CORPORATE GOVERNANCE 13 Board composition and preparation and organization of its work 14
Policies and rules for determining compensation and all benefi ts in kind paid to members of the executive bodies 27
LEGAL INFORMATION 415 Report from the Executive Board on the resolutions to be put to the vote at the General Shareholders’ Meeting 416
The present registration document includes all elements of the annual financial report mentioned in section I of Article L.451-1-2 of the French Monetary and Financial Code and Article 222-3 of the general regulations of the Financial Markets Authority. A table showing the relationships between the documents mentioned in Article 222-3 of the
Profi le Natixis was formed (at the end of 2006) through the combination of the corporate and investment banking, asset management and services businesses of Groupe Banque Populaire and Groupe Caisse d’Epargne. It is among the leading banking groups in Europe. Natixis has a diversifi ed base of activities with signifi cant expertise in its businesses, an extensive customer base and a broad international presence. It has approximately 22,000 employees in some 60 countries.
Natixis’ activities are organized into fi ve business divisions : Corporate and Investment Banking; ■
Retail banking also contributes directly to Natixis’ performance through its 20% (1) interest in the share capital of the Banques Populaires and the Caisses d’Epargne and, indirectly, through the sale of Natixis products and services in the branches of these two networks that together account for around 25% of the French retail banking market.
Natixis has strong positions in all of its main businesses. As the banking partner of nearly all the largest companies in France, it is also very active in servicing fi nancial institutions (banks, insurance companies, pension funds, etc.). It has gradually built up an increasingly signifi cant international customer base.
Its very broad range of products and services (structured fi nance and commodities, capital markets, asset management and fi nancial services) enable it to meet the needs of its own corporate and institutional clients as well as the personal banking, small business and small and medium-sized businesses customers of its two parent groups, Groupe Banque Populaire and
Banques Populaires (BFBP) and Caisse Nationale des Caisses d’Epargne (CNCE). This dual affi liation, governed by an agreement signed on April 2, 2007 between BFBP and CNCE, enables Natixis to benefi t from a liquidity and solvency guarantee from BFBP and CNCE
(1) Natixis holds cooperative investment certifi cates (CCIs) representing 20% of the share capital of each of the Banque Populaire banks and each of the Caisse d’Epargne banks (with the exception of Caisse d’Epargne et de Prévoyance de Martinique and Caisse d’Epargne et de Prévoyance de NouvelleCalédonie ), enabling it to consolidate under the equity method 20% of the net income of the Banque Populaire banks and the Caisse d’Epargne banks.
(1) Data taking into account: (i) Reclassifi cation of leasing activities and international services (Natixis Pramex International and Natixis Algérie) of the Corporate and Investment Banking division to the Services division (fi rst application 30.06.2008), (ii) Adjustment of analytical conventions in relation to the remuneration of allocated capital and the allocation of infrastructure costs (fi rst application 30.06/2008), (iii) Allocation of capital according to CRD/ Basel II standardized approach (fi rst application 31.03.2008).
(1) Data taking into account: (i) Reclassifi cation of leasing activities and international services (Natixis Pramex International and Natixis Algérie) of the Corporate and Investment Banking division to the Services division (fi rst application 30.06.2008), (ii) Adjustment of analytical conventions in relation to the remuneration of allocated capital and the allocation of infrastructure costs (fi rst application 30.06.2008), (iii) Allocation of capital according to CRD/ Basel II standardized approach (fi rst application 31.03.2008).
Natixis share capital STOCK MARKET PROFILE AS OF DECEMBER 31, 2008
Free fl oat (including DZ Bank AG and Intesa San Paolo Holding International)
Dividends distributed during the previous fi ve fi scal years: Number of shares comprising the share capital 2,908,137,693 1,222,042,694 1,219,864,330 48,995,480 48,255,962 * Adjusted for the 10-for-one stock split.
Natexis Banques Populaires offered its shareholders the opportunity of payment of dividends in shares for dividends paid in 2006 for the 2005 fi scal year.
Trading in Natixis shares TRENDS IN AVERAGE MONTHLY SHARE PRICE AND NUMBER OF SHARES TRADED SINCE JANUARY 2006
(2) An adjustment coeffi cient of 0.66 necessary for the adjustment of share prices prior to September 5, 2008 due to the capital increase.
Earnings announcements were also published in the press, in particular the fi nancial and business press, when the annual and interim results were announced. An electronic version of the earnings announcement was published online on the main market, economic and fi nancial websites, where visitors could link to the Natixis website and access presentations of fi nancial results and press releases.
Fiscal year 2008 was a particularly busy one for fi nancial news.
All of the documents produced were published online on the Company’s website, in French and, where appropriate, in
In addition to regular individual meetings organized throughout 2008 with institutional investors, in France and abroad, special meetings with investors and analysts were held during conferences organized by Morgan Stanley (April 2008)
Company. Club members receive all publications intended for shareholders such as the “Lettre aux actionnaires” (in French only) , at no charge and in the form that they choose (by mail or e-mail); the range of activities offered by the Club was extended ■
in 2008. Club members were invited to attend events organized in connection with the Company’s sustainable development and sponsorship policy (special visit to the
Dominique Ferrero, Chief Executive Offi cer; four issues of the ■ “Lettre aux actionnaires ” were published in 2008, addressing subjects of specifi c interest to individual shareholders (dividend, General Shareholders’ Meeting, news of the Company, discussions with senior executives). The newsletter is sent to Shareholder club members. All issues of this newsletter can be downloaded by all shareholders from the Natixis website; Natixis was present at the ■ Actionaria exhibition ( held in
Paris on November 21-22, 2008). Club members had free entry passes to this exhibition. Over 500 contacts were made with shareholders at the Company’s stand. From a qualitative viewpoint, and despite the particularly diffi cult stock market environment, impact studies continue to show that visitors to the exhibition have a very positive opinion of Natixis through its stand; shareholders have four ways in which they can contact ■
Shareholders’ Club, a postal address for shareholders (Natixis - Club des actionnaires - Quai de la Marne - 75016 Paris Cedex 19), a specially-created e-mail address (actionnaires@
natixis.fr) allowing shareholders to raise questions and send messages to the Company. The Shareholder Relations team responds to these messages live, the ■ Natixis website “ Shareholders’ corner” section, enables the general public to access press releases, Natixis news highlights as well as all communications sent to shareholders.
during these meetings were able to be taken into account in the communication support media created for the operation.
Meeting was held in order to authorize the Executive Board to proceed with the capital increase that took place during
September 2008. This meeting was held at the Palais Brongniart in Paris.
Website: www.emetline.com e-mail: emetline@natixis.fr 2009 fi nancial communications calendar 2008 Results Press Release
The Notice of General Shareholders’ Meeting pack presents the agenda of the Meeting and the resolutions that will be put to a vote. It is sent directly to holders of registered shares who purchased their shares at least one month before the Meeting date. Included in the pack is a form to apply for an admittance card, for shareholders planning to attend the Meeting in person, and proxy and postal voting for shareholders who are unable to attend.
Holders of bearer shares should request the bank or broker that manages their share account to send a certifi cate of attendance (“attestation de participation”) to Natixis, which must be received at least three days prior to the Meeting date, to allow an admittance card to be sent to the shareholder.
Shareholders will be required to present their admittance card at the door. If they do not receive this card in time, they can still vote at the Meeting if they show an offi cial identity document (accompanied by the certifi cate of attendance provided by the bank or broker that manages their share account).
Shareholders who do not attend the General Shareholders’ Meeting in person can take part in the vote by: giving proxy to the Chairman of the Meeting, by returning the signed proxy form. The Chairman then casts a “Yes” vote on all ■ resolutions presented or approved by the Executive Board and a “No” vote on all other resolutions; voting by post by returning the signed postal voting form after checking the appropriate boxes so as to vote “Yes”, “No” or “Abstain” ■ on each resolution presented to shareholders; giving proxy to their spouse or another Natixis shareholder to vote on their behalf at the Meeting. ■
Ordinary General meeting to be held on April 30, 2009 such as those relating to changes to the method of administration and management of Natixis by adopting the structure of a French Société Anonyme with a conseil d’administration – similar to a Public Liability
Chairman, Banque Populaire Provençale et Corse 245 Boulevard Michelet BP 25 13274 Marseille Cedex 09
Member, Compensation Committee First appointed: 12.11.2008 Term expires: 2012 AGM (3)
Chairman, Executive Board, Caisse d’Epargne Bretagne – Pays de Loire 8 Rue de Bréa BP 835 44000 Nantes
Permanent representative: Philippe Queuille First appointed: AGM, 17.11.2006 Term expires: 2012 AGM (3)
Member, Audit Committee First appointed: Supervisory Board Meeting, 06.03.2009 Term expires: 2012 AGM (3) (Member of the Compensation Committee from 16.01.2008 to 06.03.2009)
(1) A brief curriculum vitae of each of the corporate offi cers of Natixis as well as a list of the roles that they performed as director in 2008 and in the previous fi ve years are shown in the appendixes below.
