Financial assets at fair value through profit and loss – Trading 4,549 146 (101) 6,144 (6,822) (147) 1,104 (4) 3 (74) 4,798
Other financial assets held for trading 1,344 7 23 5,841 (5,485) (67) 1,662
Other financial assets under the fair value option 611 19 24 1,233 (1,037) (51) 799
TOTAL FINANCIAL ASSETS RECORDED AT FAIR VALUE 11,401 219 13 187 8,427 (8,984) (304) 1,246 22 24 (138) 12,114
The main impacts recognized in the income statement are mentioned in Note 7.3.(a)
Derivative instruments not eligible for hedge accounting (negative fair value) 830 (306) (13) 360 (206) (55) 1,335 0 1,945
Other financial liabilities under the fair value option 678 78 (79) 1,019 (599) 1,097
TOTAL FINANCIAL LIABILITIES RECOGNIZED AT FAIR VALUE 1,601 (234) (92) 1,621 (812) (55) 1,385 0 (0) 3,414
i.e. a sensitivity impact representing a valuation increase of €6.1 million (reflecting an improvement in the above-mentioned inputs) or a valuation decrease of €5.8 million (reflecting a deterioration in said inputs).(2)
The standard deviation of the consensus prices used to evaluate the parameters(1)
Financial assets and liabilities at fair value: transfers between fair value levels 8.5.3
Financial assets held for trading 89 150 14 o/w debt instruments in the form of securities 89 150 14 o/w equity instruments
Derivative instruments not eligible for hedge accounting (positive fair value) 23 85 148 206 o/w interest rate derivatives 17 o/w currency derivatives 178 o/w other 6
FINANCIAL DATA Consolidated financial statements and notes 325Natixis Registration Document 2018
Loans and receivables due from banks at amortized cost 27,285 27,558 26,533 1,026
Loans and receivables due from customers at amortized cost 69,279 69,997 48,486 21,511
Debt instruments in the form of securities at amortized cost 1,193 1,229 461 767
Amounts due to banks 73,234 73,311 73,145 166 o/w security deposits received 88 88 88
Loans and receivables due from banks 45 289 45 851 0 44 532 1 319
Of which €186 million at January 1, 2018 for the SFS business lines recognized in non-current assets held for sale as at December 31, 2018 (see (c) Notes 3.6 and 6.9).
Loans and receivables due from banks at amortized cost at 31/12/2018
Gross carrying amount excluding insurance company contributions, in the amount of €887 million at December 31, 2018.(a)
RECONCILIATION TABLE FOR LOANS AND RECEIVABLES DUE FROM CUSTOMERS AT AMORTIZED COSTR
Loans and receivables due from customers at amortized cost at 31/12/2018
Changes in contractual cash flows not giving rise to derecognition (187) 2 (40) 1 (9) (0) 0 0 (236) 3
Variations linked to changes in credit risk parameters (excluding transfers) 2,707 32 (6,678) 31 (120) (187) (91) (16) (4,181) (139)
Transfer to non-current assets held for sale (b) (9,933) 27 (10,204) 96 (1,361) 370 (13) 1 (21,511) 495
Contracts fully repaid or sold during the period (6,803) 8 (10,024) 54 (734) 176 (29) 10 (17,590) 247
Impairment in value (write-off) 0 0 0 0 (255) 255 (4) 4 (259) 259
Value adjustments for credit losses Unimpaired loans Impaired loans Total Gross exposures
Provisions for impairment of non-performing outstandings (5) (5) (104) (42) (146)
Value adjustments for credit losses (121) (1,099) (1,220) (194) (1,389) (1,583)
Variations linked to changes in credit risk parameters (excluding transfers) 71 6 (5) 12 1 (3) (30) 86 (33)
Of which €1.8 million at January 1, 2018 for the SFS business lines (a) recognized in non-current assets held for sale.
financial asset, or retains the contractual rights to collect cash flow from the financial asset but assumes a contractual obligation to pay those cash flows to one or more beneficiaries.
A financial asset is partially or wholly transferred if Natixis transfers the contractual rights to collect cash flow from the
Financial assets at fair value through profit or loss 7,455 6,648 14,215 13,524
“Held-to-maturity financial assets” are exclusively recognized by fully-consolidated insurance companies (see Note 9.4.6).(a)
Securitization assets for which the counterparties to the associated debts have recourse only to the transferred assets At December 31, 2018
At December 31, 2018 (as at December 31, 2017), there is no material impact from continuing involvement in a securitization vehicle maintained by Natixis.
Financial assets received as security 8.7.3 and able to be sold or reused as security
The fair value of the financial assets received as security that Natixis may sell or reuse as security was €231 billion at December 31, 2018, versus €215 billion at December 31, 2017.
The fair value of the financial assets received as security that were resold or reused as security was €155 billion at December 31, 2018, versus €143 billion at December 31, 2017.
≤ 90 days > 90 days ≤ 180 days > 180 days ≤ 1 year > 1 year Total
Standard Deferred tax assets Deferred tax liabilities Standard Deferred tax assets Deferred tax liabilities
Sources of deferred tax on recyclable OCI (388) 2 83 (567) 8 172
Deferred tax related to the tax amortization of goodwill in the United States.(b)
Except for tax losses that arose prior to January 1, 2018 (limited to 20 years).(a)
Loans and receivables due from banks and similar items at amortized cost 422
The information reported at December 31, 2017 has not been restated for the impact of the first-time application of IFRS 9 “Financial (a) instruments”, in accordance with the option available under this standard.
FINANCIAL DATA Consolidated financial statements and notes 335Natixis Registration Document 2018
Impaired financial assets are assets for which a default event has been identified as defined in Article 178 of the EU regulation of June 26, 2013 (b) on regulatory requirements for credit institutions.
Unimpaired assets for which expected credit losses are measured over 12 months (S1 bucket)
New originated or acquired contracts 2,965 (6) 2,589 (15) 0 0 0 0 5,554 (21)
Contracts fully repaid or sold during the period (1,897) 4 (1,284) 29 (103) 18 (3,285) 50
Variations linked to changes in exchange rates 11 0 5 (0) 0 0 16 0
Lessor (in millions of euros) Real estate assets Non-real estate assets Total
FINANCIAL DATA Consolidated financial statements and notes 337Natixis Registration Document 2018
Cash flow hedging – Analysis of other items of comprehensive income8.9.4
Of which €970 million in trade receivables at December 31, 2018.(b)
Of which €487 million at January 1, 2018 for the SFS businesses recognized in non-current (c) assets held for sale as at December 31, 2018 (see Notes 3.6 and 6.9).
Of which €1,225 million at January 1, 2018 for the SFS business lines recognized in non-current (b) assets held for sale as at December 31, 2018 (see Notes 3.6 and 6.9).
At December 31, 2018, intangible assets reclassified as assets held for sale pursuant to IFRS 5 totaled €150 million.
FINANCIAL DATA Consolidated financial statements and notes 339Natixis Registration Document 2018
Of which +€122.7 million of goodwill recorded on the acquisition of MV Crédit and -€27 million for the disposals carried out: (a) -€19 million for Axeltis and -€8 million for Selection 1818. In addition, a goodwill adjustment for Investors Mutual Limited (-€9.6 million) and Mirova Althélia (-€0.2 million) was made within the one-year allocation period.
Furthermore, goodwill on entities consolidated using the equity method amounted to €3.3 million at December 31, 2018. Certain goodwill recorded for the United States gives rise to a tax amortization over 15 years due to the difference between the carrying amount of the goodwill and its tax value. This difference in treatment generated a deferred tax liability of €335.8 million as at
Of which +€100.4 million in goodwill recorded on the acquisition of Investor Mutual Limited.
Of which €11.8 million in goodwill recorded on the acquisition of Lakooz by S-Money, €14.3 million on the acquisition of PayPlug and €72.3 million (c) on the acquisition of the Fintech Dalenys. These four companies specialize in new online payment methods.
Of which €2 million at January 1, 2018 for the SFS business lines recognized in non-current assets held for sale as at December 31, 2018 (see (a) Notes 3.6 and 8.9).
The fair value of customer deposits is presented in Note 8.5.4.
Of which €1,367 million at January 1, 2018 for the SFS business lines recognized in non-current assets held for sale as at December 31, 2018 (b) (see Notes 3.6 and 6.9).
The fair value of debt securities is presented in Note 8.5.4.
Subordinated debt issue agreements do not incorporate a clause providing for early redemption in the event that the covenants are not observed.(b)
Issues of debts and subordinated notes consist of a€300.5 million issue of a new subordinated note underwritten by BPCE.(a)
Of which -€119 million for the SFS business lines recognized in non-current assets held for sale as at December 31, 2018 (see Notes 3.6 and 6.9).(c)
Of which €388.8 million in provisions at December 31, 2017 in respect of exposure to outstanding Madoff assets, net of insurance. The amount (a) of insurance was €123 million for disputes pertaining to the case (see Section 3.11 of Chapter III, “Risk factors, risk management and the pillar III report”).
Of which €2 million at December 31, 2017 in respect of the workforce adjustment plan completed in 2015.(b)
Of which €30.6 million of provisions for restructuring costs at December 31, 2017 in respect of the Coface plan.(c)
Less than 1 month 1 to 3 months 3 months to 1 year 1 to 5 years Over 5 years Undated Total
Assets at fair value through profit and loss—excluding trading derivatives 0 0 0 2 1 153 157
Financial liabilities at fair value through profit or loss 2 0 1 6 14 128 151 o/w senior debt o/w senior debt
Assets at fair value through profit and loss—excluding trading derivatives 17 12 10 5 8 72 124
Loans and receivables due from banks 22 3 11 2 7 1 45
On the liability side of the balance sheet, the “Liabilities related to insurance policies” line consists of: insurance companies’ technical reserves;a insurance and reinsurance liabilities, including amounts due toa policyholders; derivative instruments held by insurance businesses;a shares of the revaluation on interest rate risk-hedgeda portfolios; the deferred profit-sharing liability.a
Financial assets under IAS 39 9.2.1 are classified in one of the four categories of financial assets set out below: At initial recognition, financial assets and liabilities are measured at fair value, corresponding to their acquisition price at that date. Their subsequent accounting treatment depends on their balance sheet classification. In accordance with IAS 39, financial assets
Gains or losses arising from changes in the fair value (excluding revenues) of available-for-sale financial assets that are not hedged are recognized directly in equity under “Gains and losses recorded directly in equity”. Accrued or earned income is recognized in the income statement under “Net income from insurance activities” using the effective interest rate method. Available-for-sale financial assets are tested for impairment at each reporting date. Where there is objective evidence that an asset is impaired and a decline in the fair value has already been recognized directly in equity, the cumulative impairment loss is removed from equity and taken to income under “Provision for credit losses” (debt instruments) or “Net income from insurance activities” (equity instruments).
The general principles of fair value of financial instruments are the same as those presented in Note 6.6.
Policies managed by the insurance subsidiaries of the Coface, Compagnie Européenne de Garanties et Cautions (CEGC) and Natixis Assurances sub-groups meet the definitions of insurance policies and investment contracts with a discretionary participation feature set out in IFRS 4. Accordingly, they result in the recognition of technical reserves in liabilities. These reserves are measured in accordance with French GAAP pending the entry into force of IFRS 17 dealing with technical liabilities of insurance companies.
Technical reserves for insurance policies meet the commitments of insurance companies with regard to policyholders and contract beneficiaries.
In accordance with IFRS 4, insurance technical reserves are calculated using methods stipulated by local regulations. A liability adequacy test is carried out in order to ensure that the insurance liabilities as presented in the consolidated financial statements are sufficient to cover future cash flows estimated at that date. The test is based on a stochastic or deterministic valuation model of discounted future cash flows.
Policy acquisition costs are expensed to the period. In particular, acquisition costs for non-life insurance policies are expensed over the acquisition period of the premiums: the portion of deferred acquisition costs is calculated pro rata to the unearned premiums at the end of the year.
Application of the shadow accounting mechanism resulted in the recognition of a deferred profit-sharing liability on December 31, 2018 as on December 31, 2017.
Capital gains and losses on disposal of investments (net of reversals, write-downs and amortization) 105
Change in fair value of investments carried at fair value through profit or loss (1,013)
Capital gains and losses on disposal of investments (net of reversals, write-downs and amortization) 104 104 0 0 104 0 0 0 104
Gross operating income Provision for credit losses Tax Other items Net income
Of which €2,721 million at January 1, 2018 for the SFS business lines recognized in non-current assets held for sale as at December 31, 2018 (a) (see Notes 3.6 and 6.9).
Securities under the fair value option through profit or loss 9.4.1.1 17,501 15,845
Loans and receivables at fair value through profit and loss 9.4.1.1 0 2,011
Conditions for classification of financial assets under 9.4.1.1 the fair value option
Financial assets are designated at fair value through profit or loss when this choice provides more pertinent information or when these instruments incorporate one or more significant and separable embedded derivatives.
At December 31, 2018, permanent impairment of variable-income securities stood at €69 million, compared with €15 million at December 31, (b) 2017. This expense was 88% offset by the profit-sharing mechanism. The 2018 expense can be broken down into an additional impairment loss on previously impaired securities for €13 million (€7 million at December 31, 2017) and an allowance for newly impaired securities for €56 million (€9 million at December 31, 2017).
Financial assets and liabilities measured at fair value are categorized based on the fair value hierarchy presented in Notes 5.6 and 8.5.
Financial assets at fair value through profit and loss —Trading 4,827 4,730 98 0
Fixed-income securities held for trading 4,810 4,726 84 o/w debt instruments in the form of securities
Derivative instruments not eligible for hedge accounting (positive fair value) 18 4 13 0 o/w interest rate derivatives 4 4 o/w credit derivatives o/w equity derivatives 1 1
Other available-for-sale securities 47,593 39,708 5,617 2,267 o/w debt instruments in the form of securities 40,874 34,443 4,213 2,218 o/w other available-for-sale financial assets
Financial assets at fair value through profit and loss —Trading 1,465 (29) (2) 0 Derivative instruments not eligible for hedge accounting (positive fair value) 4 0 0 0 o/w currency derivatives 4 o/w equity derivatives 0 o/w other
FINANCIAL DATA Consolidated financial statements and notes 353Natixis Registration Document 2018
Financial assets designated under the fair value option through profit or loss 0 2 0 0 (1)
o/w debt instruments in the form of securities 56 9 603 (1,506)
Of which €11,598 million for guarantee deposits made for the acceptance of reinsurance treaties, compared with €10,258 million at (a)
Technical reserves relating to financial contracts without a discretionary profit sharing feature -
Of which €1,953 million at January 1, 2018 for the SFS business lines recognized in non-current assets held for sale as at December 31, 2018 (a) (see Notes 3.6 and 6.9).
Financial liabilities designated at fair value 9.5.1 through profit or loss
Information required under IFRS 7 on financial liabilities at fair value through profit or loss is presented in Note 8.1.2.
The information about debts due to banks and customer deposits required by IFRS 7 is presented in Note 8.14.
Information to be disclosed about the temporary exemption from the application of IFRS 9 9.5.5 for insurance activities
Excluding mutual funds, whose fair value amounted to €5,067 million at December 31, 2018.(a)
The entity has since been organized around four core businesses: Asset & Wealth Management, which includes asseta management within Natixis Investment Managers and wealth management; Corporate & Investment Banking, which advises businesses,a institutional investors, insurance companies, banks and public sector entities and offers them a diversified line of financing solutions as well as access to the Capital Markets. Its duties are threefold: to strengthen the bank’s customer orientation, to serve as a meeting place between issuers and investors and to roll out the “Originate to Distribute” model to optimize the rotation of the bank’s balance sheet via active management of the loan book; Insurance, which is BPCE Group’s single platform for thea distribution of personal insurance and non-life insurance products; Specialized Financial Services, which combines Payments anda Specialized Financing with Factoring, Leasing, Consumer Finance, Sureties & Financial Guarantees, and Film Industry Financing; and Financial Services with Employee Savings and Securities. These business lines are the key growth drivers for the retail banking business of Groupe BPCE.
Together, these specialized asset management companies enable the Group to provide a full range of expertise meeting demand from all customer segments. Coverage of the various customer segments is optimized by the organization of distribution around a shared platform and the business franchises developed over the long term by the asset management companies. Since the start of 2014, Private Equity companies for third party clients have been transferred to Natixis Investment Managers and a sponsoring vehicle was set up to monitor Natixis’ commitments in the funds. The teams have extensive expertise in equity financing for generally unlisted, small and medium-sized enterprises in France and Europe via sponsored equity holdings. This business line covers the Private Equity segments for third party investors, such as Private Equity deals (top-line funding for mature companies), venture capital (new, innovative companies) and funds of funds.
FINANCIAL DATA Consolidated financial statements and notes 357Natixis Registration Document 2018
In early 2018, CIB changed the way it presents the earnings and analysis of its financing activities with the creation of three new business lines based on four key sectors defined in the New Dimension plan: the Energy & Natural Resources sector, which comprisesa Trade Finance, origination and structuring of structured commodity finance; the Real Assets business line which brings togethera origination and structuring in three sectors: Infrastructure, Aviation and Real Estate & Hospitality; the Distribution & Portfolio Management business line,a which comprises syndication and structured and vanilla finance portfolio management.
The Equities, Fixed Income, Credit, Forex, Commodities and Global Structured Credit and Solutions businesses remain part of the Global Markets business line, while short-term Trade Finance and the development of the flow offering are combined under Trade and Treasury Solutions.
The Corporate Center recognizes the central funding mechanisms and income from Natixis’ asset and liability management. To this end, it includes all Treasury activities, including the short-term Treasury business, which has been part of Natixis’ Finance Department since the start of 2017 (it was previously part of Corporate & Investment Banking).
It also records income on the bank’s portfolio of equity investments not belonging to a division.
- net revenues: €114 million; - expenses: -€60 million; - gross operating income: -€55 million; - provision for credit losses: €0 million; - pre-tax profit: €55 million.
FINANCIAL DATA Consolidated financial statements and notes 359Natixis Registration Document 2018
Of which €1,916 million excluding the net revenues of the XVA desks, which break down into €1,317 million in net revenues for FICT and (a) €599 million for Equities.
Liabilities on assets held for sale 0 0 0 9,737 0 0 9,737
Net income for the period (Group share) 703 297 618 35 (77) 1,577
Loans and receivables due from banks and similar items at amortized cost 23,894 784 236 219 2,150 27,285
Net income for the period (Group share) 508 285 660 43 173 1,669
The information on risk management required under IFRS 7, with the exception of the disclosures given below, is presented in Section 3.2.3 of Chapter 3, “Risk factors, risk management and the pillar III report”.
This table, produced for the first time at December 31, 2018, aims to present the breakdown by credit risk category of the various accounting outstandings eligible for IFRS 9 provisioning (broken down into Stages S1, S2 and S3), and the corresponding impairments and provisions. The credit risk categories are represented by the IFRS 9 probability of default ranges associated with the central scenario (see Note 6.3).
NetPD scale PD scale 0.00 to < 0.15 0.15 to < 0.25 0.25 to < 0.50 0.50 to < 0.75 0.75 to < 2.50 2.50 to < 10.0 10.00 to < 100.0
0.00 to < 0.15 0.15 to < 0.25 0.25 to < 0.50 0.50 to <
The following table presents the exposure of all of BPCE Group’s financial assets to credit and counterparty risk. This exposure to credit risk (determined without taking into account the effect of unrecognized netting and collateral) and counterparty risk is equal to the net carrying amount of the financial assets.
Customer loans and receivables at amortized cost 2,388 (1,114) 1,274 282 577
Assets impaired after their origination/acquisition (Stage 3) or on their origination/acquisition (POCI).(a)
FINANCIAL DATA Consolidated financial statements and notes 363Natixis Registration Document 2018
Loans and receivables due from banks (Excluding repurchase agreements) 36,533 63 (69) 36,527 - 279 46,335 71 (71) 46,335 1 306
TOTAL EXPOSURE AND IMPACT OF GUARANTEES 207,953 4,872 (2,064) 210,761 1,330 48,868 214,269 5,110 (2,272) 217,106 1,667 51,513
Customer loans and receivables (Excluding repurchase agreements) 12,964 25,683 38,647 10,843 30,358 41,200
Full-time equivalent current employees of Natixis at the reporting (a) date (including the employees of entities restated under IFRS 5 at December 31, 2018).
