Management functions
It regularly reports on its work, submitting its analyses and findings to Natixis’ Executive Managers, to Natixis’ Board of report on risks and risk management.
To fulfill these responsibilities, the Risk Division uses an ITa quantification methods for each type of risk.
system tailored to the activities of Natixis’ core business lines and which applies the department’s modeling and membership and duties are described in detail in Chapter 2, Section 2.5, “Chairman’s report on internal control procedures”
monitored under the authority of the Asset/Liability Management Committee (the “ALM Committee”) whose
The Compliance function oversees the non-compliance risk management system of Natixis S.A. and of its French and security/business continuity.
international branches and subsidiaries. It is also in charge of preventing fraud risk and of information systems
Its operating rules are governed by a charter that is signed off by the Senior Management Committee.
In addition, the Compliance Manual is an effective means of embedding the risk culture by highlighting the enhanced combating the financing of terrorism and the management of supervision in key areas including professional ethics, putting client interests first, enhanced corruption and fraud prevention, all the bank’s staff.
the Risk Appetite Framework (RAF), which describes the2. interface between the organization’s key processes and the implementation of the governance that puts the RAS into action.
The business model developed by Natixis is based on its financial services), responding to the needs of its clients and those of Groupe BPCE.
selection and oversight. Market risk management in particular has a highly selective approach, coupled with limited tolerance
Natixis’ most important asset is its reputation and its relationship with its clients. The client's interest is therefore put transaction execution and security in all its activities, entities and geographic regions of operation.
first, and the bank is dedicated to operating at the highest level of ethical standards, and in line with the best standards of protection.
in the realm of financial security (anti-money laundering, terrorism, corruption and fraud), compliance and client
Natixis is committed to strictly observing the laws, regulations and norms governing its activities, in France and internationally,
The risk appetite operating mechanism relies on two successive levels for each identified risk and selected indicator: an overall limit setting the risk envelope allocated to thea business lines; and a warning threshold on the maximum risk which, ifa exceeded, would pose a risk to Natixis’ continuity and/or stability.
concentration risk, market risk, liquidity and leverage risk, This operational framework is applied by type of risk (credit and operational risk, solvency risk, etc.) and draws on Natixis’ pre-existing measuring and reporting systems.
It is regularly reviewed and consolidated, and is presented to the Board of Directors’ Risk Committee.
The stress test mechanism is structured as follows: global internal and external exercises;a specific exercises by scope;a periodic regulatory exercises.a
Global internal stress tests impact of a central scenario and of a stressed scenario on a bank’s income statement, risk-weighted assets and equity.
The results are reported to the Group’s Senior Management and to the Risk Committee.
The impact of this adverse scenario was presented at the Senior Management Committee and Risk Committee Meeting, and was analyzed as part of building Natixis’ solvency trajectory. The impact was measured in terms of provisions for credit losses, net income (group share), net revenues and Common Equity Tier 1.
Section 3.4.7.1 on “Impact of stress scenarios” and the market stress tests detailed in Chapter 3, Section 3.6.3 on
Credit risk quality. The debtor may be a bank, an industrial or a commercial the probability of a debtor’s inability to repay and, in this event, the projected recovery is a key component of measuring credit periods of economic uncertainty, insofar as such conditions may lead to a higher rate of default.
executes with its customers (for example, over-the-counter derivatives [swaps, options, etc.], securities lending and
Natixis is exposed to this risk because of the transactions it borrowing, and repurchase agreements).
Rating agencies assess the creditworthiness of the units available for sale for investors.
In general, securitizations have the following characteristics: they result in a material transfer of risk where the transactiona is originated by Natixis; payments made in the course of the transaction depend ona the performance of the underlying exposures; transfer.
particular, bond prices, interest rates, securities and commodities prices, derivatives prices and prices of all other
Asset liquidity is also an important component of market risk. In imbalance in the supply and demand of certain assets), a financial instrument or any other tradable asset may be unable the event of insufficient or non-existent liquidity (for example, because of a reduced number of transactions, or a major to be traded at its estimated value.
Operational risk is the risk of loss due to inadequate or failed internal processes, or due to external events, whether and information systems. External events include, but are not limited to, natural disasters, fraud or terrorist attacks.