(2) To be ratifi ed by the Combined General Shareholders’ Meeting of April 30, 2009.
Permanent representative: Alain Lemaire First appointed: AGM, 17.11.2006 Term expires: 2012 AGM (3)
CEO, Caisse Nationale des Caisses d’Epargne et de Prévoyance 50 Avenue Pierre Mendès France 75201 Paris Cedex 13
Chairman, Banque Populaire des Alpes 2 Avenue du Grésivaudan BP 43 – CORENC 38701 LA TRONCHE CEDEX
Member, Audit Committee First appointed: 17.11.2006 Term expires: 2012 AGM (3)
Chairman. Executive Board. Caisse d’Epargne Côte d’Azur 455 Promenade des Anglais BP 297 06205 Nice Cedex
Member, Supervisory Board First appointed: 30.05.2007 Term expires: 2012 AGM (3)
Joint Chairman, Audit Committee First appointed: 17.11.2006 Term expires: 2012 AGM (3)
Member, Compensation Committee First appointed: AGM, 17.11.2006 Term expires: 2012 AGM (3)
Vice-Chairman of the Steering and Supervisory Board of Caisse d’Epargne Île-de-France 57 Rue du Général-de-Gaulle 95880 Enghien-les-Bains
(3) At the General Shareholders’ Meeting called to approve the fi nancial statements for 2011.
Executive Chairman (until March 2, 2009) First appointed: Supervisory Board Meeting, 17.11.2006
Member, Executive Board (from February 14 to November 30, 2008) First appointed: Supervisory Board Meeting, 14.02.2008
Natixis’ Supervisory Board was appointed for a period of six years at the General Shareholders’ Meeting of November 17, 2006. It is composed of eighteen members, in addition to two non-voting directors.
can be divided into three groups: seven members from Groupe Banque Populaire; ■
Groupe Banque Populaire and Groupe Caisse d’Epargne, that each held 35.62% of Natixis’ shares as of December 31, 2008, have an equal number of seats on the Supervisory Board. This equal representation is in accordance with the agreement signed between the two shareholders.
Groupe Caisse d’Epargne; four independent members serve on Natixis’ Supervisory ■
General Shareholders’ Meetingheld to approve the fi nancial statements for fi scal year ending December 31, 2011. As a result, Didier Patault was appointed second Vice-Chairman of the Supervisory Board and member of the Compensation
Committee elected to replace Bernard Comolet who had occupied these roles until then.
Board any documents that it deems useful to the fulfi lment of its mission.
Executive Board presents a report summarizing the main actions or events in the Company’s management, including all quantitative and qualitative information required concerning the development of the Company’s business activities.
At the end of each fi scal year, within regulatory timeframes, the
Executive Board presents to the Supervisory Board the annual fi nancial statements, the consolidated fi nancial statements, and its report to the General Shareholders’ Meeting, for the purposes of review and verifi cation. At the General Shareholders’ Meeting, the Supervisory Board presents its observations on the Executive
Offi cers as provided for under French law and Article 9 of the by-laws and under the terms and conditions mentioned in the shareholders’ agreement as described in paragraph 1.2.2. of the
In addition to the prior authorizations provided for by legal and regulatory provisions in force, it should be noted, in particular, that Natixis’ by-laws and the shareholders’ agreement require the prior authorization of the Supervisory Board for certain transactions: increases in share capital, with maintenance of preferential ■
subscription rights, with immediate effect or in the future, for an amount, including premium, of over €75 million, and an increase in Natixis’ share capital, with immediate effect or in the future, without preferential subscription rights; extension of Natixis’ activities into material lines of business not ■
carried on by Natixis; appointment of Supervisory Board members and the Board of ■
Offi cers and Deputy Chief Executive Offi cers of the main subsidiaries; any acquisition or increase in a stake, all investments, ■
as “independent”: an independent director is a person who has no relationship whatsoever with the Company, its management or the Group that may compromise his or her freedom of judgement or be of a nature as to create a situation of confl ict of interest with management, the Company or the Group.
Therefore, an independent member of the Supervisory Board may not: be an employee or corporate offi cer of the Company or the ■
directly or indirectly, holds a directorship or in which an employee is designated as such or a corporate offi cer of the company holding a directorship; CONTENTS< >
Company or its group, have been an auditor of the Company or a group company in the previous fi ve years, have been an executive of the Company or one of the group’s companies in the previous fi ve years, been a member of the Company’s
Supervisory Board for more than 12 years, receive or have received additional material compensation from the Company or the Group other than directors’ fees.
Supervisory Board members representing signifi cant shareholders, directly or indirectly, in the Company may be considered independent if these shareholders do not control the
Board represents a shareholder of the Company holding, directly or indirectly, more than 10% of the share capital or voting rights, the Board, on the basis of a report from the Compensation
Board is discussed by the Compensation Committee, which prepares a report on the subject for the Board; the Ethics and Compliance Charter for Supervisory ■
Board members: the Internal Rules state that each member of the Supervisory
Board must devote due time and attention to fulfi lling his or her duties and regularly attend meetings of the Board and
Committee or Committees of which he or she is a member. Each
Supervisory Board member must ensure that he or she acts at all times in the best interests of Natixis and undertakes to defend and promote Natixis’ values.
Members must also inform the Company of the number of shares held as of December 31 of each year and of any fi nancial transaction, to enable communication of this information by the
The Company may also ask each Board member to provide any information in relation to the trading of securities of listed companies, necessary for it to fulfi l its reporting obligations to all authorities such as stock market authorities, both in France and abroad.
Supervisory Board members shall refrain from carrying out any transactions involving Natixis securities in the 45 days prior to the publication of the Company’s quarterly, interim or full-year results or before a General Shareholders’ Meeting and ending two trading days after the date of the event concerned.
created solely for the purpose of carrying out corporate or investment banking transactions, irrespective of the value, may be decided by the Executive Board without prior authority from the Supervisory Board.
In accordance with the regulations, the Executive Board may in turn decide to sub-delegate the power granted to it pursuant to this rule; evaluation of the Supervisory Board: ■
in the Internal Rules: in particular, the Internal Rules provide that, except for the adoption of decisions in relation to the checking and review of the Company and consolidated fi nancial statements, Supervisory
Minutes of Supervisory Board Meetings are prepared and these are sent to the members.
During 2008 The Supervisory Board met on 13 occasions. The attendance rate of its members was 87.12% for the whole year
Executive Board members attended all meetings, which enabled board members to listen to them and put any questions that they considered relevant.
In accordance with banking legislation, the Board has been informed of reports prepared on the conditions for exercising internal control and on the measurement and monitoring of risks. The Board also examined the Chairman’s report on the conditions for the preparation and organization of the work of the Board.
In addition the Board received a report on the work of the Audit
In relation to business monitoring, the Board was kept informed of the budget projections for the Company at the beginning of 2008 and for the 2009 fi scal year at the end of the year, as well the parent company and consolidated statutory fi nancial statements prepared by the Executive Board. It was regularly kept informed of correspondence from the Banking Commission
(Commission Bancaire) and the AMF. It also received draft copies of resolutions submitted to the General Shareholders’ Meeting by the Executive Board. A regular update was presented to it on liquidity.
In addition to activity reports from the Executive Board giving an account of events between two meetings and the trends in business markets, the Board was kept regularly informed of measures affecting the Natixis organization, in the Departments of the parent company itself or in its subsidiaries.
together various entities; the restructuring of the Guarantees and Surety division with ■
transfers of assets and liabilities; the sale by Natixis of Natixis Consumer Finance securities to ■
Obviously, the work of the Board was marked by the special focus afforded to the analysis of the situation created by the international fi nancial crisis.
In this regard the Board regularly questioned the Company’s management and listened to the comments, in particular, of the
Audit Committee on the impact of the crisis that fi rst hit structured credit products before spreading to other asset categories.
half of 2008 by BFBP and CNCE, and the approval of the signature of the letter of agreement pertaining to it.
plan to Executive Board members and its closure (in that it defi nes the potential rights of members, fulfi lling the conditions required to benefi t from the plan, if they were appointed to the Executive Board between November 27, 2006 and
Board examined the AFEP-MEDEF recommendations of October 6, 2008 on the compensation of executive corporate offi cers of listed companies. It showed that these recommendations are in line with the Company’s corporate governance approach. In addition it specifi ed that, pursuant to the July 3, 2008 law transposing the European Community directive 2006/46/EC of June 14, 2006 into French law, the modifi ed AFEP-MEDEF code is the one that the Company refers to in the preparation of the report provided for under Article
In accordance with the agreement signed on November 17, 2006, the two shareholders have equal representation on the Risk Management Committee and the Compensation
Committee. By special dispensation, the fi rst joint chairman of the
Pursuant to Article 17.1 of the by-laws and the provisions of the shareholder agreement, referred to in the previous paragraph, the
Supervisory Board Meeting on November 17, 2006 appointed the following as Audit Committee members: Nicolas Mérindol and Jean-Charles Naouri, as co-Chairmen; and Jean-Claude
Créquit, Michel Goudard, Yves de La Porte du Theil and Robert
The Supervisory Board, at its January 16, 2008 meeting, appointed subsequent to the retirement of Michel Goudard on
Following the appointment of Alain Lemaire as the new permanent representative of CNCE to the Supervisory Board, he was also appointed co-Chairman of the Audit Committee, to replace Nicolas Mérindol.
