Committees such as the Underwriting Committee, Legal Disputes and Provisioning Committee, and Watchlist Committee.
CEGC’s operational risk is limited via the risk management systems set forth in each business line’s approval procedures.
CEGC covers its portfolio of commitments with a reinsurance program tailored to its activities. Through this program, the company is able not only to secure its underwriting income and solvency margin on the loan guarantee markets, but also to protect its equity in the event of high-severity claims on the corporate markets (property administrators and realtors, single-family home builders, developers, and regulated and contractual guarantees for companies).
Subprime ABS CDOs represented gross exposure of €1.266 billion as at December 31, 2011. €36 million in impairments were recognized (excluding the effect of the BPCE guarantee) in 2011, bringing total impairments to €889 million.
US RMBS Net exposure as at 12.31.2010 Change in value in 2011 Other changes Net exposure as
Breakdowns by rating and type of underlying for US RMBS were as follows at December 31, 2011.
4RISK MANAGEMENT Sensitive exposures in accordance with the recommendations of the Financial Stability Forum
Net exposure as at 12.31.2011 AAA AA A BBB BB B CCC CC
4 RISK MANAGEMENT Sensitive exposures in accordance with the recommendations of the Financial Stability Forum
– the carrying cost of goodwill is borne entirely by the Corporate Center,
• GAPC is presented as a business line in its own right. The valuation of the spread on own debt is recognized by the Corporate Center; • the regulatory capital allocations required for the operation of Natixis’ businesses amounted to 7% of average Basel 2 riskweighted assets. Furthermore, equity allocations specifically to the insurance subsidiaries, which have their own capital requirements, were made; • in accordance with the new approach authorized by the Regulator starting December 31, 2010, CCIs are no longer subject to a 50% deduction from Tier 1 capital and 50% deduction from Tier 2 capital; rather, they are reocognized as risk-weighted assets with a weighting of 370%; • the result used to determinate Natixis’ ROE is net income (group share), from which DSN interest expense is deducted, net of tax effects as recognized in equity. The equity used is average annual shareholders’ equity (group share) under IFRS, after distribution of dividends, eliminating unrealized or deferred gains or losses recognized in equity and excluding DSN .
In 2011, Natixis’ operating performance was in line with that of 2010 overall, despite a very severe deterioration in the economic and fi nancial climate. The fi rst half of 2011 confi rmed the growth of “core businesses”, in line with the ambitions defi ned in the August 2009 “New Deal” strategic plan. In the second half of 2011, Natixis operated in the midst of an unprecedented crisis for European banks, which had a particularly severe impact on its CIB and Insurance businesses and, to a lesser extent, its Asset Management business. Natixis adapted to the new business climate by reducing its liquidity needs by €13.7 billion year-onyear, mainly through the disposal of non-core assets and US dollar-denominated assets and by ramping up the refocusing of its CIB businesses. In 2011, net income (group share) stood at €1,562 million pro forma, down 10.5% compared to end-2010 (down 8.4% at constant exchange rates).
Resources were pooled with the creation of the Global Structured Conduit & Solutions Department, comprising the bank’s loan structuring expertise (Capital Markets – Debt & Financing JV).
On March 31, 2011, Banque Privée 1818 fi nalized the merger of Sélection-R, a subsidiary of Rothschild Group, with 1818 Partenaires, with the aim of creating a distribution platform for Independent Wealth Management Advisors (IWMAs). The resulting new entity, Sélection 1818, is 66%-owned by Banque Privée 1818 and 34%-owned by Rothschild et Cie.
The Specialized Financial Services business continued to grow with the integration of businesses acquired in 2010 and early 2011 from Groupe BPCE (GCE Paiements in the payments sector, and Cicobail, Oceor Lease and GCE Car Lease in the lease fi nance sector). The Specialized Financing product range (consumer fi nance and factoring) offered by the networks grew and the business completed its effort to merge the Group’s Securities Clearing and Payments platforms.
Within Financial Investments, Coface was reorganized to gradually refocus on its core credit insurance and factoring businesses in Germany and Poland, activities that are now conducted by core COFACE. Non-strategic entities (service businesses) have been incorporated into non-core COFACE.
GAPC continued to implement its asset disposal policy with the aim of reducing the volatility of its results and to reduce its consumption of cash. Year-on-year, €4.9 billion in assets (including €3.4 billion in dollar-denominated assets) were sold. Excluding the impact of Basel 2.5 – CRD3 regulatory changes (1), risk-weighted assets including the BPCE guarantee was reduced by nearly €2 billion year-on-year, i.e. a decrease of 26%.
Efforts to create revenue synergies are progressing ahead of schedule under the New Deal Strategic Plan: the additional revenue generated by the BPCE networks reached €274 million for a linearized objective €197 million euros by late 2011 (cumulative target for late 2013: €395 million).
* Excluding GAPC, discontinued operations and net restructuring costs. ** Core businesses and Financial Investments. *** At constant exchange rates.
Analysis of changes in the main items in the consolidated income statement
Standing at €6,639 million, net revenues of the businesses(2) were stable year-on-year (at constant exchange rates) despite a sharply deteriorated market environment. Excluding the foreign exchange effect and restated for scope effects, net revenues were down 1.0%. In 2011, income contributed by the Investment Solutions and SFS divisions was up by more than 5% while that of CIB was down 8% at constant exchange rates. The synergies delivered exceeded the strategic plan both in terms of additional income via the Groupe BPCE networks and cost synergies.
Payroll charges were modestly up over the year in connection with the 3% increase in average headcount. Variable payroll charges were down 6% due to the sharp decrease in performance-based compensation and the relative stability of incentive bonuses and profi t-sharing. Excluding the consolidation of Investment Solutions, SFS and Coface, headcount was up by 413 FTEs (full-time equivalent) year-on-year, i.e. +2% to 20,451 FTEs at end-2011.
The provision for credit losses was €335 million in 2011 (excluding the GAPC workout portfolio) and was relatively closed to the provision level for credit losses at end-2010, which came to €318 million, despite the write-down of Greek securities totaling €126 million, refl ecting a 70% haircut on the nominal value of the exposures.
The share of income from associates, mainly comprising the consolidation of 20% of the earnings of shareholding networks via CCIs, was up 19% to €594 million due to the sharp rise in the contribution of the retail banking networks (+37% for Banques Populaires and +12% for Caisses d’Epargne).
Gains or losses on other assets stood at by €16 million in connection with the sale by NAITSS (a Natixis S.A. subsidiary in charge of the IT infrastructures) of the assets associated with the Natixis Antares data center to ALBIAN-IT (a subsidiary 97% owned by BPCE, 1% owned by Natixis S.A., 1% owned by IBP
and 1% by GCE ITCE). This disposal was part of a plan to merge Groupe BPCE’s IT infrastructures.
The tax expense for the period totaled €562 million in 2011, having doubled within one year. The tax rate returned to normal in 2011, with an effective tax rate of 33% at end-2011, whereas in 2010 Natixis was able recognize a tax credit linked to previous losses.
After taking into account minority interests for a total of €39 million, recurring net income (group share) was €1,640 million.
After recognizing post-tax restructuring costs, which were down signifi cantly compared to 2010 (restructuring costs were recognized in the fi nancial statements through the end of March 2011), and the net GAPC loss, down 31% to -€88 million, net income (group share) came out at €1,562 million in 2011.
The Tier 1 ratio was virtually unchanged at 11.3 % at end-2011; the decrease in RWA was offset by the effect on Tier 1 capital of the redemption of €800 million in hybrid securities in the fi rst quarter of 2011.
Income generated by the Fixed Income, Foreign Exchange, Credit, Commodities, Cash Management and Arbitrage businesses was down 8% on 2010.
• Debt Platform activities improved compared to 2010, driven by the momentum in the primary bond market in the first half of the year. Although the market was under pressure in the second half of the year, Natixis maintained its position as world leader in covered bonds, with a No. 8 ranking in “All Bonds in Euros” (No. 9 in 2010). Loan syndication and loan trading activities were particularly dynamic, validating the balance sheet rotation strategy rolled out in 2010 in the CIB.
• The Credit business saw a decline in intermediation revenue s due to the widening of credit spreads impacting secondary market activities, particularly in Corporate, Financial and Covered Bond underlying instruments.
• The Foreign Exchange and Emerging Markets businesses performed despite the renewed volatility on the market, posting a solid year-on-year performance. In Foreign Exchange, sales income rose by 16%, driven by higher volumes, the increase in the number of underlying instruments traded and the rollout of option trading capacities. In Emerging Markets, the development of cross-selling deals with the finance and commodities business pushed income higher.
• Despite the improvement in sales revenue , revenue from the Commodities business was impacted by the highly volatile context , thus generating lower trading revenue s .
This decrease in net revenues was adjusted to 20% on account of exceptional revenue s of €25 million earned in 2010 on derivatives.
In one of the largest transactions of the year, Lazard-Natixis advised Carrefour in its spin-off of Dia (fi rst cross-border spin-off). Natixis was also coordinator, documentation agent, mandated arranger and bookrunner for a €1,050 million syndicated credit facility. Natixis was also mandated by Air France KLM for a groundbreaking convertible bond swap.
The Corporate Solutions business declined 32% relative to 2010. Strategic Derivatives revenue was hurt by the low number of new transactions in 2011.
Gross operating income, up 3.8% (+6.1% at constant exchange rates), reaching €529 million.
Higher provisions for credit losses were largely due to the provision for losses on Greek securities held in the Insurance portfolios, amounting to €83 million, for a total write-down of 70% of the nominal value of these securities at December 31, 2011. Investment Solutions’ pre-tax profi t came out at €436 million compared to €498 million a year earlier.
In Europe, the OSSIAM ETF EURO STOXX 50 EQUAL WEIGHT NR fund was voted “Most Innovative ETF of the Year” by Feri Eurorating and the magazine Capital, published in Germany.
Novethic awarded its Socially Responsible Investment label to fi ve Natixis Asset Management funds. This label recognizes funds that systematically incorporate social, environmental and governance concerns into their management approach.
In the United States, the quality of the Natixis portfolio management teams was recognized with several awards in 2011, including the nomination of Bill Nygren of Harris Associates as ‘‘US Equities Manager of the Year”by Morningstar.
Oakmark International and Oakmark Global received the gold and bronze medals, respectively, at the “S&P Equity Research Mutual Fund Excellence Awards”. This award is bestowed each year to mutual funds which consistently earn a 5-star rating.
At 23.9 bp, the average rate of return on assets under management was up 1.1 points relative to 2010. This trend was attributable to the growing weight of US assets under management, which enjoy higher margins.
The personal protection insurance business remained on a good track, with revenues rising nearly 20% compared to 2010. ADE (payment protection insurance) was buoyed by dynamic mortgage distribution activity and by partnerships formed with Natixis’ revolving credit business (the consumer fi nance arm of SFS). Individual personal protection insurance grew on the back of the expanded range offered by the Banque Populaires network.
At €264 million, the Insurance division’s net revenues increased by 24.1% compared to 2010, driven by the Personal Protection
Insurance activity (payment protection insurance revenues improved, as did the credit insurance claim rate) despite especially harsh market conditions.
Capital under management, including unrealized capital gains and fund commitments, totaled €2,905 million at December 31, 2011, up 29% on 2010. Third parties accounted for 69% of all capital under management (vs. 63% in 2010), confi rming Natixis’ gradual withdrawal from the funds and controlled fi nancial investments. Funds of funds accounted for 48.4% of total capital under management, development capital 36.3% and venture capital 15.3%.
Net revenues for 2011 amounted to €85 million, up 22.6% on 2010, consisting primarily of unrealized capital gains on the portfolio, up relative to 2010, while capital gains were down due to fewer disposals.
The performance of Financial Services was more uneven. Revenue s from the Employee Benefit Scheme business improved on the back of business development through the networks and direct sales campaigns (the number of employee accounts under management exceeded three millions at end-2011, up 3% year-on-year). The service voucher business continued to grow: the Chèque de Table® market share was 12% and CESU market share 13.9%. The Securities Services business was sharply undermined by the deterioration in the fi nancial environment, with the volume of transactions falling nearly 11% over the year. Assets under custody fell by 14% following the transfer of custodial activities from HSBC asset management companies to CACEIS Bank and due to outfl ows from money market UCITS across all customer segments.
At €1,129 million, SFS revenue s were up 5.1% . Growth was driven by Specialized Financing, which posted income growth of 10.5% in 2011, while Financial Services revenue s were stable.
Net revenues totaled €837 million in 2011, up 4.7% compared to end-2010, driven by the Coface’s core activities (strategic scope), up 12.2%, whereas non-core activities fell by 21.4%. The loss fell year-on-year to 55.1% in 2011, versus 55.9% in 2010. Restated to take account of foreign exchange and scope effects, total net revenues were up 2.4%.
The scope of this business line was signifi cantly reduced in 2010 due to two major operations: the October 2010 sale of Private Equity’s proprietary operations in France to a fund advised by AXA Private Equity, and the transfer of third party operations to Investment Solutions. FY 2010 is presented pro-forma of this transfer.
The strategic refocusing of NPE’s activities continued in 2011 with the sale of the Brazil-based businesses in the fi rst half of the year, the sale of LBO Europa fund in late September 2011 and the disposal of the Holland Venture fund at end-2011 by sale to partners. Natixis’ share of assets under management (or cash at risk) stood at €453 million at end-2011, down 14% relative to 2010.
N et revenues for 2011 amounted to -€21 million compared with a gain of €23 million in 2010. Year-on-year, capital gains on disposals steeply declined, with portfolio revaluations failing to offset the write-downs recorded on China and India, in particular.
GAPC pre-tax profit was -€125 million at the end of the year, after recognition of a gain of €18 million in respect of the BPCE guarantee (-€182 million and -€247 million, respectively, in 2010).
Corporate Center expenses comprised expense which are not reinvoiced to the Natixis business lines. The 2011 improvement over 2010 was primarily attributable to non-recurring items recognized in 2010 (products associated with pro rate discounting of VAT and the renegotiation of Paris property leases) and to the introduction of the systemic risk banking taxes , which generated an expense of €23 million in 2011.
5FINANCIAL DATA Management Report for the year ended December 31, 2011 5.1.4.7 Retail banking contribution
(2) At the time of the initial consolidation of the CCIs by Natixis, unrealized capital gains made by the two networks on part of their portfolios were reported as equity, limiting the recognition of goodwill. The effective realization of these capital gains by the two networks in 2010 generated revenue recognized as Net Revenues that Natixis cannot recognize twice. This revenue was therefore deducted (after tax) from the equity method contribution line.
• The shifting of funds from money market funds to savings accounts and term deposits resulted in a 7.2% reduction in fund AUM year-on-year. Despite an adverse economic climate, AUM in life insurance products was close to that reported last year (-0.7%).
(up 7.2%) and equipment loans to professional and business customers (up 5.8%).
• Despite a slight decline in the net interest margin (down 0.9%), net revenues climbed 2.5% relative to December 2010, reaching €6,358 million. At €2,374 million, fee income rose 2.2%, buoyed by growth in service fee income (+€31 million, i.e. +7.7%) and payment instruments (+€31 million, i.e. +9.6%).
• Management fees increased by 3.6%, while taxes, compounded by the reforms related to the systemic risk levy, were up 56% (+€53 million).
• Banques Populaires’ net income stood at €1,101 million at December 31, 2011, up 11.7% year-on-year.
• The network’s outstandnig loans grew by €16 billion year-onyear (up 10.3%): the increase in property loans (up 12.0%), driven by the individual customer market, combined with the increase in equipment loans (up 11.2%), largely due to increased demand from local authorities.
• Inflows continued to be shifted from money market funds to on-balance sheet savings: as a result, fund assets under management declined 18% compared to December 31, 2010. This AUM transfer, coupled with higher rates of return on regulated savings, boosted home savings by individual customers (up 3%), Livret A passbook savings account deposits across all markets (up 3%) as well as other network passbook savings accounts and loans. AUM invested in life insurance products grew 5% over the period.
• Fee income was virtually stable (at €3 billion, down 0.5%): the sharp increase in service fee income (up €160 million, i.e. +9.9%), as a result of the continuing policy of selling package offers to customers and due to loan fees and prepayment penalty fees, was offset by the continued impacts of the widespread availability of Livret A passbook savings accounts (drop in fees on centralized savings of €185 million).
Against this backdrop, the creation of the BPCE-Natixis treasury and central bank collateral management pool and the merger of the Treasury team in May 2011 improved the coordination and diversifi cation of Groupe BPCE’s refi nancing. Collateral and securities’ portfolio management was optimized via repo transactions and a centralized team.
Soon after the publication of the Basel 3 liquidity framework (December 2010), 2011 began with numerous issues in the 1-year/18-month segment.