Natixis’ overall interest rate risk is defined as the risk of losses
As is the case for most corporate and investment banks, Natixis has very few assets and liabilities generating structural interest rate positions. Natixis’ overall interest rate risk concerns predominantly linked to the lag between IBOR fixing dates. This is therefore classed as a secondary risk at the bank level.
Liquidity risk is the risk that Natixis will be unable to honor its commitments to its creditors due to the mismatching of maturities between assets and liabilities. This risk could arise, for example, in the event of massive withdrawals of customer deposits, a crisis of confidence, or an overall market liquidity transactions with contractual maturities, as Natixis has fewer stable and permanent customer resources than retail banks and crisis. As a corporate and investment bank, this risk for Natixis results primarily from mismatched positions between
Structural foreign exchange risk is defined as the risk of transferable equity loss generated by an unfavorable fluctuation accounts due to a mismatch between the currency of net investments refinanced by purchases of currency and the in exchange rates against the currency used in the consolidated currency of equity.
concerns structural positions in the US dollar due to the consolidation of foreign branches and subsidiaries funded in this
with the provisions specific to banking and financial activities, significant financial losses, that arises from a failure to comply of a legal, administrative or disciplinary penalty, accompanied by Non-compliance risk is defined by French regulations as the risk of the supervisory body. This risk is a sub-category of executive body, notably issued in accordance with the policies professional or ethical standards, or instructions from the whether these are stipulated by laws or regulations, with employees, shareholders, supervisors, or any other third parties in the Company by its customers, counterparties, suppliers, Reputational risk is the risk of damage to the confidence shown normal conduct of business.
Environmental and social risks: Natixis’ environmental anda companies in which Natixis invests. social risks arise from the operations of the clients and
was enacted into French law by the French Ministerial Order of Basel 3 regulations in Europe with immediate effect. The CRD IV IV and the Capital Requirements Regulation (CRR) have applied strength of banking institutions, has resulted in: This regulatory framework, aimed at reinforcing the financial a stricter definition of the capital items eligible to meet capitala requirements; counterparty risk on derivatives; reinforced own funds requirements, in particular fora higher ratios to observe, specifically regarding CET1 capital anda capital buffers: 2.5% of total risk exposures by 2019, a capital conservation buffer, which will have to representj exposures. The rate applied in France is 0%; holds risk exposures, weighted by the amount of said a contracyclical capital buffer, i.e. the average of thej contracyclical capital buffer of each country in which Natixis
As under Basel 2, the Basel 3 regulatory provisions are divided into three pillars: observable requirements; capital based on various possible methodologies and minimum Pillar I: a set of rules defining the measurement of risks anda and internal governance and oversight systems; requirements for each institution in accordance with their risks supervisory authorities, allowing them to define specific capital Pillar II: a mechanism governing the role of the bankinga adequacy of their management. This mechanism was highlighting the level of risks incurred, capital adequacy and the Pillar III: requires institutions to disclose several itemsa guidelines by the EBA.
As a result of the SREP 2016 process, Natixis must observe a contracyclical capital buffer, which was very low at conservation buffer. These items do not include the level of the of Pillar II (excluding P2G) and 1.25% in respect of the capital phased-in CET1 ratio of 7.75% in 2017, 2% of which in respect
December 31, 2016 and whose measurement is based on buffers. exposures to countries applying non-zero contracyclical capital
Subject to the framework market risk to capital Not subject from capital to deduction or subject requirements
Cash, central banks 26,704 26,704 26,704 loss at fair value through profit or Financial assets designated assets Available-for-sale financial from banks Loans and receivables due receivables Customer loans and interest rate risk portfolios hedged against Revaluation adjustments on
Current tax assets 436 310 310 assets Accrual accounts and other sale Non-current assets held for
Not subject to deduction or subject requirements to capital from capital
Due to central banks value through profit or loss Financial liabilities at fair interest rate risk portfolios hedged against Revaluation adjustments on
Deferred tax liabilities 685 449 449 liabilities Accrual accounts and other assets held for sale Liabilities on non-current technical reserves Insurance companies’
Share capital and reserves 10,895 10,895 10,895 gains or losses Unrealized or deferred
CET1 is calculated using accounting capital (excluding reclassified hybrid securities), with the following restatements: deductions not subject to phase-in arrangements:a estimated dividend,j goodwill and intangible assets,j derivatives, recyclable unrealized gains and losses on hedgingj own credit risk on debts issued and financial instrumentsj (Debit Value Adjustment), prudent valuation adjustments,j on expected losses on credit positions, expected loss on equity positions and shortfall of provisionsj commitments; revaluation adjustments on defined-benefit pension planj deductions subject to phase-in arrangements:a non-bank non-controlling interests,j regulations, bank non-controlling interests exceeding the limits set byj deferred tax assets dependent on future earnings, but notj related to temporary differences, recyclable gains or losses on available-for-sale assets,j company-controlled stock and cross-shareholdings,j amount exceeding threshold 1 on non-material holdings ofj capital instruments issued by financial entities, instruments issued by financial entities, amount exceeding threshold 2 on material holdings of capitalj amount exceeding threshold 2 on deferred tax assetsj dependent on future earnings and resulting from temporary differences, amount exceeding threshold 3 common to amounts notj deducted in respect of threshold 2, below).