The Supervisory Board of March 6, 2009 noted the resignation of Bruno Mettling from the Supervisory Board and appointed
The Natixis Audit Committee has internal regulations specifying its powers and its working procedures that were approved by the Supervisory Board on March 14, 2007.
Natixis’ Audit Committee has the following responsibilities: it assists the Supervisory Board in its inspection and auditing ■
No. 2004-02 of January 15, 2004; it examines the Company and consolidated annual and ■
interim fi nancial statements, as well as the Company’s budget projections at least one week before they are presented to the
Inspection Department and Commission Bancaire in relation to the Company and its subsidiaries; it approves the Company’s annual internal audit program, ■
The Company’s Executive Board provides the Audit Committee with any documents and information that may help it to discharge its duties, as necessary. The following list is not exhaustive: parent company and consolidated fi nancial, accounting, and ■
CORPORATE GOVERNANCE 2 Board composition and preparation and organization of its work summary reports by the Company’s Statutory Auditors; ■
June 30, September 30, and December 31; consolidated budgets and fi nancial statements of the main ■
The Audit Committee may submit to the Supervisory Board any proposals to carry out an audit, notably concerning the fi nancial statements of the Company and its subsidiaries.
Minutes of all Audit Committee Meetings are produced, and later provided to members of the Risk Management Committee and other members of the Company’s Supervisory Board.
The Natixis Audit Committee met on 14 occasions in 2008. The attendance rate of its members was almost 94% for the whole year (compared to 82% in 2007).
Given current events, the Committee’s attention was naturally focused on the impact of the fi nancial crisis that affected structured credit products before spreading to other asset categories. The
The Committee was kept informed of Natixis’ indirect exposure in the Madoff affair.
Corporate and Investment Banking and gave its opinion on the 2009 annual budget.
Due to the appointment of Bruno Mettling to the Audit Committee,
The Compensation Committee is responsible for making proposals to the Supervisory Board of the Company on the following issues: terms of compensation ■
of the Supervisory Board, including fringe benefi ts, pension plans, and health insurance; the level and terms of compensation paid to Executive Board ■
CORPORATE GOVERNANCE2 Board composition and preparation and organization of its work upon request from the Supervisory Board, it gives an opinion ■
Chief Executive Offi cers, Deputy Chief Executive Offi cers and Executive Board members or the Board of Directors of the Company’s main subsidiaries, in accordance with the principles set out in Articles 3 and 6.1 of the Company’s bylaws.
Supervisory Board, the Compensation Committee may also appoint external experts to carry out reviews or analysis by experts external to the Company in relation to compensation paid to executive directors of comparable companies in the banking sector.
Minutes of Compensation Committee Meetings are prepared after each meeting and sent to each member. The Chairman of the Committee provides a report on the work of the Committee to the Supervisory Board.
The Compensation Committee met twice in 2008, in January and December, to give an opinion: on the appointment of new Executive Board members of the ■
Company proposed by the Chairman in accordance with the terms and conditions of the shareholder agreement; on the compensation of Executive Board members in relation ■
relation to fi scal years 2007 and 2008 in view of the projected income for each of these periods; on the fi nancial terms and conditions relating to the termination ■
and termination of employment of executive and equivalent employees; on the examination of the AFEP-MEDEF recommendations on ■
the compensation of executive corporate offi cers; on the compensation of the new Chairman of the Supervisory ■
Board; on director’s fees for Supervisory Board members in 2009. ■
Supervisory Board members present and represented, and members representing each of the two principal shareholders.
Beaufret would be appointed Member of the Executive Board, thereby temporarily bringing the number of members on the
The Executive Board prepares and presents reports and budget projections as well as the parent company and consolidated fi nancial statements to the Supervisory Board, in accordance with the provisions provided by law and the by-laws.
Meetings were called outside their usual schedule or during holidays. This was, notably, the case for the capital increase during the summer and realized in September 2008. Finally, the
Representatives from business lines and business divisions were asked to present various development projects to the Executive
Board. Similarly, the Executive Board requested managers from support functions, notably fi nance, to join the discussions of the
During the various meetings the Executive Board regularly examined the development of Company activities and the trends in its results. It paid particular attention to the management of the fi nancial crisis. This, in the early stages, was concentrated on the underlying credits and, in particular, structured credits, and accelerated sharply following the bankruptcy of Lehman Brothers and the dislocation of the markets in the autumn, extending to all underlying assets in a context of suspicion towards banks and fi nancial institutions affecting, in particular, the liquidity of banks.
The Executive Board also paid continuous attention to the management of risks and exposures, to the control and reduction of weighted risks and to solvency requirements, and applied itself to reinforcing the Group’s funding policy. The Executive
Board regularly examined in depth the impacts of the crisis on the fi nancial statements and the situation of Natixis. It undertook various operations that lead it to strengthening the solvency of
Natixis: issuing hybrid debt at the beginning of the year whilst the markets still permitted it, a capital increase of €3.7 billion in September and a French TSSDI note issue underwritten by
The Executive Board also ratifi ed the terms and conditions of the cost saving plan and that of the Adjustment Plan to the
The Executive Board ratifi ed the operational strategies and organizational changes of certain business lines. It ensured the continuation of the introduction of monitoring and control tools, allowing for supervision of the whole Group. It also confi rmed the directions taken in relation to salary and compensation policy.
In accordance with legal requirements, the Executive Board prepared the annual, interim and quarterly fi nancial statements of the Group and called the General Shareholders’ Meeting after having established the agenda. The Executive Board ratifi ed the principles and strategies for Natixis’ fi nancial communication.
Caisse d’Epargne Groups. As a result of the capital increase, the Executive Board also decided on the option subscription adjustment methods and bonus share plans intended for all employees of the three groups.
Finally, the Executive Board ensured that the various control and regulatory authorities were kept regularly informed of developments and results of the Company, the management of the crisis, actions to strengthen solvency and monitor the fi nancial stability of the Group, as well as measures to manage and control risks.
Meetings are convened by the Executive Board or, failing that, under the terms and conditions of Article 225-103 of the
French Commercial Code. Notices of meeting are prepared in accordance with the conditions laid down by the regulations in force (Article 22 of the by-laws).
The Meeting may be described as ordinary, extraordinary, or combined ordinary and extraordinary depending on the matters listed on the agenda.
It is convened each time there are decisions envisaged with an objective to change the by-laws, notably in the event of an operation affecting the share capital: increase or reduction of capital.
Decisions are taken by a two-thirds majority of the shareholders present or represented.
Paris local time (hereinafter referred to as D-3), may attend the
For holders of nominative shares, this entry at D-3 in the share accounts is suffi cient to enable them to attend the General
certifi cate is also delivered to a shareholder who wishes to attend the Meeting in person and who has not received admission card by D-3.
Shareholders may, under the terms and conditions fi xed by law and regulations, send their proxy and postal voting forms, either in paper format or, on decision of the Executive Board published in the notice of meeting and convocation, through tele-transmission. The Executive Board may also decide that shareholders may participate and vote at any General
According to the provisions of Article 24 of the by-laws, one or several shareholders, representing at least the portion of the share capital required, and acting under the conditions and within the timeframes fi xed by law, have the right to request, by registered letter with confi rmation of receipt, the inclusion of draft resolutions on the agenda of the Meeting.
Company may, under the conditions provided for by the laws and regulations in force, request from any authorized organization or intermediary, communication of all information relating to the holders of securities conferring immediately, or in the future, the right to vote in Shareholders’ Meetings, notably their identity, their nationality, their address, the number of securities that they own and the restrictions that these securities may be subject to.
The AFEP-MEDEF recommendations of October 6, 2008 on the compensation of executive corporate offi cers of listed companies are in line with the bank’s corporate governance approach. Pursuant to the July 3, 2008 law transposing the
The AFEP-MEDEF code may be consulted at the Company’s head offi ce and on the Natixis website.
A - Compensation and all benefits in kind paid to the Chairman of the Supervisory Board
Compensation paid to the Chairman of the Supervisory Board has been set at €285,000 for 2008.
There is no variable compensation, no grant of securities to the Chairman of the Supervisory Board and the payment is in addition to the directors’ fees granted to all Supervisory Board members.
The amounts approved are: Supervisory Board members and non-voting directors: ■
variable portion: €1,000 per meeting, for up to fi ve −
Committee chairmen do not receive a variable compensation portion in accordance with the principle that no meeting shall be held in their absence.
Board members for the second half of 2008 and for 2009. The
Compensation Committee will decide in the fi rst quarter of 2009 the new measures to be applied.
Board members are based on three guiding principles: clarity, transparency and exemplarity; ■
attention to ensuring that compensation is consistent with the market); new individual compensation levels in line with previous levels. ■
These elements are determined for each fi scal year by the
In its December 18, 2008 meeting, the Supervisory Board approved the proposal of the Executive Board to waive any rights to variable compensation for the 2008 fi scal year given the results realized by Natixis during that fi scal year.