The breakdown of the headcount is presented in Note 6.6.1 of Chapter [6], “Non-financial performance report”.
Payroll costs totaled €4,061 million at December 31, 2018, versus €3,946 million at December 31, 2017.
This item includes wages and salaries paid within twelve months of the end of the reporting period in which the related services were rendered, employee incentives and profit-sharing, meeting the definition of short-term benefits under IAS 19R “Employee Benefits”. In accordance with this standard, short-term benefits are expensed in the period in which the employees render the services giving rise to such benefits.
Year of plan Expenses Grant date Initial number of shares granted (*) Acquisition dates
FINANCIAL DATA Consolidated financial statements and notes 365Natixis Registration Document 2018
Under defined-contribution plans, Natixis pays fixed contributions into a separate entity and has no obligation to pay further contributions.
In 2017, the amount consisted of the €83 million contribution made for outsourcing management of end-of-career awards.
Post-employment defined-benefit plans include all post-employment benefits for which Natixis has committed to pay a specified level of benefits.
Liabilities in respect of these awarded benefits are hedged, in full or in part, by assets composed mainly of outsourced insurance contracts managed by French insurers specializing in retirement. The insurers carry the longevity risk once the annuities are liquidated. Plan assets are invested in the insurers’ general funds, which, for the most part, generally consist of bonds. The insurers are subject to French prudential standards and regulations.
Fair value of plan assets (255) (102) 0 0 (357) (270) (88) 0 0 (359)
Effect of ceiling on assets 2 0 0 0 2 8 0 0 0 8
Actuarial liabilities at start of period 577 256 63 123 1,020 636 238 60 125 1,059 o/w amounts paid out in respect of plan liquidation (11) (6) (2) (28) (48) (12) (5) 0 0 (17)
Revaluation adjustments on other long-term employee benefits 0 0 (1) (0) (1) 0 0 (1) (0) (1)
Revaluation adjustments – past-experience effect (19) (1) 0 0 (21) (2) 2 0 0 (0)
Actuarial liabilities at end of period 526 215 51 144 936 577 256 63 123 1,020
Corresponds to the actuarial liabilities, at December 31, 2018, associated with the SFS entities recognized in non-current assets held for sale as at (a) December 31, 2018 (see Notes 3.6 and 6.9).
Fair value of assets at start of period 270 88 359 267 9 277 o/w amounts paid out in respect of plan liquidation (0) 0 (0) (3) 0 (3)
Changes recognized directly in other comprehensive income with no recycling (22) 2 (21) 25 (0) 25
Fair value of assets at end of period 255 102 357 270 88 359
Total Supplementary pension benefits and other End-of-career awards Supplementary pension benefits and other End-of-career awards
Changes associated with non-current assets held for sale (a) (6) (2) (7)
TOTAL REVALUATION ADJUSTMENTS AT END OF PERIOD 233 12 245 275 27 302
Revaluation adjustments over the period (16) 2 (14) 19 (0) 19 o/w effect of ceiling on plan assets 5 0 5 (1) 0 (1)
Total revaluation adjustments at start of period 51 2 54 44 1 45 o/w effect of ceiling on assets
Revaluation adjustments over the period (14) 3 (10) 7 1 8 o/w effect of ceiling on plan assets
Total revaluation adjustments at end of period 38 5 43 51 2 54 o/w effect of ceiling on assets
Corresponds to the changes in separate asset revaluation adjustments (in respect of post-employment plans) by SFS subsidiaries recognized in (a) non-current assets held for sale as at December 31, 2018 (see Notes 3.6 and 6.9).
f) Analysis of expenses for the period The annual payroll costs recognized in respect of defined-benefit plans consist of: the costs of services rendered, representing rights vested bya beneficiaries over the period; past service costs, arising from possible plan changes ora curtailments as well as the effects of possible plan settlements; the net interest cost reflecting the impact of unwinding thea discount on the net obligation.
Supplementary pension benefits and other End-of-career awards Long-service awards Other benefits Total Total
TOTAL EXPENSE FOR THE YEAR (A) 7 15 2 69 94 46
g) Main actuarial assumptions at December 31, 2018 The amount of the provision for post-employment defined-benefit plans is calculated on an actuarial basis using a number of demographic and financial assumptions.
Rate of increase in salaries 2.29% 2.58% 4.00% 2.27% 2.55% 4.00%
+1% change in rate of increase in healthcare costs 1.50% 1.50%
-1% change in rate of increase in healthcare costs (1.09)% (1.24)%
+1% change in rate of increase in salaries and income (incl. inflation) 12.19% 12.29% 8.23% 12.19% 12.29% 8.23%
Other share-based plans 12.2.4 a) Employee stock option plans under the Company employee savings plan
Total subscribed amount (in millions of euros) €23.6m €40.2m €2.1m €45m €26m €60m
Annual security borrowing rate (repos) 0.50% 0.16% 0.16% 0.05% (0.12)% 0.05%
Market participant’s borrowing rate (five years) 6.72% 5.47% 5.47% 4.45% 3.93% 3.34%
For the record, there were no capital increases reserved for employees in 2017.
3,716,978 treasury shares at December 31, 2018, and 1,431,936 shares at December 31, 2017.
The capital increase in 2018 is linked to the award of free shares to some Natixis employees under the 2013 and 2016 Retention and Performance Plans, for which payment is share-based (see Note 6.17 and Note 12.2.2.).
Natixis’ main capital management objectives are to ensure that the Group meets the capital requirements imposed by its external environment and maintains an adequate rating to support its activity and maximize shareholder value.
Since December 31, 2009, issues of perpetual deeply subordinated notes and preference shares have been recognized as equity instruments issued in accordance with a clause concerning dividend payments which has become discretionary, and have been booked to “Consolidated reserves” in the consolidated balance sheet.
Under this contract, this service provider is mandated to intervene in Natixis’ treasury shares with a view to increasing transaction liquidity and the trading of Natixis shares so as to avoid price gaps unjustified by market trends.
This authorization is based on the seventeenth resolution of the General Shareholders’ Meeting of May 23, 2018. It authorizes Natixis to acquire, at a maximum price of €10 per share, a number of shares not exceeding 10% of the shares making up the capital of Natixis.
Pursuant to this contract, Natixis holds 3,566,311 shares representing €14.7 million as at December 31, 2018.
New HB commitments originated or purchased 7,895 (2) 632 (3) 0 0 8,528 (4)
Variations linked to changes in credit risk parameters (excluding transfers) 1,519 3 (763) 8 (38) (4) (0) (0) 718 7
Gross carrying amount excluding insurance company contributions, in the amount of €939 million at December 31, 2018.(b)
Corresponds to the SFS business lines recognized in non-current assets held for sale as at December 31, 2018 (see Notes 3.6 and 6.9).(c)
New HB commitments originated or purchased 21,902 (4) 728 (3) 0 0 0 0 22,631 (7)
Variations linked to changes in credit risk parameters (excluding transfers) (6,096) 10 (4,412) 12 (101) 5 (19) (2) (10,627) 25
Present value of minimum lease payments receivable 15 20 1 36 2,227 5,911 3,252 11,390
The future minimum payments under operating leases as lessee that cannot be terminated, broken down by due date, representing the due dates of the undiscounted lease payments payable to external counterparties, for the residual lifetime of the operating leases in force at December 31, 2018 and at December 31, 2017, in accordance with the contractual schedules. The lease payment amounts include unrecoverable VAT. Lease expenses are not included.
FINANCIAL DATA Consolidated financial statements and notes 377Natixis Registration Document 2018
The estimated right of use amount at January 1, 2019, the date of the first-time application of IFRS 16, is therefore less than the operating lease payment commitment amounts presented in this note.
Financial assets at fair value through profit or loss 17,577 3,139 4,330 13,645 2,967 4,486
Customer loans and receivables at amortized cost 27 60 90 165
Financial liabilities designated at fair value through profit or loss 6,304 1,633 3,325 5,225 1,176 3,521
Of which €5,081 million at January 1, 2018 for SFS business lines recognized in non-current assets held for sale as at December 31, 2018 (see (b) Notes 3.6 and 6.9).
Net fee and commission income (57) (373) (194) 6 (353) (130)
Net gains or losses on financial assets at amortized cost reclassified to financial assets at fair value through profit or loss
Net gains or losses on financial assets at fair value through other comprehensive income reclassified to financial assets at fair value through profit or loss
Income and expenses from other activities (27) 13 17 (34) 13 14
Compensation for directors is granted as presented in the standardized tables compliant with AMF recommendations in Section 2.4 of the registration document.
Value of performance shares granted during the fiscal year €93,333 (d)
FINANCIAL DATA Consolidated financial statements and notes 379Natixis Registration Document 2018
Average Natixis net income (Group share) for the period in1. question equal to or higher than 75% of the expected budget average(2) for the period; Average Natixis ROE for the period in question equal to or2. higher than 75% of the expected budget average* for the period; Natixis’ cost/income ratio less than 75% at the time of3. leaving (last half-year closed).
The amount of the payment shall be determined based on the number of performance criteria met: if all three criteria are met: 100% of the agreed payment;a if two criteria are met: 66% of the agreed payment;a if one criterion is met: 33% of the agreed payment;a if none of the criteria is met: no payment will be made.a
Upon the departure of the Chief Executive Officer, the Board of Directors must make a decision regarding whether to enforce the non-compete clause provided for under this agreement.
Tranche A corresponds to the fraction of annual compensation between €0 and €39,732.(1) Tranche B corresponds to the fraction of annual compensation between €39,732 and €158,928. Tranche C corresponds to the fraction of annual compensation between €158,928 and €317,856.
The mandate of Deloitte & Associés was renewed by the shareholders at the General Shareholders’ Meeting of May 2016, for a term of six years ending as of the General Shareholders’ Meeting called to approve the 2022 financial statements.
The firm Mazars’ last six-year mandate starting from May 2012 was not renewed for 2018.
Deloitte & Associés—6, place de la Pyramide, 92908 Parisa La Défence Cedex, represented by signatory partners Charlotte Vandeputte and Jean-Marc Mickeler; PricewaterhouseCoopers Audit—63 rue de Villiers 92208a Neuilly-Sur-Seine Cedex, represented by signatory partners Emmanuel Benoist.
The Statutory Auditors and their networks were paid the following amounts in return for their duties: (in thousands of euros) Deloitte & Associés PwC MAZARS Total
Independent audit, certification and examination of the separate and consolidated accounts 8,682 74% 8,842 69% (2)% 7,048 65% 6,823 73% 3% 1,987 56% 3,780 78% (47)% 17,717 61% 19,445 61% (9)%
Services other than the certification of accounts 3,005 26% 3,889 31% (23)% 3,754 35% 2,469 27% 52% 1,559 44% 1,088 22% 43% 8,319 39% 7,446 39% 12%
Services other than the certification of accounts include: reviews of the compliance of certain entities of the group fora €2.8 million; tax assignments for the US platforms totaling €1 million; a assignments related to the restructuring of certain businessa lines equal to €1 million: €0.4 million for the Insurance division, €0.3 million for the Payment division and €0.1 million for the Brokerage business line; In addition, the fees paid to KPMG totaled €2 million for audit and account certification services and €2.2 million for other services.
Pursuant to the article referred to above, the table below specifically provides information linked to net revenues, pre-tax profit, income tax and headcount as at December 31, 2018.
OSTRUM ULTRA SHORT TERM BONDS PLUS SI (C) EUR Insurance investment mutual fund
COFACE TAIWAN (BRANCH – COFACE EUROPE) Credit insurance and related services
FINANCIAL DATA Consolidated financial statements and notes 385Natixis Registration Document 2018
NATIXIS REAL ESTATE FEEDER SARL Investment company FC 100 100 100 100 Luxembourg
NATIXIS JAPAN SECURITIES CO, LTD Financial institution FC 100 100 100 100 Japan
FCT Natixis Export Credit Agency (a) Securitization vehicle FC 100 100 100 100 France
Natixis Partners (t) Mergers and acquisitions advisory services FC 87 87 84 84 France
NATIXIS MARCO Investment company (extension of activity) FC 100 100 100 100 France
Fenchurch Partners LLP (j) Mergers and acquisitions advisory services FC 51 51 Great Britain
Vermilion Partners (Holdings) Limited (i) Holding company FC 51 51 Hong Kong
Vermilion Partners (UK) Limited (i) Holding company FC 51 51 Great Britain
Peter J. Solomon Company LP Mergers and acquisitions advisory services FC 51 51 51 51 United States
NATIXIS FUNDING CORP Other financial company FC 100 100 100 100 United States
Nexgen Reinsurance Designated Activity Company* Reinsurance FC 100 100 100 100 Ireland
Natixis Investment Managers Canada LP Asset Management FC 100 100 100 100 Canada
AEW CAPITAL MANAGEMENT, INC. Asset Management FC 100 100 100 100 United States
AEW PARTNERS III, INC. (dd) Asset Management 100 100 United States
AEW PARTNERS VI, INC. Asset Management FC 100 100 100 100 United States
AEW value investors Asia II GP Limited Asset Management FC 100 100 100 100 United States
ALTERNATIVE STRATEGIES GROUP LLC Asset Management FC 100 100 100 100 United States
CASPIAN CAPITAL MANAGEMENT, LLC Asset Management FC 100 100 100 100 United States
HARRIS ALTERNATIVES HOLDING INC. Holding company FC 100 100 100 100 United States
LOOMIS SAYLES DISTRIBUTORS, INC. Retail FC 100 100 100 100 United States
LOOMIS SAYLES DISTRIBUTORS, LP Retail FC 100 100 100 100 United States
LOOMIS SAYLES TRUST COMPANY, LLC (a) Asset Management FC 100 100 100 100 United States
Ostrum AM US LLC (formerly NAM US)* Asset Management FC 100 100 100 100 United States
NATIXIS ASG HOLDINGS, INC. Retail FC 100 100 100 100 United States
NATIXIS CASPIAN PRIVATE EQUITY LLC (a) (r) Asset Management FC 73 73 55 55 United States
NATIXIS INVESTMENT MANAGERS, LLC Holding company FC 100 100 100 100 United States
Natixis Distribution Corporation Retail FC 100 100 100 100 United States
NATIXIS INVESTMENT MANAGERS INTERNATIONAL, LLC Retail FC 100 100 100 100 United States
Natixis IM innovation (formerly AEW Co-Invest) Asset Management FC 100 100 100 100 France
DNCA Courtage (p) Asset Management FC 92 82 83 72 France
DNCA Management (v) Asset Management FC 72 72 42 42 France
NATIXIS ASSET MANAGEMENT FINANCE** Holding company FC 100 100 100 100 France
NATIXIS INVESTMENT MANAGERS PARTICIPATIONS 1 Holding company FC 100 100 100 100 France
NATIXIS INVESTMENT MANAGERS PARTICIPATIONS 3 Holding company FC 100 100 100 100 France
AEW EUROPE HOLDING Ltd Asset Management FC 60 60 60 60 Great Britain
AEW GLOBAL UK LTD Asset Management FC 60 60 60 60 Great Britain
AEW UK INVESTMENT MANAGEMENT LLP Asset Management Equity 50 30 50 30 Great Britain
H2O ASSET MANAGEMENT LLP Asset Management FC 50 50 50 50 Great Britain
LOOMIS SAYLES INVESTMENTS LTD (UK) Asset Management FC 100 100 100 100 Great Britain
NATIXIS INVESTMENT MANAGERS UK Ltd Retail FC 100 100 100 100 Great Britain
MV Credit Limited (y) Asset Management FC 100 100 Great Britain
AEW Europe Global LUX Asset Management FC 100 60 100 60 Luxembourg
DNCA ARCHER MID-CAP EUROPE (w) Asset Management FC 24 24 35 35 Luxembourg
Ostrum Multi Asset Global Income (z) Asset Management FC 58 58 Luxembourg
Natixis IM Mexico, S. de R.L de C.V. Asset management FC 100 100 100 100 Mexico
Natixis Investment Managers Uruguay S.A. Retail FC 100 100 100 100 Uruguay
Natixis Investment Managers Korea Limited Retail FC 100 100 100 100 South Korea
AEW Central Europe Czech Retail FC 60 60 60 60 Czech Republic
AEW Central Europe Romania Retail FC 60 60 60 60 Romania
AEW Europe Italian Branch Retail FC 60 60 60 60 Italy
Natixis Investment Managers, Nederlands Retail FC 100 100 100 100 Netherlands
Natixis Investment Managers S.A., Succursale italiana Retail FC 100 100 100 100 Italy
Natixis Investment Managers S.A., Zweignierderlaasung Deutschland Retail FC 100 100 100 100 Germany
NATIXIS Wealth Management Luxembourg* Bank FC 100 100 100 100 Luxembourg
ALLOCATION PILOTÉE ÉQUILIBRE C (m) Insurance investment mutual fund FC 38 38 France
MIROVA EUROPE ENVIRONNEMENT C (ee) Insurance investment mutual fund FC 30 30 France
FCT PUMACC (a) (jj) Consumer credit securitization vehicle FC 100 100 100 100 France
CO-ASSUR (jj) Insurance brokerage advisory FC 100 100 100 100 France
LEASE EXPANSION (jj) IT operational leasing FC 100 100 100 100 France
NATIXIS ENERGECO** (jj) Equipment leasing FC 100 100 100 100 France
NATIXIS LEASE** (jj) Equipment leasing FC 100 100 100 100 France
SAS IMMOBILIÈRE NATIXIS BAIL (a) (jj) Real-estate leasing FC 100 100 100 100 France
BATI LEASE (jj) Real-estate leasing FC 97 97 97 97 France
COFACE HOLDING AMERICA LATINA Financial data FC 42 42 41 41 Mexico
COFACE NORTH AMERICA Credit insurance and related services FC 42 42 41 41 United States
COFACE POLAND CMS Financial data FC 42 42 41 41 Poland
COFACE SERVICES AUSTRIA Receivables management and data FC 42 42 41 41 Austria
COFACE SERVICIOS ESPANA S.L. Receivables management and data FC 42 42 41 41 Spain
COFACE SOUTH AFRICA Insurance FC 42 42 41 41 South Africa
COFACE SOUTH AFRICA SERVICES Insurance FC 42 42 41 41 South Africa
COFACERATING HOLDING Receivables management and data FC 42 42 41 41 Germany
COGERI Receivables management and data FC 42 42 41 41 France
Fonds Colombes Mutual fund investments FC 42 42 41 41 France
Fonds Lausanne Mutual fund investments FC 42 42 41 41 Switzerland
COFACE UK – BRANCH (COFACE EUROPE) Credit insurance and related services FC 42 42 41 41 Great Britain
COFACE NEDERLAND – BRANCH (COFACE KREDIT) Insurance FC 42 42 41 41 Netherlands
COFACE POLAND – BRANCH (COFACE AUSTRIA) Insurance FC 42 42 41 41 Poland
COFACE ROMANIA INSURANCE – BRANCH (COFACE AUSTRIA) Insurance FC 42 42 41 41 Romania
COFACE LATVIA INSURANCE – BRANCH (COFACE AUSTRIA) Insurance FC 42 42 41 41 Latvia
COFACE HONG KONG -BRANCH (COFACE EUROPE) Credit insurance and related services FC 42 42 41 41 Hong Kong
S.C.I. ALTAIR 1 (a) Real estate operations FC 100 100 100 100 France
S.C.I. ALTAIR 2 (a) Real estate operations FC 100 100 100 100 France
Branch newly consolidated in the first quarter of 2018.(c) Entity deconsolidated as of January 1, 2018 as the percentage interest fell below eligible levels.(d) Entity consolidated in the first quarter of 2018 after the percentage interest rose above eligible levels.(e) NIM bought back the NPE securities held by Natixis S.A. on 01.01.2018. As DAHLIA A SICAR SCA is owned by NPE, it will now be consolidated under NIM.(f) An additional 5.18% investment in Payplug was completed on 04.17.2018(g) A 70% stake in Comiteo was acquired on 04.18.2018.(h) Newly consolidated in the second quarter of 2018 following Investima 77’s acquisition of Vermilion Partners on 04.16.2018(i) Newly consolidated in the second quarter of 2018 following Natixis Alternative Holding Limited’s acquisition of Fenchurch Partners LLP.(j) Business activities of the entity taken over by Natixis S.A. on 04.03.2018.(k) Entity liquidated in the second quarter of 2018.(l) Entity consolidated in the second quarter of 2018 after the percentage interest rose above eligible levels.(m) Entity disposed of on June 22, 2018.(n) Entity acquired on June 26, 2018 and its activity transferred to Natixis Immo Exploitation effective October 1, 2018.(o) The ownership interest increased from 72% to 82% after Société de Cadres’ percentage interest in DNCA Finance rose from 6% to 9% on January 1, 2018 (p) and some of the put options held by managers at DNCA Finance were exercised in the second and third quarters. The ownership interest decreased from 100% to 89% after 11% of the fund's equity was sold to outside investors.(q) The ownership interest increased from 55% to 73% following the buyout of shares from a manager who left the Company in the first quarter of 2018.(r) Ownership interest decreased in the second quarter of 2018 following the implementation of a bonus share allocation for the Company director.(s) Ownership interest increased in the second quarter of 2018 following a buyback of the Company directors’ shares.(t) Fund units subscribed on April 3, 2018.(u) The ownership interest increased from 42% to 72% after some of the put options held by managers at DNCA Management were exercised in the second (v) and third quarters.