This trend came to a sudden stop with the additional needs of the Greek government, the deterioration of the perception of euro-zone public fi nances, and the placement of three French banking groups on credit watch by Moody’s in June 2011.
Natixis began 2012 ahead of target in its short-term refi nancing program thanks to stronger synergies within the Group, active management of foreign currency positions and an increased commercial presence in certain geographic areas.
Numerous senior unsecured government issues occurred during the fi rst half of 2011. However, the bank credit market suddenly closed down in August 2011 due to the sharp deterioration in the public fi nances of several euro-zone countries.
As the Group’s only long-term issuer of vanilla public issues, BPCE provided Natixis with fi nancing for a total euro-equivalent amount of 11 billion, €2.8 billion of which was via public issues (€2.7 billion at end-June).
In 2011, net revenues increased €410 million, reaching + €2,987 million, due to: • a €464 million decrease in the interest margin; • a €59 million decrease in net fee and commission income; • a €445 million increase in income from variable-income securities; • a €55 million increase in income from trading book transactions; • a €181 million increase in income from transactions on securities held for sale; • a €251 million increase in other banking operating income and expenses.
Provisions for credit losses reached €121 million for 2011, a €37 million increase year to year.
Gains or losses on fi xed assets were positive at €60 million.
As of December 31, 2011, the balance sheet totaled €343,031 million, up from €331,134 million as of December 31, 2010.
The third resolution that will be put before the General Shareholders’ Meeting on May 29, 2012 proposes to: • allocate €43,671,828.74 to the legal reserve ; • allocate a dividend of €308,234,588.80 ; • allocate the remaining distributable profits to retained earnings, i.e. €522,510,134.59.
Pursuant to Article L.441-6-1 and D.441-4 of the French Commercial Code, the following table breaks down unpaid supplier invoices by due date: ❚ UNPAID SUPPLIER INVOICES AS OF DECEMBER 31, 2010 AND DECEMBER 31, 2011
❚ 1 - MANAGEMENT RESULTS RECLASSIFIED AS CONSOLIDATED RESULTS IN 2011
Gains or losses on other assets 9 0 20 0 29 29
❚ 3 - REPORTED CONSOLIDATED NET INCOME RECLASSIFIED AS PRO FORMA CONSOLIDATION NET INCOME
Gains or losses on assets (39.3) 0 0 0.0 0.0 0.0 0 0.0 (39.3)
Change in value of goodwill (0.3) 0 0 0.0 0.0 0.0 0 0.0 (0.3)
5 FINANCIAL DATA Consolidated fi nancial statements and notes 5.2 Consolidated financial statements and notes
Financial assets at fair value through profi t and loss 6.1 245,625 161,208
Loans and receivables to banks 6.4 48,643 68,063 o/w institutional operations
Financial liabilities at fair value through profi t and loss 6.1 232,184 158,856
Revaluation adjustments on portfolios hedged against interest rate risk 375 231
Equity group share 20,668 20,931 - Share capital and reserves 10,120 10,037 - Gains and losses recorded directly in equity (1,558) (1,033)
Net gains or losses on fi nancial instruments at fair value through profi t
Depreciation, amortization and impairment of property, plant and equipment and intangible assets (234) (225)
Consolidated net income/(loss) – group share – per share, calculated on the basis of the average number of shares over the period excluding treasury shares and including shares that could be issued on the exercise of stock options and bonus shares 5.24 0.43 0.46
NET INCOME/(LOSS) AND GAINS AND LOSSES RECORDED DIRECTLY IN EQUITY 1,075 2,370 o/w group share 1,037 2,331 o/w minority interests share 38 39
+/- Net charge to depreciation and amortization of property, plant and equipment and intangible assets 306 265
+/- Decrease/(increase) in non-fi nancial assets or liabilities (2,359) 1,287 - Income taxes paid (193) (225)
+/- Decrease/(increase) in fi nancial assets and investments in associates (a) (a) 716 1,082
+/- Decrease/(increase) in property, plant and equipment and intangible assets (173) (325)
+/- Other cash provided/(used) by fi nancing operations (b) (2,726) (3,520)
Impact of exchange rate changes on cash and cash equivalents (43) (24)
Cash fl ow of assets and liabilities held for sale 4
(a) Decrease/(increase) in fi nancial assets and investments in assoc iates, including in particular: • fl ows related to assets held to maturity (+€660 million), • fl ows related to investments in consolidated affi liates (-€86 million, including the acquisition of 25% of Indian entity IDFC for -€44 million, 66% of Sélection R, a subsidiary of the Rothschild group which was renamed Sélection 1818, for -€17 million, 100% of GCE Car Lease for -€10 million and the payment of a price supplement related to the 2010 acquisition of Cicobail for -€12 million); • fl ows related to affi liates accounted for by the equity method (+€75 million, including the increase in the subscriptions for BP and CEP corporate investment certifi cates for -€145 million and dividend payments received for +€221 million).
(b) Flows from fi nancing activities can be broken down as follows: • redemption of deeply subordinated notes for -€832 million, • interest paid related to deeply subordinated notes for -€421 million, • redemption and interest related to subordinated debts for -€1,474 million.
(1) The complete body of standards adopted by the European Union may be consulted on the European Commission website at: accounting/ias/index_en.htm.
The amendment to IFRS 7 “Financial instruments: Disclosures” and IFRS 1 “First-time adoption of IFRS” on disclosures made on transfers of fi nancial assets, adopted by the European Commission on November 22, 2011, and subject to application on a prospective basis for annual accounting periods beginning on or after July 1, 2011, was not adopted early for Natixis’ 2011 consolidated fi nancial statements. This amendment required qualitative and quantitative information on transferred assets that have not been fully derecognized, as well as on fully derecognized assets with which there is continued involvement, to be supplied in the notes to the fi nancial statements. This amendment will have no impact on Natixis’ consolidated fi nancial statements, but may result in the disclosure of additional information.
In addition, in drawing up the consolidated fi nancial statements as at December 31, 2011, Natixis also took into account: • with regard to the valuation of financial instruments, the recommendation published on October 15, 2008, by the AMF, the Conseil National de la Comptabilité (CNC – French National Accounting Board), the Commission Bancaire (French Banking Commission) and the Autorité de Contrôle des Assurances et des Mutuelles (ACAM – French insurance regulator), and the guide published by the IASB on October 31, 2008, entitled “Measuring and disclosing the fair value of financial instruments in markets that are no longer active”.
• These two texts underline the importance of using judgment to determine fair value in illiquid markets. As a result of this recommendation, as at December 31, 2011, Natixis does not systematically apply models using observable data, as with previous texts, in view of the lack of market liquidity affecting some asset classes.
The consolidated fi nancial statements are based on the individual fi nancial statements as at December 31, 2011, of the entities included in Natixis’ scope of consolidation.
A review of potential voting rights held by Natixis had no impact on the entries into scope in 2011.
Minority interests are equity investments that do not afford control over the entity in question, within the meaning of IAS 27 (revised).
Lastly, Natixis and the Caisses d’Epargne banks have agreed to maintain, for a minimum period of 10 years as from the date of the contributions, any industry and commercial relations existing in the following areas: • custody; • design and management of customer products (asset management, revolving credit facilities, guarantee insurance for borrowers, factoring and non-real estate lease financing, financial engineering and capital market products, local authority financing and debt management); • securities and derivatives brokerage.
Revenues derived from the management of public procedures represent the fees paid by the French State. The methods and principles of this compensation are set in a fi nancial agreement between the State and Coface. This agreement, signed on June 9, 2008, covers a four-year period (2007 to 2010) and was subject to an amendment, signed on October 8, 2009, covering the period from January 1, 2009, to December 31, 2010, and a new amendment extending the fi nancial agreement was signed on December 9, 2011, for the 2011 period. A new fi nancial agreement is currently under negotiation for 2012 and subsequent fi scal years.
€64 million was booked for 2011, versus €62 million in 2010.
2.4 Currency conversion of the statements of foreign subsidiaries and branches
The balance sheets of foreign subsidiaries and branches whose functional currency is not the euro are translated into euros at the closing exchange rate, except for share capital, reserves and capital allocations, which are translated at the historic exchange rate. The income statements of foreign subsidiaries and branches whose functional currency is not the euro are translated at the average exchange rate for the year. Any resulting translation gains or losses arising on both balance sheet and income statement items are recognized in equity under “Translation adjustments ” for the portion attributable to the Group and “Minority interests” for the portion attributable to third parties.
The following accounting treatment is applied to business combinations giving rise to control: • IFRS 3, prior to revision, for business combinations having taken place before January 1, 2010, with the exception of those having taken place before January 1, 2004. On its first-time application of IFRS, Natixis elected to use the option available under IFRS 1 for first-time adopters, i.e., not to retrospectively restate business combinations carried out prior to January 1, 2004, in accordance with the provisions of IFRS 3; • IFRS 3, as revised (IFRS 3R), for business combinations carried out after January 1, 2010. IFRS 3R may be applied prospectively to business combinations for which the purchase date was on or after the implementation date of IFRS 3R.
In accordance with IFRS 3 (pre- or post-revision), business combinations are recorded using the purchase method. Under the purchase method, the identifi able assets and liabilities of the acquired entity are measured at their fair value at the valuation date.
– or based on their fair value at the purchase date, resulting in the recognition of goodwill, both for the group share and the minority interests (full goodwill method),
– hence, goodwill is a residual item determined as the difference between (i) the sum of the purchase price, the fair value at the purchase date of the share of interest held in the acquired entity prior to the purchase date, and the amount of minority interests (determined using the partial or full goodwill method) and (ii) the net amount of the assets and liabilities assumed, measured at their fair value at the purchase date.
Specifi c case of business combinations carried out under joint control
Combined entities considered to be under joint control include, in particular, two entities controlled by Natixis and those involving an entity controlled by Natixis and an entity controlled by BPCE.
At December 31, 2007, goodwill arising on the CCIs had been defi nitively allocated to the following valuation adjustments: • valuation adjustments on Banques Populaires land and buildings in the amount of €102 million (Banques Populaires CCIs); • valuation adjustments on Caisses d’Epargne land and buildings in the amount of €47 million (Caisses d’Epargne CCIs).
In 2011, goodwill increased by €82 million, excluding translation losses of €36 million and write-down losses of €43 million.
• ”Core” Coface: Goodwill of €1 million reported due to the acquisition of minority interests in Business Data Information from the exercise of a put, and a €2 million decrease in goodwill from TKB following a drop in additional prices.
All items of goodwill are impairment tested based on the value in use of the cash-generating units (CGUs) to which they have been allocated, except for: • the Coface non-core CGU, whose recoverable amount is capped at the net fair value of selling costs; • the Private Equity CGU, which is assessed based on its RNAV, with all of the assets of entities making up this CGU being recognized at fair value.
As a result of these tests, the Coface “non-core” CGU wrote down goodwill of €43 million. The net amount of goodwill after writedown is €138 million.
5FINANCIAL DATA Consolidated fi nancial statements and notes 2.6 Dilutive/accretive impact resulting from ownership of the CCIs issued by the Caisses d’Epargne and Banques Populaire
The granting of put options to minority shareholders which do not transfer to Natixis the risks and benefi ts associated with the underlying shares prior to exercise, result in the recognition of a liability for the estimated present value of the option’s exercise price. The corresponding receivable is booked to equity, deducted in part from minority interests in the amount of their carrying value, with the rest deducted from consolidated reserves (group share). Subsequent changes in the liability related to adjustments to the exercise price of the put option are recorded in consolidated reserves (group share).
Natixis entered into an agreement to transfer its Natixis HO CHI MINH branch to BPCE. The transfer is, however, on hold pending approval from the Vietnamese regulatory authorities.
In accordance with IFRS 5 “Non-current assets held for sale and discontinued operations”, Natixis continued to show Natixis HO
The following rules are applied to consolidate the fi nancial statements of insurance subsidiaries: • income and expenses are classified by type in accordance with banking accounting principles and not as a function of expense; • balance sheet items are included under the corresponding line items of the financial statements presented in the banking format.
Pursuant to paragraph 30 of IFRS 4, insurance policies and investment contracts with discretionary participation (life insurance) are measured using shadow accounting, which consists in recognizing the portion of unrealized gains or losses potentially attributable to policyholders as a deferred participation reserve. The deferred participation reserve thus refl ects the potential entitlement of policyholders to unrealized gains for Financial investments or their portion of unrealized losses. Considering pay-out ratios observed in the past, concerns weighing on assumptions used to estimate net future cash fl ows from fi nancial products and the rate of return to grant policyholders in a highly competitive economic environment, the deferred participation rate adopted on December 31, 2011, is 100.0% compared to 92.0% on December 31, 2010.
Deferred participation assets and liabilities arise mainly on: • the remeasurement of available-for-sale financial assets and financial assets at fair value through profit and loss; • the remeasurement of real estate assets held to cover insurance policies; • the restatement in the consolidated financial statements of the capital reserve and the liquidity risk reserve.
Deferred participation may be recovered depending on the intention and ability of companies to steer future compensation of contracts according to resources. These are sensitive to: • changes in the equity and bond markets; • changes in net inflows, which result from the commercial appeal of policies and the propensity of policy holders to renew their contracts; • available reserves and own resources within companies to hold assets for a period compatible with changes in liabilities and consistent with market cycles.
– the behavior of the insurer: choice of asset allocation, policy on realization of capital gains, steering of reserves.
On April 1, 2011, through its subsidiary Natixis Lease, Natixis acquired 100% of the share capital of GCE Car Lease from Caisse d’Epargne Midi-Pyrénées.
As part of refocusing on its credit insurance business line, Coface entities located in Europe that were considered not strategic were sold to Natixis HCP, a structure that was newly consolidated during the third quarter of 2011 and wholly owned by Natixis S.A., while the entity located in the US was sold to Natixis Collection
3.2 Changes in the scope of consolidation since January 1, 2011
• Creation of Natixis Japan Securities Co, Ltd and the transfer of part of the Natixis Tokyo branch’s operations to this entity; • Creation of Liberty Island Funding, an SPE and securitization vehicle implemented by the New York branch whose purpose is to diversify sources of financing; • Consolidation of the Bleachers, an SPE, carried out during the fourth quarter of 2011, with Natixis now bearing most of the risks and advantages.
• The following entities, which had become non-material, were deconsolidated in 2011 : – Natixis Commercial Paper Corp, – Ixis Strategic Investments Corp, – Ixis Hawaii Special Member LLC, – WTC Owner LLC; • Liquidation of Natixis ABM Corp. and Natixis Capital Arranger Corp.
• For the purposes of creating a distribution platform for Independent Wealth Management Advisors (IWMAs), Banque Privée 1818 acquired 66% of Sélection 1818, a subsidiary of Rothschild group. This acquisition generated goodwill of €37.6 million in accordance with the full goodwill method. Banque Privée 1818 also granted a put to Messine Participations (which holds 34% of Sélection 1818). The value of the put was measured in debt at €33.7 million as at December 31, 2011.
• Sale of Mantra Gestion to an entity outside the Group.
• Acquisition of a “Double Rock” branch by Reich & Tang Deposit, generating goodwill of €3.6 million; • Acquisition of 60% of Darius Capital Partners, generating goodwill of €5.5 million based on the full goodwill method.
In addition, NGAM agreed to a buyback commitment on the equity of Darius Capital Management’s founders (who hold 40% of Darius), for which a put was measured in debt at €4.6 million; • Acquisition of 25% of IDFC Asset Management Company Ltd. and IDFC AMC Trustee Company Ltd. and IDFC AMC Trustee Company Ltd (investment advisors), generating goodwill of €40.9 million determined according to the partial goodwill method. These entities were accounted for using the equity method; • Creation of Kennedy Financement Luxembourg 2; • Creation of Loomis Sayles Investments Ltd (UK); • Creation of Natixis Global Asset Management Asia Pte.
• Dilutive impact of 5% for BP Développement related to an unequally subscribed capital increase entailing a €3.4 million reduction in consolidated equity.
5FINANCIAL DATA Consolidated fi nancial statements and notes 3.2.3 SPECIALIZED FINANCIAL SERVICES
• Deconsolidation of Natixis Factor Portugal and Natixis Factor Italy, which had become non-material.
• Following the sale of 33% of SLIB shares by Natixis, SLIB became non-material and was deconsolidated. This disposal generated a capital gain of €2.5 million.
• Total transfer of Fructibail Invest’s assets and liabilities to Fructibail on December 31, 2011.
• Following the revision of the Coface division’s materiality thresholds, the following entities were consolidated: – Coface Chile S.A., Coface Seguro De Crédito Mexico, Coface Romania CMS, Coface South Africa, Coface South Africa Services and Coface Sigorta Turkey.