In addition, he may receive a bonus representing 120% of this salary if performance targets are reached, up to a maximum of €630,000 if the Company achieves 150% or more of its targets.
The fi xed compensation paid to Dominique Ferrero in relation to his duties as Chief Executive Offi cer of Natixis was €600,000 for 2008. In addition, he may receive a bonus representing 120% of this salary if performance targets are reached, up to a maximum of €1,080,000 if the Company achieves 150% or more of its targets.
The Compensation Committee and the Supervisory Board have ratifi ed the proposal of the Chief Executive Offi cer to waive any rights to variable compensation for the 2008 fi scal year.
François Ladam (Term of offi ce as a board member ended May 31, 2008)
€500,647 (including the family supplement); a guaranteed bonus upon his arrival of €500,000; ■
Jean-Marc Moriani (Appointed to the Board with effect from February 14, 2008)
Jean-Marc Moriani was as follows: in relation to his employment contract, a fi xed salary of ■
Compensation Committee to fi x directorship compensation at €200,000 a year, effective from February 14, 2008. The payment of this fi xed compensation in relation to 2008 will be subject to an adjustment in 2009; no variable compensation in relation to his duties. ■
Up until August 31, 2008, Jean-Marc Moriani was seconded to the Natixis branch in the USA. He therefore enjoyed benefi ts related to his expatriate status such as payment of his housing,
Supervisory Board at its meeting on February 14, 2008, should have resulted in the grant in 2008 of: 190,000 subscription share options for the Executive Chairman ■
for his role with Natixis (converting to 292,600 options after adjustment (see paragraph below)); 190,000 subscription share options for the Chief Executive ■
On the assumption that Natixis was to introduce a new subscription stock option plan for Executive Board members, it will try to ensure it complies with AFEP-MEDEF recommendations on the subject.
Populaire, between 2002 and 2008, with the method resulting in the application of an adjustment ratio of 0.649 to the exercise price of the subscription options and of the ratio strictly inverse to the number of options.
calculating the adjustment of the number of bonus shares granted on November 12, 2007, in relation to the SAGA
benefi ciaries, and in an identical process to that proposed for the subscription option plans, the Executive Board decided to revise upwards the number of bonus shares granted on
November 12, 2007, resulting in the additional grant of 33 shares per benefi ciary (in addition to the 60 received initially).
The benefi ciaries of the stock options and bonus shares are bound to the following obligations: sworn statement at the moment they exercise options or sell ■
the exercise of options in the 45 days prior to the release of information on the quarterly, interim and annual results; prohibition on selling shares granted freely in the 45 days prior ■
No repurchase hedging operations of securities arising from the exercise of options are authorized for Executive Board members.
maintain an equivalent number of shares to 50% of the net capital gain on acquisition (calculated after taking account of tax on capital gains and compulsory social security contributions), realized on securities arising from options exercised after
the Executive Board does not provide for such grants to its members. The Board has not defi ned a similar restriction to that applicable to subscription options and share purchases.
From November 17, 2006 to December 18, 2008, Natixis established a group pension plan for Executive Board members through an insurance company, similar to the plan for Banque
This plan serves to provide a guaranteed pension income equivalent to a variable percentage, depending on the member’s entry date into the plan, up to a maximum of €370,000, and after deducting all Social Security, ARRCO, AGIRC and other pensions that the offi cer is entitled to.
Jean-Pascal Beaufret will not benefi t from this plan as he did not complete the necessary seven years of service prior to his departure.
French Commercial Code is published in the annual report of the Company.
The valuation of these options according to IFRS 2 in no way refl ects the potential gain generated from the exercise of the option. It only refl ects the personnel expenses that must appear in the fi nancial statements, insofar as the options are granted in return for a delivered or expected service.
On the publication date of the reference document, the options granted in 2007 and 2008 had not yet vested. With the Natixis share price signifi cantly below their exercise prices, of €14.38 and €8.27 respectively, it is diffi cult to imagine a theoretical future gain for the benefi t of the benefi ciaries.
(1) Philippe Dupont has expressly waived the subscription options that were granted to him in 2008 in relation to his functions within BFBP.
Philippe Dupont, Executive Chairman ns ns - in relation to his functions at Natixis ns ns - in relation to his functions at BFBP ns ns
Exceptional compensation - in relation to BFBP subsidiaries 0 0 0 €586
Benefi ts in kind (car and accommodation) 4,270 € 4,270 € 4,262 € 4,262 €
In the following tables: the expression “Amounts due” corresponds to compensation ■
and benefi ts in kind granted to the Executive Board member as part of his functions in relation to the fi scal year, irrespective of the date of payment (for example, variable compensation granted in relation to 2007 but paid in 2008 therefore appears both in the column “amounts due” of 2007 and the column “amounts paid” of 2008); the expression “amounts paid” corresponds to compensation ■
Benefi ts in kind €404,160 €404,160 ns ns - benefi ts in kind in France (car) €1,798 €1,798 ns ns - benefi ts related to secondment to the USA €402,361 (2) €402,361 (2) ns ns
Amounts due Amounts paid Amounts due Amounts paid - in relation to Natixis subsidiaries 0 0 €30,489 €30,489
Member, Natixis Supervisory Board 10,000 14,000 (2) due: 18,000 paid: 30,000 (1)
Member, Natixis Compensation Committee 10,000 10,000 due: 10,000 paid: 20,000 (1)
In relation to BFBP and its subsidiaries 12,534 9,936 (3) 9,936
In relation to CNCE and its subsidiaries 19,900 66,000 (2) 25,230
Personal fi xed compensation in relation to CNCE 89,622 89,622 0
Benefi ts in kind in relation to CNCE 378 378 0
Member, Natixis Supervisory Board 10,000 28,000 (2) due: 18,000 paid : ns
In relation to BFBP and its subsidiaries 10,965 9,936 (3) 9,936 Compensation in relation to BFBP specialist committees 7,288 2,916 (3) 2,916
Member, Natixis Audit Committee 10, 000 11, 000 (2) due : 10, 000 paid : 14, 000 (1)
Personal fi xed compensation in relation to CNCE 73,236 73,236 ns
Personal variable compensation in relation to CNCE (5) unavailable 354,596 (5) due: 354,596 paid: 288,750 (4)
Member, Natixis Supervisory Board 10,000 14,000 (2) due: 20,000 paid: 32,000 (1)
Personal fi xed compensation in relation to BFBP 290,000 290,000 290,510
Personal variable compensation in relation to BFBP 0 130,000 (3) 130,000
Benefi ts in kind in relation to BFBP 45,733 45,733 45,733
In relation to CNCE and its subsidiaries 74,100 129,435 (2) 103,670
Variable compensation in relation to CNCE unavailable 385,000 (4) due: 385,000 paid: 440,000 (3)
Benefi ts in kind in relation to CNCE 52,156 52,156 65,586
Member, Natixis Supervisory Board 8,000 12,000 (2) due: 14,000 paid: 26,000 (1)
Member, Natixis Supervisory Board 10,000 14,000 (2) due: 20,000 paid : 32,000 (1)
Member, Natixis Supervisory Board 10,000 14,000 (2) due: 20,000 paid: 28,000 (1)
Member, Natixis Compensation Committee 4,000 4,000 due: 3,000 paid: 7,000 (1)
Member, Natixis Audit Committee 10,000 13,000 (2) due: 10,000 paid: 12,000 (1)
(1) Including a portion due in relation to director’s fees for the 2006 fi scal year.
Subscription or purchase options granted during 2008 to each executive corporate officer by the issuer and by any company of the Group, after adjustment
(2) Philippe Dupont has expressly waived the subscription options that were granted to him in 2008 in relation to his functions within BFBP.
Performance bonus shares granted to each executive corporate officer No performance bonus shares were granted in 2008 to executive corporate offi cers of Groupe Natixis.
Natixis shares were granted at no cost to all Natixis, Banque Populaire and Caisses d’Epargne employees in 2007 during the merger of Natexis Banques Populaires and Ixis in order to strengthen the identity and the spirit of cohesion within the newly created Natixis.
The bonus shares granted on November 12, 2007 become fully vested on November 12, 2009 and will be available for sale by the optionee on November 12, 2011.
Date of the General Shareholders’ Meeting 31.05.2001 31.05.2001 27.05.2004 19.05.2005 17.11.2006 24.05.2007
Date of the decision by the Executive Board 10.09.2002 10.09.2003 17.11.2004 15.11.2005 29.01.2007 21.01.2008
Number of exercisable subscription options as at 31.12.2008 including those that may be exercised by: (1) 5,099,094 6,266,106 6,587,350 7,653,800 15,398,922 7,576,792 1) Natixis Supervisory Board members in 2008: 147,840 149,380 149,380 264,880 962,500 ns
Methods of exercise when the plan includes several tranches ns ns ns ns ns ns
Number of options exercised at 31.12.2008 3,680,230 1,393,828 130,130 21,560 0 0
Options granted during the fi scal year by the issuer and any company included in the scope for option grants for the period, to the top ten Natixis employees by number of options granted. 0 €8.27 21.01.2008
(1) After adjustment following the increase in capital in September 2008.