In the fourth quarter of 2018, AEW Ciloger Dependant Branch’s activity was transferred to the new subsidiary AEW Invest Gmbh.(gg) In the fourth quarter of 2018, Natixis IM sold part of its securities to the structure’s management as part of the reorganization of Seventure’s share (hh) ownership.
As part of the reorganization of Ossiam’s share ownership, the management increased its stake in the structure in the fourth quarter of 2018, reducing (ii) Natixis IM’s ownership percentage to 75%.
Information on equity and income is that of the last fiscal year as adopted by the General Shareholders’ Meeting (December 31, 2017).(b)
In compliance with the assignment entrusted to us by your General Shareholders’ Meeting, we carried out the audit of the Natixis Group’s consolidated financial statements for the year ended December 31, 2018, as appended to this report.
Furthermore, the non-audit services that we provided to your Company and its controlled undertakings during the fiscal year that are not disclosed in the management report or the notes to the consolidated financial statements are as follows: PricewaterhouseCoopers Audit: the main engagementsa conducted in fiscal year 2018 concerned certification, comfort letters issued in connection with issuance programs, reviews of compliance procedures and services provided as part of restructuring measures.
Deloitte & Associés: the main engagements conducted ina fiscal year 2018 concerned reviews of reporting compliance, either as required by regulations or requested by the regulators, the independent third-party body engagement on the CSR information in the management report, comfort letters issued in connection with issuance programs and certification.
Without prejudice to the opinion expressed above, we draw your attention to the first-time application of IFRS 9 “Financial instruments” presented in Note 1 “Impact of the first-time application of IFRS 9 as of January 1, 2018” and in Note 2 “Basis of presentation” to the consolidated financial statements.
Impact of the first-time application of IFRS 9 as of January 1, 2018
In addition to the impairment procedures for known credit risk (stage 3), the new impairment rules for expected losses require the recognition of estimated provisions as follows: Stage 1 incorporating a 12-month expected loss based on thea initial recognition of a financial asset; Stage 2 incorporating an expected loss at maturity, in the eventa of a significant deterioration in the credit risk since the initial recognition.
Estimating these expected credit losses requires a significant degree of judgment, in particular to define: Certain input for the calculation of expected credit losses, ina particular the Probability of Default and Loss Given Default. This input is established on the basis of models developed internally, taking into account specific sector characteristics; Credit risk deterioration criteria;a
Our work mainly consisted, together with our credit risk experts, in: Reviewing methodologies used by Natixis to estimate expected credit losses (credit risk deterioration criteria, input for the calculation of expected credit losses and procedures for establishing macro-economic projections) and verifying that they have been established in compliance with the provisions set out in IFRS 9; Reviewing the work and conclusions of the Risk division relating to the internal validation of IFRS 9 impairment models; Performing counter calculations based on a sample of portfolios.
Our work also consisted in verifying the information provided in the Notes to the consolidated financial statements relating to the first-time application of IFRS 9.
Outstanding loans bearing a known counterparty risk (stage 3) are the subject of impairments determined essentially on an individual basis. These impairments are determined by management which takes into account estimated recoverable future cash flows.
Net exposure to credit and counterparty risk totaled €187,172 million at December 31, 2018 including €96,564 million in respect of loans and receivables. Impairment for expected credit losses stood at €1,289 million at and 11.2 to the consolidated financial statements for more details.
In line with the due diligence procedures in respect of the first-time application of IFRS 9, our work consisted primarily in: Taking note of and evaluating the internal control systema governing the definition and validation of impairment models and input used to calculate this impairment.
Performed independent analyses of the assumptions used anda the estimates of provisions approved by management based on information provided by the institution and external data; Verified that estimated impairment allowances were correctlya recognized.
We also assessed the information presented in detail in the notes to the consolidated financial statements and required by IFRS 9 in respect of the “impairment” component, as at
We examined the identification, assessment and provisioning arrangements for legal and compliance risks.
FINANCIAL DATA Statutory Auditors’ report on the consolidated financial statements 399Natixis Registration Document 2018
We deemed the assessment of complex derivative financial instruments, and in particular those classified in fair value Levels 2 and 3, to be a key audit matter due to: the material nature of the exposures and the use of judgmenta in determining fair value; and specific valuation adjustments recognized by Natixis in 2018 ona certain products marketed in Asia where the business model used led to the introduction of a hedging strategy that proved to be inadequate in the market conditions in 2018.
For more details, please refer to the paragraph on Key Events as well as to Notes 6.6, 6.23, 8.5 and 8.7 to the consolidated financial statements.
We tested the relevant control to our audit, including those relating to: the validation and periodic review, by the Risk division, ofa valuation models; the independent verification of valuation inputs;a the determination of the main valuation adjustments;a the classification of instruments according to fair value levels.a
Insurance companies’ technical reserves amounted to €79,732 million at December 31, 2018. Please refer to Notes 6.23, 9.2.5, 9.5 and 10.6.2 to the consolidated financial statements for more details.
The main audit procedures applied included, depending on the type of risks covered by the reserves: obtain an understanding of the general conditions relating toa insurance contracts marketed by the group; assessing the methods and assumptions used to calculatea those reserves, including their consistency with applicable regulations, market practices and economic and financial conditions; testing, on the basis of accounting reconciliations, recurrencea tests, or surveys, the reliability of information relating to insurance contracts recorded in the management systems and used for the valuation of technical reserves; carrying out, based on a sample of policies, an independenta recalculation of certain reserves; assessing calculation methods and the result of the liabilitya adequacy test, as required under IFRS 4.
Based on projections made by management, we carried out tests to check that deferred tax asset bases are properly calculated and that the right tax rates are used.
We certify that the consolidated Non-Financial Performance Report provided for by Article L.225-102-1 of the French Commercial Code is included in the Management Report, it being specified that, in accordance with the provisions of Article L.823-10 of said code, we have not verified the information contained in this report with respect to its fair presentation or consistency with the consolidated financial statements and the information must be the subject of a report by an independent third body.
As of December 31, 2018, PricewaterhouseCoopers Audit was in its third year of appointment without interruption. As of that date, the length of Deloitte & Associés' uninterrupted appointment was over 20 years, including 13 years since the combination of the Ixis business of the Caisse Nationale des Caisses d'Epargne (CNCE) and the Natexis Banques Populaires business of Banque Fédérale des Banques Populaires (BFBP), which on November 17, 2006 resulted in the incorporation of Natixis through the transfer of CNCE's subsidiary shares and equity investments to the Natexis Banques Populaires entity, which was renamed Natixis.
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with International Financial Reporting Standards as adopted by the European Union and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.
See Note No. Year ended December 31 2018 2017 12 Due to central banks 12 Due to banks 96,850 124,254 22 o/w institutional operations: 1 16 Provisions for risks and other expenses 2,192 2,293
See Note No. Off-balance sheet items – Commitments given 2018 2017
Net gains/(losses) on transactions on securities held for sale 53 16
Write-down, amortization and impairment of property, plant and equipment and intangible assets (77) (78)
Provisions for risks10. 413 Transactions denominated in foreign 11. currencies 413
INVESTMENT IN SUBSIDIARIES AND NOTE 6 AFFILIATES, ASSOCIATES, OTHER LONG-TERM INVESTMENTS AND TREASURY SHARES 418
FINANCIAL DATA Parent company financial statements and notes 407Natixis Registration Document 2018
STATEMENT OF ASSETS, LIABILITIES AND NOTE 22 COMMITMENTS RELATED TO MANAGEMENT OF PUBLIC PROCEDURES 432
GAINS/(LOSSES) ON SECURITIES HELD NOTE 27 FOR SALE AND SIMILAR 434
Natixis’ separate financial statements have been prepared and are presented in accordance with regulation No. 2014-07 of the Autorité des Normes Comptables (ANC—French accounting standards authority) dated November 26, 2014 relating to the financial statements of companies in the banking sector and regulation No. 2014-03 (modified) relating to the French General Accounting Plan (PCG—Plan comptable général).
Customer loans comprise loans to economic operators other than banks, with the exceptions of those represented by a security, and reverse repo stock and securities. They are broken down by type of loan (current accounts overdrawn, commercial loans, cash loans, equipment loans, export credit, subordinated loans, etc.).
Loans accelerated by the lender and loans classified among non-performing loans for more than one year for which a write-off is planned are deemed to be irrecoverable.
Where there is a risk of partial or total non-recovery of loans or of borrowers breaching their covenants, impairment charges (for non-performing loans) or provisions (for off-balance sheet commitments) corresponding to the amount of the probable loss are recognized on the income statement under “Provision for credit losses”. These impairments and provisions are assessed quarterly on a case-by-case basis taking into account an analysis of the risk and available collateral.
Securities are, in accordance with Book II—Title 3 “Accounting treatment of securities transactions” of regulation No. 2014-07 of the ANC, classified according to: their type: government securities (treasury bills and similara securities), bonds and other fixed-income securities (negotiable debt securities and interbank market instruments), shares and other variable income securities; the economic purpose for which they are held, into one of thea following categories: held for trading, held for sale, held for investment, other long-term securities, investments in associates and investments in subsidiaries and affiliates.
Securities held for trading: securities that are originallya bought or sold with the intention of reselling or repurchasing them in the short term, and securities held as part of a market-making operation. Securities bought or sold for the
They are valued at year-end at the lower of their carrying amount and their market value. Unrealized losses give rise to the recognition of an impairment loss, whose calculation factors in gains from any hedging transactions conducted. Unrealized gains are not recognized.
In line with regulatory requirements, unrealized losses are not subject to impairment, unless there is a strong likelihood that the instruments will be sold before maturity due to unforeseen circumstances or if there is a risk of default by the issuer of these instruments. Unrealized gains are not recognized.
Investments in subsidiaries and affiliates: shares andj other variable-income securities in related corporate entities over which Natixis exercises exclusive control, i.e. corporate entities likely to be fully consolidated in Natixis’ consolidation scope.
In line with applicable accounting principles, a specific amortization schedule is defined for each significant component of an item of property, plant and equipment which has a different useful life or is expected to consume future economic benefits differently from the item as a whole. For buildings comprising business and investment property, the following components and depreciation periods are applied: land: non-depreciablea non-destructible buildings (of historical importance): a non-depreciable walls, roofs and waterproofing: 20 to 40 yearsa foundations and framework: 30 to 60 yearsa external rendering: 10 to 20 yearsa equipment and installations: 10 to 20 yearsa internal fixtures and fittings: 8 to 15 yearsa
FINANCIAL DATA Parent company financial statements and notes 411Natixis Registration Document 2018
Other items of property, plant and equipment are depreciated over their estimated useful lives, generally five to 10 years.
This line item comprises debt attributable to freely tradable securities held for sale issued by Natixis in France or in foreign countries, with the exception of subordinated instruments recognized as subordinated debt.
This line item notably includes medium-term notes, interbank market instruments, negotiable debt securities and bonds and other fixed-income securities.
Expenses and income arising from forward financial instruments used to hedge and manage Natixis’ overall interest rate risk are
The accounting treatment of speculative positions is identical for interest flows. Contracts are marked to market value at each reporting date and any unrealized losses are taken to the income statement as provisions.
Actuarial assumptions are reviewed annually. Differences resulting from changes in actuarial assumptions and experience adjustments (impact of differences between actuarial assumptions and actual experience) give rise to actuarial gains and losses.
Insurance contracts taken up with a related party to Natixis and intended to finance all or part of Natixis’ defined-benefit plan commitments are recorded in the asset side of the balance sheet as “Other assets”.
FINANCIAL DATA Parent company financial statements and notes 413Natixis Registration Document 2018
Changes to the terms and conditions of a cash-settled employee retention and performance plan indexed to the value of the Natixis share which would lead to the latter being reclassified as an employee retention and performance plan settled in shares would trigger, when the plan provides for the allocation of existing shares, the derecognition of the debt recorded for the initial plan indexed to the value of the Natixis share and the recognition of a liability as a provision for the new employee retention and performance plan settled in shares. The difference between the recognition of the new plan and the derecognition of the preexisting debt is taken directly to profit and loss. When the plan provides for the allocation of new shares, only the derecognition of the debt recorded for the initial plan indexed to the value of the Natixis share is taken to profit and loss.
A provision of €120,000 was recorded in the financial statements at December 31, 2018 in respect of plans to be settled in shares (allocation of existing shares), against an expense of €134,000 in 2017.
In accordance with delegated regulation 2015/63 and implementing regulation 2015/81 supplementing the BRRD Directive on ex-ante contributions to financing mechanisms for the resolution, the Single Resolution Board set the level of contributions to the Single Resolution Fund. Contributions paid to the fund may be made in cash security deposits recognized as assets on the balance sheet (15% in cash security deposits) and in contributions recorded in income as “Taxes other than on income”.
Non-recurring income and expense items are determined based on their amount, their unusual nature with respect to current operations, and the likelihood of the events in question repeating.
Due to additional contributions, the corporate tax rate used to calculate the expense payable for the year was 34.43% for France. Applicable local corporate tax rates were used for foreign subsidiaries.
There were no changes to accounting methods in respect of the 2018 fiscal year.
FINANCIAL DATA Parent company financial statements and notes 415Natixis Registration Document 2018
Non-performing loans amounted to €2,150 million at December 31, 2018 versus €2,839 million at December 31, 2017 (of which €223 million at December 31, 2018 relating to irrecoverable loans versus €247 million at December 31, 2017).
Receivables eligible for refinancing with the Banque de France and/or the European Central Bank amounted to €627 million at December 31, 2018 versus €1,579 million at December 31, 2017.
FINANCIAL DATA Parent company financial statements and notes 417Natixis Registration Document 2018
Of which Shares and other listed variable-income securities for €47,097 million at December 31, 2018 versus €44,705 million at December 31, (d) 2017.
The total amount of securities held for investment sold before maturity totaled €15 million in 2017. No sales were recorded for 2018.
There were no transfers of securities between categories in 2017 or 2018.
- the inclusion of Oddo BHF shares for +€20 million; - the exclusion of Hines Pan European Core Fund shares for -€10 million; - the exclusion of Colyzeo Investors shares for -€4 million.
- a reversal of provisions on Hines pan European Core Fund shares for +€4 million; - a reversal of provisions on Colyzeo Investors shares for +€3 million.
- the inclusion of Natixis North América LLC shares for +€167 million; - the increase in the stake in Natixis Global Asset Management in the amount of +€936 million; - the Contango Trading S.A. capital increase for +€79 million; - the Natixis Wealth Management capital increase for +€70 million;- - the Natixis Payment Holding capital increase for +€54 million.
The table below was drawn up in accordance with the provisions of Article L.247-1 of the French Commercial Code.
DF EFG3 LIMITED Maples Corporate Services Limited of PO Box 309, Ugland House, Grand Cayman, KY1-1104 U 85,000 USD 9,888 USD 100.00% NATIXIS NORTH AMERICA LLC 1251 Avenue of the Americas New York, NY 10020 U 2,468,579 USD (356,021) USD 100.00%
Loans and receivables received but not yet paid (in thousands of euros)
Non-operating property, plant and equipment 1 0 0 0 1 land and buildings 1 1 other property, plant and equipment 0 0
FINANCIAL DATA Parent company financial statements and notes 425Natixis Registration Document 2018
Investments in subsidiaries and affiliates (530) (17) 187 5 57 (298)
Expected return on plan assets 1.56% 3.03% 0.50% 1.32% 1.05% 0.80%
FINANCIAL DATA Parent company financial statements and notes 429Natixis Registration Document 2018
Unrecognized actuarial gains and losses 1 (7) 5 (1) 7 (10) 13 10
Payments to the fund during the period (3) (3) (4) (67) (71)
Actuarial gains and losses on benefit obligations (11) (10) (2) (3) (26) 1 4 6 11
Change in actuarial gains and losses not recognized 2 (15) (2) (3) (18) (5) 3 0 6 4
Natixis issued Perpetual deeply subordinated notes which offer unit-holders fixed rate or variable rate income and which may be redeemed at the end of a set period and then at each coupon anniversary date. In the event of non-redemption at the end of this period, for some of these issues, a variable coupon indexed to the EURIBOR or LIBOR will be paid.
FINANCIAL DATA Parent company financial statements and notes 431Natixis Registration Document 2018
(in millions of euros) Revaluation reserve for depreciable fixed assets Provisions for investment Accelerated depreciation
The capital increase in fiscal year 2017 corresponds to the allocation of 285,658 free shares to certain Natixis employees, within the scope of Retention and performance plans.
The capital increase in fiscal year 2018 corresponds to the allocation of 945,549 free shares to certain Natixis employees, within the scope of Retention and performance plans, and the creation of 11,982,805 shares under the “MAUVE 2018” transaction.
FINANCIAL DATA Parent company financial statements and notes 433Natixis Registration Document 2018
FINANCIAL DATA Parent company financial statements and notes 435Natixis Registration Document 2018
Depreciation, amortization and impairment of property, plant and equipment and intangible assets (77) (78)
Of which pension costs for €111 million at December 31, 2018 versus €149 million at December 31, 2017.(a)
Of which a net provision reversal for the Workforce Adaptation Plan of €2 million at December 31, 2018 versus €4 million at December 31, 2017.(b)
Including a contribution of €157 million to the Single Resolution Fund (SRF) at December 31, 2018, versus €116 million at December 31, 2017. (c)
Natixis S.A. was subject to an audit covering the 2008 to 2013 fiscal years, which resulted in the reception of a reassessment notice in December 2016.
The European Court of Justice has ruled the application of a share of costs and expenses, fixed at 5% of dividends received from subsidiaries based in another European Union Member State which, if they had been residents of France, could have belonged to a tax consolidation Group, contrary to the freedom of establishment principle (EJC 2-9-2015, Case C-386/14, Groupe Steria SCA). Natixis, as the Head of the Tax Consolidation Group in France, thus received a reimbursement of the tax unduly paid on the 5% share of costs and expenses for a total of €6 million.
FINANCIAL DATA Parent company financial statements and notes 437Natixis Registration Document 2018
Information on risk management is presented in Section 3.5 of Chapter [3], “Credit and counterparty risks”.
(in millions of euros) ≤ 3 months 3 months to 1 year 1 to 5 years > 5 years Undated Total
At December 31, 2018, in accordance with the above-mentioned Article, Natixis hereby reports that it has: in the Marshal Islands, €63 million in outstanding financing (neta of provisions) and €2 million in financial commitments given; in Panama, €106 million in outstanding financing (net ofa provisions).
Company financial performance over the last five years (Art. 133, 135 and 148 of the French Decree on Commercial Companies
Income before tax, depreciation, amortization and provisions 738,855,652.86 872,230,135.57 1,061,747,058.72 1,058,912,618.73 1,610,377,425.74
Income after tax, depreciation, amortization and provisions 1,305,316,943.00 1,134,225,514.40 1,621,448,753.36 1,678,182,285.17 1,834,308,793.77
Income after tax, but before depreciation, amortization and provisions 0.29 0.32 0.45 0.42 0.60
Income after tax, depreciation, amortization and provisions 0.42 0.36 0.52 0.53 0.58
Social security and other employee benefits 389,150,406.91 349,581,989.26 388,380,689.14 503,004,737.45 421,145,026.49 of which for 2018: (a)
In compliance with the assignment entrusted to us by your General Shareholders’ Meeting, we carried out the audit of the parent company financial statements of Natixis S.A. for the year ended December 31, 2018, as appended to this report.