• Acquisition of 20% of the minority interests in Business Data Information, generating goodwill of €1 million from the exercise of a put on minority interests. This goodwill was calculated according to the partial goodwill method.
• Deconsolidation of Mercosul following the disposal of its assets in Brazil; • Deconsolidation of Natixis Inversiones, Finatem and FNS5, which had become non-material.
The various legal entities specifi cally created to manage a transaction or group of similar transactions (special purpose entities – SPEs) and substantially controlled by Natixis, even where there is no equity relationship, are consolidated if they make a material contribution to the consolidated fi nancial statements. The main criteria for assessing the existence of such control as defi ned by SIC 12 are as follows: • Activity: the SPE’s activities are substantially conducted on behalf of Natixis which, directly or indirectly, has created the SPE to meet its specific business needs.
• Decision-making powers: Natixis has decision-making and management powers enabling it to control or obtain control of the SPE or its assets, including certain decision-making powers arising after the formation of the SPE. Such decisionmaking powers may have been delegated by setting up an auto-pilot mechanism.
• Risks: Natixis substantially retains the majority of the residual risks or risks inherent in ownership of the SPE or its assets in order to obtain benefits from its activities.
The analysis differs depending on whether Natixis is a guarantor of the fund: 1. Non-guaranteed mutual funds: Acting as manager of the asset management company does not in itself transfer the majority of a fund’s risks and benefi ts to the NGAM sub-group. In fact, the asset management company does not guarantee and is not exposed to risk in respect of the fund’s assets, and any provision for profi t-sharing with the asset management company only applies to a small part of the gains. NGAM’s compensation as manager is marginal compared to the returns generated for investors.
Several funds managed by the asset management companies in the NGAM Corp. sub-group are consolidated given the subgroup ’s majority interest in these funds. Funds in which it does not hold a majority interest are not consolidated, as none of the SIC 12 criteria is met.
The interests of the Natixis Assurances sub-group in UCITS and SCIs are subscribed in the form of euro or unit-linked insurance policies: • euro-denominated policies are policies under which the insured party receives a minimum guaranteed return plus the major share of the surpluses generated by the insurance company’s main fund. Any shortfall between the fund’s return and the minimum guaranteed return is borne by the insurer, which thus incurs the risks. The risks and benefits criteria are met for such funds if the insurer holds a majority interest.
At December 31, 2011, the Natixis Assurances sub-group held a majority interest in five funds which are material to the consolidated financial statements and were thus consolidated in the Natixis consolidated financial statements: – ABP ACTIONS, – ABP Croissance Rendement, – ABP MIDCAP, – Fructifoncier; • unit-linked policies are policies under which the insured party selects the funds in which the insurer invests on its behalf. The value of the insurer’s interest in such funds in the form of unit-linked policies is reflected in the insurance policies, the remuneration of which is not guaranteed. The risks and benefits inherent to these investments are borne by the insured party. Such funds do not therefore require consolidation.
5 FINANCIAL DATA Consolidated fi nancial statements and notes 4.2.4 PRIVATE EQUITY SPEs
Accordingly, none of these entities had been consolidated as of December 31, 2011.
– other structures under which a separate legal entity (SCI, SAS, SNC, etc.) acquires the assets. Natixis Immo Développement does not have any interest in structures that could have a material impact on Natixis’ consolidated fi nancial statements. Accordingly, no such entity was consolidated as of December 31, 2011; • Natixis controls a certain number of SPEs designed to own or lease real estate assets intended to be re-let or otherwise made available to other Group subsidiaries or third parties. Such SPEs are consolidated once Natixis has a majority interest in these vehicles and where they are material to the consolidated financial statements. Three SPEs meet these criteria and were thus consolidated as of December 31, 2011: – Natixis Immo Exploitation, – SCI Altaïr 1, – SCI Altaïr 2; • The Natixis Lease sub-group owns a certain number of SPEs which own real estate assets. Three of them are under Natixis’ control (interests in excess of 50%) and were material as at December 31, 2011. They were thus included in Natixis’ scope of consolidation at that date: – SCI Valmy Coupole, – OPCI Natixis Lease Investissement, – SASU Immobilière Natixis Bail held by OPCI Natixis Lease Investissement;
As stated in Note 2, Natixis has elected to use the option provided by IAS 28 and IAS 31, i.e., not to account for interests held by Private Equity subsidiaries using the equity method nor proportionally consolidate them if they are designated as “Financial assets at fair value through profi t and loss”. In accordance with the fair value option amendment, Private Equity investments less than 20%-owned are also recognized as “Financial assets at fair value through profi t and loss”, since managing and measuring these investments at fair value is a well-established practice within Private Equity companies.
If estimates of future cash fl ows as of the reclassifi cation date are revised upwards in subsequent reporting periods, the impact is accounted for as an adjustment to the effective interest rate at the date of the change in estimate.
Gains or losses arising from changes in the fair value (excluding income) of available-for-sale fi nancial assets that are not hedged are recognized directly in equity under “unrealized capital gains or losses”. Accrued or earned income is recognized in the income statement under “interest and similar income” using the effective interest rate method. Available-for-sale fi nancial 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” (fi xed-income securities) or “Net revenues” (variable-income securities).
Determining whether there is objective evidence of impairment is based on a multi-criteria approach and independent expert opinions, particularly in the case of debt instruments. Evidence of impairment includes: • for debt instruments: default on interest or principal payments, existence of mediation, warning or legal reorganization procedures; counterparty bankruptcy and any other indicator pointing to a material decline in the counterparty’s financial position, such as losses on completion projected by discounted cash flow models or stress tests; • for equity instruments (excluding investments in unlisted companies): indications suggesting that the entity is unlikely to recover all or part of its initial investment. Securities presenting an unrealized capital loss of over 30% on their face value, or presenting an unrealized capital loss for a period of more than six months, are systematically tested for impairment. The test involves a qualitative analysis considering a variety of factors such as share price performance over a given period or information relating to the issuer’s financial position. Where necessary, an impairment loss is recognized based on the market price at the reporting date. Irrespective of this analysis, an impairment loss is systematically recognized when securities present an unrealized capital loss of over 50% at the reporting date, or an unrealized capital loss on their face value for a period of more than 24 months; • for investments in unlisted, non-consolidated companies: unrealized capital losses of over 20% on their face value for a period of more than 18 months, or significant changes in the technological, market, economic or legal environment suggesting that the amount invested in the equity instrument may not be recoverable; • for shares in venture capital funds (FCPRs), net asset value alone is not enough to determine whether there is any evidence that the initial investment might not be recovered. This is because net asset value during the investment phase is reduced by start-up costs (structuring and brokerage fees, etc.) Accordingly, for investments of this type which are not quoted on an active market, the following impairment principles apply: – no impairment is recognized if, at the reporting date, the position and results of the fund are in line with the business plan,
IAS 17 also describes three indicators that individually or in combination could also lead to a lease being classifi ed as a fi nance lease: • if the lessee can cancel the lease, the lessor’s losses associated with the cancellation are borne by the lessee; • gains or losses from the change in the fair value of the residual value accrue to the lessee; • the lessee has the ability to continue the lease at a rent that is substantially below the market rent.
When evidence of impairment exists, Natixis calculates the estimated recoverable amount discounted at the original effective interest rate, taking into account the impact of any available guarantees. Impairment is recognized as the difference between the net carrying amount of the loan and its estimated recoverable amount.
For industry risk, microeconomic criteria include indicators of fi nancial solidity applied to a sample of companies representing each industry sector. Examples of criteria tracked by industry analysts are trends in sales volumes, the extent to which companies in the industry meet their growth targets, profi t trends for companies in the industry, as well as available cash and gearing ratios. Examples of macroeconomic criteria include general market inputs such as the price of oil and the US$ and commodities costs.
In line with IAS 39, derivative fi nancial instruments are recognized at fair value on the balance sheet, regardless of whether they are held for trading or hedging purposes.
The prospective hedge effectiveness test is used to ensure that the fi nancial characteristics of the hedged item and hedging instrument are essentially the same: value date, maturity, notional amount, fi xed rate and payment frequency.
Gains or losses arising from changes in the fair value on the hedge are recognized as income for both the effective and ineffective portions symmetrically with changes in the fair value of the hedged items.
Level 1 comprises instruments whose fair value is determined based on directly usable prices quoted on active markets.
These instruments are valued using generally accepted models (discounted cash flow method, Black & Scholes model, interpolation techniques), and on the basis of directly observable inputs.
For these instruments, the extent to which models are used and the observability of inputs has been documented.
Instruments measured using level 2 inputs also include: • securities not quoted on an active market whose fair value is determined based on observable market data. Example: use of market data published by listed peer companies or the earnings multiple method; • listed securities with low liquidity whose fair value is determined by similar instruments listed on an active market, or identical or similar instruments listed on an inactive market but for which regular transactions have been observed; • shares of UCITS whose NAV is not determined and published on a daily basis, but are subject to regular reporting or offer observable data from recent transactions; • debt issues measured at fair value through profit and loss. The valuation of the “issuer credit risk” component is based on the discounted cash-flow method, using directly observable parameters (yield curve, revaluation spreads, etc.). For each issue, this valuation represents the product of its remaining notional amount and its sensitivity, taking into account the existence of calls, and based on the difference between the revaluation spread (based on BPCE’s cash ask curve as at December 31, 2011, and Natixis’ senior CDS curve as at December 31, 2010) and the average issue spread. Changes in the issuer spread are generally not material for issues with an initial maturity of less than one year.
Inputs relating to all such instruments were demonstrated to be observable. From a methodology perspective, observability is based on four inseparable criteria: • inputs are derived from external sources (a recognized contributor wherever possible); • they are updated periodically; • they are representative of recent transactions; • their characteristics are identical to the characteristics of the transaction. If necessary, a proxy may be used, provided that the relevance of such an arrangement is demonstrated and documented.
• instruments carried at fair value on the balance sheet and for which data are no longer available due to a freeze in trading in the wake of the financial crisis, which were not reclassified within “Loans and receivables” pursuant to the amendment to IAS 39 and IFRS 7 published on October 13, 2008 (see below). When there is a significant drop in trading in a given market, a valuation model is used based on the only available relevant data.
At December 31, 2011, instruments on which the recognition of day-one profi t/loss has been deferred included: • structured products with multiple underlyings (equities/ indexes); • options on funds; • hybrid interest rate and inflation-linked products; • interest rate derivatives; • securitization swaps; • structured credit products (CDS, CDOs and FTDs); • and carbon-based derivative instruments.
In the absence of observable market data, directly-held ABS CDO portfolios with subprime exposure are measured using a valuation method which was refi ned in 2010. The adjustment to the valuation method was based on a discounted cash fl ow approach using Intex modeling.
The following assumptions applied in previous years remained unchanged: • the current rating of assets posted as collateral rated CCC+ or below is taken into account by applying a 97% discount to the underlyings. This discount was reduced to 70% for underlying assets initially rated AAA in standard securitization transactions (i.e., excluding Commercial Real Estate CDOs – CRE CDO, ABS CDO, ABS CDO Mezzanine, on which a 97% discount continues to be applied); • non-subprime underlying assets held (excluding US RMBS) are valued using a discount matrix taking into account transaction types, ratings and vintages; • valuation of RMBS and CLOs based on the model used for directly held RMBS and CLO positions.
In the case of structures in which Natixis holds the underlying assets, each underlying tranche is valued transparently, using the corresponding mark-to-model or mark-to-market techniques.
The valuation model used to measure write-downs on CDS contracted with monoline insurers consists in applying a standard rate of recovery of 10% for unrealized capital losses on the underlying assets concerned (rate justifi ed by the low capitalization of monoline insurers given their risk exposures) and a probability of default calibrated to the credit risk associated with the credit enhancer.
e) Other instruments not exposed to US housing risk measured by Natixis using a valuation model
The model used for European CMBS was refi ned during the fi scal year. It is based on projected future cash fl ows and defaults on underlying loans for each structure, which are determined based on the individual characteristics for each loan and a correlation assumption applied to loans in the same pool.
Trust Preferred Securities (Trups) CDOs: The valuation model applied in previous years, based on projected future cash fl ows according to default distribution scenarios, was refi ned over the 2011 fi scal year by adopting an approach drawing on collateral segmentation. Default distribution curves are determined based on the type of underlying loans. For banking receivables, a median time-to-default approach is used based on fi nancial ratios. For other sectors, default rates are estimated considering the current ratings of assets.
IFRS 7 requires disclosure in the notes to the fi nancial statements of the fair value of all fi nancial instruments carried at amortized cost, including loans. The valuation methods used to determine the fair value disclosed in the notes to the fi nancial statements are described below.
On November 12, 2009, an asset protection system was implemented for part of the GAPC portfolios by BPCE, with retroactive effect at July 1, 2009. With this guarantee mechanism, Natixis can free up a substantial portion of the capital allocated to segregated assets to guard against risks of losses on these portfolios subsequent to June 30, 2009. This protection system is structured around two mechanisms: • a sub-participation with the characteristics of a financial guarantee, covering 85% of the face value of assets recognized in “loans and receivables” and “available-for-sale financial assets”. Under this guarantee, Natixis is protected from the very first euro in default up to 85% of the default amount; • two Total Return Swaps (TRS), one in euros and one in US$, transferring to BPCE 85% of unrealized and realized gains and losses on the portfolio of instruments at fair value through profit and loss (cash and derivatives) since July 1, 2009. TRS are derivatives and are therefore carried at fair value on the balance sheet, with a matching entry to income. At the same time, Natixis purchases an option from BPCE which, if exercised, allows it to recover the net gains on this portfolio after a tenyear period in return for the payment of a premium estimated at €367 million. The premium is also recognized at fair value.
In accordance with Article R.332-210-1 of the French Insurance Code, a fi ve-year appraisal is conducted by an independent expert approved by ACP . Between two appraisals, the market value of property is certifi ed by experts on a half-yearly basis.
• is a subsidiary acquired exclusively with a view to resale.
Financial liabilities in this category are carried at fair value at the reporting date and shown in the balance sheet as “Financial liabilities at fair value through profi t and loss”. Changes in fair value (including the issuer spread) are recognized in the income statement under “Gains or losses on fi nancial instruments at fair value through profi t and loss”.
5 FINANCIAL DATA Consolidated fi nancial statements and notes b) Assignee
– the principal locations affected, – the location, function, and approximate number of employees who will be compensated upon termination of their services,
– the expenditures that will be undertaken, and – the date the plan will be implemented; • the Group has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement that plan or announcing its main features on the closing date to those affected by it.
A provision is set aside for defi ned benefi t plans based on an actuarial assessment of the benefi t obligation using the projected unit credit method. This method draws on demographic and fi nancial assumptions. The value of any plan assets is deducted from the obligation. This valuation is carried out on a regular basis by independent actuaries.
The annual payroll costs recognized in respect of defi ned benefi t plans consist of: • rights vested by beneficiaries over the period; • the interest cost reflecting the impact of unwinding the discount on the obligation; • the expected return on plan assets; • amortization of actuarial gains and losses and past service costs; • the effects of plan curtailments and settlements.
Through its principal shareholder BPCE, Natixis indirectly benefi ts from fi nancing made available under the fi nancial sector bail-out plan approved by the European Commission in 2008. This plan has two key components: • inter-bank medium-term loans guaranteed by the transfer of full ownership of receivables meeting certain eligibility criteria. The transfer of ownership enables the lenders to pledge the receivables with Société de Financement de l’Économie Française (SFEF) as security for any loans they receive from SFEF. The corresponding loans granted to Natixis by BPCE, itself eligible for SFEF financing, are shown in the consolidated balance sheet within “deposits from financial institutions”.
Under IFRS 2 “Share-based payment”, employee bonus share awards give rise to an expense representing the fair value of the goods or services received at the grant date. This payroll expense is recognized against equity. The fair value of the services received is calculated by reference to the fair value of the shares at the grant date, less the present value of dividends forfeited by employees during the vesting period, taking into account the presence conditions.
Where the payment of compensation is subject to presence conditions, the corresponding expense is recorded over the vesting period on a straight-line basis as long as the settlement does not occur during the year of attribution, in which case the cost is immediately taken into account on the income statement.
The details of these plans and their quantifi ed impacts over the period are provided in Note 11.2.2.
5FINANCIAL DATA Consolidated fi nancial statements and notes 5.19 Treasury shares and treasury share derivatives
Treasury share derivatives are recognized differently depending on how they are unwound: • as equity instruments, if they are unwound by trading a fixed number of treasury shares for a fixed amount of cash or another financial asset, and if this trade is the only possible unwinding method. In such case, the instruments are not subsequently revalued; • as derivatives, if they are unwound via a net cash settlement or a net treasury shares settlement. In such case, the fair value changes in the instruments are recorded in the income statement.