Payments in relation to a noncompetition clause yes no yes no yes no yes no
Philippe Dupont, Executive Chairman, Natixis date appointed: November 17, 2006 date term expires: November 17, 2012 x x (2) x (4) x
(2) Executive Chairman Philippe Dupont is not a member of a supplementary pension plan in relation to his role at Natixis. However, he is a member of a supplementary retirement plan in relation to his functions within Groupe Banque Populaire.
(3) The Group pension plan for Natixis corporate offi cers was closed to all new entrants on December 18, 2008.
This group retirement plan provides for the payment of a retirement pension after deduction of all pensions paid by compulsory (Social security, Arrco, Agirc) and supplementary plans.
CORPORATE GOVERNANCE 2 Board composition and preparation and organization of its work
The brief summary of their curriculum vitae shows that they all have recognized business expertise through their positions as executives of banks or large industrial companies or as former bank executives.
Management has been convicted of fraud in, at least, the previous fi ve years (minimum), has been subject to bankruptcy, liquidation or receivership during, at least, the previous fi ve years, has been convicted or punished by offi cial or regulatory bodies, has been disqualifi ed from acting as a member of administrative, management or supervisory bodies of an issuer or from involvement in the management or conduct of the business of an issuer during at least the previous fi ve years
Management or the Executive Board of the Company that could confer benefi ts upon termination of such an agreement and that might by their nature compromise their independence or interfere with their decisions.
Natixis and its subsidiaries do have business relationships with its two principal shareholders or certain of their subsidiaries.
Natixis Global Associates: a worldwide distribution platform to serve asset-management companies 59
Benefi t Planning, in spite of a diffi cult economic situation 67
Capital Markets: structured around centers of expertise ■ in interest-rate, foreign exchange, commodity, debt and equity markets. Net Banking Income 2008 excluding GAPC (1): €1,019 million.
The CIB Division’ s support functions (in addition to human resources, corporate secretary and economic research) include two departments one of which is dedicated to systems, organization, operations and fi nance, and the other to active risk management and supervision.
Following the worsening of the fi nancial crisis and the bankruptcy of Lehman Brothers in mid-September 2008, on December 18, 2008, Natixis’ Supervisory Board approved a restructuring plan proposed by Management designed to profoundly transform the activity of the CIB division.
The measures adopted include: T ■ he termination of the principal fi nance and proprietary structured credit investment activities in the Debt and Finance business line: these proprietary activities have been halted, and a segregated structure has been created to optimize management as the business is phased out.
(termination of equity derivatives operations and plain vanilla fi nancing for corporate customers ) and closure of marginal offi ces (particularly in South America).
A ■ reduction in staff and costs: The impact of the termination of the most complex or high-volatility market activities will result in a 40% staff reduction in the activities concerned.
Natixis has created a segregated structure within the CIB, known as GAPC (Gestion Active des Portefeuilles Cantonnés, or
amount (source: Agefi Hebdo/Dealogic); No. 4 book runner on the worldwide market ■
The department maintains close-knit relations with almost all major French corporations and institutions and is well-entrenched in the medium-to-large French company segment. Internationally,
Some examples of fi nancing transactions completed in 2008: in France: SFR (acquisition of Neuf Cegetel), Tereos, Aker ■ Yards
Banking Association (EBA) exchange system. Natixis confi rmed its role as advisory bank, providing its expertise to its customers on topical subjects: payments within Europe, the development of banking communication and cash management. The increase in volumes and associated income shows the effectiveness of the marketing operation.
Natixis Finance acts as a mergers/acquisitions advisor, particularly to corporate midcaps, fi nancial institutions and private equity funds; it has special expertise in the utilities and infrastructure sectors as well as in real estate.
Debt & Finance designs customized fi nancing and investment solutions for Natixis’ corporate and institutional customers. These solutions combine Natixis’ expertise in the areas of specialized origination, credit structuring and distribution. The department is organized in four business lines: Structured Finance and
and the transaction arranged for the manufacturer Embraer was elected “aeronautical fi nancing transaction of the year” by
Financing assets for maritime and land transport: ■ Natixis is a major participant in this business, with more than 400 assets and more than 80 clients fi nanced in ten years. Based in Paris, with offi ces in Hong Kong, Singapore, New York and Dubai, the activity is geographically diversifi ed and fi nances a wide range of assets (oil-tankers, chemical tankers, gas tankers, bulk carriers, containers and container vessels, ferries, offshore platforms, etc.). In 2008, more than 30 transactions were successfully arranged and syndicated, including Emarat Maritime (Dubai),
In project financing, ■ Natixis offers a full range of products throughout the world: fi nancial advisory services, arranging, subscription and acquisition of interests in senior and
Magazine and Project Finance International for transactions arranged by Natixis, including 3 for North American: YahSat
Build-up) for wide and innovative coverage of fi nancing requirements (family business transfer, hive-offs, stock market exits, secondary LBOs, mixed LBO/real estate and LBO/
(deconsolidation and monetization of contracts). In 2008, this model, based on transactions that are diversifi ed, innovative and very selective in terms of risk and counterparty, allowed
Colony), in a diffi cult economic climate. Financial engineering has continued to develop its products aimed at large corporate clients, shipping companies and airlines.
Commodities financing ■ combines sector expertise (energy, metals, agricultural commodities) and geographical specialization (Commonwealth of Independent States, Central and Eastern Europe, Latin America, North America, Africa and
Aluminium & Electricity (China) and Metalloinvest (Russia). The sector also has intensifi ed development of cross-selling with the Group’s other business lines (export fi nance, employee savings schemes, bond issues, primary equity capital markets in the United States, project fi nancing, Coface and commodities derivatives).
India, Dassault-Turkey, MBDA-Peru) confi rm the development of the business in France and in the international level.
for institutional customers on all types of assets (offi ces, residential, hotels/leisure, commercial), in Continental Europe and the United
In 2008, REF downsized its activities, while continuing to meet the needs of its historical customers (AxaReim, Nexity, Altarea/
New York, Hong Kong and Singapore, the teams operate in Europe, the Middle East, Africa and Asia. Natixis is also a regular player in the secondary loan market. In 2008, in spite of tightening liquidity, the business performed comparably to the previous year. Natixis is in 10th place in the EMEA zone with 45 transactions fi nalized as MLA/Bookrunner, among them
Debt engineering ■ has an objective of developing debt products and balance-sheet solutions specifi cally adapted to Natixis’
Banques Populaires and the Caisses d’Epargne, was offi cially launched and successfully fi nalized its fi rst transactions. The
Solutions North America took part in 6 major transactions, in close collaboration with the structured-fi nance activities. These transactions were syndicated on the American market.
In association with the “ Capital Markets” and “ Debt and Finance” activities, a cross-company origination team is dedicated to any problem involving debt fi nancing, mainly in euros, using techniques in the markets for credit syndication, primary debt capital markets and securitization. The team offers Natixis’ customers the most appropriate solutions for their situations .
Natixis is a recognized player in the securitization market, in the United States and in Europe, focused on the specifi c requirements of its customers. This business line offers alternative and competitive sources of fi nancing to customers of the bank, corporations and fi nancial sponsors. Natixis works as a structurer, arranger, syndication lead manager and as counterparty for interest rate and/or foreign-exchange swaps for securitization vehicles. The underlying assets include: trade receivables, bank debt (personal loans, mortgages, consumer loans, credit cards, automobile loans, etc.), student loans, commercial mortgagebacked securities, collateralized debt obligations, subscription loans, and insurance risks.
The bank gives its clients access to its specialist knowledge of complex structured products, its sophisticated analysis tools, its privileged relationships with purchasers and sellers of structured assets, and the dynamism of its marketing teams. It also has a sound reputation with a large base of investors, allowing it to refi nance effectively. In 2008, Natixis securitized $1.5 billion of assets (Asset-Backed Securities – ABS) in the United States, excluding CDOs and mortgages.
(including infl ation) in European, Asian currencies or currencies in the Americas; the ■ credit sector includes the origination and trading of public or private bonds or credit derivatives; in emerging ■ markets, Natixis offers interest-rate, credit and foreign-exchange products, and continues to grow by following a niche strategy including geographical positioning to develop the other activities of the bank (China, Russia, Vietnam).
Milan, Madrid and Frankfurt), but is also carried out through trading and distribution platforms in Singapore and New York.
The signifi cant events of 2008 were as follows: the interest-rate and credit ■ sectors suffered from the fi nancial crisis in several segments of their business: exotic operations involving interest rates and hybrid interest/exchange rates, as well as loan portfolios (ABS, covered bonds, corporate, fi nancial and High Yield) suffered from the high volatility of markets and lack of liquidity; commercial ■ activities have nevertheless stood up well in this diffi cult environment, based on close local relationships with clients. The distribution teams improved their commercial performance by 20% in terms of contributions per customer over 2008; in the primary bond market, ■ 2008 saw Natixis ranked among the 10 best-performing banks in the Euro market, maintaining its rank as a fi rst-rate player in Euro-denominated covered bonds, and confi rmed its leadership in the public sector and among French corporate issuers.