January 1, 2018 to the date of our report and in particular we did not provide any services that are prohibited under Article 5(1) of Regulation (EU) No 537/2014 or under the French Code of Ethics (Code de déontologie) for statutory auditors.
We conducted our audit engagement in compliance with the independence rules applicable to us, for the period from
Furthermore, the non-audit services that we provided to your Company and its controlled undertakings during the fiscal year that are not disclosed in the management report or the notes to the parent company financial statements are as follows: Deloitte & Associés: the main engagements conducted ina fiscal year 2018 concerned reviews of reporting compliance, either as required by regulations or requested by the regulators, the independent third-party body engagement on the CSR information in the management report, comfort letters issued in connection with issuance programs and certification.
Pursuant to the provisions of Articles L. 823-9 and R. 823-7 of the French Commercial Code (code de commerce) relating to the justification of our assessments, we draw to your attention the key audit matters relating to risks of material misstatement that, in our professional judgment, were of most significance in our audit of the parent company financial statements of the current period, as well as how we addressed those risks.
FINANCIAL DATA Statutory Auditors’ report on the parent company financial statements 443Natixis Registration Document 2018
We evaluated the design and tested the effectiveness of the key controls put in place by Natixis S.A., in particular those related to: the identification of indicators of impairment (such as past-duea payments) and the counterparty rating process; the classification of exposures as non-performing;a the monitoring and valuation of guarantees;a the determination of individual impairment losses ona non-performing loans and the associated governance and validation system.
Natixis S.A. is involved in litigation before the courts and is the subject of investigations and requests for information from regulatory and tax authorities in different jurisdictions.
For more details, please refer to paragraph 10 of Note 1 and to Note 16 to the parent company financial statements.
As part of its Corporate & Investment Banking activity, Natixis S.A. holds financial instruments that are marked-to-market in its balance sheet, including a significant portion of instruments that are not quoted on an active market.
The determination of the market value of these financial instruments is based on valuation techniques that include a significant amount of judgment in the choice of methodologies and data used: use of adequate internal valuation models;a determination of valuation inputs unobservable on the market;a estimation of additional valuation adjustments, to reflecta certain market, counterparty or liquidity risks.
We deemed the valuation of financial instruments not quoted on an active market, to be a key audit matter due to: the material nature of the exposures and the use of judgmenta in determining their valuation; specific valuation adjustments recognized by Natixis in 2018 ona certain products marketed in Asia where the business model used led to the introduction of a hedging strategy that proved to be inadequate in the market conditions in 2018.
Financial instruments not quoted on an active market are recognized within securities held for sale, securities held for trading and securities held for investment, which represented assets of €39.7 billion at December
Please refer to paragraph 2 of Note 1 and to Notes 2, 5, 26 and 27 to the parent company financial statements for more details.
We examined the internal control procedures and systems for the identification, valuation and accounting of financial instruments not quoted on an active market.
We tested the relevant control to our audit, including those relating to: the validation and periodic review, by the Risk division, ofa valuation models; the independent verification of valuation inputs;a the determination of the main valuation adjustments, as wella as the value adjustments made.
We carried out these checks with the assistance of our valuation experts, with whom we also carried out independent valuations by examining, on a sample basis, the assumptions, methodologies and models used to estimate the valuation. For 2018, this work focused on the valuation adjustments recognized by Natixis on certain products marketed in Asia.
In accordance with French law, we have verified that the various information items concerning the purchase of investments and controlling interests and the identity of the shareholders and holders of the voting rights have been properly disclosed in the management report.
We were appointed Statutory Auditors of Natixis S.A. by the General Shareholders' Meetings held on May 24, 2016 in the case of PricewaterhouseCoopers Audit, and on June 16, 1998 in the case of Deloitte & Associés (taking into account the mergers of firms that have occurred since that date). The appointment was previously held by other entities of the Deloitte network for which the full history of appointments cannot be established.
The parent company financial statements have been approved by the Board of Directors.
446 Natixis Registration Document 2018 identifies and assesses the risks of material misstatement ofa the financial statements, whether due to fraud or error, designs and performs audit procedures responsive to those risks, and obtains audit evidence considered to be sufficient and appropriate to provide a basis for his opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; obtains an understanding of internal control relevant to thea audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control; evaluates the appropriateness of accounting policies used anda the reasonableness of accounting estimates and related disclosures made by management in the parent company financial statements; assesses the appropriateness of management’s use of thea going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. This assessment is based on the audit evidence obtained up to the date of his audit report. However, future events or conditions may cause the Company to cease to continue as a going concern. If the Statutory Auditor concludes that a material uncertainty exists, there is a requirement to draw attention in the audit report to the related disclosures in the parent company financial statements or, if such disclosures are not provided or are inadequate, to issue a qualified opinion or a disclaimer of opinion; evaluates the overall presentation of the financial statementsa and assesses whether these statements represent the underlying transactions and events in a manner that achieves fair presentation.
FINANCIAL DATA Internal control procedures relating to accounting and financial information 447Natixis Registration Document 2018
The Finance Department prepares Natixis’ consolidated financial statements and all consolidated regulatory reports (including solvency, liquidity and Resolution-related ratios) using the tools and databases developed and administered by Natixis S.A.
In this regard, the processes for preparing the consolidated financial statements and regulatory reporting are operationally autonomous, but linked to BPCE’s processes. The reliability of these processes is based on the following core principles: definition, in coordination with BPCE, and dissemination of thea accounting and regulatory principles applicable to Natixis companies, including the analysis and interpretation of new standards published during the period; documentation and oversight of the different stages in thea preparation of these reports; audit trails justifying all published accounting and managementa data, based on the individual contributions made by each entity and restatements made centrally; formal, documented first- and second-level controlsa contributing to the management of risks relating to accounting and financial information (balance sheet, income statement, regulatory and financial information); data archiving and security procedures;a provision of support and appropriate training to the accountinga and regulatory reporting teams of those consolidated entities that use the consolidation and data collection tools, thus allowing for best practices to be shared within the Company.
For the preparation of the consolidated financial statements and part of its regulatory reporting, Natixis has software that enables it to: produce a local IFRS-compliant reporting package, including,a for foreign entities, a reporting period foreign currency conversion feature; extend its data collection and consolidation processes toa regulatory reporting; guarantee the consistency of data relating to the banking anda insurance consolidation scopes; offer retrieval features that can be used to input data into thea various reports; offer BPCE access to Natixis’ data through dedicateda interfaces, in keeping with confidentiality rules given that Natixis is listed; secure the integration process for consolidation packagesa received from international entities through the implementation of local first-level controls followed by centralized second-level controls.
In order to perfect its overall data collection system, Natixis is continuing to develop and add new modules or adapt existing modules to new standards (including the update of IFRS 9 as of January 1, 2018 and IFRS 16 as of January 1, 2019), based on its consolidation tool, thus facilitating the compilation and preparation of certain regulatory reports (COREP capital reporting and FINREP).
Lastly, Natixis and Groupe BPCE as a whole ensure the publication of their financial information within a schedule in line with industry-wide practices.
The accounting and financial reporting control system is primarily based on the following fundamental principles: separation of the accounting production and control functions;a and the standardization of control processes within the Group’sa different business lines and entities: methods, software, reporting and frequency; 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. This includes procedures that describe in detail the organization of the system; risk mapping showing the nature, the frequency of occurrencea and the responsibility by control level across all scopes (accounting and regulatory); centralized oversight within the financial, risk or compliancea departments, performed by the dedicated Regulatory and Accounting Review team, which reviews first-level controls and also performs second-level controls; a risk-based approach, enabling the Review teams to guide anda determine the frequency of their controls given the quality of the internal control processes.
Work in 2019 will be focused on the following actions: implementing the production process and the associateda control environment relative to IFRS 16, applicable as of January 1, 2019 and covering leasing activities; continuing the progress of the project to streamline thea information systems used for market and financing transactions in France and abroad; continuing the progress of the project to streamline and poola data used by the various overview systems, for which new, more granular, uses are planned for 2019; moving forward with the sale, to BPCE SA, of the Factoring,a Sureties & Financial Guarantees, Leasing, Consumer Finance and Securities Services business lines currently operated by Natixis or its specialized subsidiaries, notably by implementing service agreements that will bind BPCE and Natixis, which will continue to carry out certain work on BPCE’s behalf; continuing with initiatives committed to strengtheninga second-level controls in accounting and regulatory matters.
In addition to the control procedures followed by the Finance Departments responsible for preparing individual or consolidated accounts, the quality of accounting controls is verified by: ad hoc audit assignments conducted by BPCE’s Generala Inspection and Natixis’ Internal Audit Department; inspections carried out by the banking supervisory authorities;a audits conducted by Statutory Auditors. This work is carrieda out by a group of firms working in a uniform manner each quarter on most of the entities falling within Natixis’ scope of consolidation and whose opinions rely, in particular, on compliance with policies determined and validated beforehand by Natixis and the effectiveness of local internal control procedures.
THE NATIXIS CODE OF CONDUCT 6.2 AND ITS IMPLEMENTATION 460 Presentation of the Code of Conduct6.2.1 460
MANAGING ENVIRONMENTAL & 6.4 SOCIAL RISKS 479 Incorporating E&S criteria in financing 6.4.1 operations and investments 479
REPORTING FRAMEWORKS 6.7 AND METHODOLOGY 505 Specific methodological information on audited data 505
More than 100 different nationalities 78% of the EuroStoxx 50 are Natixis’ clients
Strong management of the resources 11% CET1 after distribution 5 cross-functional levers Digital | Talents | Brand
Leader of employee savings in France with 2.8 millions of accounts
Clients €65 bn of assets integrating ESG criteria 68% of power generation projects are renewable energy
Systematic green or ISR products offered when opening a new live insurance product 8% of hybrid and electric vehicules in the long term rental car fleet as “Top Employer 2019 ”
of coal, tobacco, and extreme oil 97.6% of permanent jobs in the world
As a key source of financing for the economy, Natixis has a role to play in the transition to sustainable development, and since 2017 it has decided to further its environmental and social responsibility (ESR) ambitions.
ESR is one of the main cross-business drivers used to achieve the goals of the New Dimension 2018-2020 strategic plan, which is aimed at creating lasting value. It is backed by enhanced governance, with the establishment of a dedicated department reporting directly to a member of the Senior Management Committee.
Natixis has described its business model (see Introduction to this registration document) and identified the main risks and opportunities arising from the social and environmental impact of its activities, the respect for human rights, and the fight against corruption and tax avoidance.
Social/Societal Risks relating to a loss of employee value for members of staff
Outstanding loans used to finance renewable energy and sustainable real estate
NON-FINANCIAL PERFORMANCE REPORT Strategic outlines and organization of the ESR policy 455Natixis Registration Document 2018
DEVELOPPEMENT contribute to the global energy transition and develop a sustainable economic model with our clients
Continue the implementation of the Green Weighting Facor: a mechanism favoring the most virtuous pact on the environment
Test the CSR risk measurement tool and prepare for its operational deployment
Develop CSR training: putting online a CSR MOOC Develop solidarity actions
Through its three main areas of focus (internal mobilization, risk management, and sustainable business development), the ESR Department is responsible for steering and coordinating the integration of ESR in Natixis’ operations and activities, thus helping to meet growing demand from clients, investors, and corporates to incorporate ESR criteria in their own growth model.
This department is also responsible for all regulatory and strategic ESR reports: registration document, carbon assessment, mobility plan, etc. In addition, it is in charge of relations with international and external stakeholders (clients, employees, ESG rating agencies, NGOs, etc.) with questions on Natixis’ ESR policy.
The correspondents from Natixis’ business lines (Corporate & Investment Banking, Asset & Wealth Management, Insurance, Specialized Financial Services) take part in business forums aimed at developing ESR in the business lines, while correspondents from the corporate departments (Real Estate and Logistics, Human Resources, Compliance, etc.) are involved in projects to incorporate sustainable development in the Company’s operations.
In this context, the Corporate & Investment Banking has established a Green & Sustainable Hub. This operational hub comprises experts who help issuers and investors all around the world by offering them solutions and expertise in green and sustainable financing. Its expertise extends to all asset classes: structuring and origination of loans and investment solutions in partnership with the business lines, which have appointed Green Captains, and in coordination with the ESR Department.
Paris Agreement on climate change. This is a natural extension of its pledge to make a real positive contribution to the environment and to society more broadly.
In 2018, Natixis endorsed the UNEP-FI Principles for Responsible Banking, reflecting its commitment to aligning its strategy with the United Nations’ Sustainable Development Goals and the
Natixis is also a member of the French Observatory for Corporate social responsibility (ORSE) and of Finance for Tomorrow (Paris Europlace) and as such participates in work to promote responsible finance.
Internationally, Natixis actively contributes to industry-wide green finance initiatives in the Asia-Pacific region through the Hong Kong Green Finance Association.
Planned launch of a fund dedicated Programmes to ensure gender equality 100% green electricity supply contract for all buildings in France
Behave in accordance with Natixis commitments with regard to Environmental and Social Responsibility
The Code of Conduct is available on the Natixis website at:
NON-FINANCIAL PERFORMANCE REPORT The Natixis Code of Conduct and its implementation 461Natixis Registration Document 2018
A communications campaign was organized in March 2018 following the publication of the Code of Conduct and a new page was added to the Natixis website and Intranet. All staff are required to complete mandatory training on the Code of Conduct and must each commit to complying with the rules. In 2018, more than 99% of members of staff from all departments and all regions received e-learning or face-to-face training. Managers and leaders also ensure that their teams understand and adhere to the Code of Conduct and to the internal policies and procedures ensuring its application.
The Global Conduct Committee was set up in June 2018. It is chaired by the Chief Executive Officer and is formed of members of the Natixis Senior Management Committee. The Committee is governed by a Charter that describes its duties and how it functions. The Global Conduct Committee is responsible for all matters concerning the Natixis Code of Conduct and its application by all subsidiaries and direct branches. It is in charge of the oversight and regular monitoring of matters pertaining to the rules of conduct, including updates to the Code and deciding on complex cases. An escalation process is also in place to consult the Committee if required.
Governing that are the rules set out in the Global Conduct Policy, which outline: the responsibilities imposed by the Code of Conduct and,a specifically, how conduct must have a bearing on decisions, both strategic and operational, and on individual behavior; the terms of governance and reporting; anda risk assessment, monitoring of indicators, and the controla system. The committees all met at least once in 2018 and reviewed any shortfalls—human resources, risk, compliance or other—with respect to the Code, ensuring that these shortfalls are addressed in the annual appraisals of the employees concerned.
Tr ai ni ng a nd c om m un ic at io n
To combat tax avoidance, Natixis has control systems to ensure its transactions comply with tax laws and regulations. All new products, new activities and exceptional transactions must be approved with regard to these laws and regulations. In addition, Natixis reports transparently on its organizational structure and operations, and discloses its revenues and the corresponding taxes on a country-by-country basis for greater clarity on the determining factors of its tax expense. It has also adopted the UK HM Revenue & Customs Code of Practice on Taxation for Banks.
Natixis observes transparency rules intended to combat tax avoidance in France and around the world. It applies the Common Reporting Standard (CRS) for the Automatic Exchange Of Information (AEOI) on income received by participating countries’ tax residents abroad, as well as US FATCA regulations to prevent tax avoidance involving foreign accounts or entities owned by US taxpayers. (See Chapter 3.2.8.3 Client protection—Know Your Client.)
Natixis also incorporates tax fraud in its anti-money laundering system. (See Chapter 3.2.8.4 Financial security.) In general, Natixis maintains professional relations and cooperates with all the tax authorities in the countries in which it does business.
DOES IT COMPLY WITH THE LETTER OF OUR POLICIES & PROCEDURES?
At Natixis, each entity, subsidiary and branch office must adapt the overall policy to its activities and specific situation and/or ensure that the policy complies with its own procedures and local regulations.
NON-FINANCIAL PERFORMANCE REPORT Business line contributions to green and sustainable growth 463Natixis Registration Document 2018
In line with the sustainable development objectives of its New Dimension strategic plan, Natixis accelerated in 2018 the development of innovative financial products and services designed to service the environmental and social ambitions of its clients.
Several key initiatives were launched during the year to drive the transition of each business line towards sustainable finance: the business transforming Green Weighting Factor initiative, the internal working group on natural capital and biodiversity, the expanding integration of environmental, social and governance (ESG) criteria throughout asset management strategies, Natixis Assurances’ commitment to align its investments on a climate trajectory compliant with the Paris Agreement.
“most innovative investment bank for climate change and sustainability” by The Banker, and ranked #1 for green bond and ESG research by Euromoney.
In 2019, Natixis intends to consolidate its leading role in sustainable finance innovation, through the full implementation of its Green Weighting Factor and by expanding ESG investing further across all Natixis investment businesses. Natixis pursues its strategic objective to double sustainable finance revenues, by expanding the range of sustainable finance products and services offered to CIB clients, launching new investment solutions in its asset management affiliates, and developing sustainable investments and products for its insurance business. Offering clients investment and financing solutions that effectively address Sustainable Development Goals have today become a key priority.
April 2018, 1,961 signatories with $81.7 trillion in assets under management had adopted the PRI(1).
Ostrum AM (€257.6 billion in assets under management at December 31, 2018) has been a PRI signatory since 2008 and was rated A and A+ on all its investments in the 2018 assessment cycle (on 2017 performance). These excellent scores were well above the median scores of Ostrum AM’s peers. Similarly, AEW (€63.5 billion in assets under management at September 30, 2019), a Natixis Investment Managers affiliate specialized in real estate asset management, has been a PRI signatory since 2009. It was rated A+, ranking it in the 25% best performers in its category.
Four other asset managers affiliated with Natixis Investment Managers intend to sign the PRI in 2019 and to incorporate ESG criteria in their investment decisions, taking the portion of assets managed by Natixis Investment Managers affiliates that have signed the PRI to over 90%.
Natixis commits to the new 6.3.1.2 Principles for Responsible Banking (PRB)
Following on from the Principles for Responsible Investment (PRI) established in 2006 and the Principles for Sustainable Insurance (PSI) announced in 2012, a global initiative to increase responsibility in the banking sector was launched in 2018—the Principles for Responsible Banking (PRB). The PRB were drafted by the United Nations Environment Program Finance Initiative (UNEP-FI) and 28 banks and were unveiled at the UNEP-FI annual meeting held in Paris on November 26, 2018, which was also Climate Finance Day.
This endorsement is a monitored commitment. The UNEP-FI plans to exclude from the signatories banks that will not comply with transparency requirements, set up relevant targets and show progress.
In 2019, Natixis will consolidate its internal tools and processes so it can publish details of its progress at least once a year.
ESG integration: incorporation of ESG criteria in investmenta decisions (including thematic and/or impact investments and exclusion policies); Certification: certified funds.a
Ostrum AM systematically incorporates material ESG aspects in its analysis for both its equity and credit funds. The companies it invests in are always asked about ESG issues and how they include them in their business model. This process applies to €240.8 billion in assets under management, representing 93% of its total assets under management.
Societal exclusion policies: Natixis has adopted exclusion policies for sectors and issuers that do not respect certain human rights and fundamental principles of corporate responsibility. Ostrum AM, Mirova, Seeyond and Natixis Assurances apply these policies to their investments, in full compliance with their fiduciary duties towards their customers.
The following sectors and issuers are excluded: controversial weapons;a tobacco(1);a companies deemed the worst offenders (which do not observea the principles of the United Nations Global Compact or the OECD Guidelines for Multinational Enterprises); blacklisted countries (those on the FATF list or under US ora European embargoes).
In 2018, Ostrum AM converted a money market fund with €7.1 billion in assets under management into a socially responsible fund using a best in-class approach rounded out by active positive screening. This UCITS—Ostrum Sustainable Trésorerie—has begun the process of obtaining SRI certification.
Mirova, the Group’s responsible investment affiliate, always includes ESG criteria in its investment filters on all asset classes, representing €10.1 billion in assets under management.
DNCA, a leading European equity manager, developed in 2018 its own ESG rating model—Above & Beyond Analysis (ABA)—to analyze its portfolios by rating issuers according to extra-financial criteria. Meetings with company directors and on-site visits also help to enhance the clarity and relevance of the information collected.