AT1 capital comprises: applying phase-in arrangements; subordinated debt instruments recognized as AT1 aftera applied to CET1; deductions made from this category via the phase-in provisionsa any surplus deduction of Tier 2 capital (see below).a
Other instruments to be reclassified as Additional Tier 1 capital 1,611
Total shareholders’ equity – group share 19,836 Reclassification as Additional Tier 1 capital (1,611)
Prudential filters after phase-in arrangements Own credit risk: Gain on reclassification of hybrid securities (257)
Own credit risk: liabilities and derivatives net of deferred taxes 9
Total Additional Tier 1 (AT1) 1,770 Total Tier 1 capital 14,244 Subordinated debt instruments
Dividends proposed to the General Shareholders’ Meeting and expenses (1,130) (1,127)
The change in prudential capital under Basel 3/CRR over the period is shown below: CHANGES IN PRUDENTIAL CAPITAL AFTER APPLYING PHASE-IN ARRANGEMENTSR
Deferred tax assets that rely on future earnings (excluding temporary differences) 672
Amount of Additional Tier 1 (AT1) capital at end of period 1,770
Common Equity Tier 1 (CET1) capital totaled €12.5 billion at December 31, 2016, up €0.1 billion over the year.
In addition to the above items, AT1 capital increased by €0.5 billion, stemming mainly from a €400 million issuance. The balance was primarily due to the change in the phase-in rate
T2 capital was stable over the year: the positive impact of the issuance of €0.3 billion in T2-eligible instruments (via BPCE) was offset, first by the gradual run-off of instruments ineligible for grandfathering arrangements, and second by the change in the impact of phase-in arrangements over the period.
At €115.5 billion, risk-weighted assets climbed €2.2 billion over the year. It should be noted that the BPCE guarantee concerning former GAPC exposures no longer has an impact on Natixis
The -€0.9 billion decrease in CVA risk can be primarily attributed to changes in volumes and the establishment of a hedge.
CAPITAL PLANNING3.3.5 adequacy level, continually ensuring compliance with regulatory capital requirements in all compartments and capital adequacy in line with the risk appetite defined by the institution, and adapting capital allocation and measurement of business line profitability
ultimately meeting the requirements of the supervisory authorities, shareholders and investors: The capital planning system adapts all processes with the aim of adequacy; continuously maintaining the targets set in terms of capitala developing an internal approach for measuring capitala requirements and overseeing Natixis’ resilience in stress scenarios;
132 REGISTRATION DOCUMENT 2016 - Natixis projecting capital requirements specific to business linea activity, within the framework of Natixis’ overall capital adequacy policy; implementing a system for analyzing the capital consumptiona of the business lines and their profitability on the basis of Basel 3/CRR risk-weighted assets; strategic plan and annual budget procedures, taking into account business requirements, profitability and balance between the core business divisions.
While total loss-absorbing capacity (TLAC) requirements only apply to global systemically important banks (G-SIBs) such as Groupe BPCE (a resolution entity), the European MREL (minimum requirements for eligible liabilities) ratio introduced by the BRRD directive should apply to Natixis, although the target level has yet to be defined.
Large exposures ratio exceed 25% of the bank’s total capital. Natixis complied with this requirement in 2016.
The Basel Committee has set up a system for managing leverage risk. The system was included in the CRR, defining leverage as being equal to Tier 1 capital divided by accounting mandatory as of January 1, 2015. After an observation period, the leverage ratio may become more restrictive under Pillar I as of 2018.