“Euro Supranational/Agency bond of the Year” by Euroweek, together with their second transaction, which both constituted the largest issues underwritten in this market in 2008; covered bond transactions for the Royal Bank of Canada, Sparebank 1 and BCP Millenium, which were the fi rst covered transactions managed by Natixis in Canada, Norway and Portugal; two leading Spanish issues, those of Caja Madrid (€1,250 million)
(2nd best worldwide increase by volume of operations handled, according to the Euromoney 2008 survey), strengthening its trading systems; it now has a 24 hour a day service from platforms in Singapore, Paris and New York, with an expanded range of products, while maintaining profi tability.
The Treasury and Arbitrage team ensures that the entities of the
In 2008, Natixis continued to develop its OTC (1) derivatives platform on underlying commodities. It now offers a complete range of derivative products on a number of families of underlying assets: base and precious metals, energy and agriculture. Also,
Natixis Commodity Markets (NCM), a subsidiary specialized in intermediation and trading on commodities, continued to develop the use of its electronic order-entry platform for its customers. NCM, present in London, New York, Hong Kong and
The high volatility in commodity markets during 2008 drove clients to make massive use of derivative products to hedge their risks. In this context, Natixis has continued to win market share with clients such as consumers, producers, traders or investors interested in commodities as products to diversify their portfolios.
A specialist in the French market, Natixis Securities has a multiproduct distribution platform (cash equity, lending transactions in partnership with Natixis Asset Management and Natixis, listed derivatives and bonds) serving a large customer base
Natixis Bleichroeder Inc. (NBI) is an American broker-dealer registered with the SEC, which offers institutional and corporate customer services covering brokerage, order execution, prime brokerage, lending transactions, advisory services and access to stock markets. NBI covers 55 world markets and its trading services are available 24 hours a day. In 2008, NBI consolidated its expertise in the brokerage of American Depositary Receipts
May, the €375 million increase in the capital of Altarea in June
(the only signifi cant transaction in the real estate sector), the €130 million increase in the capital of Altran Technologies in July, and lastly, Natixis acted as global coordinator to manage the €3.7 billion capital increase for Natixis in September. The bank also managed the issues of OBSAAR (3) for NextradioTV, Havas and Akka Technologies.
NORTH technical platform and the continuation of its policy of direct membership of various stock markets (particularly
Tokyo, Hong Kong and Northern Europe); this strategy aims to expand the range of tradable underlying assets; the consolidation of the Equity Finance teams present in three ■
geographical zones (Europe, Asia, USA), whose recognized expertise ensures Natixis a place in the worldwide top 10
(Natixis Direct) for products and services is made available to personal banking clients.
The Corporate Solutions teams offer customers customized and innovative solutions for managing and optimizing their balance-sheets or transferring their risks during restructuring and acquisition transactions, as well as a capacity to execute such transactions of recognized quality. With a team of 150 persons and present in 12 countries, Corporate Solutions is aimed at a large international corporate client base located in Europe, the
Middle East, in Asia (North and Southeast), in India and in the
The Corporate Solutions team carried out 117 transactions in 2008, up from 90 in 2007. These transactions were carried out in Europe, the Middle East and Asia, with strong development of the business in Asia and the Middle East.
Overall, during 2008, the Corporate Solutions business retained its profi tability in spite of the crisis.
Natixis is a recognized player in structuring and managing funds, present in the United States, Europe and Asia.
Within a secure framework, Natixis has developed activities in asset management on behalf of third parties having strong business and marketing synergies with the CIB and aimed at French and international institutional investors.
Grouped in the Natixis Alternative Investments International holding company, the activities include: the management of the ■ greenfield and brownfield, infrastructure funds; the management of environment and sustainable- ■ development funds (the carbon fund, the renewableenergies fund); the management of insurance risk transfer funds ■ (alternative risk transfer); European industrial and commercial real estate funds; ■
OPERATIONS3 Corporate and Investment Banking and Natixis Bleichroeder Inc. Their dedicated teams, specialized in structured fi nance and some capital markets activities for companies and institutional investors, are mainly located in New
Since May 2008, the North American platform has implemented a series of measures aimed at regrouping its businesses in accordance with Natixis’ plan to restructure the businesses of the CIB. It also continues to meet the needs of its customers coping with diffi cult markets, offering them solutions to meet their fi nancial objectives or aiming to minimize the impact of market volatility. Furthermore, senior management, businessline managers and the risk-management teams have worked assiduously to reduce the risk profi le related to the American operations.
Responsive to market trends and aware of the requirements of its customers, the North American platform also expanded Natixis’
businesses. It seeks to support French clients in the Asia-Pacifi c region and to build a portfolio of regional large accounts.
or Sinosure coverage. Among fi nancial institutions, despite a sharp slowdown in activity, Natixis has remained among the market leaders in India (Punjab National Bank, Bank of India,
Airport; No. 11 MLA in project fi nance in Australia, source: Dealogic), as well as a breakthrough in Asia, with the key Lion
In the financing of acquisitions and LBOs, ■ the Hong Kong and
In commodities financing ■ , in 2008, the business was refocused on the main producers and importers in each country, and emphasis was placed on structured operations. Further success came through some 10 mandates as arranger in
China (H&H and Coalmine pre-fi nancing), in Southeast Asia and Oceania (RBL fi nancing for Oil Search and Salamander
As part of the CIB restructuring plan presented at the end of the year, the exotic interest-rate and equity products were halted, mainly in Tokyo. The plain vanilla cash, foreign-exchange and interest rate activities have been maintained and will continue to be developed.
The Economic Research team headed by Patrick Artus is recognized for its expertise and in-depth analyses. Coverage includes tracking the economic situation with economic and fi nancial forecasts, analyzing interest rate, currency and equity markets, preparing country assessments and compiling investment strategies. Some 40 key countries are covered in total, including the main emerging countries.
(CPM), the objective of which is to manage commitments with a view to reducing concentration (sector, geographical, etc.) and outstanding loans. ARMS also directs the Special Affairs and
Disputes department, the bank’s center of expertise on cases of companies in diffi culty. Lastly, ARMS runs the structure for the special segregated GAPC activity mentioned above.
They managed the crisis on a day-to-day basis, increasing checks on the transactions of the most risky counterparties.
Numerous projects were carried out to enhance operational effi ciency in a sustained and structured manner.
Infrastructure management was optimized and basic services, such as IT hosting, were pooled at the Group level. The Research portfolio was adapted to the bank’s new strategic requirements.
In the back-offi ce, productivity gains took place on the control of cash management and STP * was introduced for equity market settlement/delivery. The back offi ce for cash-management activities for provincial business centers was gradually centralized, as were the functions monitoring commitments in Europe.
Lastly, consistent procedures for reconciling the results of postmerger market activities were implemented in the Results Service, while a project commenced to extend the central calculation of daily P&L to the “fi nancing” businesses and at the international level.
Asset Management’s federal-type organization comprises the Natixis Global Asset Management holding company
It is adapted to a highly varied range of clients: institutional and corporate, insurers, banks, personal banking and privatebanking clients.
It responds to developments in the worldwide market for asset management, which has slowed since 2007, but for which the background trends remain: positive medium-term prospects for growth and profi tability, the growth of the open architecture
and the emergence of global distributors, growing demand for integrated and customized solutions with high added-value
This new context has impacted the division, which, after several years of growth in assets under management, saw a drop in its assets to €447 billion at the end of 2008 against €591 billion at the end of 2007. These are divided between Europe (€294.1 billion), the United States (€152.3 billion, or $214.1 billion), and with the balance in the Asia Pacifi c region.
Postale. Other than these effects, outstandings are practically stable (-€2.5 billion, namely 0.3% of total outstandings), thanks to gross infl ows that remained strong in spite of the very diffi cult market context in the fourth quarter.
American group into a global player remains the main ambition of the Asset Management division, through the regular extension of the range of management expertise and the development of its distribution platform, particularly in emerging zones, such as Asia or the Middle East, but also in Europe and the United States.
Natixis’ Asset Management division develops a wide range of investment solutions in the form of funds, dedicated products and mandates on all asset classes (money market, bonds, equities, real estate, alternative and diversifi ed). An innovative divisional architecture – based on a global distribution platform serviced by multi-specialist asset managers – ensures a high degree of competitiveness.
NATIXIS GLOBAL ASSOCIATES: A WORLDWIDE DISTRIBUTION PLATFORM TO SERVE ASSET-MANAGEMENT COMPANIES
States, two new initiatives were taken in the area of distribution to wealth-management consultants and institutional investors
In an unfavorable worldwide economic environment, infl ows were slightly positive in the United States, which is a considerable achievement in comparison to other comparable players, and negative in the rest of the world.