Mirova thematic fund: presence of women in management bodies In the first quarter of 2019, Mirova will launch a global equity fund on the theme of the presence of women in companies’ executive bodies. Women’s presence in senior management positions is a key factor of diversity in companies and proof of their commitment to gender equality. A lack of women in senior management positions is no longer simply seen as a matter of equality and equity—many far-reaching studies have shown that it also has an impact on performance. The fund’s investment strategy will select companies where women have a strong presence on management bodies. Mirova has set criteria and built an investment universe of 250 companies around the world and will build a portfolio of around 50 companies from this universe following an active fundamental management approach.
Fund managers who incorporate ESG criteria can seek certification for their funds based on the region in which they are sold (e.g. the SRI, TEEC and Finansol labels in France) and/or the investment sector (e.g. real estate sector).
AEW, the Group’s real estate asset management company, set up a working group within the French association of investment property companies (Association française des sociétés de placement immobilier—ASPIM) to create a Real Estate SRI certification in France incorporating criteria covering all environmental, social and governance issues.
Ongoing constructive dialog is established with companies to encourage them to take better account of environmental, social and governance issues in their strategic planning.
The voting and engagement policies are based on two complementary principles: individual ongoing engagement by using voting rights anda maintaining dialog with issuers; collaborative engagement alongside other investors aimed ata raising awareness of the importance of ESG among issuers, government authorities and regulators. Ostrum AM supported 12 commitments in 2018, mostly regarding alignment with the Paris Agreement(1), social risks in the textile supply chain(2), and palm oil(3).
Initiative on social risk in the textile supply chain organized by Mirova (15/06/2018).(2)
NON-FINANCIAL PERFORMANCE REPORT Business line contributions to green and sustainable growth 467Natixis Registration Document 2018
Ostrum AM’s commitment in Bangladesh Five years after the collapse of Rana Plaza, which caused the death of over 1,100 workers, this commitment seeks to inform the Bangladesh government, the textile industry, and signatories of the Bangladesh Accord (1) and the Alliance (2) of the major efforts still required to improve the health and safety of textile workers. Ostrum AM is one of these signatories. In view of investor doubts about this issue, this new commitment also invites sector companies to use their influence to encourage the Bangladesh government to respect human rights and the freedom of association, adopt a regular pay review system and ensure restructuring in the textile sector to protect workers’ health, safety and well-being.
allocation (90% of assets) invests in listed companies planning to create jobs in France over 3 years, based on analysis performed by Mirova. The employee headcount in the listed companies in which the fund invests increased by an average of 10% over the review period (2014-2017), while it was stable for CAC 40 companies overall. The portfolio’s ESG profile also improved over this period, and its carbon impact improved sharply, with the
Excluding the Impact ISR Rendement Solidaire fund and the Cap ISR Mixte Solidaire fund, which are included in SRI AUM.(3)
A social bond finances only projects that have a positive social impact on one or more target populations. The projects financed by social bonds include vital infrastructure such as access to clean water, access to basic services like education, and maintaining or developing employment. Since the ICMA launched the Social Bonds Principles in 2017, the volume of social bonds has quadrupled, rising from $2.1 billion in 2016 to $8.8 billion at year-end 2017 (ICMA, 2018). The market is growing fast but it remains small in relation to the green bonds market. Natixis arranged the issuance of three social bonds in 2018.
BPCE: issuance of the first social bond for local economic development
First corporate social bond issue Natixis worked with Danone on the first ever corporate social bond issue in 2018, raising €300 million over seven years and reflecting growing investor interest in ethical and responsible investments. The food company was the first corporation to complete such a deal aligned with the Social Bond Principles. The proceeds will be assigned to projects with a positive social impact for Danone’s stakeholders, for example to encourage responsible farming practices and empower communities and social entrepreneurs.
Natixis took part in a €2 billion syndicated loan for Danone that factors in environmental and social criteria. This credit facility includes an innovative payable margin adjustment mechanism that will be reviewed at least once a year based on ESG metrics: the average ESG rating by Vigeo and Sustainalytics and the percentage of sales by subsidiaries covered by B Corp. certification (high level of ESG performance).
NON-FINANCIAL PERFORMANCE REPORT Business line contributions to green and sustainable growth 469Natixis Registration Document 2018
GREEN GROWTH: FINANCING THE ENERGY TRANSITION AND COMBATING 6.3.2 CLIMATE CHANGE
To accelerate its transition to green finance, at Climate Finance Day in Paris in December 2017, Natixis announced the creation of the Green Weighting Factor (GWF)—a solution that will help it gradually align its activities with the objectives of the Paris Agreement.
Natixis is pursuing two goals with this innovative initiative—first, to ramp up its commitment to green financing by encouraging the funding of more sustainable activities, including by helping clients active in carbon intensive sectors adopt more sustainable practices, and second, to incorporate climate risk more systematically in its assessment of financing opportunities.
Natixis built its GWF methodology throughout 2018, drawing on its own sector expertise and on external consultants specialized in measuring carbon footprints and environmental impacts. Criteria have been set for each sector to classify the purpose of each financing project in terms of its environmental and climate impact. A color rating equivalent to an environmental rating is assigned to each facility depending on criteria and thresholds specific to each sector, in particular the real estate, oil & gas, electricity, mining, transport, infrastructure, water, waste treatment, heating and commodities trading (energy, metals, agriculture) sectors. For non-specific financing lines, Natixis awards its main clients a color rating and it aims to cover 90% of unassigned outstanding loans in 2019.
The color rating assigned to each financing line follows a seven point scale, ranging from dark brown (activities with an extremely harmful effect on the climate and the environment) to dark green (activities with a highly positive impact), with a neutral point for activities having no impact or a very limited impact. The portfolio will be assigned a color rating in full by end 2019.
After the implementation stage, Natixis will set medium-term commitments for its balance sheet decarbonization road map. The GWF will allow it to measure progress on these commitments.
Renewable energy is constantly setting new records in terms of installed capacity: 157 GW(1) was rolled out around the world in 2017, up from 143 GW in 2016. New solar energy capacity installed in 2018 (98 GW) outstripped new fossil fuel electricity production capacity (70 GW). The proportion of electricity production from renewable sources(2) increased from 11% in 2016 to 12.1% in 2017, representing approximately 1.8 gigatons of CO2 avoided.
Financing for the first concentrated solar power system in Latin America Natixis played a major role in the renewable energy sector in Latin America in 2018. Cerro Dominador, with capacity of 210 MW, was the first project in Latin America to combine PV and concentrated solar power technologies, and is currently the biggest solar power plant in the region.
Project Finance International issues an award for a transaction in the Middle East Natixis participated in financing a photovoltaic power plant in Sakaka, Saudi Arabia, with installed capacity of 300 MW. The project, which is under construction, is part of the country’s National Renewable Energy Program (NREP), which provides for the installation of 3.45 GW in new renewable energy capacity by 2020. Project Finance International (PFI) named this project Middle East and Africa Power Deal of the Year.
NON-FINANCIAL PERFORMANCE REPORT Business line contributions to green and sustainable growth 471Natixis Registration Document 2018
TOTAL INSTALLED CAPACITY OF RENEWABLE ENERGY ■ PROJECTS FINANCED BY NATIXIS ENERGECO IN 2018
TOTAL INSTALLED CAPACITY OF RENEWABLE ENERGY ■ PROJECTS FINANCED BY NATIXIS ENERGECO PER YEAR
By financing these projects, Natixis Energeco supported technological innovation in storage and floating PV plants.
Mirova launched its fourth renewable energy infrastructure fund, Mirova Eurofideme4, in 2018. This fund’s strategy differs from that of the previous funds as it incorporates financing for storage and mobile electricity, which have considerable financing requirements, as well as for production capacity. The goal is to achieve the European Union’s ambitious greenhouse gas reduction targets. The
The PACE program: green securitizations The PACE (Property Assessed Clean Energy) program allows property owners to finance the installation of equipment to improve their environmental performance (solar panels, heating, ventilation, water consumption). PACE makes these purchases possible at a lower cost and with a longer repayment term than with traditional loans. Natixis has arranged securitizations of PACE outstandings since 2015. Two new deals were arranged in 2018 for a total of €219 million.
AEW, the real estate asset management company, continued its efforts to obtain certification for its portfolio assets throughout 2018. Its buildings received BREEAM, HQE Exploitation, LEED Existing Building or BEPOS (positive energy building) certification.
Natixis Assurances also encourages individual policyholders to save energy via its range of home insurance products. The range includes coverage of equipment such as domestic windmills, solar panels or solar-powered water heaters, energy control cabinets, storage batteries and rainwater collection tanks. In addition, as well as managing customer claims, Natixis Assurances advises on using environmentally-friendly products when repairing damage.
Natixis Assurances offers preferential rates to individuals who travel less than 8,000 km per year in their car: this option applies to 26% of contracts (187,993 contracts), or €64.4 million in annual premiums in 2018. Savings of up to 30% are offered to electric vehicle owners. In the interest of supporting its customers, Natixis Assurances also offers eco-driving courses.
Green bond issuers undertake to use the funds raised to finance projects with a positive impact on the environment. Unlike traditional bonds that can finance all the issuer’s activities, a green bond finances traceable investments in measures to improve environmental performance such as energy efficiency, renewable energy, sustainable transport or water management. The green bonds market totals €167.3 billion(3).
Green bond issue for La Poste group Natixis was Green Structuring Advisor on La Poste group’s first green bond issue—a world first for a postal services company. The €500 million raised in November 2018 directly funded projects for the energy transition (solar panels, electric vehicles, green buildings).
Green bond issue for Beijing Capital Natixis was Sole Green Structuring Advisor and underwriter for Beijing Capital group’s first green bond issue. The $250 million raised over three years cover the water and waste treatment firm’s entire solid waste processing chain. The issue was awarded a Green Bonds certificate by the Hong Kong Quality Assurance Agency.
See section on aligning with the objectives of the Paris Agreement.(1)
Since 2015, Natixis has developed a range of climate indices to meet the need for investment in sectors contributing to the energy and ecological transition in different regions. The selection
Natixis is contributing to the objectives of the Paris Agreement in all its financing and investment activities by applying its exclusion policies on the coal industry, oil sands and oil exploration in the Arctic (see Chapter 6.4.3 Climate risks).
NON-FINANCIAL PERFORMANCE REPORT Business line contributions to green and sustainable growth 475Natixis Registration Document 2018 emissions “induced” by the Company’s activity with a lifecyclea approach that takes into account direct emissions as well as those of its suppliers and products; emissions “avoided” thanks to efficiency measures or greena solutions.
Using this method, Mirova estimates that the climate scenario for all its equity, bond and infrastructure portfolios stands at +1.5°C, compared with +5°C for the MSCI World index(2).
Natixis has signed up to the ten common principles of the act4nature initiative, which are to: Incorporate biodiversity in its corporate strategy;1.
Measure the direct and indirect impact of its activities on3. biodiversity; Gradually integrate biodiversity in its decisions;4.
Natixis already incorporates biodiversity in its project financing activities and in 2019 it will increase its recognition of natural capital preservation in all its activities: projects from an environmental, social, health and safety perspective and to take all the necessary steps to minimize and correct the potential impacts. Protecting biodiversity is an integral part of these requirements. The quality of the client’s impact studies and management systems is also taken into account when assessing the project. The assessment is generally performed by an independent consultant and it pays particular attention to the preservation of natural and critical habitats, in compliance with the regulations applicable to the project. For projects located in non-designated countries(1), additional action is required to meet the conditions set by the International Finance Corporation(2).
Mining activities to extract, recycle and transforma commodities have a significant impact on natural capital and biodiversity. For this reason, Natixis works with its clients to plan, avoid, reduce and offset the impact of these activities at each stage in the investment process. For each transaction, the Energy & Natural Resources (ENR) team ensures that its clients observe the practices required in the sector (Equator Principles, etc.) and Natixis’ internal policies.
Inclusion of biodiversity criteria in a green loan to Séché Environnement The first syndicated green loan deal led by Natixis refinanced Séché Environnement’s financial debt. The credit agreement takes into account the average rate of progress in biodiversity preservation via four commitments: 1. Adopt initiatives to promote biodiversity; 2. Make biodiversity a priority within the Company; 3. Use biodiversity to inspire stakeholders; 4. Raise awareness of the impact our lifestyle has on global biodiversity.
IFC performance standards 6: biodiversity conservation and sustainable management of living natural resources.(2)
Mirova has used a platform specialized in preserving biodiversity and natural capital since 2017 and it produces innovative investment solutions to mitigate and adapt to climate change and to protect local regions, biodiversity, soil and marine resources.
The LDN Fund aims to generate positive environmental and socio-economic impacts alongside financial returns. By addressing land degradation, the LDN Fund project aims to deliver the following benefits: land degradation neutrality;a climate change mitigation;a climate change adaptation;a improved livelihoods;a improved biodiversity.a
The LDN Fund’s first round of fundraising at the end of 2018 raised $60 million. Its investors include public sector entities such as the European Investment Bank, Agence Française de Développement and the Luxembourg government, as well as private investors including Fondaction, Fondation de France, BNP Paribas Cardif, Garance and Natixis Investment Managers. The team is continuing to raise funds with a target of $300 million.
The LDN Fund will use its investments to apply sustainable land management practices on 500,000 hectares of land around the world, to reduce CO2 by 35 Mt, and to create or improve jobs for over 100,000 people.
The Land Degradation Neutrality Fund’s first investment Mirova’s Land Degradation Neutrality (LDN) Fund has been operational since its first closing in late 2018 and it has finalized its first transaction with an investment in the Urapi Sustainable Land Use program. The first project developed, financed and launched by Urapi covers four coffees cooperatives in Peru and will rehabilitate nearly 9,000 hectares of degraded land as productive agroforestry systems, capture and reduce 1.3 Mt in CO2 emissions and improve living conditions for 2,400 producers.
It was launched in 2018 and has raised half of its target of $100 million. It will invest in around twenty sustainable projects, five of which have already started.
AEW chairs the Circolab non-profit created in February 2018 to promote the circular economy in the construction and real estate sector and in particular to encourage the reuse of materials via various initiatives: publication of reuse guidelines, promotion of best practices, development of shared tools, creation of an ecosystem of real estate sector players. Circolab currently has around thirty members (public and private sector contracting authorities, construction firms, building materials manufacturers, project managers, associations).
NON-FINANCIAL PERFORMANCE REPORT Managing environmental & social risks 479Natixis Registration Document 2018
Managing environmental & social risks6.4 INCORPORATING E&S CRITERIA 6.4.1 IN FINANCING OPERATIONS AND INVESTMENTS
The ESR Department ensures environment and social (E&S) risks are taken into account in our financing and investment business lines. A risk monitoring team has therefore been assigned to track ESR policies in sensitive sectors, determine which business sectors to exclude from such policies, assess the quality of assessment and monitoring of E&S risks in transactions, and analyze the reputational risk incurred by the parties involved.
This commitment was set out in a sector policy published on Natixis’ website at the following address: 160708_coal_policy_fr.pdf. It also applies to investments made by Ostrum, across all directly managed portfolios, and to Natixis Assurances, across all general-purpose funds. Both Ostrum and Natixis Assurance have stopped investing in industrial companies deriving 50% or more of their business from coal-fired power plants and/or thermal coal mining.
In December 2017, Natixis committed to discontinuing all exclusion has deepened the bank's commitment to fighting financing of, or investment in, tobacco producers, wholesalers, cancer, as patron of the Gustave Roussy foundation since 2011. and traders as well as tobacco product manufacturers. This 2018 Key Event
Publication of oil and gas sector policy Natixis published its oil and gas sector policy in November 2018. This set out the conditions underlying Natixis’ commitment, namely: to discontinue the financing of projects involving the exploration, production, transportation and storage of extra-heavyj oil and oil derived from oil sands, and related export terminals; to no longer provide general purpose corporate financing for, and no longer invest in*, any company of which thej aforementioned activities (see above) account for 30% or more of total operations; to discontinue financing for onshore or offshore oil exploration and production projects in the Arctic.j
For more information please refer to: * This applies to all Natixis Assurances investments.
Natixis has internal ESR policies for the nuclear, mining & metals, and palm oil sectors. These apply to financing operations and cover the following issues: nuclear: compliance with the strictest international securitya rules (IAEA, etc.), reliability of technologies, demonstration by the host country and the operator of their capacity to control and operate their nuclear industry, based on specific criteria; mining & metals: compliance with international mining industrya standards as well as the E&S criteria established by the IFC (World Bank); palm oil: traceability and compliance with best practices anda applicable standards.
As a signatory of the Equator Principles since December 2010, Natixis applies an industry-wide methodology recognized by 94 member banks and financial institutions aimed at evaluating the E&S risks of the projects it finances and assessing the quality of the management systems used by its clients to manage, minimize, and remedy the impacts they cause as best they can.
Details of the analysis and decision-making process, the resources used and full information on transactions audited in this way are available in the annual Equator Principles report (published before July 31 each year and available on the Natixis website.(1)
In respect of French law on duty of vigilance, Natixis is working on an additional tool for assessing the quality of its clients’ environmental and social risk management. The system, which is currently being devised, will be used to assess clients of the Corporate & Investment Banking business in the onboarding process and, subsequently, on a regular basis, at a frequency determined on the basis of the nature and degree of E&S risks at hand. The assessment process will gradually be applied to the division’s portfolio of existing clients, taking into account the schedule for periodic renewals of financing authorizations.
Several additional projects were initiated at the same time, with the aim of establishing a duty of vigilance plan for Natixis employees at its own offices, and also for its purchases of products and services. Work was also begun to expand the due diligence procedures implemented in respect of the bank's financing activities.
Lastly, Natixis’ Compliance Department adapted the bank's whistleblowing system to take new regulations into account (including, in particular, the duty of vigilance, but also the Sapin II law).
Of the more than 100 purchasing categories in the banking sector, the mapping system identified 13 types of high ESR risk-type purchases. These are to be the subject of targeted duty of vigilance measures: Under the new consultation procedures conducted by BPCE Procurement in sensitive categories, suppliers are assessed on the basis of their ESR performance: ESR questionnaire based on the risk map sent to the supplier;a the supplier must detail their action plan to deal with thea identified ESR risks; ESR/Procurement together assess this response;a
This process was applied in 2018 (e.g. Servers category) and further consultation efforts are scheduled for 2019 (works, vehicles).
Natixis also has a large number of establishments outside France, however, and it needs to ensure that employees and service providers working outside France and Europe are not subject to major occupational health and safety risks.
Natixis has decided to focus on countries in which it has a headcount (excluding financial holdings) of more than 100 employees and on countries deemed to be at risk on the country risk map, based on three indicators: gross national income per inhabitant in dollars: GNI/inhabitanta (source: World Bank); weekly working hours (source: International Labora Organization); the index of “violence and repression of workers” (source:a ITUC(2)).
NON-FINANCIAL PERFORMANCE REPORT Managing environmental & social risks 483Natixis Registration Document 2018
For several years now, Natixis has addressed the human rights and environmental risks incurred by some of its financing activities, most notably by applying the Equator Principles for project financing or specific sector-based policies applied to sensitive sectors.
In 2018, Natixis joined the UN Environment Programme Finance Initiative (UNEP-FI) to address climate risks involving 16 international banks. Their aim is to meet the challenges of implementing some of the recommendations made by the Task Force on Climate-Related Financial Disclosure (TCFD) by establishing a joint methodology for conducting stress tests on climate change-related risks (physical and transition risks).
Transition risks can arise where a company’s business model needs to be adapted to a low-carbon economy; be it due to the introduction of strict carbon regulations, a change in customer behavior, or technological innovation. These changing market conditions can give rise to stranded assets or a significant loss in revenue, thereby exacerbating the Company’s credit risk.
In 2018, Natixis took the innovative step of introducing a Green Weighting Factor, to support its clients in the shift towards lower carbon activities and in gradually lowering their carbon footprint. Climate transition risk will now be systematically taken into account in the assessment of financing opportunities (see section on Green Weighting Factor: an innovative solution for a greener financing portfolio).
Ostrum AM, Mirova and Natixis Assurance use the “Carbon Impact Analytics method, co-developed by Mirova and Carbone 4, to calculate their portfolios’ carbon footprint in terms of CO2 emissions (see section on Natixis’ alignment with Paris Agreement objectives).
Applied to the strategies managed by Mirova, the methodology shows that the investments made by the Natixis subsidiary go below the 2°C scenario and are much better than the main benchmark indices.
Climate change results in increased frequency and/or intensity of extreme weather events, such as hurricanes, storms, droughts, and flooding.