Deferred tax assets and liabilities are offset at the level of each tax entity. The tax entity may either be a single entity or a group of entities that have elected for group tax relief.
Deferred tax assets are only recognized if the tax entity concerned is likely to generate suffi cient taxable income in a fi xed maximum period of 10 years against which temporary differences or tax loss carryforwards can be utilized.
All temporary differences have been recognized regardless of their recovery or payment date. The net deferred income tax balance is shown in the balance sheet under “Deferred tax assets”.
The French Finance Act for 2010 replaced business tax with the “contribution économique territoriale”. This tax includes the real property contribution, or “contribution foncière des entreprises” (CFE) and the value-added contribution, or “cotisation sur la valeur ajoutée des entreprises” (CVAE). The CFE is treated as a tax other than on income, and will be recognized under “Operating expenses” in the consolidated income statement. Natixis considers that the same treatment would be applied to the CVAE, since its calculation is not based on taxable income.
With the application of this exceptional tax and non-taxability of subsequent activity, there is no longer any justifi cation for the deferred tax liability on restatements of the capitalization reserve for the previous fi scal years. The entire deferred tax liability of €62.6 million was therefore reversed to the consolidated income statement at December 31, 2010.
Financial guarantee commitments not classifi ed as derivatives are contracts requiring the issuer to make specifi c payments to repay the business guaranteed for a loss that it has incurred owing to the failure of a debtor to make the contractual installments due. The exercise of these rights is subject to the occurrence of an uncertain future event.
All fi nancial guarantees issued by insurance subsidiaries that also meet the defi nition of an insurance contract were accounted for in line with the requirements of IFRS 4 “Insurance contracts”, as permitted by paragraph AG64 (a) of the amendment.
In preparing its fi nancial statements, Natixis is required to make certain estimates and assumptions based on available information that is likely to require expert judgment. These estimates and assumptions constitute sources of uncertainty which may affect the calculation of income and expenses in the income statement, the value of assets and liabilities in the balance sheet, and/or certain disclosures in the notes to the fi nancial statements. The fi nancial crisis has led to greater use of accounting estimates. As a result, future results of certain operations may differ signifi cantly from the estimates used in the fi nancial statements at December 31, 2011.
FAIR VALUE OF LOANS AND RECEIVABLES RECOGNIZED AT AMORTIZED COST (EXCLUDING LOANS RECLASSIFIED UNDER THE AMENDMENT TO IAS 39 AND IFRS 7)
Insurance technical reserves are calculated using estimates and assumptions that may lead to adjustments in amounts reported over the subsequent period: • for personal risk insurance, claims reserves are calculated by modeling claims experience; • for life insurance, technical reserves are computed based on economic and financial assumptions, mortality and morbidity tables, and behavioral statistics, for example concerning surrenders; • for credit insurance, claims reserves include an estimate of claims reported but not settled at the reporting date. In addition to the amount of claims payable, a provision is set aside for unknown claims, calculated on a statistical basis by reference to the final amount of claims to be paid following settlement of risks and any debt recovery measures. Provisions for debt recovery procedures, representing estimates of expected recoveries, are calculated by applying a terminal recovery rate to all subscription periods not yet settled.
Net earnings/(loss) attributable to the Group (in millions of euros) 1,562 1,732
Number of potential dilutive shares resulting from stock option plans and bonus share plans (b) 18,904,018 13,656,034
(b) This number of shares refers to the shares granted under the deferred share-based bonus plans (2009, 2010 and 2011 plans). In 2011, based on the average share price, the 2007 and 2008 stock option plans presented in Note 11.2.4 are not considered as potential dilutive shares.
At December 31, 2011, fi nancial assets at fair value primarily comprised securities and derivative instruments.
Change in fair value of loans and receivables attributable to credit risk
6.1.1.3 Conditions for classifi cation of fi nancial assets designated at fair value through profi t and loss
The use of the fair value option is considered to provide more pertinent information in two situations: • where there is an accounting mismatch between economically linked assets and liabilities. This arises for example in the case of an asset and a hedging derivative when the criteria for hedge accounting are not met; • where a portfolio of financial assets and liabilities is managed and recognized at fair value as part of a documented policy of asset and liability management.
Variable-income 6.1.2 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS
Instruments designated at fair value through profi t and loss 6.1.2.1 and 6.1.2.2 81,517 45,046
Other payables 836 882 6.1.2.1 Financial liabilities designated at fair value through profi t and loss and credit risk
12.31.2011 12.31.2010 Changes in the fair value of fi nancial liabilities, designated at fair value through profi t and loss, attributable to credit risk
Difference between carrying amount and amount contractually due at maturity Period Aggregate
(a) Fixed-income securities presenting an unrealized capital loss at December 31, 2011 carry a gross unrealized capital loss of €346 million (excluding life-insurance securities given the deferred participation liability), including €111 million in securities presenting an unrealized capital loss for a period of less than six months.
6.4 Loans and receivables 6.4.1 LOANS AND RECEIVABLES DUE FROM BANKS
The fair value of loans and receivables due from banks totaled €48,725 million at December 31, 2011, compared with €67,940 million at December 31, 2010.
5FINANCIAL DATA Consolidated fi nancial statements and notes 6.4.2 CUSTOMER LOANS AND RECEIVABLES
Customer lease fi nancing outstandings 6,507 4,100 10,607 6,239 3,979 10,217
Provisions for impairment 6.4.2.3 Other loans and receivables due from customers
5 FINANCIAL DATA Consolidated fi nancial statements and notes 6.5 Held-to-maturity financial assets
The fair value of held-to-maturity fi nancial assets totaled €4,224 million at December 31, 2011, compared with €5,125 million at December 31, 2010.
6.6.2 INFORMATION ON FINANCIAL INSTRUMENTS RECLASSIFIED AS AT OCTOBER 1, 2008
The fi nancial instruments reclassifi ed in accordance with the October 13, 2008 amendment were measured using the valuation models described in Note 5.6. Changes in the fair value of reclassifi ed assets that would have had an impact on income for 2011 if the October 1, 2008 reclassifi cation had not taken place, are summarized in the table below.
The table below shows the carrying amount of: • repurchased securities and other items provided as security for liabilities; • receivables for which ownership has been transferred to BPCE or SFEF as security in connection with the financing indirectly received from SFEF through BPCE.
• financial instruments (securities and receivables) deposited with central banks and assignable as collateral to guarantee refinancing operations at any time
This heading covers fi nancial assets received as security under fi nancial guarantee agreements with the right to reuse the assets in the absence of any default on the part of the owner of the guarantee. No material fi nancial assets were received by Natixis as security under fi nancial guarantee agreements.
≤ 90 days 180 days 1 year > 1 year Total
6.6.7 FAIR VALUE OF FINANCIAL ASSETS CARRIED AT FAIR VALUE IN THE BALANCE SHEET
Financial assets designated at fair value through profi t and loss 81,426 9,884 70,275 1,267 27,369 10,263 15,775 1,331
5 FINANCIAL DATA Consolidated fi nancial statements and notes 6.6.7.1 Financial assets at fair value measured using level 3 of the fair value hierarchy
Financial assets at fair value through profi t and loss – Trading 11,207 477 (17)
TOTAL FINANCIAL ASSETS RECORDED AT FAIR VALUE 13,975 432 46 56
(b) The reclassifi cation of derivatives not eligible for hedge accounting outside level 3, amounting to €10 million, resulted from the transition of multiunderlying equity products with a residual maturity of less than 8 years to the observable inputs category.
Sensitivity analysis of the fair value of fi nancial instruments measured according to level 3 – Assets and Liabilities
• a flat variation of: – +/-10% in the estimated loss rates on underlying assets to model the valuation of ABS CDO tranches; – or +/-1% for CLO underlyings; – or +/-10% for the LTV used to calculated the CMBS collateral loss rate; i.e. a sensitivity impact representing a valuation increase of €52.3 million (refl ecting an improvement in the above-mentioned inputs) or a valuation decrease of €56 million (refl ecting a deterioration in said inputs) (2).
(1) i.e. the standard deviation of consensus prices used to measure the inputs (TOTEM, etc.). (2) Impact determined before taking the BPCE guarantee into account.
5 FINANCIAL DATA Consolidated fi nancial statements and notes 6.7 Deferred tax assets and liabilities
Deferred participation – debit balances 841 32 6.8.3.2 Insurance accrual accounts – Liabilities
Net value Fair value Net value Fair value 6.10 Assets obtained by taking possession of guarantees
The fair value of amounts due to banks totaled €109,289 million at December 31, 2011, compared with €106,684 million at December 31, 2010.
5 FINANCIAL DATA Consolidated fi nancial statements and notes 6.12.2 CUSTOMER DEPOSITS
The fair value of customer deposits amounted to €44,483 million at December 31, 2011, compared with €60,087 million at December 31, 2010.
5FINANCIAL DATA Consolidated fi nancial statements and notes 6.14 Insurance companies’ technical reserves
5 FINANCIAL DATA Consolidated fi nancial statements and notes 6.16 Subordinated debt
(in millions of euros) 12.31.2010 Issues (a) Redemptions (b) Translation adjustments Other (c) 12.31.2011
This table does not include: • preference shares, • accrued interest.
The fi nancing that Natixis indirectly receives through its main shareholder BPCE under the fi nancial sector bail-out plan approved by the European Commission is described in Note 5.17.
Financial liabilities held for trading 150,667 28,130 122,348 188 113,810 26,370 86,484 956
Financial liabilities designated at fair value through profi t and loss 81,517 548 80,970 45,046 2 45,044
TOTAL FINANCIAL LIABILITIES RECOGNIZED AT FAIR VALUE 956 79 6.19 Breakdown of financial liabilities by contractual maturity
Total on-balance sheet exposure Less than 1 month 1 to 3 months 3 months to 1 year 1 to 5 years Over 5 years
Financing, guarantee, securities, a) The premium paid to BPCE in respect of the guarantee given against GAPC assets classifi ed as “Loans and receivables” and “Available-for-sale fi nancial assets” is recognized in expenses pro rata to the write-back of the provisions and the discounts recognized in respect of reclassifi cations during the period.
At December 31, 2011, the expense recognized in respect of the premium totaled -€331 million (-€293 million in 2010), of which -€232 million was recognized in net revenues under guarantee commissions (-€159 million in 2010) and -€99 million in Provision for credit losses (-€134 million in 2010).
5 FINANCIAL DATA Consolidated fi nancial statements and notes 7.3 Gains and losses on financial instruments at fair value through profit and loss
Net gains/(losses) on fi nancial assets and liabilities excluding hedging derivatives 651 1,102
Net gains/(losses) on fi nancial assets and liabilities held for trading (a) 125 1,164 o/w derivatives not eligible for hedge accounting 1,760 (1,776)
(a) “Net gains/(losses) on fi nancial assets and liabilities held for trading” include: • the valuation of unhedged ABS CDOs with subprime exposure (see Note 5.6), resulting in the recognition of an expense of €36 million in 2011 (excluding the impact of the BPCE guarantee), versus an expense of €19 million at December 31, 2010, for a net exposure of €377 million at December 31, 2011; • impairments taken against the fair value of CDS entered into with monoline insurers (see Note 5.6), which led to a decrease of €529.5 million in cumulative impairments in 2011, versus an expense of €234 million in 2010 (excluding the impact of exchange rate fl uctuations and the BPCE guarantee), bringing cumulative impairments to €1,573 million at December 31, 2011 versus €2,086 million at December 31, 2010; • impairments taken against credit derivatives contracted with Credit Derivatives Product Companies (see Note 5.6), reversed in the amount of €0.5 million in 2011 to reach €15 million, versus a writeback of €145 million in 2010 (excluding the impact of the BPCE guarantee and exchange rate fl uctuations), for an economic exposure of €101 million at December 31, 2011.
(b) Net gains and losses include the valuation of the issuer spread on issues carried out by Natixis and designated at fair value through profi t and loss with a positive €238 million impact on income for the period versus income of €21 million last year.
5FINANCIAL DATA Consolidated fi nancial statements and notes 7.4 Net gains or losses on available-forsale financial assets
Insurance income includes changes recorded in income in respect of a €3.2 billion increase in reinsurers’ share of technical reserves offset by -€3.2 billion charge in “Other insurance income and expenses”.
Gains or losses on sales 4 (13) (9) 5 (15) (11)
Other related income and expenses 188 (162) 27 146 (107) 39 7.5.2 OTHER INSURANCE INCOME AND EXPENSES
(a) These correspond to sales of credit information, marketing information and receivables collection services provided by Coface non-core subsidiaries.
5FINANCIAL DATA Consolidated fi nancial statements and notes 7.6 General operating expenses
It also includes any impairments recorded in respect of proven default risks associated with counterparties of OTC instruments.
“Impairment of fi nancial assets” includes impairment recognized against securities classifi ed as “Loans and receivables” (including items reclassifi ed following the October 13, 2008 amendment) and fi xed-income securities classifi ed within available-for-sale fi nancial assets.
Pensions and other employee benefi ts 11.2.2 & 11.2.3 (232) (210)
Provisions for risks and other costs (60) 23 0 0 (37) (27) 61 0 0 34
The provision for permanent impairment recognized on Greek sovereign securities (see Note 10.4.2.1) is €105.2 million after applying the rules of profi t sharing relating to the life insurance portfolios in question.
+ Impairment of goodwill 43 - Share in income from associates (594) (500)
= Consolidated net income/(loss) before tax, goodwill, amortization and share in income from associates 1,570 1,482
Gains and losses recorded directly in equity are recycled to income.
TOTAL CHANGES IN UNREALIZED OR DEFERRED GAINS OR LOSSES (639) 112 (526) 607 (6) 601
This business line groups together a number of service businesses primarily serving the Caisses d’Epargne and Banques Populaires networks, and other Natixis business lines: • Factoring: this is France’s fourth-leading factoring business, providing companies with invoicing management solutions such as financing, insurance, and collection. Natixis Factor uses the Banques Populaires and Caisses d’Epargne networks, which account for a significant portion of its business; • Sureties and Financial Guarantees: this business line is operated by Natixis Garanties and notably includes: guarantees for mortgage loans granted to retail and business customers by the Caisses d’Epargne, and more recently the Banques Populaires networks, along with legal guarantees and bail bonds; • Consumer finance: the third-leading player in consumer finance in France, this Natixis business line includes a broad range of activities throughout the value chain for revolving loans (marketing, origination, administrative management, outof -court collection) and administrative management services for personal loans. These activities are operated by Natixis Financement, which manages revolving loans granted by the BPCE Group networks, and manages personal loans granted by the Caisses d’Epargne and more recently by the Banques Populaires; • Leasing: this business line provides financing solutions for real estate and non real estate that is managed under finance leases or other long-term leasing arrangements; • Employee Savings Scheme: (a comprehensive B2B employee benefits planning range of products), employee savings: administration of employee accounts, fund administration and accounting, collective life insurance, and special payment vouchers; • Securities Services: custody (account administration, back office outsourcing, depositary control) and office services;
• Private Banking: this business line encompasses wealth management activities in France and Luxembourg, financial planning solutions, and services for independent wealth management advisors (IWMAs). Banque Privée 1818, created from the merger between Banque Privée Saint Dominique (BPSD) and La Compagnie 1818, has taken its place as a major player on the French market. Its development continued in 2011 with the consolidation of Sélection-R, now Sélection 1818, in the interest of creating a platform for IWMAs, following its merger with 1818 Partenaires. Its clientele derives mainly from Caisses d’Epargne and Banques Populaires, and to a lesser extent from Natixis. Private Banking offers advisory services, financial planning and expertise, and fund management solutions.
• Private Equity for third party clients: The Private Equity business for third party clients is centered around a Natixis department that was set up in 2010: Natixis Capital Investissement (NCI). The teams have extensive expertise in equity financing for generally unlisted, small and mediumsized enterprises in France and Europe via sponsored equity holdings. NCI 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.
At December 31, 2011, the scope of activities covered by GAPC was as follows: • GAPC 0 – Management; • GAPC 1 – Structured Credit Euro; • GAPC 2 – Structured Credit US; • GAPC 3 – Vanilla credit; • GAPC 4 – Correlation trading; • GAPC 5 – Complex interest rate derivatives; • GAPC 7 – Complex equity derivatives; • GAPC 8 – Fund-based structured products (formerly Alternative Assets).
This information is determined based on the accounting principles applied in accordance with IFRS as adopted by the European Union at December 31, 2011.
12.31.2010 - pro forma accounting for 2011 scope of consolidation changes
5FINANCIAL DATA Consolidated fi nancial statements and notes 9.8.2 BALANCE SHEET SEGMENT ANALYSIS
The 2010 segment balance sheet was not restated for the reclassifi cation of Coface’s «non-core» businesses owing to its nonmaterial nature.