Natixis Global Associates’ activities complement the direct distribution function exercised by the various asset management companies both to institutional clients in the USA and France, and to personal banking customers in France through the
“ New initiatives to support management companies and clients „ NATIXIS ASSET MANAGEMENT: A KEY PLAYER IN EUROPE
The European asset management business managed €294.1 billion of assets at the end of 2008.
Natixis Asset Management (€273.2 billion of assets under management) is Natixis Global Asset Management’s European expert, with its two subsidiaries, Natixis Multimanager, specialized in multi-management, and Natixis Epargne Financière. Natixis
In 2008, Natixis Epargne Financière, a common distribution entity serving the networks for the Banques Populaires and Caisses d’Epargne groups, was established. Its purpose is to support the networks in their policy of developing sales of mutual funds, mainly managed by Natixis Asset Management.
NAMI, develops real-estate investment trusts and real-estate mutual funds in France.
The European management companies thus provide a complete range of products and services covering all classes of traditional assets: money-market, interest-rates, equities and real estate, and expertise in high added-value areas, such as structured products, socially-responsible investment and multimanagement.
sales & marketing subsidiaries in the UK, Italy and Germany and in Dubai, where a subsidiary was opened in 2006 to boost Middle
East sales, and by Global Associates’ various European sales forces, which cover Austria, Scandinavia, Benelux, Portugal,
In the 9th edition of the Agefi 2008 Asset Management Grand Prix, Absolute Asia AM Pacifi c Rim Equities Fund won 1st place in the “Equities Asia, excluding Japan” category.
AEW Europe won two “IPD EuroProperty Investment Awards” for its management in France during the last three years, one for diversifi ed portfolios and the other for specialized portfolios.
MARKETING ACTIVITY IN THE UNITED STATES AND THE ASIA PACIFIC REGION
Gross infl ows in asset management stood at $28 billion and net infl ow remained positive at $1 billion in spite of very adverse market conditions, particularly due to the success of the “hedged equity” offer from Gateway.
Investment Advisers (defi nitively acquired in February 2008), specialized in “hedged equity”, and Alpha Simplex, specialized in quantitative and alternative management, introduced several funds adapted to the new market environment and placed their expertise at the service of the Group. Furthermore, Natixis
Private Equity, a company managing funds and co-investors in private equity in the United States.
Natixis Global Associates also assists American asset management companies in developing sales of their products in the Asia-Pacifi c region in Singapore, Japan and Australia.
In 2008, a partnership was initiated with China Industrial Bank to create an asset-management joint-venture; it should be fi nallized in 2009 when the required approval is obtained.
SmartMoney of the fi ve best investors in the world (August 2008 edition). Loomis Sayles was ranked in the “Top Equity Fund
Loomis Sayles (€75.4 billion in assets managed): ■ management of assets (growth, core, value) and bonds (core to high yield); Harris Associates (€26.8 billion): management of American ■ and international value equities; Reich & Tang Asset Management (€10.1 billion): ■ management of small and mid-cap American equities, core and high-yield international bonds; money market; AEW Capital Management (€8.2 billion): real estate asset ■ management; Harris Alternatives (€6.4 billion): alternative multi- ■ management; Capital Growth Management (50%-owned, €5.1 billion): ■ equity management; Gateway Investment Advisers (€5.0 billion): hedged ■ equity; Vaughan Nelson (€4.8 billion): management of value ■ equities and bonds; Hansberger Global Investors (€4.2 billion): management of ■ international equities; Snyder (€1.1 billion): small and mid-cap American value ■ equities; Westpeak (€0.8 billion): index-linked and quantitative ■ management; Natixis Caspian Capital Management (51%-owned, ■ €0.7 billion) alternative and money-market management; Alpha Simplex (€0.5 billion): quantitative management; ■
Absolute Asia Management (€0.3 billion): management of ■ Asian equities (excluding Japan), emerging Asian equities.
The Private Banking business is aimed at high-net-worth individual clients, through three structures established in France and internationally. It is based on the expertise of high-level specialists and offers a complete range of services, adapted to the expectations of different client segments: the wealth-management service for direct clients, the creation of products and services for high-networth individual clients of the Group’s networks, and the marketing of products and services to independent fi nancial advisors.
India. NPE is devoted exclusively to small and medium-sized businesses and operates in all areas of private equity – venture capital, expansion capital, buy-out/buy-in fi nancing and funds of funds – with 18 teams, 194 private-equity professionals and 695 investments.
It relies on the expertise and experience of specialized teams to develop a wide range of products and services in the areas of asset management, insurance, tax optimization, fi nancing and real estate.
offers a full range of products and services through one of the leading platforms on the French market.
Founded in 2005, La Compagnie 1818 - Banquiers Privés - has a considerable wealth-management department aimed at large private investors where the approach is widely based on an open architecture.
It also has a signifi cant share of the market for independent wealth-management professionals through the Centre Français du Patrimoine (CFP), which is one of the fi rst overall platforms dedicated to this business.
Banking international is dedicated to managing the wealth of an international high-net-worth clientele.
As well as providing traditional services, it has developed expertise in complex international legal and tax issues. To this end, it offers customized wealth-management structures and creates innovative investment funds and structures for personal investment and fi nancing.
The division develops competitive products and services for the clients of the bank networks and supplies complete, high-performance solutions to banks and institutional clients. Previously attached to the Corporate and Investment Bank, three activities – fi nancial leasing, international development consulting for companies, and the banking subsidiary established in Algeria – joined the division in mid-2008.
The Payments and Securities Services businesses round out the offering by providing payment and transaction processing services.
In 2008, the Services division strengthened its presence with the two networks serving the Caisses d’Epargne and the Banques Populaires, and also developed its clients outside these two groups.
June 30, 2008); No. 2 in guarantee insurance in France; ■
No. 2 French player in real estate leasing in France ■ (source: ASF survey, March 2008); No. 10 (CACEIS) in institutional custody services worldwide ■
June 2008 illustrates this diversifi cation strategy. With a minimum investment of €1,500, Scintilium offers two tax frameworks (life insurance/personal savings plan and Capi-personal equity plan/
The declared objective of strong development in high-net-worth clientele and wealth management has also resulted in signifi cant growth in infl ows on the Solévia (+2.2%) and Solévia Patrimoine
Related Accidents” contracts increased by 12% to reach a total of 121,000 contracts in the portfolio. There was also a 9% increase in premiums relating to Fructi-Famille, a contract for sheltering families from fi nancial worries in case of death or absolute and defi nitive invalidity.
In total, non-life revenue stood at €195 million, up by 6%.
The effort to develop in the independent fi nancial advisors market continued with the introduction of a “house-branded” range of products and services provided by Foncier Assurance.
Particular emphasis will be placed on the pursuit of growth in provident and non-life insurance, in particular through a national marketing campaign by Groupe Banque Populaire.
Also, Natixis Assurances continues to invest in renovating its production facilities and consolidating its work methods: the vast program to overhaul the IT system, which began ■
in 2007, will enter a key stage with the partial activation of the system for managing life-insurance contracts; “Solvabilité 2”, a program mobilizing numerous staff within the ■
Guarantees and sureties: a harmonized, multi-market range of products and services
For its clients and partners, it also stands out via its on-line services, provided through its profi ciency in information technologies, in a professional world traditionally based on paper, where the signed document was authoritative.
February 1, 2008: document demateriali ■ zation for business sureties with www.cautiondemarche.com; June 17, 2008: SACCEF obtains 88.5% overall satisfaction ■ in the Quality Barometer from Groupe Caisse d’Epargne, the best score shared with Natixis Financement in the ranking of the network’s dedicated subsidiaries; September 16, 2008: market introduction of CEGI ■ guarantee products for Corporate clients of Natixis; December 11, 2008: approval by Groupe Banque Populaire ■ of the surety services for small-to-medium-sized businesses/manufacturers; December 12, 2008: activation of the online sureties ■ site www.cmi-garanties.com; annual housebuilders’ convention and presentation of “Excellence trophies” to nine winners; Mid-December: introduction of the Saccef-Agri product ■ range by Banques Populaires; Year-end 2008: after the Foncia contract in 2007, signature ■ of the Lamy contract, respectively No. 1 and No. 2 French players in asset management.
Natixis Lease designs and manages a complete range of lease fi nance products for real estate and non-real estate investments in France, Spain and Italy.
Paribas Lease Group survey - January 2008) and number 1 in
With Natixis LLD, Natixis Lease provides an automobile fl eetmanagement service. This activity reported nearly 2,000 orders in 2008 and currently manages more than 5,500 vehicles used by a clientele composed of very small, small and medium-sized businesses.
A highlight of 2008 was the success of the Créodis revolving credit card, developed for Banques Populaires. Since its introduction in October 2007, more than 94,000 accounts have been opened and €102 million of loans have been taken throughout the network.
The outstandings managed (personal loans) or carried (revolving credit) by Natixis Financement grew strongly overall, going from €4.5 billion at the end of 2007 to €6.9 billion at the end of 2008.
Natixis Financement is seeking to achieve major-player status in the consumer fi nance business by supporting the expansion of the Caisse d’Epargne and Banque Populaire networks in France and abroad, and by developing a policy of external partnerships.