The risk control framework is overseen by the Risk Division with the strong involvement of all the bank's businesses and support functions. All the internal standards, policies and procedures are consistent with BPCE’s framework and are reviewed periodically to take into account the results of internal controls, regulatory changes and the bank’s risk appetite.
Credit risk management and control are performed in accordance credit risk through various sections that: with the segregation of duties. Accordingly, together with the other departments, the Risk Division is in charge of monitoring define the credit risk policies and internal credit riska management procedures; set credit risk limits and exposure thresholds;a issue transaction authorizations after a counter-analysis of thea credit risk and the counterparty risk in line with the processes for credit approval and limit authorization; define methodologies and internal rating models;a implement second-level permanent controls;a monitor exposures and report to Senior Management.a
TARGETS AND POLICY3.4.1 control and management system. The policies are the product of or sector.
consultation between the Risk Division and the bank’s various business lines, and are intended to establish a framework for risk-taking while outlining risk appetite and Natixis’ strategic vision by translating it into the risk appetite for each business line
The framework these risk policies set out makes a distinction between recommendations based on good practices, and strict (qualitative or quantitative) supervisory criteria, any deviation from which affects the decision-making process and the usual
This framework helps to monitor the concentration of the banks’ commitments in relation to a given sector or type of risk.
products.a of deviations) and is presented to the Global Risk Committees.
IFRS 7) (Data certified by the Statutory Auditors in accordance with
Natixis’ credit risk measurement and management procedures are based on: a standardized risk-taking process, structured via a system ofa limit authorizations and decision-making Committees; independent analyses carried out by the Risk Division duringa the loan approval review process; rating tools and methodologies providing standardized anda tailored assessments of counterparty risk, thereby making it possible to evaluate the probability of default within one year and the loss given default; information systems that give an overview of outstandinga loans and credit limits.
The principles of counterparty risk management are based on: measuring exposure to counterparty risk;a counterparty risk limits and allocation procedures;a a value adjustment in respect of counterparty risk (credita valuation adjustment); counterparty risk mitigation;a factoring in specific wrong-way risk.a
main risk factors, the model values the positions for each counterparty and for the entire lifespan of the exposure, taking
Thus, the model determines the EPE (Expected Positive Exposure) profile and the PFE (Potential Future Exposure) profile, the latter of which is the main indicator used by Natixis for assessing counterparty risk exposure.
The limits are defined depending on the counterparty risk profile and after analysis of all information relevant and useful for by the credit committees.
The limits are in line with Natixis’ credit approval process and are reviewed and approved either by means of delegated authority or
General wrong-way risk is covered through WWR stress scenarios by asset class.
Specific wrong-way risk gives rise to specific own funds requirements (Article 291.5 of the European Regulation of June 26, 2013 on prudential requirements for credit institutions and investment firms) and to prior approval of specific limits.
The internal rating system is an integral part of Natixis’ credit risk
The internal rating mechanism is based on: internal rating methodologies specific to the various Basela asset classes and consistent with Natixis’ risk profile; there is a unique rating procedure and methodology for each asset class; an IT system used for managing the successive stages of thea rating process, from the initiation of the process to the approval and logging of the complete process; incurred on the relevant loans; procedures and controls that place internal ratings at the hearta of the risk-management system, from transaction origination to ex-post analysis of defaulting counterparties and the losses periodic reviews of rating methodologies, the method fora calculating the LGD and the underlying risk parameters.
Autorité de Contrôle Prudentiel et de Résolution (ACPR – French Prudential Supervisory Authority), and that use the advanced internal ratings-based method (A-IRB) to rate “corporate”,
“sovereign”, “bank”, “specialized financing” and some categories of consumer finance exposures.
INDICATIVE CORRESPONDENCES BETWEEN INTERNAL RATINGS BASED ON EXPERT APPRAISAL AND EXTERNAL AGENCY R RATINGS (CORPORATES, BANKS, SPECIALIZED FINANCING INSTITUTIONS) (EDTF 15)
The rating scale varies according to the type of counterparty and includes 21 notches for major corporations, banks and specialized financing institutions. It should be noted that internal ratings are also one of the criteria used to determine the level of authority required to approve credit applications.