As a lending institution, Natixis is subject to banking regulations and to supervision by the ACP, the French Prudential Supervisory Authority. Supervision is on a consolidated and individual basis and is designed to set a number of rules guaranteeing the bank’s capital adequacy, liquidity and fi nancial equilibrium. The measures deployed to meet these objectives are chiefl y quantitative (capital adequacy ratios, management of large exposures and liquidity risk). Qualitative measures are also used, based on internal control requirements.
The capital adequacy ratio encompasses credit risk, market risk, settlement risk and operational risk. This ratio measures the adequacy of regulatory capital in relation to risk. The numerator of the equation represents the Bank’s consolidated regulatory capital, calculated in accordance with CRBF regulation 90-02. The denominator represents the entity’s weighted credit, market, settlement and operational risks. Natixis complied with the 8% minimum capital adequacy ratio at December 31, 2011.
The liquidity ratio is designed to ensure that liquid assets with maturities of less than one month are equal to or exceed liabilities falling due within the same period. It is defi ned as the ratio between cash/cash-equivalents and liabilities falling due in less than one month.
The minimum liquidity ratio under prudential rules is 100%. At December 31, 2011, Natixis’ liquidity ratio was 122%.
Procedures for managing large exposures are designed to prevent excessive concentration of risks on a single benefi ciary. The regulation is underpinned by an obligation to be respected at all times: all risks associated with a single counterparty cannot exceed 25% of the bank’s capital. Natixis complied with this requirement during 2011.
Loans and receivables due from EC 48,597 280 (234)* 48,643 68,063
Loans and receivables due from customers 109,374 5,173 (2,725)* 111,822 128,049
Held-to-maturity fi nancial assets 4,411 0 (374) 4,037 5,031 * Including collective provisions.
Loans and receivables due from banks 34,841 275 (229) 34,887 2 376
Loans and receivables due from customers 87,071 5,163 (2,724) 89,510 2,084 32,312
TOTAL EXPOSURE AND IMPACT OF GUARANTEES 238,568 5,727 (3,011) 241,284 2,181 41,657
At December 31, 2011: 90% of collective provisions on the Finance sector comprise provisions covering CDPCs (credit derivative product companies), compared with 87% at December 31, 2010.
The sector reversal includes a €0.3 million reversal in respect of CDPCs.
At December 31, 2011, exposure to sovereign risk presented according to the methodology applied for the stress tests conducted by the EBA (European Banking Authority), excluding insurance operations, was as follows: (in millions of euros)
Banking book Trading book Residual maturity o.w. other loans and receivables o.w.
(a) Net carrying value after the provision for impairments. (b) Without applying contractual rules governing shares of profi ts on life insurance activities.
The reductions in sovereign risk exposure are due to the disposal of assets classifi ed as «Available-for-sale fi nancial assets» carried out in the second half of 2011, with the exception of Greek debt, the change in which corresponds to the provision for impairment.
Due to the diffi cult conditions described above, the fair value of these assets was recorded under level 2 in the special release on the fair value hierarchy (see Note 6.6.7).
Four other European countries, Spain, Ireland, Italy and Portugal are facing a crisis of confi dence regarding their debt. However these countries have committed to take measures to signifi cantly reduce their defi cits and have affi rmed their intention to honour their commitments in full.
No impairment was booked at December 31, 2011 in respect of sovereign debt securities issued by Spain, Ireland, Italy and Portugal. There was also no change in their accounting category.
The fair value of these assets was recorded under level 1 in the special release on the fair value hierarchy (see Note 6.6.7), with the exception of Portuguese sovereign securities, for which the fair value was recorded under level 2 given trends in market prices.
10.4.4 FAIR VALUE OF HELD-TO-MATURITY FINANCIAL ASSETS AT DECEMBER 31, 2011
(a) Net carrying value, excluding accrued interest, after impairments and without applying the contractual rules governing the share of profi ts on life insurance portfolios.
Number of employees * 20,451 19,576 * Full-time equivalent current employees of Natixis at the reporting date.
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 profi t-sharing, meeting the defi nition of short-term benefi ts under IAS 19 “Employee Benefi ts”. In accordance with this standard, short-term benefi ts are expensed in the period in which the employees render the services giving rise to such benefi ts.
On March 18, 2009, Natixis set up a retention plan for Corporate and Investment Banking employees, designed to foster loyalty among key employees and encourage them to continue contributing to CIB’s activities. The rights to deferred compensation vest gradually over a period running from the grant date (March 18, 2009) to July 1, 2012. The amount settled in cash at each payment date depends on changes in performance-linked ratios relating to CIB and more generally Natixis, as well as the holding period.
Each year since 2010, a payment plan based on equities has been awarded to certain categories of staff, in accordance with regulations. The accounting treatment of these plans is described in Note 5.18.
Regarding the plan approved by the Board of Directors on February 2, 2012, as these allocations had not yet formally been carried out at the reporting date, these expenses have been estimated using best available estimates of inputs at the reporting date. These inputs relate to the share value and dividend assumptions.
Year of plan Grant date Initial number of units granted* Acquisition dates
* The expected number of units at the acquisition date is funded by equity swaps.
Pension plans for which employees can volunatarily opt are operated by certain Natixis entities and are also classifi ed as defi ned-contribution plans.These entities have a single contribution obligation (“PERCO” contribution).
Post-employment defined-benefit plans include all postemployment benefi ts for which Natixis has committed to pay a specifi ed level of benefi ts. These plans include banking sector topup pension plans, end-of-career awards, mutual health insurance funds and other contractual benefi ts accruing to retirees.
The amount of the provision for post-employment defi nedbenefi t plans is calculated on an actuarial basis using a number of demographic and fi nancial assumptions.
Obligations in respect of long-term employee benefi ts are accounted for on the same actuarial basis as post-employment defi ned-benefi t obligations, except that no “corridor” is applied to actuarial gains and losses and all past service costs are recognized immediately in income.
5FINANCIAL DATA Consolidated fi nancial statements and notes a) Impact of new laws and regulations
These measures had no material impact on the obligations in respect of post-employment defi ned-benefi t schemes. The adjustment of retirement age assumptions used to determine the Company’s commitments was recorded under actuarial gains or losses.
As Natixis has undertaken, in respect of the employment preservation (2009) and work adjustment (2008) plans, to carry the benefi ciaries of these plans until the age of retirement on full benefi ts, this measure resulted in the recognition of an additional provision for plan restructuring in the amount of €0.7 million.
On April 1, 2011, employees of Informatique CDC joined the Natixis S.A. scheme folllowing the dissolution of this entity (see Note 3). With effect from this date, the employees concerned are eligible for end-of-career awards, supplementary healthcare benefi ts and long-service awards offered to Natixis S.A. employees, while retaining their existing length of service advantages; c) Impact of the employment preservation plan launched in 2009
Expected return on plan assets 3.00% 5.20% 7.61% 3.01% 4.77% 6.25%
Rate of increase in healthcare costs 4.50% 4.30% 4.50% 4.10% 4.30% 5.00%
Benefi ts paid over the period (19) (3) (3) (89) (113)
Change in obligation taken to income (7) 18 5 (3) 13
Change in actuarial gains and losses not recognized 52 14 2 68
Transfers, curtailments g) Breakdown of assets held to fund post-employment benefi ts granted to employees
5FINANCIAL DATA Consolidated fi nancial statements and notes i) Analysis of sensitivity to assumptions applied to defi ned-benefi t plans and other long-term employee benefi ts recognized at December 31, 2011
(a) Based on the Bank’s standard yield curve for interbank swaps. (b) Dividend payment rates generally correspond to the last dividend payment made and no estimated future increases are taken into account.
5FINANCIAL DATA Consolidated fi nancial statements and notes 12.2 Capital management
12.3 Equity instruments issued 12.3.1 UNDATED DEEPLY SUBORDINATED NOTES AND PREFERENCE SHARES
Since December 31, 2009, issues of undated deeply subordinated securities 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 “Share capital and reserves” in the consolidated balance sheet.
Changes in these items over the period are presented below: (in millions of euros) 01.01.2011 Issues Redemptions Translation adjustments 12.31.2011
Natixis entered a liquidity contract with an independent service provider, and in accordance with the Compliance Charter established with the French Financial Markets Association (Association des Marchés Financiers) on September 23, 2008, approved by the French Financial Markets Authority (Autorité des Marchés Financiers – AMF) on October 1, 2008.
This authorization is founded on the tenth resolution of the General Shareholders’ Meeting of May 26, 2011, superseding the fi fteenth resolution of the General Shareholders’ Meeting of May 27, 2010, authorizing Natixis to acquire 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 5,114,271 shares representing €9.9 million as at December 31, 2011.
The amounts shown represent the nominal value of the commitment undertaken: (in millions of euros) 12.31.2011 12.31.2010
In accordance with IAS 39 (§2), fi nancing commitments outside the scope of IAS 39 are recognized in accordance with IAS 37, “Provisions, Contingent Liabilities and Contingent Assets”.
A fi nancing commitment given is a contingent liability, defi ned by IAS 37 as: • a potential obligation arising from past events whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity; or
At December 31, 2011, none of these vehicles was consolidated as Natixis does not exercise control and is not exposed to the majority of the risks and rewards associated with the securitized assets.
In January 2012, Natixis implemented a transaction with BPCE to optimize the Core Tier 1 ratio via a guarantee mechanism based on a prudential value equivalent to that used for the CCI issues by the Banque Populaire banks and the Caisses d’Epargne.
Called P3CI, for Natixis the mechanism of the transaction consists of issuing new bonds for an amount of €6.9 billion, entirely subscribed by BPCE.
For Natixis the result is the reduction of its risk-weighted assets by approximately €25.6 billion, i.e. 18% of its risk-weighted assets before P3CI.
On January 13, 2012, Natixis presented the Central Works Council with the detail of the strategy adjustments and job cuts which will affect Corporate and Investment Banking in 2012, allowing Natixis to adapt to the new prudential liquidity requirements.
The planned adjustments concern a selective reduction of fi nancing and market activities, and the development of specifi c businesses (Corporate Solutions, Alternative Assets, Equity Markets) and the adaptation of corresponding support functions.
Net gains or losses on fi nancial instruments at fair value through
Financial assets at fair value through profi t and loss 5,374 5,675
Financial liabilities at fair value through profi t and loss 1,985 1,459
Net gains or losses on available-for-sale fi nancial assets 79 96
Net income (group share) for 20% shareholdings in CCIs 220 277
In 2011 attendance fees paid to members of the Board of Directors included a fi xed portion (€10,000 per year per person) and a variable portion (€2,000 per Board Meeting per person). The members of the Audit Committee and the Compensation Committee received a fi xed payment (€5,000 and €3,000 respectively, €20,000 for the President of the Audit Committee and €10,000 for the Present of the Compensation Committee) and a variable payment of €1,000 per meeting per person. This compensation was paid in full at the end of the year.
With regard to calculation of severance payments for the duties of Chief Executive Offi cer, the Board of Directors, on the advice of the Compensation Committee, authorized during the meeting of February 22, 2011, the commitment establishing the terms and conditions for compensation due or liable to be due to Laurent Mignon in the event he no longer performs the duties of Chief Executive Offi cer. This commitment was also approved by the Combined General Shareholders’ Meeting of May 26, 2011 (see sixth resolution).
At the end of this commitment, it is expected that the Chief Executive Offi cer will not receive severance payments if he leaves the Company at his initiative to perform new duties or changes his position within Groupe BPCE. Furthermore, this payment will not be paid if the Company is experiencing serious economic diffi culties. Furthermore, in accordance with the provisions of the AFEP-MEDEF C ode of corporate governance, the right to compensation is subject to a certain number of criteria and performance conditions.
* Tranche A corresponds to the fraction of annual compensation between 0 and €36,372. Tranche B corresponds to the fraction of annual compensation between €36,372 and €145,488. Tranche C corresponds to the fraction of annual compensation between €145,488 and €290,976.
Change in fair value of investments carried at fair value through profi t
Investment income (net of expenses) 220 332 (9) 323 (104) 1 220
5 FINANCIAL DATA Consolidated fi nancial statements and notes 15.3.2 INSURANCE COMPANY CONTRIBUTIONS TO THE CONSOLIDATED INCOME STATEMENT
Net gains or losses on fi nancial instruments at fair value through profi t and loss (336) 382 386
Net gains or losses on available-for-sale fi nancial assets 21 52 49
Depreciation, amortization and impairment on property, plant and equipment and intangible assets (30) (28) (14)
The mandate of Deloitte & Associés was renewed by the shareholders at the General Meeting of May 2010, for a term of six years ending as of the General Shareholders’ Meeting called to approve the 2016 fi nancial statements. KPMG Audit was appointed in replacement of Salustro Reydel by the shareholders at the General Meeting of May 2010, for a term of six years ending as of the General Shareholders’ Meeting called to approve the 2016 fi nancial statements.
• Deloitte & Associés – 185, avenue Charles-de-Gaulle – 92524 Neuilly-sur-Seine cedex; • KPMG Audit, Département de KPMG S.A. – 1 cours Valmy – 92923 Paris La Défense Cedex; • Mazars – Immeuble Exaltis 61, rue Henri-Régnault – 92075 La Défense Cedex.
The Deputy Auditors are: • BEAS, 7-9 Villa Houssay – 92200 Neuilly-sur-Seine; • Mr. Malcolm McLarty, 1 cours Valmy – 92923 Paris La Défense Cedex; • Mr. Patrick de Cambourg, Immeuble Exaltis – 61, rue Henri-Régnault – 92075 La Défense Cedex.