The economy stands to suffer from these physical risks, and some sectors and geographic regions are already proving vulnerable to such events, which can result in major financial losses (supply chain breaks, operating losses), alter the value of assets and affect borrower solvency. This could have a knock-on effect on credit and investment portfolios.
Despite this, financial institutions lack the tools needed to analyze portfolio exposure to physical risks. Natixis has therefore committed to the ClimINVEST initiative launched by a consortium of European climate change experts, notably I4CE and Météo France.
This project seeks to co-design and co-produce tools, in conjunction with financial institutions, to facilitate the inclusion of physical climate change risks in decision-making processes. The methods and tools developed will subsequently be made public to ensure these are approved by as many institutions as possible.
Direct impact: Each year, Natixis measures its carbon footprint (see Chapter 6.5.3) and takes a number of measures to limit its own impact on the climate, namely: carbon neutrality of power consumption via renewable energya supply contracts; energy-efficient buildings;a eco-friendly business travel;a reduced paper consumption;a waste management.a
Indirect impact generated by its business lines: Natixis draws on its investment and financing operations as its key means of action the fight against climate change, both in terms of risk management and business opportunities. Natixis applies a low-carbon strategy across all of its business lines: Asset & Wealth Management, Corporate & Investment Banking, Insurance and Specialized Financial Services (see Chapter 6.3.2).
Set-up and monitoring of certifications 12 certified buildings (HQE(1), BBC(2), HPE(3) or BREEAM (4)
After receiving ISO 14001 certification for the management of its buildings over several years, the Real Estate and Logistics Department (DIL) launched its DIL Progress label in 2017. This specifically covers the DILs commitments in terms of building works, property and data center management, and security, across all its business lines. The ESR aspect includes the key environment-related actions stipulated under the ISO 14001 standard: identifying the main sources of environmental impact;a respecting environmental requirements;a informing business lines of environmental actions taken.a
Participation in the CUBE 2020 challenge, to save building energy Natixis took part in the CUBE2020 challenge for the first time in 2018. The contest, which is organized by the IFPEB*, is aimed at saving energy used in buildings. Natixis entered one of its Parisian properties, 47 Quai. The aim is to achieve an energy saving of at least 10%, by involving employees and teams from the IT, Facilities Management, Communications and ESR departments. Awareness-raising efforts were launched in conjunction with concrete energy-saving actions, both on the IT front (automatic stand-by mode) and in terms of the building (settings).
* IFPEB: Institut Français pour la Performance du Bâtiment—French Institute for Building Efficiency.
Abroad, Natixis occupies environmentally-certified offices: building 1251, its New York head office, which houses most of its employees, obtained the LEED gold-level environmental certification for its design and construction. It has also improved its Energy Star score from 69 to 76. In Madrid, following a major overhaul, Natixis’ building is in the process of receiving BREEAM certification. Natixis' teams in Hong Kong work in the ICC building, which received several certifications for its environmental performances (platinum-level BEAM(6) certification, bronze-level LEED(7) certification for interior design).
Natixis has optimized the energy consumption of its buildings for several years with the roll-out of various measures: a re-lamping policy with the use of LED light bulbs;a installation of motion sensor lighting systems;a
Optimization of heating and cooling systems that give greatera consideration to temperatures outside the building.
Combining these measures with efforts to raise employee awareness of “eco-gestures” has been steadily reducing energy consumption in Natixis buildings since 2010, per workstation and per m² of rented surface.
Energy consumption: electricity, heating and cooling of office buildings (in MWh) 56,022 56,806 57,397
Several international platforms implemented actions to improve the efficiency of their buildings: lighting: use of motion sensors (Frankfurt, Kazakhstan, Milan),a re-lamping for LEDs or energy saving light bulbs (Frankfurt, Istanbul, Kazakhstan, Moscow), automatic switch-off (Madrid, Milan)
Since November 2015, Natixis’ buildings have run entirely on green electricity, i.e. from fully renewable sources of energy, pursuant to the terms of its energy supply contract with Engie. This energy source is guaranteed by the supplier and certified AlpEnergie 2015.
Consumption per m2 of usable rented surface (in m3) 0.25 0.25 0.25
Practically all paper (98%) used by Natixis is sustainable forest management-certified (FSC certification(1)).
In 2018, the bank's consumption of paper continued to fall, declining 24% relative to 2017.
Carbon assessment (in metric tons of CO2 equivalent) 2018 2017 2016 2018 carbon emissions -excluding purchases- were up slightly compared to previous years.
At the same time, however, a decrease in carbon emissions due to staff travel was recorded, with the integration of telecommuting.
In addition to this measure of Natixis direct carbon footprint, Initiatives have been undertaken to address material sources of carbon emissions in the conduct of Natixis’ business, predominantly through the use of financial products offered to its clients: an assessment of the environmental impact of investment vehicles offered by Natixis was performed in certain business lines (see Chapter 6.3.2.5).
The volume of paper and ink cartridge waste decreased substantially in 2018, in step with the decline in printouts.
Natixis is also selling its IT equipment to companies specialized in reusing and recycling Waste Electrical and Electronic Equipment (WEEE).
During the European Week for Waste Reduction, these were shown around the sorting centers run by Paprec, the company in charge of collecting waste for Natixis, giving them greater insight into the sorting chain and recycling process for collected waste.
The inter-company mobility plan for the Greater Paris region involves more than 20 Group companies and 26 different office buildings, or some 18,000 employees. This enabled Natixis to take fresh steps to reduce the need for employees to travel and to support more environmentally-friends forms of transport.
to work remotely. The use of teleconferencing and videoconferencing has been rising steadily, notably with the roll-out of Easy workstations.
Facilitate telecommuting and remote working to reducea business travel: The system is being rolled out gradually, with more than 5,000 Natixis employees telecommuting at end-December, or over 41% of Natixis’ headcount in France.
Expand bicycle infrastructure: a Natixis now has 550 indoor bike parking spaces spread across 17 Greater Paris locations (an increase of 200 spaces since 2017) and 52 new outdoor bicycle racks have been installed in front of the 47 Quai building (in the 13th arrondissement of Paris).
Facilitate the use of electric bicycles: a Parking spaces fitted with charging sockets have been installed: 77 parking spaces (an increase of 20 spaces since 2017).
Encourage the use of public transport and “soft” modesa of transport: Natixis encourages its employees to use public transport systems, which happen to be available close to its offices. It reimburses 60% of employee travel costs. Since 2018, Natixis has also been reimbursing employee subscriptions to public bike-sharing services in full.
2018 Key Event 2018 European Mobility Week Natixis launched a proactive communication drive for the 2018 European Mobility Week: sending out flyers describing the various measures in the new mobility plan, offering trial runs on electrical and hydrogen-powered bikes as well as electric cars, and organizing a bike repair workshop.
The environmental impact of the Company car fleet can be significant. In 2018 alone, Natixis Company cars covered nearly 13.5 million kilometers.
Natixis is therefore selecting more eco-friendly vehicles—in terms of both CO2 and particulate emissions—under its car policy. The share of electric and hybrid engine vehicles in the bank’s car fleet increased substantially in 2018, to 74 vehicles, or 13% of the total fleet, compared to 9% in 2017. Under its car policy, Natixis only provides Senior Management Committee members with rechargeable hybrid vehicles respecting average CO2 emission rates of 48 mg/km. Diesel cars are being eliminated from the fleet, with their share of the fleet falling from 24% at end 2017 to 7.8% at end 2018 and 44 diesel vehicles due to reach the end of their long-term leasing contracts in 2019.
The average CO2 emission rate has stabilized at 114 g/km following the implementation of the new WLTP standard, under which car manufacturers are obliged to lower their vehicles’ CO2 emissions.
Since 2011, Natixis’ business travel and expenses policy has set out rules ensuring the safety and comfort of employees during business trips, while contributing to the policy of optimizing the costs and managing the environmental impact of these trips. This policy applies to Natixis and its subsidiaries, excluding Financial Investments in France. The subsidiaries and branches abroad establish travel rules that are consistent with the Group’s Worldwide Travel policy.
This notably includes rules on business travel that has an environmental impact: when a destination can be reached by both rail and air, trainsa are now compulsory for a number of destinations in France and Europe (depending on journey time); economy class is compulsory for domestic flights, flightsa between European countries and intercontinental flights of less than four hours;
In terms of urgent courier services in the Paris region, the Real Estate and Logistics Department offers access to bike courier service for distances of less than 3 km. In 2018, 42% of courier services were provided by bike couriers, representing a total distance of over 11,570 km traveled (compared to 4,000 km in 2017).
Given the high level of digitization throughout Natixis' business rate per employee, the total lifespan of equipment, the rate of lines, digital sustainability is a key challenge for Natixis. The digital internal and/or external re-usage, and printing volumes. footprint of Natixis’ IT system primarily reflects the equipment 2018 Key Event
Participation in WeGreenIT study Natixis took part in the WeGreenIT study for the first time in 2018, with a view to quantifying the environmental impact of its IT system. The study, which was organized by WWF France and the Club GreenIT, enabled the bank to take stock of the environmental impact of its information system and identify solutions to reduce it.
With a “mature” company score of 60%, Natixis subsequently demonstrated its ability to implement the right practices needed to reduce the social and environmental impact of its IT system.
Managing and containing growth in Natixis’ stock of IT equipment has been one of the key challenges facing the Infrastructures Department in recent years. This has meant focusing on reducing the number of devices in stock and using equipment to its full potential. The use of technology such as virtual servers, resource overallocation and data compression means that infrastructure growth can now be absorbed without significantly increasing the number of devices required. The number of application servers used by the bank has increased 2.5-fold since 2015, while the quantity of equipment in data centers has shrunk by 5%.
Natixis has been taking steps to keep its IT-related power consumption in check. Newly-deployed devices are more energy efficient (the new Easy workstations consume close to 50 % less energy than the former workstations) and shared printers become the standard. Pilot trials were conducted on the use of automatic standby mode for multifunction printers, computers and computer screens.
Consistent with the Objectif 100 Hectares charter signed in 2017, Natixis committed to: developing urban farming and landscaping projects for botha existing and future Natixis buildings in Paris; promoting eco-friendly green spaces in built-up areas,a contributing to biodiversity and water management in Paris, with a zero phyto and water-saving approach to upkeep; sharing its knowledge of the subject with other partnersa companies, employees and project stakeholders.
A new vegetable garden was created in 2018 (see 2018 Key Event) and, thanks to the inclusion of two new office buildings—Elements and Austerlitz 2—Natixis now has an additional 725m² and 2,160m² in green space, respectively. Finally, two more beehives were installed on the roof of Natixis buildings in addition to the two existing hives. The first harvests were distributed to employees and clients. Finally, conferences on the protection of biodiversity were organized to raise employee awareness.
NON-FINANCIAL PERFORMANCE REPORT Managing our direct environmental impact 491Natixis Registration Document 2018 2018 Key Event
Abroad, Natixis offices in Frankfurt committed to a patronage for the planting of apple trees producing local and ancient varieties on a green area of the city.
Natixis is a unique company, enhanced by the richness of its identity and history. It owes its success to the commitment of its people and to the longstanding trust of its clients.
The Natixis Worldwide scope covers all of Natixis and its subsidiaries around the world, including Financial investments and entities within the accounting consolidation scope (Coface, Fimipar, Natixis Algérie).
Data non restated for transfers and restructuring between divisions in 2018(a)
A planned partnership between Natixis and ODDO BHF in cash equity activities was submitted to employee representative bodies in late 2017 and was concluded in 2018, with the transfer of research and sales/execution staff from Natixis to ODDO.
Insurance: the business line continued to expand, increasing its headcount by 6.5%.
Specialized Financial Services: the headcount fell by -34.3%, mainly due to the transfer of payment activities to the new
The managed scope covers all of Natixis and its subsidiaries around the world that apply its HR Policies. The indicators provided in Chapter 6.6.1 refer to this scope.
(a) Data not restated for transfers and restructuring between business lines in 2018.
Six agreements applicable to the Natixis France scope were signed in 2018: 2018 Natixis France agreement Employees covered Signing date
Amendment no. 5 to the employee savings plan 100% 05/03/2018 2018-2019 agreement on the right to disconnect after hours 100% 06/06/2018 2018-2020 profit-sharing agreement 100% 27/06/2018 2018-2022 telecommuting agreement 100% 29/06/2018
The agreement covers four areas: Management of jobs and transformations, with the aim ofa developing a forward-looking view of role changes and defining support measures for employees in positions undergoing change; Mobility, career management and training, with the aim ofa helping each employee adapt to changes and grasp new career opportunities; Structural change management, with the aim of establishing aa common framework to support employees during restructuring operations with impacts on employment; Inter-generational cooperation and transmission of skills,a with the aim of promoting the hiring of young employees and developing a “responsible” policy for older staff.
In 2018, Natixis simplified its organizational structure by: reducing the number of managerial levels and makinga teams larger; recognizing talented employees by creating three leadershipa roles (manager-leaders, expert leaders and project leaders); applying a new leadership model to guide the actions of alla leaders and help them drive the Company’s transformation.
Internal mobility is a contributing factor to the Company’s performance and forms the core of Natixis’ career management system.
The Mobility and Hiring Team was further developed in 2018: the team was entrusted with filling over 89% of job openings in
Job openings filled through internal transfers (%) 55.7 58.9 50.3 7.7 14.2 13.8 55.8 51.5 15.5 15.5 13.0 6.6 47.4 49.9 43.0
To promote a positive employee experience, Natixis regularly supports and measures employee engagement, monitors quality of life in the workplace, and takes an inclusive approach to diversity.
Natixis’ compensation policy is structured in such a way as to promote employee engagement over the long term and increase the Company’s employer appeal, while discouraging excessive
The compensation policy is centered on three components and reflects both individual and collective performance: fixed compensation reflects, at the individual level, the skills,a responsibilities and expertise expected for a position, as well as the role and importance of duties in the organization; variable compensation is granted where applicable, based ona the achievement of individual and collective targets. Pursuant to the various regulations in force, and to encourage performance over the long term, a significant portion of variable compensation granted to employees identified as risk-takers may be deferred (from 40% to 60% for the highest amounts); Natixis also encourages its employees in France to contribute to collective performance via incentives, profit-sharing and employee savings mechanisms (employee savings plan and collective pension plan).
ESR bonus The New Dimension business plan placed ESR at the center of Natixis’ strategy. In 2018, ESR criteria were included in the new profit-sharing agreement (2018-2020) with two goals regarding energy consumption and paper use. As the collective goals were met in 2018, an additional profit-sharing amount will be paid to all employees in 2019.
Furthermore, in 2013, 2014, 2015 and 2016 Natixis gave its employees the opportunity to purchase Natixis shares on preferential terms via employee share ownership programs. A new employee share ownership plan, MAUVE, was launched in 2018. The compensation policy also incorporates the fundamental objectives pursued by Natixis in terms of equality in the workplace and non-discrimination. To this end, in its latest agreement on gender equality in the workplace, Natixis S.A. renewed its commitments to equal pay between men and women and launched new measures to improve efforts to decrease the wage gap between men and women.
Average mandatory employee profit-sharing (in thousands of euros) 2.9 2.4 2.2
On the accounting consolidation scope : mandatory employee profit sharing : 43,9 M€ in 2018, 51,2 M€ in 2017, 45,9 M€ in 2016. (2) Voluntary employee profit sharing : 108,6 M€ in 2018, 127,4 M€ in 2017, 118,4 M€ in 2016 .
Natixis allows all its employees to complete an internal survey every two years. This survey measures employee engagement and the impact of HR policies, identifies areas for improvement in the Company as a whole and specific to each entity, and gives rise to action plans. Over 12,000 members of staff completed the survey in October 2018, a record participation rate of 77%. In detail. The employee engagement rate remains high (69%) as does pride in being part of Natixis (79%). There is a high level of satisfaction in terms of employees’ life-work balance (75%). And a sharp improvement in employees’ perception of the impact of new working environments and digital on efficiency (72%).
their well-being and their performance. Managers have also provided very positive feedback on the homeworking system with a satisfaction rate over 90%.
Natixis continued rolling out its telecommuting program in France, with more than 5,000 telecommuters at end-December 2018, or 41% of Natixis employees in France. A new agreement signed in 2018 renewed most of the existing terms while relaxing eligibility rules and the terms of application. The satisfaction rate among participating employees is very high (over 98%) both in terms of
Natixis has undertaken a number of initiatives within the scope of Natixis S.A. to encourage a proactive policy to prevent stress in the workplace and psychosocial risks.
Various initiatives, such as preventive campaigns organized by Natixis’ staff physician and provision of a 24/7, 365-day-a-year psychological support service available from the office or home, are in place to improve health and well-being in the workplace.
In 2018, Natixis focused on continuing its initiatives to promote diversity in four key areas: gender equality in the workplace, cooperation between older and young employees, and the integration and retention of employees with disabilities.
Within the scope of Natixis France, seven companies have established a collective bargaining agreement on gender equality in the workplace. Within the scope of Natixis S.A., an agreement calls for the implementation of concrete initiatives centered on six priorities: hiring and employment, compensation and equal pay, career development and promotions, professional training, the work/life balance and parenting, and communication and awareness-raising.
International Women’s Day provides Natixis the opportunity every year to raise awareness by organizing conferences and testimonials on gender equality in the different countries in which it operates. Accordingly, on March 8, 2018, Natixis broadcast a series of videos showing portraits of women to showcase the careers of women who stand out for their expertise and success in positions often held by men.
Natixis rises up the SBF 120 ranking of gender equality in corporate management bodies Natixis improved its position in the SBF 120 ranking of gender equality in management bodies in 2018, reaching 46th position—ahead of its main competitors. The ranking is published each year by the French Ministry of Women’s Rights in partnership with Ethics & Boards and Challenges, based on criteria covering the presence of women in management bodies (Board of Directors, Executive Committee) and the Company’s gender equality policy. It also takes into account the presence of women in the Company’s top 100 positions.
Other noteworthy initiatives promoting gender equality around the world: Natixis London works with We are the City and Gender Network to share best practices on gender equality. In Milan, Natixis belongs to a network promoting women’s access to management positions (ValoreD).
In the Asia-Pacific region, Natixis refers to diversity and equal opportunity in all its handbooks and in its induction process. The DANA (Diversity at Natixis) initiative was launched with a major campaign to raise employee awareness and apply an internal diversity charter. Natixis Hong Kong is involved in the HeforShe program with the Hong Kong Chamber of Commerce.
% of women in the workforce 52.1 51.4 51.6 32.6 35.1 37.6 33.6 32.9 30.8 44.8 43.2 44.2 49.3 49.1 49.6
Percentage of women among employees who received training 51.1 51.6 49.2
Natixis gives students and recent graduates opportunities to learn about the diversity of its professions and, to this end, participates in several forums and has established long-term partnerships promoting closely monitored relations with targeted schools and universities.
Nearly 1,500 work-study participants, 1,400 interns (excluding short-term introductory work placements) and 100 international corporate volunteers worked at Natixis in 2018.
Natixis has signed a third agreement in France to establish its commitment over the long term.
Natixis’ commitments are as follows: access to professional training. New measures are regularly taken when a person with a disability joins the Company and for managers responsible for employees with disabilities; Promoting the retention of employees with disabilities bya adapting positions and working conditions, and providing
Events organized during European Disability Employment Week (EDEW) To mark EDEW, 3,500 Natixis employees took part in Handi’days events focused on mental disorders, which are set to be one of the main causes of disability around the world by 2020. A series of conferences featuring testimonials by writers and bloggers were organized, along with workshops and other events.
It has five major priorities: developing the skills needed to accompany the business lines’a transformation and maintain the employability of staff in sensitive positions; meeting the challenges of the digital transformation and newa ways of working; developing leadership and supporting changes in managementa to boost employee engagement; enhancing English language skills to further the Company’sa international growth; facilitating employee mobility.a
In 2018, the Learning Hub was revamped and improved to centralize all training tools available to staff. It includes access to an online training platform, Vodeclic, which improves employees’ skills in office and collaborative software applications. Vodeclic provides employee tutorials on hundreds of software programs and applications, training exercises using case studies, evaluations to validate lessons learned, and a program that can be customized to each employee’s needs.
In 2018, Natixis employees in France received over 287,000 hours of training thus 94,4% of employees took one or more training courses.
In 2018, Natixis organized several events to raise awareness and funds in support of Gustave Roussy. It supported international breast cancer awareness month, Pink October, by taking part in the Odyssea race, and took part in initiatives to raise awareness of men’s health issues in November, with internal events for employees.