The reconciliation of the external rating agencies’ alphanumeric credit rating scales and the risk weighting coefficients is performed in accordance with the note published by the ACPR: Method for calculating prudential ratios within the CRD IV (Capital Requirements Directive IV).
application of a rating based partially on an internal or exposure rating of the issuer (or of the guarantor, if applicable).
Accordingly, an internal and independent validation team within the Corporate Secretariat of the Risk Division, reporting to the Chief Risk Officer, ensure the relevance and consistency of the models, as well the accuracy of the data used. The validation process comprises four steps, in accordance with the delegation of competence of Groupe BPCE: quantitative analysis: analysis of proxies, sizing methods, riska indicators, aggregation rules, etc.
analysis of data quality and implementation of the model:a analysis of the quality and representativeness of data, integrity use test: the validation team ensures that the internal modelsa are used by qualified staff, that usage procedures are documented, that ex-post controls are performed, etc.
Expert analysis-based rating models using quantitative criteria (accounting balance sheet) and qualitative criteria (questionnaire). One model per type of counterparty and per
14 Expert analysis-based rating models by business sector for Corporates and statistical models for SMEs (scores)
LGD Sovereigns 1 Qualitative model based on internal and external defaults. The assessment of LGD during periods of decline is included insofar as all defaults are included for the LGD model
Institutions 2 Qualitative model based on internal and external defaults by type of counterparty. LGD assessed in this model include defaults occurring in periods of decline
CCF Sovereigns 1 Model calibrated on internal defaults and segmentation by type of product and type of counterparty
Institutions 1 Model calibrated on internal defaults and segmentation by type of product and type of counterparty
1 Model calibrated on internal defaults and segmentation by type of product and type of counterparty
Consumer Finance 1 Rating model based on credit history since 2002. The model includes segmentation and a score
The rating systems are periodically checked and undergo external benchmarking to ensure the consistency of ratings produced using the expert appraisal and quantitative methods, as well as their robustness over time according the regulatory requirements. The monitoring methods are defined through a backtesting procedure tailored to each type of model.
difficulty in creating and maintaining a PD scale based on internal data.
The backtesting procedure, which draws on these data (and sometimes external data in the case of backtesting of the banking model or the Major Corporate rating grids particularly), consists of two stages: an analysis of the absolute performance,
decide on any measures to be taken to correct any deviationsa
Rating Analysis Committee Meetings (CANO) are chaired by the heads of the Individual Risk and Consolidated Credit Risk
LGD are backtested by the Risk Division’s teams to: verify that the model is correctly calibrated;a assess the model’s discriminating power;a assess the model’s stability over time.a
The LGD, ELBE (see glossary) and CCF (see glossary) levels for
Financing and Financial Collateral scope are regularly updated, so the different lending scopes are backtested at least once a year based on the updated internal data, as are the rating models and the associated PD, to verify the reliability of the estimates over Time. The parameters of the models for the Specialized recovery parameters are updated.
Two types of indicators are used: (usually those calculated when the model was built or those issued by external data or agencies). These analyses are applicable to both expert appraisal-based models and statistical models; into question if the segmentation variables or the LGDs result in excessively large distribution differences. All of these indicators are compared against the benchmark indicators population stability indicators: these analyses are used to verifya that the population observed is still similar to the population that was used to build the model. The model may be called model performance indicators: the model’s performance isa measured to validate the segmentation and also to quantify, overall, the differences between the forecast and actual figures. This is achieved by using statistical indicators, which are compared against those calculated during modeling.
The backtesting report and the reviews are presented to the Chief Risk Officer and the Group Risk Standards and Methods Committee (BPCE CNMRG).
As part of its oversight function, the Risk Division makes sure the rules and commitments underpinning the Bank's IRBA approval
Credit risk mitigation is a technique to reduce the credit risk incurred by the bank in the event of counterparty default which purposes.