NATIXIS JAPAN SECURITIES CO, Ltd (11) Financial institution FC 100 100 0 0 Japan
NATEXIS US FINANCE CORPORATION Issuance of debt securities FC 100 100 100 100 United States
NATIXIS TRUST (formerly Natixis Luxembourg)* Bank FC 100 100 100 100 Luxembourg
NATINIUM FINANCIAL PRODUCTS (1) Securitization vehicle FC 100 100 100 100 Ireland
NATIXIS HO-CHI MINH Financial institution FC 100 100 100 100 Vietnam
NATIXIS FUNDING CORP Other fi nancial company FC 100 100 100 100 United States
NATIXIS NORTH AMERICA LLC (formerly NATIXIS NORTH AMERICA INC)* Brokerage FC 100 100 100 100 United States
NATIXIS DERIVATIVES INC Brokerage FC 100 100 100 100 United States
NATIXIS REAL ESTATE HOLDINGS LLC (formerly NATIXIS REAL ESTATE CAPITAL INC)* Real estate fi nance FC 100 100 100 100 United States
CDC HOLDING TRUST Secondary markets fi nance FC 100 100 100 100 United States
Commercial real estate fi nance 0 0 100 100 United States
CANZAS SECURISATION LLC (1) Real estate fi nance FC 100 100 100 100 United States
LAVENDER TRUST (1) Real estate fi nance FC 100 100 100 100 United States
CM REO HOLDINGS TRUST (1) Secondary markets fi nance FC 100 100 100 100 United States
CM REO TRUST (1) Secondary markets fi nance FC 100 100 100 100 United States
NH PHILADELPHIA PROPERTY LP (1) Real estate fi nance FC 100 100 100 100 United States
IXIS CMNA ACCEPTANCES LLC (1) Other fi nancial company FC 100 100 100 100 United States
NEXGEN FINANCIAL HOLDINGS Ltd Holding FC 100 100 100 100 Ireland
UNIVERSE HOLDINGS Ltd Structured fi nance FC 100 100 100 100 Cayman Islands
NEXGEN CAPITAL Ltd Structured fi nance FC 100 100 100 100 Ireland
NATIXIS CORPORATE SOLUTIONS (ASIA) Pte Ltd Structured fi nance FC 100 100 100 100 Singapore
NATIXIS CORPORATE SOLUTIONS Ltd Structured fi nance FC 100 100 100 100 Ireland
ULTIMA TRADING & GLOBAL STRATEGIES Ltd (1) Structured fi nance FC 100 100 100 100
NATIXIS GLOBAL ASSET MANAGEMENT Holding FC 100 100 100 100 France
AEW EUROPE INVESTMENT LTD Asset Management FC 100 60 100 60 United
AEW GLOBAL ADVISORS (EUROPE) LTD Asset Management FC 100 100 100 100
AEW PARTNERS III, INC. Asset Management FC 100 100 100 100 United States
AEW SENIOR HOUSING INVESTORS INC Asset Management FC 100 100 100 100 United States
AEW VIF INVESTORS, INC. Asset Management FC 100 100 100 100 United States
ALPHASIMPLEX MANAGED FUTURES FUND (1) (3) Asset Management 0 0 48 48 United States
ASG LASER FUND (1) (2) Asset Management 0 0 76 76 United States
CAPITAL GROWTH MANAGEMENT, LP Asset Management Equity 50 50 50 50 United States
CASPIAN CAPITAL MANAGEMENT, LLC Asset Management FC 51 51 51 51 United States
DARIUS CAPITAL PARTNERS USA (26) Investment advisory services FC 60 60 0 0 United States
AEW EUROPE CC LTD Asset Management FC 100 60 100 60 United
AEW EUROPE HOLDING Ltd Asset Management FC 100 60 100 60 United
NATIXIS EPARGNE FINANCIÈRE SERVICES (12) Asset Management 0 0 100 100 France
EPI SO SLP LLC (1) Asset Management FC 100 60 100 60 United States
HANSBERGER GROUP, INC. Asset Management FC 100 100 100 100 United States
HANSBERGER GLOBAL INVESTORS, INC Asset Management FC 100 100 100 100 United States
HANSBERGER INVESTMENT ADVISORS PRIVATE Ltd Asset Management FC 100 100 100 100 India
AURORA ASG GLOBAL OPPORTUNITIES FUND (1) (2) Asset Management 0 0 100 100 United States
HARRIS ASSOCIATES INVESTMENT TRUST Asset Management FC 100 100 100 100 United States
HANSBERGER FOCUSED INTERNATIONAL EQUITY FUND (formerly HGI/VN Global Equities Fund) (1) (3) Asset Management 0 0 100 100 United States
AEW EUROPE S.A. Asset Management FC 60 60 60 60 France
NATIXIS ASSET MANAGEMENT ADVISERS, LP Retail FC 100 100 100 100 United States
NATIXIS DISTRIBUTION CORPORATION Retail FC 100 100 100 100 United States
NATIXIS DISTRIBUTORS, LP Retail FC 100 100 100 100 United States
KOBRICK FUNDS, LLC Asset Management FC 100 100 100 100 United States
KENNEDY FINANCEMENT Luxembourg Asset Management FC 100 100 100 100 Luxembourg
LOOMIS SAYLES MULTI-ASSET REAL RETURN CAYMAN FUND (1) (2) Asset Management 0 0 100 100 United States
LOOMIS SAYLES MULTI-ASSET REAL RETURN FUND (1) (2) Asset Management 0 0 89 89 United States
NAMI AEW EUROPE Asset Management FC 100 60 100 60 France
NATIXIS ASSET MANAGEMENT FINANCE (formerly Natixis Asset Management Participations 2)* ** Holding FC 100 100 100 100 France
NATIXIS GLOBAL ASSET MANAGEMENT, LP Holding FC 100 100 100 100 United States
NATIXIS GLOBAL ASSOCIATES ITALIA Asset Management FC 100 100 100 100 Italy
NATIXIS GLOBAL ASSOCIATES LUXEMBOURG Retail FC 100 100 100 100 Luxembourg
NATIXIS ASG HOLDINGS, INC Retail FC 100 100 100 100 United States
NATIXIS GLOBAL ASSOCIATES SWITZERLAND Asset Management FC 100 100 100 100 Switzerland
NATIXIS CASPIAN PRIVATE EQUITY LLC (1) Asset Management Equity 40 40 40 40 United States
SNYDER CAPITAL MANAGEMENT, INC. Asset Management FC 100 100 100 100 United States
SNYDER CAPITAL MANAGEMENT, LP Asset Management FC 100 100 100 100 United States
NATEXIS PRIVATE EQUITY OPPORTUNITIES Private Equity FC 94 94 93 93 France
NATIXIS PRIVATE EQUITY CASPIAN IB, LP (1) (14) Private Equity FC 49 49 73 73 United States
Investment product distribution to CGPIs FC 66 66 0 0 France
ASSURANCES BANQUE POPULAIRE VIE Life insurance FC 100 100 100 100 France
NATIXIS FACTOR ITALIE -SUCC (NATIXIS FACTOR) (2) Factoring 0 0 100 100 Italy
NATIXIS BAIL** Real estate leasing FC 100 100 100 100 France
NATIXIS ENERGECO** Equipment lease fi nancing FC 100 100 100 100 France
NATIXIS LEASE** Equipment lease fi nancing FC 100 100 100 100 France
NATIXIS LEASE MILAN Equipment and real estate leasing FC 100 100 100 100 Italy
OCEOR LEASE TAHITI** Equipment lease fi nancing FC 100 100 100 100 Tahiti
SAS IMMOBILIERE NATIXIS BAIL (1) Real estate leasing FC 100 100 100 100 France
COFACE S.A. Credit insurance and related services FC 100 100 100 100 France
Credit insurance and related services FC 100 100 100 100 Brazil
COFACE NEDERLAND SERVICES Receivables management and data FC 100 100 100 100 Netherlands
COFACE NORTH AMERICA Credit insurance and related services FC 100 100 100 100 United States
Credit insurance and related services FC 100 100 100 100 United States
COFACE ROMANIA CMS (28) Insurance FC 100 100 0 0 Romania
COFACE SIGORTA TURQUIE (28) Insurance FC 100 100 0 0 Turkey
COFACE SOUTH AFRICA SERVICES (28) Insurance FC 100 100 0 0 South Africa
COFACE UK SERVICES LTD Receivables management and data FC 100 100 100 100 United
COFACERATING.DE Receivables management and data FC 100 100 100 100 Germany
COFACREDIT Credit insurance and related services EM 36 36 36 36 France
COFINPAR Credit insurance and related services FC 100 100 100 100 France
COGERI Receivables management and data FC 100 100 100 100 France
COFACE CENTRAL EUROPE HOLDING Holding FC 75 75 75 75 Austria
COFACE UK - SUCC (COFACE S.A.) Insurance FC 100 100 100 100 United
COFACE PORTUGAL - SUCC (COFACE S.A.) Insurance FC 100 100 100 100 Portugal
COFACE NEDERLAND - SUCC (COFACE KREDIT) Insurance FC 100 100 100 100 Netherlands
COFACE FACTORING PORTUGAL - SUCC (COFACE AUSTRIA BANK) Factoring FC 100 100 100 100 Portugal
COFACE DANMARK-SUCC (COFACE KREDIT) Insurance FC 100 100 100 100 Denmark
COFACE ARGENTINA -SUCC (COFACE S.A.) Insurance FC 100 100 100 100 Argentina
COFACE CHILE -SUCC (COFACE S.A.) Insurance FC 100 100 100 100 Chile
COFACE CANADA - SUCC (COFACE S.A.) Insurance FC 100 100 100 100 Canada
COFACE HUNGARY (formerly ÖKVC FIÓKTELEPE) - SUCC (COFACE AUSTRIA) Insurance FC 100 100 100 100 Hungary
COFACE ROMANIA INSURANCE -SUCC (COFACE AUSTRIA) Insurance FC 100 100 100 100 Romania
COFACE CZECH INSURANCE -SUCC (COFACE AUSTRIA) Insurance FC 100 100 100 100
COFACE SLOVAKIA INSURANCE -SUCC (COFACE AUSTRIA) Insurance FC 100 100 100 100 Slovakia
COFACE SINGAPORE -SUCC (COFACE S.A.) Insurance FC 100 100 100 100 Singapore
COFACE AUSTRALIE (SUCC-COFACE S.A.) Insurance FC 100 100 100 100 Australia
COFACE TAIWAN (SUCC-COFACE S.A.) Insurance FC 100 100 100 100 Taiwan
FINANCIÈRE 5-7 (24) Private Equity holding 0 0 100 100 France
NATIXIS PRIVATE EQUITY INTERNATIONAL Private Equity FC 100 100 100 100 France
NATIXIS HCP (formerly INVESTIMA 72 - SAS) (18) Holding FC 100 100 0 0 France
COFACE BELGIUM SERVICES Business and solvency data FC 100 100 100 100 Belgium
COFACE SERVICE Receivables management and data FC 100 100 100 100 France
COFACE SERVICIOS PORTUGAL Receivables management and data FC 100 100 100 100 Portugal
Issuance of preferred shares FC 100 0 100 0 United States
NATEXIS FUNDING USA LLC Refi nancing activity FC 100 100 100 100 United States
NATIXIS ALTAÏR IT SHARED SERVICES Data services FC 100 100 100 100 France
S.C.I. ALTAÏR 1 (1) Real estate operations FC 100 100 100 100 France
Other fi nancial institution EM 20 20 20 20 France * Change in registered company name. ** French subsidiaries whose individual prudential oversight is performed based on Group consolidated ratios in accordance with the provisions of
(24) Total transfer of Financière 5-7’s assets to Natixis Private Equity on December 30, 2011. (25) Dilution of 5% following a capital increase.
(26) Acquisition in the third quarter of 2011. (27) Acquisition in the fourth quarter of 2011.
5 FINANCIAL DATA Statutory auditors’ report on the consolidated fi nancial statements 5.3 Statutory auditors’ report on the consolidated financial statements
These consolidated fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these consolidated fi nancial statements based on our audit.
In our opinion, the consolidated fi nancial statements give a true and fair view of the assets and liabilities and of the fi nancial position of the Group as at 31 Decemeber 2011 and of the results of its operations for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union.
The accounting estimates used in the preparation of the consolidated fi nancial statements as at December 31, 2011 were made in a context of uncertainty, related to the public fi nances crises of some of the Eurozone countries and, Greece in particular, which was accompanied by an economic and liquidity crisis and a lack of visibility concerning economic prospects. Such is the context in which we made our own assessments that we bring to your attention in accordance with the requirements of article L.823-9 of the French Commercial Code (“Code de commerce”).
As described in Note 5.7 to the consolidated fi nancial statements, a guarantee mechanism with by BPCE has been in place since July 1, 2009 covering certain assets ring-fenced in the Workout Portfolio Management structure (GAPC). We reviewed the monitoring of this mechanism and the corresponding accounting treatment.
5FINANCIAL DATA Statutory auditors’ report on the consolidated fi nancial statements
The Group recognizes impairment losses against available-forsale fi nancial assets when there is objective evidence that such assets have suffered a decline in value (Notes 5.1, 6.3, 7.4 and 7.7 to the consolidated fi nancial statements). We examined the control procedures relating to the identifi cation of evidence of impairment and measurement of the largest impairment losses, as well as the estimates made in recognizing impairment losses to cover the decline in value of these assets where applicable.
The Group revises its measurement of intangible assets and goodwill carried in its consolidated balance sheet (Notes 2.5, 5.8 and 6.11 to the consolidated fi nancial statements). We examined how this work was carried out, as well as the main assumptions and parameters used.
The Group recognized deferred tax assets in respect of tax loss carryforwards (Notes 5.21 and 6.7 to the consolidated fi nancial statements). We examined the main estimates and assumptions on which the recognition of deferred tax assets was based.
The Group recognizes provisions to cover risks and litigations related to its activity (Notes 5.14, 6.15.2, 7.6 and 7.7 to the consolidated fi nancial statements). We examined the methodology used to measure these provisions, as well as the main assumptions applied.
As required by law, we have also verifi ed in accordance with professional standards applicable in France the information presented in the Group’s management report.
We have no matters to report as to its fair presentation and its consistency with the consolidated fi nancial statements.
5 FINANCIAL DATA Parent company fi nancial statements and notes 5.4 Parent company financial statements and notes
See note no. Off-balance sheet items – Commitments received 2011 2010 2009
Commitments received from banks 6,785 11,049 12,880 23 o/w institutional operations: 8
Revaluation adjustments 20 Regulated provisions and investment subsidies 21 24 25
Write-down, amortization and impairment of property, plant and equipment and intangible assets (114) (78) (199)
Funding/reversal of funding for general banking risks and regulated provisions 1 2 1
The fi nancial statements for the fi scal year are presented in identical format to those for the previous fi scal year. Generally accepted accounting principles have been applied in compliance with the principle of prudence based on the following principles: • going concern; • consistency of accounting methods; • principle of periodicity.
Fees earned on the granting or acquisition of loans, as well as marginal transaction costs, are recognized using the effective interest rate actuarial method over the effective life of the loan. Recognition is shown as net interest income in Net revenues. Fees and transaction costs to be recognized are included in the relevant loan book.
Unpaid amounts of loans already committed are included in off-balance sheet items under “Financing commitments given”.
Loans declared in default, restructured loans on which the borrower has once again defaulted and loans classifi ed as nonperforming 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 or provisions are recognized on the income statement under “Provision for credit losses”. Impairment is assessed quarterly on a case-by-case basis taking into account an analysis of the risk and available collateral.
Impairment losses are calculated as the difference between the net carrying amount of the loan and the amounts thought to be recoverable, discounted at the original effective interest rate for fi xed-rate loans or at the last effective interest rate determined according to the contractual terms for variable-rate loans.
In accordance with banking regulations: • accrued interest due on loans to borrowers subject to legal proceedings is deducted from the interest account in which it was initially recorded. If the interest is subsequently recovered, it is credited to this line upon collection; • interest on non-performing loans three or, where applicable, six or nine months overdue is also written down in full by deduction from the interest account in which it was initially recorded; • all other loans made to these customers are automatically also classified as non-performing, even when the risk appraisal does not require an impairment charge against the outstanding principal.
Each group of assets is assessed for objective evidence of impairment based on observable data indicating a likely decrease in the estimated recoverable cash fl ows for that group of assets. A collective write-down in the balance sheet liabilities is taken against any group of assets showing objective evidence of impairment. Assets belonging to that group, which
Provisions for sector risk are based on combinations of indexes specifi c to each sector (sector growth, cash held by businesses in the sector, cost of commodities, etc.). The method for calculating the impairment loss is the “expected loss” method calculated at maturity.
These securities are valued individually at the lower of their value in use at the reporting date or their acquisition cost. Unrealized loss is subject to a provision for impairment; • Investments in related companies: shares and other securities in related corporate entities over which Natixis exercises exclusive control, i.e. corporate entities likely to be fully consolidated in Natixis group. They are recognized at their acquisition date at the purchase price, excluding acquisition costs. These securities are valued individually at the lower of their value in use at the reporting date or their acquisition cost. Unrealized loss is subject to an allowance for impairment.
The DCF method for measuring future cash flows is based on the establishment of business plans prepared by the Management of the subsidiaries in question and approved by Natixis Senior Management. The discount rate on future cash flows is the result of: – an average rate of return on an investment deemed to be risk-free,
– an average beta as refl ected in a sample of equivalent companies; • Treasury shares: Natixis holds treasury shares to regulate the share price under a liquidity agreement. These shares are recognized as securities held for trading and follow the same rules as other securities in this category.
– as a provision for credit losses on fi xed-rate securities in the portfolio of securities held for sale or for investment when adjustments in value relate to risk exposure to a counterparty,
The regulation allows banks to sell all or part of the securities reclassifi ed as “held for investment” if the two following conditions are met: • the transfer was motivated by exceptional circumstances; • the market for these securities has become active again.
After acquisition, fi xed assets are carried at cost less any cumulative write-down, amortization and impairment losses.
In line with applicable accounting principles, a specifi c amortization schedule is defi ned for each signifi cant component of an item of property, plant and equipment which has a different useful life or is expected to consume future economic benefi ts differently from the item as a whole. For buildings comprising business and investment property, the following components and depreciation periods are applied: • land: non-depreciable; • non-destructible building (of historical importance): nondepreciable; • walls, roofs and waterproofing: 20-40 years; • foundations and framework: 30-60 years; • external rendering: 10-20 years; • equipment and installations: 10-20 years; • internal fixtures and fittings: 8-15 years.
Where perpetual subordinated notes are treated as equivalent to amortizing securities, each periodic payment is broken down into the repayment of principal, which is deducted from the nominal amount, and interest, which is charged to the income statement under “Interest and similar expenses”.
“Outright” foreign currency futures or transactions hedging other foreign currency futures are measured based on the forward foreign exchange rate remaining to run on the currency in question. Differences in interest rate or contango/backwardation associated with hedged foreign currency futures are recognized in stages as interest expense or income over the effective term of the transaction.
Natixis distinguishes between two types of post-employment benefi ts: • defined contribution plans, under which an entity has no obligation to pay a specified benefit amount; • defined benefit plans, under which Natixis has a legal or constructive obligation to pay a specified benefit amount.
The amount recognized as a provision in the balance sheet represents the present value of the obligation under defi ned benefi t plans: • minus any past service cost not yet recognized in income; • plus or minus any unrecognized actuarial gains or losses arising from: – experience adjustments linked to demographic variables, – changes in actuarial assumptions, – differences between the actual return and expected return on plan assets; • minus the market value of plan assets.