We are proud to support the Academy’s “Musicians in residence” program and to contribute to the training of talented young people and the development of a new generation of artists.
Since 2007, Natixis and the Orchestre de Paris have pursued the same goal of sharing French and international music concerts beyond their usual audience. Natixis is supporting the orchestra’s program to use digital solutions to make symphonies more accessible. It is setting up a new platform available to all those who are curious and connected—the young and old, and both novices and experienced listeners. The website is due to go live in spring 2019.
Many Natixis employees are involved in solidarity-based initiatives, which are encouraged by Natixis as a way to build team spirit. These initiatives demonstrate our employees’ commitment to social issues and their determination to rally around a cause.
For the ninth year running, Natixis entered a team into the Course du Cœur charity road race to support the Trans-Forme association in its public awareness campaign on organ donation. For four days and four nights, 14 members of staff took turns to cover the 750 km between Paris and Bourg Saint Maurice (Les Arcs). Staff and their families also turned out in large numbers for the 30th edition of the Financial Community Telethon. Donations to the AFM-Téléthon charity were matched in full by the company.
Since 2013, Natixis has allowed its employees to take humanitarian leave (Congé Solidaire®) to support the non-profit association Planète Urgence. Natixis funds the mission preparation, travel and logistics expenses. In 2018, 29 missions were completed for the protection of biodiversity, social and educational support for young children, and adult skills training in various fields (office tools, project management, etc.), taking the total number of missions organized since the program’s launch to 139.
Natixis Assurances allows its members of staff a day’s leave each year so they can volunteer with non-profit associations. In 2018, 185 volunteer missions were organized in various areas (helping in charity shops, accompanying underprivileged children on a day trip to the beach, installation of temporary cinemas in children’s hospitals, etc.). A total of 589 missions have been carried out with associations since 2014.
In Moscow, Natixis funded a charity helping abandoned children in Russia and organized a collection of gifts for elderly people living in retirement homes to mark the new year.
Lastly, Natixis continues to expand its contributions to charitable causes in the Asia Pacific region, with an increase in staff volunteering activities, including: a new edition of Hong Kong Volunteering Month. This initiativea included a charity walk to distribute items to homeless people, a visit to an organic farm with disabled students and a collection of Christmas gifts for underprivileged children in Hong Kong and Asia.
The information in this document covers the 2018 fiscal year. The reporting period considered is one full calendar year, running from January 1 to December 31.
The managed scope covers all of Natixis and its subsidiaries around the world whose HR information systems contain data on employees by name. The HR indicators used for the ESR approach pertain to staff under contract. This scope excludes Financial investments. The list of entities in this scope is presented below.
The Natixis Worldwide scope covers all of Natixis and its subsidiaries around the world, including Financial Investments and entities within the accounting consolidation scope (Coface, Fimipar, Natixis Algérie).
The headcount includes all employees who have an activea employment contract with a Natixis legal entity (managed scope). Interns, apprentices and beneficiaries of a VIE (International Volunteer Program) assignment are not considered. Expatriates and seconded employees are accounted for in their entity of origin.
Hires include external recruitment to positions with permanenta employment contracts or fixed-term employment contracts, transfers from Groupe BPCE and the conversion of all other types of contract (work-study placements, internships, VIE, etc.) into permanent employment contracts or fixed-term employment contracts, and conversions of fixed-term employment contracts into permanent employment contracts.
Departures include external departures of employees witha permanent employment contracts or fixed-term employment contracts and transfers to Groupe BPCE, and conversions from fixed-term employment contracts to permanent employment contracts.
The absentee rate is the total number of business days absenta (due to illness, accidents in the workplace or in transit, maternity or parental leave, etc.) divided by the total number of employee workdays theoretically available.
Some indicators required in the non-financial performance report are not included as they are considered to be immaterial given the nature of Natixis’ operations: actions against food waste;a efforts to combat food poverty, improve animal welfare anda ensure responsible, fair, sustainable food supplies.
In our capacity as Statutory Auditor of Natixis SA, we hereby present our report on the consolidated Non Financial Performance Report for the year ended December 31, 2018 (hereafter referred to as the “Report”), as presented in the Management Report, on a voluntary basis, pursuant to the legal and regulatory provisions of Articles L. 225 102-1, R. 225-105 and R. 225-105-1 of the French Commercial Code.
The Board of Directors decided to prepare a Report in accordance with legal and regulatory requirements, including a presentation of the company’s business model, a description of its main non-financial risks, a presentation of the policies applied with regard to these risks and the results of these policies, including key performance indicators. The Report was prepared according to the company’s procedures (hereafter referred to as “the Standard”), the material components of which are presented in the Report and available on the website or from the company’s registered office on request.
Our independence is defined in Article L.822-11-3 of the French Commercial Code and in our Code of Ethics. In addition, we have implemented a system of quality control including documented policies and procedures regarding compliance with the ethical requirements, French professional standards and applicable legal and regulatory requirements.
We performed our work in accordance with Articles A. 225-1 et seq. of the French Commercial Code setting out how the independent third party should perform its review and in accordance with the professional code of the Compagnie
Nationale des Commissaires aux Comptes (France’s National Association of Statutory Auditors) relating to this assignment, and pursuant to the international standard ISAE 3000 (Assurance engagements other than audits or reviews of historical financial information).
We completed the work needed to assess the Report’s compliance with regulatory requirements and the sincerity of the Information reported: We familiarized ourselves with all the companies included ina the scope of consolidation, the description of the main social and environmental risks relating to these activities and their impact in terms of respect for human rights, and the fight against corruption and tax evasion, as well as the corresponding policies and their effect; We assessed the appropriate nature of the Standard in termsa of its relevance, completeness, reliability, objectivity, and comprehensible nature, taking best practices in the sector into consideration, where applicable; We verified that the Report includes each category ofa information required under section III of Article L. 225 102 1 regarding social and environmental risks and respect for human rights, and the fight against corruption and tax evasion; We verified that the Report includes an explanation of reasona justifying the absence of information required under paragraph 2 of section III of Article L. 22-102-1; We verified that the Report describes the company’s businessa model and the main risks arising from the activities of all entities included in the scope of consolidation, including, where relevant and reasonable, the risks created by its business relationships, its products and services and its policies, actions and results, including key performance indicators; Where relevant in terms of the main risks or policiesa presented, we verified that the Report includes the information required in section II of Article R. 225-105; We assessed the process for selecting and approving the maina risks; We investigated the existence of internal control and riska management procedures in the company; We reviewed the consistency of the results and keya performance indicators presented in terms of the main risks and policies described;
NON-FINANCIAL PERFORMANCE REPORT Report by one of the Statutory Auditors 509Natixis Registration Document 2018
Our work involved five persons and was conducted between January and March 2019.
We were assisted in our work by our experts in sustainable development and corporate social responsibility. We held around ten interviews with the persons responsible for preparing the Report.
Without prejudice to the conclusion expressed above, and in accordance with the provisions of Article A. 225-3 of the French Commercial Code, we issue the following comment: As specified in the Report, Natixis’ direct carbon assessment isa limited to France and emissions linked to procurement and services were not reported for this fiscal year.
Authorized but unissued capital – 7.3.3 capital increase authorizations 518 7.3.4 Securities not conferring rights over the share capital 521 7.3.5 Other securities giving access to capital 521
DISTRIBUTION OF SHARE 7.4 CAPITAL AND VOTING RIGHTS 523 Distribution of share capital at 7.4.1
Ownership of shares by members of 7.4.2 management and supervisory bodies 523
Changes in the shareholder base over the 7.4.5 past three years 525
Natural or legal persons exercising 7.4.6 or potentially exercising control over Natixis 525
Agenda and draft resolutions 7.6.2 of the Combined General Shareholders’ Meeting of May 28, 2019 540
STATUTORY AUDITORS’ SPECIAL 7.7 REPORT ON RELATED-PARTY AGREEMENTS AND COMMITMENTS 555 Agreements and commitments submitted for the approval of the General Shareholders’ Meeting 555
Agreements and commitments already approved by the General Shareholders’ Meeting 556
Corporate purpose (Article 2 of the bylaws) The corporate purpose, in France and elsewhere comprises: the conduct of all banking business and related businesses as per the banking law;j the provision of all investment services as defined in the French Monetary and Financial Code;j the performance of the specific assignments entrusted by the French State in the economic and financial area, in thej framework of special agreements; the performance of all brokerage business;j the acquisition of interests in companies, groups or associations with a direct or indirect connection with the activitiesj referred to above; as well as the execution of all private and commercial transactions.j
Registered office: 30, avenue Pierre Mendès France – 75013 Paris, Paris Trade and Companies Register No. 542 044 524.
The corporate purpose, in France and elsewhere comprises: the conduct of all banking business and related businesses asa per the banking law; the provision of all investment services as defined in thea French Monetary and Financial Code; the performance of the specific assignments entrusted by thea French State in the economic and financial area, in the framework of special agreements; the performance of all brokerage business;a the acquisition of interests in companies, groups ora associations with a direct or indirect connection with the activities referred to above; as well as the execution of all private and commerciala transactions.
The share capital has been set at €5,044,925,571.20 divided into 3,153,078,482 fully paid-up shares of €1.60 each.
The Company may, under the conditions stipulated by the legislative and regulatory provisions in force, request any organization or authorized intermediary to communicate all information regarding the holders of securities conferring immediately or in the future voting rights in its Shareholders’ Meetings, namely their identity, nationality, address, how many securities they own and the restrictions to which these securities may be subject.
Directors are appointed for a term of four (4) years. They may be re-elected. A director’s duties end at the end of the Ordinary General Shareholders’ Meeting convened to approve the financial statements of the past fiscal year, held the year during which his term expires.
The Board may also be convened by the Chairman at the request of at least one-third of the directors, or at the request of the Chief Executive Officer, on the basis of a specific agenda. The Chairman is bound by the requests made in this manner.
Subject to an emergency such as defined below and the case referred to in Article 14 below, the Board of Directors must be convened with reasonable notice prior to the scheduled date of the meeting. Notices of meetings shall include the detailed agenda for the meeting.
In the event of an Emergency, the notice and convening periods of the Board of Directors are not subject to Article 11.1 above, provided that the Chairman of the Company’s Board of Directors has: given prior notice to the directors providing the reasonj for the Emergency as per the foregoing definition; and provided all directors, along with the notice of saidj meeting, with all the necessary information for their analysis.
By way of exception, the first Board Meeting will be held immediately after the Combined General Shareholders’ Meeting of April 30, 2009, and the choice of the Senior Management procedure will be made with an ordinary quorum (at least one-half of the directors present or represented).
The Board of Directors determines the compensation and term in office of the Chief Executive Officer, which shall not exceed that of his term as director when he is a Board member.
The compensation of the Deputy Chief Executive Officer(s) is determined by the Board of Directors.
Directors are liable vis-à-vis the Company or third parties, either for breaches of the legal or regulatory provisions governing joint stock companies, or for breaches of these bylaws, or for misconduct in their management, under the conditions and subject to the penalties stipulated by the laws in force.
516 Natixis Registration Document 2018 the meeting in person and who have not received an admission card by D-2, twelve midnight Paris time.
Shareholders’ Meetings are chaired by the Chairman of the Board of Directors, or in the event of his absence, by one of the Deputy Chief Executive Officers, or by a director appointed by the General Shareholders’ Meeting.
As an exception to Article L.225-123 Paragraph 3 of the French Commercial Code, whereby a voting right equivalent to twice that attributed to other shares may be attributed to fully paid-up shares which have been registered in the name of the same shareholder for at least two years, each member of the meeting has a right to as many votes as they hold or are represented by shares.
Furthermore, at the end of each fiscal year, an inventory is drafted of the Company’s various assets and liabilities and accounting documents imposed by both the laws governing companies and by banking regulations.
The balance of the earnings constitutes, along with any retained earnings, the distributable profit of which the Ordinary General Shareholders' Meeting disposes freely in the framework of the laws in force, and which it can carry forward, or place on reserve, or distribute partially or entirely, on the proposal of the Board of Directors.
Any dispute arising among the shareholders concerning the performance of these bylaws shall be submitted to the courts having jurisdiction where the Company has its registered office.
General information on Natixis’ capital7.3 FORM AND TRANSFER OF SHARES 7.3.1 (CHAPTER II, ARTICLE 4 OF THE BYLAWS)
The share capital was set at €5,044,925,571.20 on March 1, 2019, divided into 3,153,078,482 fully paid-up shares of €1.60 each.
The Combined General Shareholders’ Meeting of May 23, 2018 granted the Board of Directors financial authorization for a 26-month period to carry out capital increases with cancellation of preferential subscription rights. Under this delegation, the Board of Directors may decide to increase the share capital reserved for members of an employee savings plan, up to the limit of fifty (50) million euros. This delegation substitutes the unused part of any similar prior delegated power given to the Board of Directors by the shareholders in the Combined General Shareholders' Meeting of May 23, 2017, under resolution twenty, with the stipulation that the Mauve 2018 share ownership plan in progress at the time of this General Shareholders' Meeting had been approved by the Board of Directors based on resolution twenty adopted by the Combined General Shareholders' Meeting of
The Combined General Shareholders’ Meeting of May 23, 2017 granted the Board of Directors financial authorization for a 26-month period to carry out capital increases with retention or cancellation of preferential subscription rights (these authorizations replaced those granted by the Combined General Shareholders’ Meeting of May 19, 2015).
This same meeting resolved in particular that under certain circumstances, the Board of Directors may: decide to increase capital without preferential subscriptiona rights through an offer as set out in Article L.411-2(II) of the French Monetary and Financial Code (private placement); decide to increase capital with waiving of preferentiala subscription rights with a view to remunerating contributions in kind granted to the Company, within the limit of 10% of the share capital at the time of the issue; decide to increase capital via the incorporation of premiums,a reserves, retained earnings or other items; decide to increase the number of securities to be issued,a within the legal limits, in the event of capital increases with or without preferential subscription rights; decide to increase the share capital reserved for members ofa an employee savings plan, up to the par value limit of fifty (50) million euros.
The Board of Directors of Natixis, at its meeting on July 31, 2014, by virtue of the authorization granted by the Combined General Shareholders’ Meeting of May 21, 2013, resolution seventeen, resolved to award 31,955 free performance shares to the Chief Executive Officer of Natixis. These shares will vest at the end of a vesting period that runs until July 31, 2018, inclusive, provided that presence and performance conditions are met.
LEGAL INFORMATION General information on Natixis’ capital 519Natixis Registration Document 2018
The Board of Directors of Natixis, at its meeting on July 28, 2016, by virtue of the authorization granted by the Combined General Shareholders’ Meeting of May 24, 2016, resolution twenty, decided to award 3,081,642 free shares to the recipients designated by the Board of Directors. These shares will be permanently vested in part on March 1, 2018, and in part on March 1, 2019, provided that presence and/or performance conditions are met (systematic performance conditions applicable to “regulated” categories of staff).
The Board of Directors of Natixis, at its meeting on April 10, 2017, by virtue of the authorization granted by the Combined General Shareholders’ Meeting of May 24, 2016, resolution twenty, decided to award 3,012,307 free shares to the recipients designated by the Board of Directors. These shares will be permanently vested in part on March 1, 2019, and in part on March 1, 2020, provided that presence and/or performance conditions are met (systematic performance conditions applicable to “regulated” categories of staff).
The Natixis Board of Directors, at its meeting on May 23, 2018, by virtue of the authorization granted by the Combined General Shareholders’ Meeting of May 24, 2016, resolution nineteen, decided to award 11,661 performance shares to Laurent Mignon, the Chief Executive Officer of Natixis, and 58,024 performance shares to the members of the Natixis Senior Management Committee. These shares will vest at the end of a vesting period that runs until May 22, 2022, inclusive, provided that presence and performance conditions are met.
The Chief Executive Officer then acknowledged the issue of share capital through the incorporation of the special unavailable reserves account amounting to €1,512,878.40 for the issue of 945,549 new shares with a par value of €1.60 each, bringing the Company’s capital up from €5,019,776,380.80 to €5,021,289,259.20, and amended the bylaws accordingly (Article 3: Share capital).
At its meeting on November 7, 2017, the Board of Directors decided to use in 2018 the authorization to carry out a capital increase - without preferential subscription rights - reserved for members of employee savings plans that was granted by the Combined General Shareholders’ Meeting of May 23, 2017 (resolution twenty), for the launch of the Mauve 2018 employee share ownership plan with an overall par value ceiling of €50,000,000, representing a maximum of 31,250,000 shares. Accordingly, the Board of Directors invested the Chief Executive Officer with all the necessary powers, in particular to set the Subscription Price and the subscription period for the shares to be issued.
Resolution No. Purpose of authorization Amount authorized Duration Date used Amount used 24/05/2016 19 To award free shares under the LTIP 0.2% / 0.03% (c) of share capital 38 months 28/07/2016 23/05/2017 23/05/2018 02/08/2018 €242,053 (b)
24/05/2016 20 To award free shares for payment of a portion of variable compensation 2.5% / 0.1% (c) of share capital 38 months 28/07/2016 10/04/2017 13/04/2018 €4,930,627 (b)
€500m (a) 26 months None None 23/05/2017 16 To carry out a capital increase through the issue—without preferential subscription rights maintained—of shares and/or securities giving access to the Company's share capital or entitling holders to the allotment of debt securities through an offer as set out in Article L.411-2 (II) of the French Monetary and Financial Code €500m (a) 26 months None None 23/05/2017 17 To carry out a capital increase through the issue—without preferential subscription rights—of shares and/or securities providing access to the Company's share capital or entitling holders to the allotment of debt securities as remuneration for contributions in kind involving capital stock or securities giving access to capital 10% of the share capital (a)
26 months None None 23/05/2017 18 To carry out a capital increase through the incorporation of premiums, reserves, retained earnings or other items €1.5bn (a) 26 months None None 23/05/2017 19 To increase the number of securities to be issued in the event of capital increases with or without preferential subscription rights 15% of initial issue (a)
Amount deducted from the ceiling decided in resolution No. 14 of the General Shareholders’ Meeting of May 23, 2017 (€1.5 billion).(a)
LEGAL INFORMATION General information on Natixis’ capital 521Natixis Registration Document 2018 7.3.4 SECURITIES NOT CONFERRING RIGHTS OVER THE SHARE CAPITAL
No stock options were granted in fiscal years 2009 to 2018.
SUMMARY OF STOCK OPTION PLANS GRANTED TO NATIXIS EXECUTIVE CORPORATE OFFICERS AT DECEMBER 31, 2018■
Options awarded by the issuer during the year to the 10 salaried employees of the issuer and of all the companies within its scope who were awarded the most options 0 N/A N/A
LEGAL INFORMATION Distribution of share capital and voting rights 523Natixis Registration Document 2018
OWNERSHIP OF SHARES BY MEMBERS OF MANAGEMENT 7.4.2 AND SUPERVISORY BODIES
Board members, including natural and legal persons, owned 71% of Natixis’ capital at December 31, 2018 (almost all of this being owned by BPCE).
Under the share buyback program authorized by the General Shareholders’ Meeting of May 23, 2018, Natixis owned 3,716,978 treasury shares at December 31, 2018.
The table below shows the number and percentage of shares held as treasury shares at December 31, 2017, and December 31, 2018.
At December 31, 2018, the percentage of the capital owned by Natixis employees was 2.51%, of which: 1.10% was held through capital increases reserved fora employees; 0.67% was held outside of employee savings plans bya employees and former employees; 0.74% was held under the BPCE Actions Natixis employeea share ownership plan, including bearers of Groupe BPCE shares.