The collateral is adjusted for its volatility and type. Collections on
Depending on their nature, collateral guarantees must meet specific eligibility criteria: non-financial guarantee: the eligibility of personal guaranteesa depends on the quality of the guarantor and must fulfill several conditions: represent a direct claim opposite to the guarantor and referj to specific exposures, be irrevocable and unconditional,j to settle payment arrears under the legal document governing the transaction, if the counterparty defaults, the bank can take legal actionj against the guarantor within the permitted time frame so as the guarantee is an obligation secured by a legal documentj that established the guarantor’s liability, the guarantor covers all types of payment to be made by thej borrower in question; collateral, real collateral or netting agreement) and borrower, as well as liquidity. It must be valued at least once a year and financial guarantee: eligibility is determined by the relevanta legal framework, the nature of the guarantee (financial meet all of these conditions: all the legal documents are binding to all parties and arej legally valid in all relevant jurisdictions, the bank has the right to realize or take ownership of thej collateral in case of default, insolvency or bankruptcy, there is no material positive link between the quality of thej counterparty credit and the value of the collateral, the asset must be liquid and its value sufficiently stable overj time for its realization to be certain.
derivative and lending/borrowing transactions, their real value is included in current exposure calculations and simulated in accordance with the market risk factor diffusion model for
Concentration risk is rounded out with an analysis, based on stress test methodologies (migration of ratings according to macroeconomic scenarios).
credit-default swap sellers, which are generally OECD banks. Transactions with nonbank third parties are fully collateralized in cash. These transactions are subject to decision-making and monitoring procedures that apply to derivative transactions.
securitization transactions in order to reduce all or part of the credit risk exposure attached to some assets by transferring the risk to the market. CDS-protected loans remain on Natixis’ balance sheet, but bear the counterparty risk attached to the
basis using dedicated consolidation systems. An IT system enables comprehensive consolidation of limits and credit exposures across a scope covering all of Natixis' exposure to credit risk and most of that of its subsidiaries.
The Risk Management function provides Senior Management other things, results in the production of half-yearly market reviews covering the majority of the business sectors, for which the focus (especially in geographic terms) is tailored to the make-up of Natixis’ portfolio. The purpose of this process is to: Periodic reviews of sector-based risk policies also help to ensure that the risk envelopes allocated by the Global Risk Committee, chaired by the Chief Executive Officer, are observed. This risk undergoes sector monitoring by the Risk Division, which, among monitor new information about each sector (main events anda changes in trends); monitor objective indicators specific to each sector;a assess the change in the risks inherent to each sector;a regularly rate business sectors/sub-sectors, independently ofa the individual counterparty rating process.
by business sector and the distribution of these exposures by geographic region and by rating. Aside from this regular and systematic monitoring, this sector monitoring may also give rise
The limits governing country exposure (country caps) are examined at least once a year and approved by the Global Risk Committee in light of the countries’ ratings and situations.
At its monthly meetings, the Limit Breach Committee analyzes breaches of predefined limits using specific indicators (number, total, duration, business lines concerned, etc.), examines watch list, individual provision and alert procedures.
Loans with deteriorating risk levels are identified as they arise and are reported immediately to the Risk Division and the business line concerned, in accordance with the counterparty
Corporate & Investment Banking risks are monitored by the Restructuring and Special Affairs Department (DRAS), which intervenes in difficult cases where necessary. The Litigation
Impact of stress scenarios3.4.7.1 the A-IRB, F-IRB and standardized approaches. It is based on choosing scenarios that replicate plausible crisis situations and high degrees of severity, in keeping with market practices, while taking past events, market trends and the environment into account so that purely historical or theoretical scenarios are eliminated.
The credit stress test system covers Natixis scopes subject to the scopes defined for the stress scenarios, with particular attention paid to the market stress requirements.
regularly works on improving the methods used and adding to models have therefore been added to the stress scenarios since the stress test program was first introduced. The Risk Division
The system is a true risk management tool, with scenarios that are regularly introduced and revised. New subsidiary scopes and
are regularly presented to the Global Risk Committee, which also validates the selected scenarios. The stress-testing approach factors in counterparty ratings and default rates (stressed PD scales, migration matrices, specific downgrades per sovereign
The Natixis Watch List and Provisions Committee meets once a quarter and covers all the bank’s business lines. It reviews all non-performing loans under watch that may give rise to provisions or adjustments to existing provisions, and decides on the amount of provisioning necessary.
This Committee is organized by the Risk Division and chaired by the Chief Executive Officer and assembles members of the Senior Management Committee in charge of the business lines, Finance and Risk, the Chief Risk Officer and the heads of the relevant support functions.
For the latter risks, the search for objective evidence of impairment is undertaken through analysis and close monitoring
EAD, RWA AND CAPITAL REQUIREMENT BY APPROACH AND BY BASEL EXPOSURE CATEGORY (NX01)R