On November 12, 2009, an arrangement was introduced by BPCE to protect assets of a portion of the GAPC portfolios with retroactive effect at July 1, 2009. With this guarantee mechanism, Natixis was able to free up a signifi cant portion of its equity allocated to ring-fenced assets and to protect itself against the risk of loss from these portfolios subsequent to June 30, 2009. This protective arrangement is based on two mechanisms: • a sub-participation in terms of risk which acts as a financial guarantee on 85% of the nominal value of assets recognized as “securities held for investment”, “securities held for trading”, “securities held for sale” and “receivables”. Under this guarantee, Natixis is protected from the very first euro in default up to 85% of the default amount; • two total return swaps (TRS), one in euros and another in dollars, which transfer to BPCE 85% of the profit or loss recognized as from July 1, 2009. The instruments hedged by these TRS are mostly represented by “securities held for trading” and to a lesser extent by “securities held for sale”. At the same time, Natixis has bought an option from BPCE which, if exercised, will allow it to recover in 10 years’ time any net positive performance by the portfolio in exchange for payment of a premium.
Due to the 5% increase in the corporate income tax, the tax expense recognized in respect of fi scal year 2011 comprises taxes payable in France at the rate of 36.10%, and at the local corporate tax rate applicable to foreign branches.
NOTE 2 CHANGES IN ACCOUNTING METHODS AND COMPARABILITY OF FINANCIAL STATEMENTS
Advances to banks 115,757 96,321 97,911 o/w write-downs of non-performing (1) (1) (2)
Transfers of securities between categories: There were no transfers of securities between categories in 2009, 2010 or 2011.
Breakdown of listed and unlisted securities: (in millions of euros) 2011 2010
NOTE 7 INVESTMENTS IN SUBSIDIARIES AND AFFILIATES, OTHER LONG-TERM SECURITIES AND TREASURY SHARES
D) Investments with a book value less than or equal to €150,000 1,763,362.15
CAISSE D’EPARGNE DE BRETAGNE - PAYS DE LA LOIRE 9,640,000 450,773,956.00
D) Investments with a book value less than or equal to €150,000 1,170,023.67
The table below was drawn up in accordance with the provisions of Article L.247-1 of the French Commercial Code: Number of shares at
A - BREAKDOWN OF INVESTMENTS WITH A GROSS VALUE OF OVER 1% OF THE REPORTING COMPANY’S CAPITAL
Aurora Place Level 3088 Philip Street 2000 Sydney AUD63,000 AUD (17,116) 100.00%
(a) The net value of these lines is higher than their gross value due to a positive translation adjustments .
Non-operating fi xed assets 3 (2) 1 3 (2) 1 3 (1) 2
(in millions of euros) End 2010 Charges Reversal Others End 2011
Due to banks 140,790 107,499 100,574 o/w accrued interest 1 3 o/w other amounts due 19 0 86
(in millions of euros) 2011 2010 2009 o/w securities held for trading 0 0 0 o/w liabilities on securities held for trading 40,735 35,827 40,087
Off-balance sheet commitments Country risk Specifi c credit risk Provisions for litigation Sector risk Tax provisions
Total transfer of assets and liabilities - Garbo Invest 2 2
The share capital is composed of 3,082,345,888 shares, each with a par value of €1.60. All shares confer the same rights on their holders, except for treasury shares, which have no voting rights.
Net gains (losses) on securities held for trading (1,324) 3,429 1,891
The tax consolidation agreement at Natixis group is based onthe principle of neutrality, whereby each subsidiary determines its tax and contributes to the group tax as if it were not consolidated. On an exceptional basis, Natixis performed tax reallocations in order to eliminate the impacts of the Fillon Act on certain subsidiaries, thus limiting the deduction of tax loss carryforwards to 60% of taxable profi t.
<= 1 month 1-3 months 3-6 months from 6 months to 1 year 1-5 years > 5 years perpetual Total
(in millions of euros) < 1 year 1-5 years > 5 years
Independent audit, certifi cation and examination of the separate and consolidated accounts 5.5 5.0 5.7
Monitoring of Natixis’ subsidiaries and branches in non-cooperative countries forms an integral part of Natixis’ risk monitoring process overseen by the Risk function. This process involves: • local Risks officers/functions that have a functional link to the central Risk Control Department; • specific reporting procedures that respect local constraints but also comply with overall risk requirements.
Company financial performance over the last five years (Art. 133, 135 and 148 of the Commercial Companies Decree ) (in euros)
In compliance with the assignment entrusted to us by your General meeting, we hereby report to you, for the year ended 31 December 2011, on: • the audit of the accompanying financial statements of Natixis S.A.; • the justification of our assessments; • the specific verifications and information required by law.
These fi nancial statements have been approved by the Board of Directors. Our role is to express an opinion on these fi nancial statements based on our audit.
5 FINANCIAL DATA Statutory auditors’ report on the company fi nancial statements
The Company recognizes provisions to cover employee benefi ts (Notes 1.7, 18 and 31 to the company fi nancial statements). We examined the methodology used to measure these benefi t obligations, as well as the main assumptions and parameters applied.
We have also performed, in accordance with professional standards applicable in France, the specifi c verifi cations required by French law.
Concerning the information given in accordance with the requirements of article L.225-102-1 of the French Commercial Code (“Code de commerce”) relating to remunerations and benefi ts received by the directors and any other commitments made in their favour, we have verifi ed its consistency with the fi nancial statements or with the underlying information used to prepare these fi nancial statements and, where applicable, with the information obtained by your Company from companies controlling your Company or controlled by it. Based on this work, we attest the accuracy and fair presentation of this information.
This is a free translation into English of the statutory auditor’ s report on the fi nancial statements issued in French and it is provided solely for the convenience of English-speaking users. The statutory auditor’ s report includes information specifi cally required by French law in such reports, whether modifi ed or not. This information is presented below the audit opinion on the fi nancial statements and includes an explanatory paragraph discussing the auditor’s assessments of certain signifi cant accounting and auditing matters. These assessments were considered for the purpose of issuing an audit opinion on the fi nancial statements taken as a whole and not to provide separate assurance on individual account balances, transactions, or disclosures. This report also includes information relating to the specifi c verifi cation of information given in the management report and in the documents addressed to shareholders. This report should be read in conjunction with, and construed in accordance with, French law and professional auditing standards applicable in France.
1.1 Agreements and commitments authorised during the past fi nancial year
In accordance with article L.225-40 of the French Commercial Code, we have been informed of the agreements and commitments previously approved by your Board of Directors.
5 FINANCIAL DATA Statutory auditors’ special report on related party agreements and commitments 1.1.2 AUTHORIZATION OF AGREEMENTS FOR NATIXIS TO ACQUIRE ALL OF NATIXIS PRIVATE EQUITY’S SHARES IN SIX ASSET MANAGEMENT COMPANIES
Corporate offi cer concerned: • Mr. Criton, Natixis Director, Natixis Private Equity Director.
Corporate offi cers concerned: • Mr. Pérol, Chairman of the BPCE Executive Board, Chairman of the Natixis Board of Directors; • Mr. Gentili, Member of the BPCE Supervisory Board, Natixis Director; • Mr. Patault, Member of the BPCE Supervisory Board, Natixis Director; • Mr. Jeannin, Member of the BPCE Supervisory Board, Natixis Director; • Mr. Klein, Member of BPCE Executive Board, Natixis Director; • Mr. Criton, Member of the BPCE Supervisory Board, Natixis Director; • Mr. Queuille, Member of BPCE Executive Board, Natixis Director; • Mr. Sueur, Vice-Chairman of the Steering and Supervisory Committee of Caisse d’Epargne Ile-de-France, Natixis Director; • Mr. Mateu, Chairman of the Executive Board of Caisse d’Epargne Rhône Alpes, Natixis Director; • BPCE, represented by Mr. Duhamel, Chief Financial Officer and Member of the BPCE Executive Board, BPCE’s permanent representative on the Natixis Board of Directors.
Simultaneously, plans for the buyback or early redemption by Natixis of six lines of deeply subordinated notes held by BPCE
at their nominal value, i.e., $577,250,000 and €1,926,806,000, plus interest accrued at the date of said buyback or redemption.
On December 15, 2011, the Board of Directors approved the signing of a P3CI subscription agreement, which will take effect no later than March 30, 2012.
We have been informed of the following agreements and commitments authorised since the year end, which were subject to the prior approval of your Board of Directors.
Total costs relating and chargeable to Natixis are billed annually at the actual cost of the duties completed by BPCE for Natixis.
2.1 Agreements and commitments approved in prior years and continued during the year
In accordance with Article R.225-30 of the French Commercial Code, we were informed that the execution of the following agreements and commitments, already approved by the Annual General Meeting in prior years, was pursued in 2011.
Expenses recognized by Natixis in respect of this agreement amounted to €111,825,885.76 for the fi scal year ended December 31, 2011.
On August 25, 2011, the Board of Directors approved a preliminary agreement between Natixis and BPCE for the purpose of protecting Natixis against future losses and earnings volatility caused by assets ring-fenced in its Workout Portfolio Management structure (GAPC).
This preliminary agreement resulted in the signing of several agreements between Natixis and BPCE related to the guarantee of certain GAPC assets.
On August 5, 2010, the Board of Directors approved amendment No. 1 to the fi nancial guarantee of November 12, 2009 (subparticipation in risk) between Natixis and BPCE.
The premium pertaining to Natixis was spread out and reported on the income statement in the amount of €149,450,763.80 for the fi scal year ended December 31, 2011. The spreading out of the premium pertaining to the “Miroirs” guarantees with the subsidiaries had a neutral impact on Natixis’ income statement.
2.1.4 CREDIT AND FINANCIAL GUARANTEE MASTER AGREEMENTS BETWEEN NATIXIS AND NATIXIS LEASE
Income recognized by Natixis in respect of these agreements came to €15,820,891.47 for the fi scal year ended December 31, 2011.
Natixis’ Annual General Meeting of April 30, 2009 expressly approved and ratifi ed the credit and fi nancial guarantee master agreements set up in December 2008 between (i) Natixis and BFBP, and (ii) Natixis and CNCE, within the scope of agreements signed by BFBP and CNCE with SFEF.
The expense recognized by Natixis in respect of these agreements came to €61,032,650.78 for the fi scal year ended December 31, 2011.
2.1.6 AGREEMENT PROVIDING FOR THE DISTRIBUTION OF NATIXIS PRODUCTS AND SERVICES TO THE REGIONAL BANKS ACQUIRED BY GROUPE BANQUE POPULAIRE FROM HSBC
Similarly, IXIS CIB entered into a number of letters of joint and several guarantees and commitments with its US subsidiaries, e.g. Natixis Municipal Products Inc. (formerly CDC Municipal Products Inc.), Natixis Derivatives Inc. (formerly CDC Derivatives Inc.), Natixis Financial Products Inc. (formerly CDC Financial Products Inc.), Natixis Funding Corp. (formerly CDC IXIS Funding Corp.) and Natixis Commercial Paper Corp. (formerly CDC IXIS Commercial Paper Corp.).
The conditions governing the payment and calculation of the fees payable by Ixis CIB in respect of the guarantees were defi ned in an agreement with CDC Finance – CDC Ixis and CNCE.
5FINANCIAL DATA Statutory auditors’ special report on related party agreements and commitments 2.1.8 TRIPARTITE AGREEMENTS BETWEEN NATIXIS, SOCIÉTÉ DE FINANCEMENT DE L’ECONOMIE FRANÇAISE (SFEF) AND, RESPECTIVELY, BFBP AND CNCE
2.1.9 AGREEMENTS BETWEEN NATIXIS, NATIXIS TRANSPORT FINANCE (NTF), SFEF AND BPCE
On February 25, 2009, the Supervisory Board approved revisions to this program.
2.2.4 LETTERS OF JOINT AND SEVERAL GUARANTEES AND COMMITMENTS BETWEEN IXIS AND ITS SUBSIDIARIES IN FORCE
5FINANCIAL DATA Statutory auditors’ special report on related party agreements and commitments 2.2.5 DE FACTO ASSOCIATION AGREEMENT BETWEEN CDC, CNCE (REPLACING CDC IXIS IN ITS RIGHTS AND OBLIGATIONS) AND IXIS CIB (FORMERLY CDC IXIS CAPITAL MARKETS)
On November 17, 2005, the Supervisory Board approved a service and partnership agreement between IXIS CIB and CNCE pertaining to the development and hosting of a website for spot and forward currency orders by IXIS CIB for CNCE.
Through these agreements, IXIS CIB granted CFF the right of non-transferable, non-exclusive, and personal use of the AMeRisC software. Furthermore, IXIS CIB provides on a daily basis the market and econometric data that it holds, for the purpose of running the AMeRisC software. In connection with the deployment of the software within CFF, Ixis CIB also provides consulting services at cost price.
We have been informed that the performance of the following agreements and commitments, already approved by the Annual General Meeting of May 6, 2011, as it was provided in the statutory auditors’ special report of April 4, 2011.
The name of the Company is “Natixis”. The Company’s registered offi ce is in Paris (13th), at 30, avenue Pierre-Mendès-France.
Any individual or legal entity owning directly or indirectly, alone or jointly, a fraction of 1.0% of the voting rights (on the basis of all the voting rights attached to the shares, including those deprived of voting rights), or any multiple of this percentage, shall notify the Company by registered letter with acknowledgment of receipt of the number of votes they own. This notice must be made within a period of 15 days following each acquisition or sale of this fraction.
Except for the rights which may be granted to preferred shares, if any were created, each share entitles its owner to a share in the ownership of the Company’s assets which is proportional to the number of shares issued.
The Company is managed by a Board of Directors, composed of at least three (3) directors and no more than eighteen (18) directors subject to the departures stipulated by law in the event of a merger.
He organizes and conducts its work, on which he reports to the General Shareholders’ Meeting.
• provided all directors, along with the notice of said meeting, with all the necessary information for their analysis.
On the proposal of its Chairman, the Board of Directors may decide to create Committees within the Board responsible for reviewing issues which the Board itself or its Chairman submits to them for their examination and opinion. It determines the structure and powers of these Committees, which conduct their activities under its responsibility.
12.2 In addition to the operations referred to by law and regulations in force, the Internal Rules of the Board of Directors will determine the decisions which will be subject to the prior approval of the Board of Directors.
The compensation of the Deputy Chief Executive Offi cer(s) is determined by the Board of Directors.
They may receive a compensation, the amount of which is determined by the Board of Directors.
The primary and substitute Statutory Auditors are appointed by the Ordinary General Shareholders’ Meeting under the conditions stipulated by law. They are vested with the duties and powers conferred upon them by the laws in force.
General Shareholders’ Meetings are convened by the Board of Directors or, failing this, under the conditions of Article L.225-103 of the French Commercial Code. Notices are made under the conditions determined by the regulations in force.
With respect to holders of bearer shares, it is their authorized intermediaries which hold accounts of bearer shares which prove their clients’ status as a shareholder directly to the centralizing body of the meeting. They do so by producing a certifi cate that they attach to the voting form or admission card request in the name of the shareholder or the name of the registered intermediary acting on behalf of the shareholder. A certifi cate is also delivered to shareholders who wish to attend the meeting in person and who have not received an admission card by the 3rd business day preceding the General Shareholders’ Meeting at twelve midnight Paris time.
Shareholders may vote by post form or by proxy in accordance with the legal and regulatory provisions in force. In accordance with the decision of the Board of Directors, shareholders may participate in General Meetings by means of video-conferencing
The Extraordinary General Shareholders’ Meeting may be convened at any time either by the Board of Directors or pursuant to any legal provision. It may amend any of the provisions of these bylaws, in particular it can increase or reduce the share capital, extend the Company’s duration or decide its early dissolution, however it cannot change the Company’s nationality or increase the shareholders’ commitments.
From the earnings of each fi scal year, minus any losses carried forward as the case may be, at least 5% is levied to create the legal reserve. This levy ceases to be mandatory when said reserve reaches a sum equal to one-tenth of the share capital. It must be resumed when this reserve falls below this tenth.
The Combined General Shareholders’ Meeting of May 26, 2011 granted the Board of Directors fi nancial authorization for a 26-month period to carry out capital increases with retention or cancellation of preferential subscription rights.
The Combined General Shareholders’ Meeting resolved that these capital increases, which may not exceed an overall par value ceiling of three (3) billion euros, could be carried out either through issuing shares or through issuing securities that give access to share capital, particularly in the form of fi nancial instruments representing debt securities.
In addition, the Combined General Shareholders’ Meeting of May 27, 2010 authorized the Board of Directors to allocate free new shares to employees and corporate offi cers of Natixis and related companies, for a period of 38 months and on one or more occasions, for a total nominal amount of €233 million, to be deducted from the overall €3 billion ceiling mentioned above.
None of the capital increase authorizations granted to the Board of Directors by the Combined General Shareholders’ Meeting of May 26, 2011 had been used as of December 31, 2011.