In accordance with the provisions of Articles L.225-197-1 et seq. of the French Commercial Code: the Natixis Board of Directors, at its meeting ona February 22, 2012 (by virtue of the authorization granted by the General Shareholders’ Meeting of May 27, 2010, resolution eighteen), decided to grant 6,119,373 free shares to certain employees of Natixis and its subsidiaries; the Natixis Board of Directors, at its meeting ona February 17, 2013 (by virtue of the authorization granted by the General Shareholders’ Meeting of May 27, 2010, resolution eighteen), decided to grant 1,724,325 free shares to certain employees of Natixis and its subsidiaries; the Natixis Board of Directors, at its meeting ona November 6, 2013 (by virtue of the authorization granted by the General Shareholders’ Meeting of May 21, 2013, resolution seventeen), decided to grant 90 free shares to the Chief Executive Officer of Natixis; the Natixis Board of Directors, at its meeting on July 31, 2014a (by virtue of the authorization granted by the General Shareholders’ Meeting of May 21, 2013, resolution seventeen), decided to grant 31,955 performance shares to the Chief Executive Officer of Natixis; the Natixis Board of Directors, at its meeting ona February 18, 2015 (by virtue of the authorization granted by the General Shareholders’ Meeting of May 21, 2013, resolution seventeen) decided to award 95,144 performance shares to the members of the Natixis Senior Management Committee; the Natixis Board of Directors, at its meeting on July 28, 2016a (by virtue of the authorization granted by the General Shareholders’ Meeting of May 24, 2016, resolution nineteen), decided to award 103,820 performance shares to the members of the Natixis Senior Management Committee and 47,463 to the Chief Executive Officer of Natixis.
During this same meeting, the Board of Directors (by virtue of the authorization granted by the Combined General Shareholders’ Meeting of May 24, 2016, resolution twenty), decided to award 3,081,642 free shares to the recipients designated by the Board of Directors; the Natixis Board of Directors, at its meeting on April 10, 2017a (by virtue of the authorization granted by the Combined General Shareholders’ Meeting of May 24, 2016, resolution twenty), decided to award 3,012,307 free shares to the recipients designated by the Board of Directors; the Natixis Board of Directors, at its meeting on May 23, 2017a (by virtue of the authorization granted by the General Shareholders’ Meeting of May 24, 2016, resolution nineteen), decided to award 49,458 performance shares to the members of the Natixis Senior Management Committee, and 29,911 shares to the Chief Executive Officer of Natixis; the Natixis Board of Directors, at its meeting on April 13, 2018a (by virtue of the authorization granted by the Combined General Shareholders’ Meeting of May 24, 2016, resolution twenty), decided to award 3,389,678 free shares to the recipients designated by the Board of Directors; the Natixis Board of Directors, at its meeting on May 23, 2018a (by virtue of the authorization granted by the General Shareholders’ Meeting of May 24, 2016, resolution nineteen), decided to award 58,024 performance shares to the members of the Natixis Senior Management Committee, and 11,661 shares to the Chief Executive Officer of Natixis; the Natixis Board of Directors, at its meeting ona August 2, 2018 (by virtue of the authorization granted by the Combined General Shareholders’ Meeting of May 24, 2016, resolution nineteen), decided to grant 13,605 performance shares to the Chief Executive Officer of Natixis.
In the interest of aligning Natixis employees with the growth and earnings of Natixis over the long term, from 2013 to 2016 inclusive, and in 2018, the Natixis Board of Directors agreed on the principle of using the authorization granted by the General Shareholders’ Meeting to carry out a capital increase reserved for the employees of the Natixis group, without their preferential subscription right under the Mauve employee share ownership plan.
The amounts invested in the Mauve plan are locked up for a period of five years. Barring cases of early unlocking applicable to employee savings plans in France, this number may be reduced outside of France based on local legislation and the formula proposed.
On July 27, 2018, the Chief Executive Officer of Natixis recognized a capital increase for a total amount of €59,937,990.61, corresponding to the issuance of 11,982,805 new shares each with a par value of €1.60, divided into an increase in the nominal value of the capital of €19,172,488 and an issue premium of €40,765,502.61, and amended the bylaws accordingly.
Of which 1.10% held through capital increases reserved for employees, 0.67% of which held outside of employee savings plans by employees (a) and former employees and 0.74% of which held under the BPCE Actions Natixis employee share ownership plan, including bearers of Groupe BPCE shares.
As principal shareholder of Natixis, BPCE assumes the responsibilities provided for by banking regulations.
Natixis’ main shareholder BPCE held 70.70% of the share capital and 70.78% of the voting rights at December 31, 2018. Given its capital structure, Natixis believes that a hostile takeover bid would have very little chance of succeeding.
The draft resolutions below are the drafts available at the date of publication of this registration document. The final versions of these drafts will be published in the French official gazette (BALO) of April 12, 2019 and posted online on the Natixis website: www.natixis.com.
REPORT OF THE BOARD 7.6.1 OF DIRECTORS ON THE RESOLUTIONS SUBMITTED TO THE SHAREHOLDERS’ MEETING
Thirty-one resolutions will be submitted to the shareholders at the Combined General Shareholders’ Meeting to be held at 3 p.m. on May 28, 2019 at Palais Brongniart, 28 place de la Bourse – 75002 Paris.
Resolutions requiring the approval of the Ordinary General Shareholders’ Meeting (resolutions one to twenty-one)
In resolutions one and two, the General Shareholders’ Meeting is asked to approve the Natixis 2018 parent company and consolidated financial statements, respectively.
Resolution three covers the appropriation of the corporate earnings of Natixis: payment of a dividend, paid in cash at €0.78 per share (€0.30 for the ordinary portion and €0.48 for the extraordinary portion). Natixis’ financial statements at December 31, 2018, showed positive net income of €1,834,308,793,77. After taking into account retained earnings of €1,625,059,649.69, and as the legal reserve exceeded 10% of the share capital, distributable earnings amounted to €3,459,368,443.46.
LEGAL INFORMATION Draft resolutions of the Combined General Shareholders’ Meeting of May 28, 2019 527Natixis Registration Document 2018
Resolution three proposes the payment of a total dividend of €2,457,225,101.76 (€945,086,577.60 for the ordinary dividend and €1,512,138,524.16 for the special dividend) charged against distributed earnings, and the allocation of the balance (€1,002,143,341.70) to “Retained earnings”.
The ex-dividend date is May 31, 2019, with dividends payable as of June 4, 2019.
For individual beneficiaries who are residents for tax purposes in France who hold shares outside a stock saving plan, these dividends are subject to income tax: at a single flat-rate withholding tax (PFU tax) of 12.8%, thea fiscal base of which is the gross amount of dividends (Article 200 A of the French General Tax Code); or, at the express and irrevocable option of the beneficiarya when declaring his/her income, at the progressive income tax scale following the application of an allowance of 40% of the gross amount of dividends (Article 158-3-2° of the French General Tax Code).
Regardless of the tax treatment of dividends for income tax purposes (PFU or progressive income tax scale), the paying establishment located in France must collect: a mandatory non-definitive flat-rate withholding tax (PFO) at aa rate of 12.8% (Article 117 (iv) of the French General Tax Code) as an initial income tax payment, except if individual beneficiaries who are residents for tax purposes in France have applied for an exemption under the conditions set out in Article 242 (iv) of the French General Tax Code; social security charges of 17.2%.a
In accordance with legal provisions, the following dividends were distributed for the three fiscal years prior to fiscal year 2018: Fiscal year Number of shares on which a dividend was paid Dividend per share
On February 12, 2019, the Board of Directors authorized thea sale of the Securities & Financial Guarantees (CEGC), Leasing (Natixis Lease), Factoring (Natixis Factor), Consumer Finance (Natixis Financement) and Securities Services (EuroTitres Department) businesses of Natixis' Specialized Financial Services division to BPCE.
Concerned by this agreement are Laurent Mignon, Catherine Halberstadt, Bernard Dupouy, Thierry Cahn, Françoise Lemalle, Alain Condaminas, Christophe Pinault, Sylvie Garcelon, Philippe Sueur and Nicole Etchegoïnberry in their role as directors.
Opinion on the components of compensation due or granted in respect of the fiscal year ended December 31, 2018, to each executive corporate officer (resolutions five to eight)
In accordance with the principles approved by the General Shareholders’ Meeting on May 23, 2018: François Pérol received no compensation in 2018 ina connection with his duties as Chairman of the Natixis Board of Directors, from which he resigned with effect at June 1, 2018; and
Compensation and benefits of any kind for Natixis Chief Executive Officer Laurent Mignon in 2018
The annual fixed compensation of Laurent Mignon is set at €960,000 for full fiscal year 2018, i.e. €400,000 for the period
The annual performance of Natixis' share against the Euro Stoxx Banks index will be compared over the four-year duration of the plan (i.e. fiscal years 2018, 2019, 2020) for each of the annual tranches, each representing 25% of the shares allocated. Based on the relative performance of Natixis’ TSR compared with the average TSR of the Euro Stoxx Banks index, a ratio will be applied for each annual tranche, as follows: performance below 90%: no vesting of shares allocated outa of the annual tranche; performance equal to 90%: 80% of the shares of the annuala tranche shall vest; performance equal to 100%: 100% of the shares of thea annual tranche shall vest; performance greater than or equal to 120%: 110% of thea shares of the annual tranche shall vest.
LEGAL INFORMATION Draft resolutions of the Combined General Shareholders’ Meeting of May 28, 2019 529Natixis Registration Document 2018
As a reminder, at its February 10, 2016 meeting, the Board of Directors approved a change to the personal protection insurance and supplemental health insurance of CEO Laurent Mignon, with the intention of bringing his situation in line with that of the other members of BPCE's Management Board. Of particular note is the implementation of a scheme to maintain compensation for a period of 12 months in the event of temporary incapacity to work, a scheme benefiting the other members of the BPCE Management Board. In 2018, €7,066 was declared in benefits in kind for the five-month period of office.
It should be noted that at its February 19, 2014 meeting, the Board of Directors approved a change to its agreement relating to a severance payment upon the termination of Laurent Mignon's term of office and the establishment of a non-compete agreement. These obligations and agreements were submitted to a vote by the shareholders and approved during the Ordinary General Shareholders’ Meeting of May 20, 2014 (resolution five). At its meeting on February 18, 2015, the Board of Directors authorized the renewal of severance pay as well as the non-compete agreement upon the Chief Executive Officer’s reappointment. The renewal of these obligations and agreements was submitted to a vote by the shareholders and approved during the General Shareholders’ Meeting of May 19, 2015 (resolution five).
The targets for 2018 were as follows: 70% quantitative targets, 25% of which based ona Groupe BPCE's financial performance (net revenues [4.2%], net income (Group share) of [12.5%] and cost/income ratio [8.3%]) and 45% based on Natixis' financial performance (net revenues [11.25%], net income (Group share) [11.25%], cost/income ratio [11.25%] and ROTE—Return on Tangible Equity [11.25%]); 30% individual strategic targets, (i) 15% of which related toa the implementation of the 2018-2020 strategic plan: success of the CIB sector approach, Asset Management Active Thinking strategy, the Innove2020 project in the Insurance business line, implementation of the Payments strategy; and (ii) 5% of which related to oversight in terms of supervision and control as provided for in regulations including the implementation of the RAF; and (iii) 5% of which related to the implementation of Natixis transformation; and (iv) 5% of which related to the managerial performance, assessed by taking into account the ability to anticipate developments, make decisions and lead the Group.
This allocation corresponds to 20% of his gross annual compensation pro-rated for the length of his corporate office during the 2018 fiscal year.
ESR objectives are based on the change in Natixis' ESR performance over the four-year vesting period as assessed by the three ESR rating agencies. The vesting process includes a rating scale corresponding to the ESR assessments of each agency, with requirements becoming more stringent over the last two years.
François Riahi receives similar protection as that of Natixis staff in terms of health and personal protection insurance.
Like all staff, the Chief Executive Officer is covered by the mandatory pension plans. He is not covered by the kind of supplementary pension plans described in Article 39 (defined benefit plan) or Article 83 (voluntary defined contribution plan) of the French General Tax Code. In addition, the Chief Executive Officer pays into an “Article 82" type life insurance policy (in reference to the French General Tax Code), put in place by Groupe BPCE. The premiums on this policy are paid by the Chief Executive Officer and not by Natixis. In 2018, as Chief Executive Officer, François Riahi paid €68,445 into this policy.
Approval of the principles and criteria for determining, distributing and granting the fixed, variable and non-recurring items constituting the total pay and benefits of any kind of the Chairman of the Board and the Chief Executive Officer (resolutions nine and ten)
Please refer to the detailed information in section 2.4 of the 2018 Natixis registration document.
The Chairman is eligible for directors’ fees, but in accordance with the rules applicable within Groupe BPCE, the portion of directors’ fees attributable to BPCE directors including the Chairman is granted and paid to BPCE and not to the directors.
Furthermore, the Chief Executive Officer’s compensation isb) closely linked to the Company’s performance, specifically through annual variable compensation that is contingent upon the achievement of predetermined objectives, the details and rate of achievement of which (i) are assessed at the end of the fiscal year by the Board of Directors on the basis of the opinion of the Compensation Committee and (ii) are then put to a vote at the General Shareholders’ Meeting. Criteria include both quantitative criteria relating to the financial performance of BPCE and Natixis as well as strategic targets.
LEGAL INFORMATION Draft resolutions of the Combined General Shareholders’ Meeting of May 28, 2019 531Natixis Registration Document 2018
25% 12.5% net income (Group share) a 8.3% cost/income ratio a 4.2% net revenuesa
The Chief Executive Officer also receives social protectiond) benefits whose terms are identical to those applicable to Natixis’ employees or implemented by Groupe BPCE for its executive officers.
The definition of regulated categories of staff at Natixis is primarily based on the principles set out in Directive 2013/36/EU, known as CRD IV, and the Order of November 3, 2014, and is determined according to criteria set by the European Banking Authority (EBA) in its regulatory technical standard published on December 16, 2013, and approved by the European Commission in Commission Delegated regulation (EU) No. 604/2014 of March 4, 2014.
Ratification of the co-opting of three directors (resolutions twelve to fourteen)
Resolutions twelve to fourteen propose that the shareholders ratify the co-opting as a director of the Company of: Laurent Mignon, which took place during the meeting of thea Board on June 1, 2018, to replace François Pérol, who resigned, to serve out the remainder of his predecessor’s term of office, i.e. until the 2019 General Shareholders’ Meeting to approve the financial statements for the year ending
Nicole Etchegoïnberry, which took place during the meetinga of the Board on December 20, 2018, to replace Stéphanie Paix, who resigned, to serve out the remainder of her predecessor’s term of office, i.e. until the 2020 General Shareholders’ Meeting to approve the financial statements for the year ending December 31, 2019.
Nicole Etchegoïnberry, 62 years old, is the Chairwoman of the Caisse d’Epargne Loire-Centre Management Board (see Nicole Etchegoïnberry’s résumé in Chapter 2 “Corporate Governance” section 2.2 of the 2018 Natixis registration document).
7 LEGAL INFORMATIONDraft resolutions of the Combined General Shareholders’ Meeting of May 28, 2019 532 Natixis Registration Document 2018
In resolutions fifteen to nineteen, shareholders are asked to reappoint the five following directors, whose terms of office expire at the end of this General Shareholders' Meeting: Laurent Mignon, President of the BPCE Management Boarda (see Laurent Mignon’s résumé in Chapter 2 “Corporate Governance” section 2.2 of the 2018 Natixis registration document); BPCE, represented by Catherine Halberstadt, Chief Executivea Officer, member of the Management Board, in charge of Human Resources (see Catherine Halberstadt’s résumé in Chapter 2 “Corporate Governance” section 2.2 of the 2018 Natixis registration document); Catherine Pariset, Chairwoman of the Natixis Audita Committee (see Catherine Pariset’s résumé in Chapter 2 “Corporate Governance” section 2.2 of the 2018 Natixis registration document); Bernard Dupouy, Chairman of the Board of Directors of Banquea Populaire Aquitaine Centre Atlantique (see Bernard Dupouy’s résumé in Chapter 2 “Corporate Governance” section 2.2 of the 2018 Natixis registration document); Christophe Pinault, Chairman of the Caisse d'Epargne et dea Prévoyance Bretagne Pays de Loire Management Board .
The directors will be reappointed for a term of four (4) years, i.e. until the end of the Ordinary General Shareholders’ Meeting convened in 2023 to approve the financial statements for the fiscal year ending December 31, 2022.
Daniel de Beaurepaire, 68 years old, is Chairman of the Steering and Supervisory Board of Caisse d'Epargne Ile-de-France (see Daniel de Beaurepaire’s résumé in Chapter 2 “Corporate Governance” section 2.2 of the 2018 Natixis registration document).
These shares may be bought, sold or transferred at any time (except in the event of a public offer of the Company’s shares) by any means (including block trades or the use of derivatives) in accordance with the regulations in effect (see below the summary table on the financial resolutions submitted to the shareholders).
Resolutions requiring the approval of the Extraordinary General Shareholders’ Meeting (resolutions twenty-two to thirty-one)
Resolution twenty-two seeks to authorize the Board of Directors to award free new or existing shares to employees of Natixis and related companies or groups, as well as to corporate officers. These free share awards would round out the compensation and employee retention packages that already exist within the Natixis group and link the interests of beneficiaries and shareholders.
Moreover, these resolutions seek to reflect certain legislative and regulatory changes seen under the CRD IV Directive and, in particular, rules relating to the compensation policy and practices of credit institutions.
Shares will only be allocated permanently following a vesting period, the duration of which will be set by the Board of Directors and which cannot be less than one (1) year. The retention period of shares by their beneficiaries will be, where applicable, set by the Board of Directors, it being noted that, in line with the law, the cumulative duration of the vesting and retention periods cannot be less than two (2) years.
It should be noted that this draft resolution addresses the allocation of performance shares to members of the Senior Management Committee with a view to reinforce the alignment over time with the shareholders' and directors' interests. It also enables the payment of a portion of the variable annual compensation in the form of a conditional and deferred allocation of performance shares pursuant to Article L. 225-197-2 of the French Monetary and Financial Code in application of the relevant European regulation (“CRD IV”).
Directors, it being noted that for persons referred to in Article L.511-71 of the French Monetary and Financial Code including Natixis executive corporate officers, the existence of such performance conditions will be required in all events.
Shares shall become fully vested and immediately transferable in the event that a beneficiary falling into the second or third categories laid down by Article L.341-4 of the French Social Security Code becomes incapacitated.
This delegation of authority would expressly waive, in favor of the beneficiaries of share allocations, the shareholders' preferential subscription rights to shares that may be issued under this resolution and the corresponding waiver by shareholders in favor of the beneficiaries of said allocations of the part of the reserves, retained earnings, premiums or other items so incorporated, and, more generally, waives all the shareholders' rights to free shares (new or existing) that may be allocated pursuant to the present resolution.
The Board of Directors will have full powers, with the right to sub-delegate said powers in accordance with applicable legislation and regulations, to put this resolution into effect and in particular to determine the identity of the beneficiaries, the number of shares that may be allocated to each of them as well the allocation conditions (e.g. duration of vesting and, where applicable, retention periods).
The Board of Directors was granted financial authorizations and delegations in 2017 which expire during the 2019 fiscal year.
The Extraordinary General Shareholders' Meeting is thus asked to renew these financial authorizations and delegations which are all aimed at entrusting the financial management of your Company to your Board of Directors by allowing it, in particular, to carry out capital increases under the methods and for the reasons set out below and in the summary table that follows.
The aim of these financial authorizations and delegations is to provide your Board of Directors, over a period of 26 months from this Extraordinary General Shareholders' Meeting, flexibility in choosing from a range of types of issue, and to enable the Board—at the appropriate time—to adapt the nature of the financial instruments issued in light of conditions in the French or international financial markets and of the opportunities available in those markets.
Resolution twenty-four thus seeks to grant the Board of Directors the authority to decide to increase the share capital (immediately or at some time in the future), with preferential subscription rights maintained(1).
Terms followed by an asterisk are defined in the index below.(1)
Your Board of Directors asks that you grant it, for some of these resolutions, the authority to waive these preferential subscription rights. This cancellation could be preferable, even necessary, to issue shares under the best conditions, taking account of market conditions, the nature of the investors concerned by the issue and the type of securities issued, for example, when speed is essential to the success of an issue or when an issue is made on foreign financial markets. Waiving preferential subscription rights may lead to the raising of more capital due to more favorable terms of issue. Finally, this cancellation is sometimes governed by law: in particular, the voting of a delegation to authorize your Board of Directors to issue shares reserved for members of employee savings plans (resolution thirty) would lead, by law, to the waiving of preferential subscription rights to the advantage of the beneficiaries of these issues.
The overall par value limit of these capital increases will not exceed €1.5 billion, divided into a par value sub-limit of €1.5 billion for capital increases with preferential subscription rights and a par value sub-limit of €500 million, i.e. around 10% of the share capital, for capital increases without preferential subscription rights. These capital increases may be carried out either through the issue of shares or through the issue of securities giving access to the share capital or entitling holders to the allotment of debt securities.