In its session on February 22, 2011, the Board of Directors used the authorization that was granted to it by the Combined General Shareholders’ Meeting on May 27, 2010 pertaining to the allocation of free shares for fi nancial market professionals, having their tax residence in France, as well as certain employees falling within the scope of the deferred compensation mechanism implemented by Natixis.
In order to carry out, in accordance with Article L.225-136 of the French
Commercial Code, one or more issues of shares without preferential subscription rights by means of an offering, by private placement, referred to in Article L.411-2 (II) of the
In order to carry out a reduction in the share capital by cancelling treasury shares the shares making up the capital of the
In order to carry out a capital increase through the issue - without preferential subscription rights maintained of shares and/or securities giving access to the capital of the
In order to increase the share capital by issuing shares or securities giving access to capital in the Company as remuneration for contributions in kind involving securities of unlisted companies the share capital (b) 26 months none none
In order to increase the share capital via the incorporation of premiums, reserves, retained earnings or other items €3bn (b) 26 months none none
Company’s capital, reserved for members of employee savings plans with waiving of preferential subscription rights in favour of said members pursuant to Article L.225129 -6 of the French Commercial Code €48m (b) 26 months none none
At December 31, 2011, 23,022,037 stock options were exercisable or yet to be exercised.
In 2007, the Natixis Executive Board resolved to grant stock options to certain employees and corporate offi cers of Natixis, Groupe Banque Populaire and Groupe Caisse d’Epargne.
On May 24, 2007, the Combined General Shareholders’ Meeting once again authorized the Natixis Executive Board to grant stock options to some, or all, employees or corporate offi cers of the Company or of related companies, within the meaning of Article L.225-180 of the French Commercial Code. This authorization also involved a maximum of 10,000,000 shares (i.e. 15,400,000 shares following the adjustment resulting from the September 2008 capital increase).
No stock options were granted in fi scal years 2009, 2010 or 2011.
The unexercised options from the November 17, 2004 plan expired on November 16, 2011.
SUMMARY OF STOCK OPTION PLANS GRANTED TO NATIXIS CORPORATE OFFICERS AT DECEMBER 31, 2011
Natixis scope of consolidation Total number of options granted/shares subscribed for Weighted average price Plan
Number of shares at the start of the fi scal year
S hares in respect of the exercise of stock options 2,153,693 3,445,908 14,166,927.51
Appropriation of 2007 earnings and deduction for payment of dividend (716,815,118.77)
S hares in respect of the exercise of stock options 22,500 36,000 142,688.50
6LEGAL INFORMATION Distribution of share capital and voting rights 6.3 Distribution of share capital and voting rights 6.3.1 DISTRIBUTION OF SHARE CAPITAL AT DECEMBER 31, 2011
At December 31, 2011, Natixis’ main shareholders were as follows: % capital % voting rights
Employee shareholding (ESOPs and Bonus share grant plan) 1.0 0% 1.01%
Under the share buyback program authorized by the General Shareholders’ Meeting of May 26, 2011, Natixis owned 5,449,206 treasury shares at December 31, 2011.
6 LEGAL INFORMATION Distribution of share capital and voting rights 6.3.4 EMPLOYEE SHAREHOLDING
The portion of Natixis’ capital held by Groupe BPCE employees (ESOPs and Bonus share grant plan) stood at 1.0% at December 31, 2011.
Employee shareholding (ESOPs and Bonus share grant plan) 1.00 % 0.96% 0.55%
Natixis’ main shareholder, BPCE, held 72.26% of the capital and 72.38% of the voting rights of Natixis at December 31, 2011. In light of this capital structure, Natixis considers that a hostile public offer would be unlikely to succeed.
APPROVAL OF THE FINANCIAL STATEMENTS FOR FISCAL YEAR 2011 (RESOLUTIONS ONE AND TWO)
Detailed comments on the parent company and consolidated fi nancial statements are provided in this registration document.
Resolution Three covers the appropriation of the corporate earnings of Natixis.
The third resolution proposes to: • allocate €43,671,828.74 to the legal reserve ; • allocate a dividend of €308,234,588.80 ; • allocate the remaining distributable profits to retained earnings, i.e. €522,510,134.59.
The dividend will be detached from the share on June 1, 2012 and paid starting on June 6, 2012.
For the purposes of calculating income tax, the dividend is eligible for the 40% allowance and the fi xed deduction applicable to individuals residing in France.
Since the term of offi ce of the permanent Statutory Auditors is due to expire at the close of this meeting, resolution Eight proposes that the fi rm Mazars S.A., represented by Michel BarbetMassin and Emmanuel Dooseman, be reappointed as permanent Statutory Auditors for a term of six (6) years, expiring at the end of the Shareholders’ Meeting called to approve, in 2018, the fi nancial statements for the fi scal year ending December 31, 2017.
6LEGAL INFORMATION Purpose and draft resolutions submitted to the General Shareholders’ Meeting of May 29, 2012 the Shareholders’ Meeting called to approve, in 2018, the fi nancial statements for the fi scal year ending December 31, 2017.
The Board of Directors would thus be authorized to set up a treasury share buyback program until, up to the limit of 1.0% of share capital, as per the law, 10% of the capital is owned. The objectives of these share purchases would be: • to implement a liquidity contract; • to award or transfer shares to the employees in respect of their share of the Company profits, employee savings plans or share buyback programs and to award free shares or any other form of share allocation to members of the staff; • payment or exchange in connection with merger and acquisition transactions.
Finally, resolution Eleven relates to the granting of the powers required to complete the legal formalities and publications relating to ordinary business.
The Board of Directors has recommended voting in favor of adopting all of the resolutions submitted to this Ordinary General Shareholders’ Meeting.
● Your Company may at no time hold a number of shares representing more than 10% of its share capital adjusted by transactions affecting it subsequent to this Shareholders’ Meeting ● The number of shares acquired with a view to holding them or subsequently tendering them in connection with a merger, spin-off or contribution may not exceed 1% of the share capital ● For liquidity contracts, the 1% ceiling is calculated net of the number of shares resold during the authorization period ● Overall amount allocated to the buyback program:€154,117,294
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for ordinary business, having reviewed the report of the Chairman of the Board of Directors on the structure of the Board, preparation and organization of the Board’s work and the internal control and risk-management procedures established by the Company, the report of the Board of Directors on the parent company fi nancial statements and the management report relating thereto, and the reports of the Statutory Auditors on the parent company fi nancial statements for fi scal year 2011, hereby approves the 2011 parent company fi nancial statements as presented, including the balance sheet, income statement and notes to the fi nancial statements, as well as the transactions refl ected in these fi nancial statements or summarized in these reports.
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for ordinary business, hereby notes that the fi nancial statements fi nalized as of December 31, 2011 and approved by the shareholders at this meeting show earnings for the fi scal year of €873,436,574.80 , and that, taking into account the retained earnings of €979,977.33, distributable earnings amount to €874,416,552.13, the appropriation of which is submitted for the approval of the shareholders at today’s meeting.
(a) The total distribution amount mentioned in the table above is calculated on the basis of the number of shares comprising the capital as of December 31, 2011 and may vary depending on changes in the number of treasury shares held and options exercised from January 1, 2012 to the date the dividend is detached.
The shareholders hereby resolve to distribute an aggregate dividend of €308,234,588.80 by appropriating from distributable earnings.
The dividend will be detached from the share on June 1, 2012 and paid starting on June 6, 2012. In the event the Company should hold some of its own shares upon payment of these dividends, the amounts corresponding to the unpaid dividends for these shares will be appropriated to retained earnings.
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority for ordinary business, hereby appoints Stéphanie Paix as director, replacing Jean-Bernard Mateu, who resigned, with effect from the end of this General Shareholders’ Meeting, for a term of six (6) years ending at the close of the General Shareholders’ Meeting called to approve the fi nancial statements for the fi scal year ending December 31, 2017.
Catherine Halberstadt has already indicated that she accepts this appointment and that she does not hold any offi ce, and is not subject to any measure likely to prevent him from performing this role.
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for ordinary business, appoints Alain Condaminas as director, replacing Bernard Jeannin, who resigned, with effect from the end of this General Shareholders’ Meeting, for a term of six (6) years ending at the close of the General Shareholders’ Meeting called to approve the fi nancial statements for the fi scal year ending December 31, 2017.
Alain Condaminas has already indicated that he accepts this appointment and that he does not hold any offi ce, and is not subject to any measure likely to prevent him from performing this role.
This program is also intended to enable the Company to implement any market practices that might be permitted by the AMF and, more generally, to conduct any other transaction that complies with the regulations in effect. In such a scenario, the Company will notify its shareholders by means of a press release; 2) resolves that Company share purchases may relate to a number of shares such that: – the number of shares that the Company buys during the buyback program may not, at any time, exceed 1% of the shares comprising the Company’s share capital, this percentage being applied to a capital amount adjusted in accordance with transactions impacting it subsequent to this General Shareholders’ Meeting. It is specified that (i) the number of shares acquired with a view to being held and subsequently tendered in connection with a merger, spin-off or asset transfer may not exceed 1% of its share capital; and (ii) when the shares are bought back to promote liquidity under the conditions set out by the General Regulations of the AMF, the number of shares taken into account to calculate the 1% limit provided for by the first paragraph corresponds to the number of shares purchased, net of the number of shares resold during the authorization period; – the number of shares that the Company holds at any time whatsoever does not exceed 10% of the shares comprising the Company’s share capital on the date in question, pursuant to Article L. 225-210 of the French Commercial Code; 3) resolves that the acquisition, sale or transfer of the shares may take place at any time, except in public offer periods, within the limits authorized by current legal and regulatory provisions, by any means, on regulated markets, multilateral trading platforms, with systematic internalizers or over the counter, including by means of the acquisition or sale of blocks of shares (without limiting the portion of the buyback program that may be realized by this means), by a tender or exchange offer, by using options or other forward financial instruments traded on regulated markets, multilateral trading platforms, with systematic internalizers or over the counter, or by the tendering of shares subsequent to the issue of securities giving access to the Company’s capital by means of conversion, exchange or redemption, by exercising a warrant or by any other means, either directly or indirectly via an investment services provider.
7ADDITIONAL INFORMATION Documents available to the public 7.2 Documents available to the public
The annual information report below lists information that Natixis has published or disclosed over the past 12 months to fulfi l legal or regulatory disclosure obligations applying to fi nancial instruments, issuers of fi nancial instruments and fi nancial instrument markets as required by Article L. 451-1-1 of the Code monétaire et fi nancier and Article 222-7 of the Autorité des Marchés Financiers (AMF - French Financial Markets Authority) General Regulation.
Description of the program of share buyback subjected to the approval of the AGM
Published on the Autorité des Marchés Financiers website www.amf-france.org and mentioned by the Autorité des Marchés Financiers
Excerpt from the Minutes of the Board of Directors’ meeting of December 12, 2010: Resignation of a director 4735 3/08/2011
Excerpt from the Minutes of the Combined Shareholders’ Meeting of May 26, 2011: Amendment of the by-laws
Updated by-laws at May 26, 2011 54186 6/23/2011 Filling of the annual statements 38352 6/23/2011 Filling of the annual statements (consolidated) 38354 8/26/2011
Excerpt from the Minutes of the Board of Directors’ meeting of August 4, 2011: Capital increase – Amendments to the by-laws
Prepared for conferences, investors days or corporate events, available on the Natixis website www.natixis.com/under Investor Relations/Specifi c Presentation
Affi liation of Natixis to BPCE and guaranty and solidarity system within Groupe
09/21/2011 KBW Conference 10/04/2011 BoA Merrill Lynch Conference 7.3.7 INFORMATION PUBLISHED IN THE FRENCH OFFICIAL LEGAL ANNOUNCEMENT PUBLICATION
1) The monthly statements concerning the total number of shares and voting rights are published on the Natixis website www. natixis. com under Investor Relations / Regulated Information in France / Statements on Share Capital and Voting Rights.
2) The weekly disclosures of the trading in the Company’s own shares are published on the Natixis website www.natixis.com under Investor Relations / Regulated Information in France / Share buyback weekly statements.
3) The description of the program of share buyback subjected to the approval of the AGM (combined annual and extraordinary general meeting) of May 26, 2012 are published on the Natixis website www.natixis.com under Investor Relations / Regulated Information in France / Share Buyback Programs.
7ADDITIONAL INFORMATION Cross-reference table of registration document 7.4 Cross-reference table of registration document
Operating results 10. Treasury and Capital resources 10.1. Information concerning the issuer’s capital resources 137 to 139; 206 to 207 10.2. Sources and amounts of the issuer’s cash fl ows 208 to 209 10.3. Information on the issuer’s borrowing conditions and funding structure 198 to 199 10.4. Information regarding any restrictions on the use of capital resources that have materially affected, or could materially affect, the issuer’s operations n/a 10.5. Information regarding the anticipated sources of funds needed to fulfi ll commitments referred to in items 5.2. and 8.1 198 to 199; 203 11. Research and development, patents and licenses 173 13. Profi t forecasts or estimates n/a
7ADDITIONAL INFORMATION Cross-reference table for the Annual Financial Report 7.5 Cross-reference table for the Annual Financial Report
Heading Registration document page number 1. Parent company fi nancial statements 336 to 384 2. Consolidated fi nancial statements 202 to 333 3. Management report (French Monetary and Financial Code)
Meeting to the Board of Directors with respect to capital increases 412-413
Article L. 225-100-3 of the French Commercial Code ● Factors likely to be material in the event of a public tender offer 409
Article L. 225-211 of the French Commercial Code ● Buyback by the Company of its own shares 406 4. Declaration by the person responsible for the registration document 420 5. Statutory Auditors’ report on the fi nancial statements 385-386 6. Statutory Auditors’ report on the consolidated fi nancial statements 334-335 7. Statutory Auditors’ special report on related-party agreements and commitments 387 to 393 8. Fees paid to the Statutory Auditors 312-313 9.
Pursuant to Article 28 of Commission regulation No. (EC) 809/2004 of April 29, 2004, the following information is incorporated by reference in this registration document: • the consolidated financial statements for the year ended December 31, 2009, presented on pages 186 to 327, the Statutory Auditors’ report thereon, pages 328 to 329, and the Group management report, on pages 168 to 185 of the registration document filed with the AMF on April 5, 2011 under number D.11-0236; • the consolidated financial statements for the year ended December 31, 2009, presented on pages 206 to 352, the Statutory Auditors’ report thereon, pages 353 to 354, and the Group management report, on pages 143 to 205 of the registration document filed with the AMF on April 30, 2010 under number D.10-0375.
Training ● The total number of training hours Art. 148–2 6 LA10 56
Policy implemented and measures taken to promote it ● Gender equality ● Employment and integration of disabled employees ● The fi ght against discrimination and the promotion of cultural diversity
● Training and information for employees regarding the protection of the environment ● Resources allocated to the prevention of environmental risks and pollution
Sustainable resource use ● The use and supply of water in line with local constraints ● The use of raw materials and, where relevant, measures taken to make more effi cient use of them ● Energy consumption and, where relevant, measures taken to improve energy effi ciency and the use of renewable energy sources Art. 148–3 1
Biodiversity protection ● Measures taken to preserve biodiversity, particularly through limiting damage to biological balances, natural environments, protected animal and vegetative species and, if applicable, their development Art. 148–3 2
The way society considers ● The impact of its operations on employment and regional development in France ● The impact of its operations on the local population Art. 148–2 EC7, EC8, SO1 62
Subcontractors and suppliers ● Purchasing policies that take into account social and environmental issues
For companies whose stock is eligible for trading in a regulated market (stock market) Labor information Work management
Sustainable resource use ● The use of land Art. 148–3 1 EN11 61
Contribution to adapting to and fi ghting climate change ● The consideration of the impact of climate change 61
Fair practices ● Measures taken to avoid all forms of corruption ● Measures taken to safeguard the health and safety of consumers ● Measures taken to safeguard human rights
Agence de l’environnement et de la maîtrise de l’énergie/Agency for the environment and control of energy consumption
Association française des entreprises privées - Mouvement des entreprises de France/French business association
AFlC Association française des investisseurs en capital/French association of venture capitalists
Comité des établissements de crédit et des entreprises d’investissement, which became Autorité
Commission nationale de l’informatique et des libertés/an independent administrative authority protecting privacy and personal data
CRD Capital Requirements Directive (Directive européenne sur les fonds propres réglementaires)
DGME Direction générale de la modernisation de l’État/French State Reform Modernization Bureau
Fonds d’Investissement et de Développement des Partenariats Public-Privé/Fund for investment and development of public-private partnerships
Prêt locatif intermédiaire/Loan for investment in property to be rented at prices above “social” housing prices but below market prices for 6 (or 12) years
RTT Réduction du temps de travail/Reduction of working time (see French law on 35 hours a week)
Société de fi nancement de l’économie française/SPV set up by the French State to refi nance French banks during the fi nancial crisis
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