(joint venture between Natixis and the Banque Postale) design a full range of products to meet the employee-benefi ts policies of companies and professionals. The employee-benefi ts planning service combines employee savings solutions (profi tsharing, employee savings plans, collective-retirement plans, shareholding plans, etc.), complementary and collective retirement and provident-insurance products (Article 83 and 39, retirement benefi ts, etc.) and special payment vouchers
Natixis Interépargne, No. 1 in running employee savings accounts in France (source: AFG June 30, 2008) with more than 3 million employee accounts under management and market share of 27.35%, is continuing its development. The number of client companies is up by about 13% compared to 2007.
Solidarity Finance barometer from Finansol) and No. 1 in sociallyresponsible save-as-you-earn schemes, approved by CIES
Natixis Interépargne is emphasizing the development of save-asyou -earn schemes for professionals and small and medium-sized businesses , historically distributed by the Banques Populaires and, since November 2007, by the Caisses d’Epargne.
A pioneer over the last 40 years in save-as-you-earn schemes, in 2008 Natixis Interépargne introduced several new products, including one entirely dedicated to small and medium-sized businesses and professionals. Combining profi t-sharing and a savings plan, Fructi Duo is the fi rst product on the market meeting the new provisions for employee savings, enacted by the law promoting increased income from work.
In the institutional and corporate markets, Natixis Interépargne also continues to progress and has won several calls for tenders from large groups. The signifi cant development with this clientele contributed to a substantial increase in income for Natixis
In collective life insurance, 2008 saw the overhaul of “Article 83”
CADO Checks issued in 2008, up by 50% compared to 2007.
(support for companies establishing themselves internationally, administrative management of subsidiaries abroad, commercial development).
At the end of 2008, Natixis Algérie had more than 900 private individual clients, as many professional clients and about 1,500 business accounts.
In 2008, the bank increased its net banking income by 37%, with nearly 40 billion DZD of commitments (equivalent value €425 million), up by 17%. Its Business activity remains the major contributor to the bank’s income.
Natixis Algérie’s strategy for development in 2009 is based on several policies: the extension of its branch network: from 12 branches ■
operational at the end of 2008, the objective is to reach some 30 branches by the end of 2009. The workforce will go from 434 employees at the end of 2008 to nearly 660 in 2009; the development of local banking, in particular with the ■
creation of a savings account introduced at the end of 2008, an overhaul of the private individual client agreement and a range of products aimed at employees (mixed retail/corporate approach); synergies with the other business lines of the Services division ■
(study on a product for clients from the emigrant community); maintaining the sustained growth of the Business activity, with ■
very strong orientation towards industrial fi nancing, high-addedvalue activities and the promotion of equipment leasing.
The services cover the exchange of all transactions in national and international payment systems. They process both block transactions and unitary transactions of large amounts, and those of correspondent banking.
It manages 6.1 million bank cards and processed 1.6 billion card transactions in 2008 on behalf of the Banque Populaire network and other network banks.
To support the development of the market for private individual cards, Natixis Paiements is preparing the facilities necessary for the market introduction of numerous future products (pre-paid card, multi-visual card, affi nity card, etc.), in collaboration with the Banques Populaires network. It has implemented a platform dedicated to the manufacture and management of pre-paid cards, with numerous applications.
The work of Partecis, a 50/50 joint venture with BNP Paribas, is progressing according to the planned schedule. The last pooled e-cash components will be delivered in 2009, for activation in 2010, while the work to Europeanise the e-cash platform has begun.
The second-largest French player in custody-service accounts and the largest player in the market for outsourcing the activity,
Natixis is one of the French leaders in retail custody services and private management.
July 1, 2008 saw the creation of EuroTitres, a department created by the merger of Gestitres within Natixis. By 2011, this merger with Natixis will create the fi rst integrated platform for retail custody services and private banking in France and enhance its position on the European scale.
In 2008, Natixis’ retail custody-services business also continued its IT investment, to adapt its platforms to regulatory requirements and to projects at the European level, and began the convergence program for its securities information systems.
America; CACEIS is also ranked among the three largest French ■
At the end of June 2008, the transfer to CACEIS of the fi nancial services previously provided by Natixis, strengthened its position as the leader in France, both in terms of custody services and services to management companies and corporate trust services. In 2008, CACEIS also continued integrating the activities acquired at the end of 2007 in Germany (CACEIS Bank
The objectives for developing the division are ambitious, because its strategic plan, introduced in 2005, aims to make Natixis the worldwide No. 1 in receivables management by 2015. In 2008, Coface Holding continued implementing its 2008-2010 strategic plan and introducing its four business lines covering receivables management.
In France, the division is based on the networks belonging to Natixis, Banques Populaires and Caisses d’Epargne,
7.2% increase in consolidated revenue in 2008, driven by credit insurance and services outside
(opened in 2008 in Taiwan, Bulgaria and Latvia), and in other countries by partners. In 2008, Coface consolidated its position as No. 1 in Latin America, with the acquisition of a majority share in SBCE, leader in exports in Brazil; and its position as No. 1 in Asia, with the fi fth year of growth exceeding 30% in Greater
The service businesses (business information and receivables management) grew by 7.7% The division’s information services are available in 65 countries, and the introduction of Coface fi nancial rating is progressing (see box). The worldwide network in receivables management was strengthened by two acquisitions in Argentina and The
This charter will be gradually extended and applied in the other countries where the division is present.
directly or through the personal banking networks, such as mutual funds, consumer fi nance and mortgage lending and insurance products, as well as fi nancial services for corporate and institutional customers, distributed either directly or through the personal banking networks; and a system of fi nancial solidarity. ■
Fédération Nationale des Caisses d’Epargne, which is an institution for coordination and consultation within Groupe
The two groups have a highly complementary customer base: in the private individual client market, with a very large customer ■
Populaire is the leading principal bank; public housing, in which Groupe Caisse d’Epargne is the leading ■
In addition to the impact on Natixis of the development of the two networks via CICs, Natixis’ development also stems from existing strong ties with the two groups: industrial ties: Natixis provides services for the Banque ■
services targeted at all customers (private individual clients, small businesses, corporate clients and institutional clients)
of Groupe Banque Populaire and Groupe Caisse d’Epargne, which distribute these products; commercial ties: the Banque Populaire and Caisse d’Epargne ■
banks are also direct clients of Natixis and recognized as a customer segment in their own right.
(1) Except the Caisse d’Epargne de Martinique, which has not issued any CICs.
593,000 Livret As opened since the beginning of 2009, with ■
On July 1, 2008, the acquisition of these seven regional banks was fi nalized following the period of exclusive negotiations that began on February 29, 2008. The amount of the transaction was €2.1 billion.
South of France with banks which, in most cases, have been established for more than 100 years in their regions. It fi ts in well with the strategy of Groupe Banque Populaire, which is based on regional positioning, a local relationship with clients and the extension of the local branch network.
With 2,990 employees serving 367,000 private individual clients and 88,000 small businesses and corporate clients through a network of 394 branches, the regional banks could accelerate their development with Groupe Banque Populaire’s products, services and organization.
In 2008, the regional banks generated net banking income of €295 million and attributable profi t of €95 million, as a contribution to the Group’s income in the second half-year.
This entity will remain the full owner of Société Marseillaise de
2008 saw new business being won at a high rate, with a strong contribution from young people (44%) and government employees (16%), to reach 144,000 additional clients. The growth in the number of private individual clients was amplifi ed by the integration of the regional banks, bringing the total number of new private individual customers to 511,000.
The fi rst stems from the partnership signed with LMDE (La
The second product follows on from the partnership concluded with Oséo, which provides students with loans without surety and underwritten by the French government. This new product was introduced quickly and more than 1,400 loans were provided to students in 3 months.
A new product has also been prepared for young people in employment. This mainly consists of an “Equipage Horizon”
agreement with the Visa card company, allowing signifi cant price reductions compared to other client segments, alerts by e-mail or SMS for monitoring the situation of the account, the “Je m’installe” loan with an attractive rate, the advance against the fi rst salary installment, repayable over 12 months for a cost of €1, and advantageous conditions on real estate loans and non-bank services through the “Le Pass Cityzen” card, available to those aged 15 to 25.
For many years, Groupe Banque Populaire has been developing the government-employees segment, with an innovative approach based partly on the favored position of CASDEN
Populaire is supported by 107 local structures with representatives in schools and 3,391 Banques Populaires branches. The ACEF, founded to provide government employees with a range of savings and loan products under preferential conditions, have adapted their organization to that of the Banques Populaires, to facilitate winning new members.
In addition to the various initiatives to win new business and retain clients, signifi cant work has been done to provide a more innovative, adapted and enhanced range of products and services in all areas. These innovations and adaptations also extend to the area of traditional commercial banking, life and non-life insurance, and to the area of savings, with the new guaranteed-capital product “Izeis”.
The growth in rates of product placement among private individual customers demonstrates the appropriateness of this approach: this rate is currently an average of 10 products per account, against 9 in 2007.
No. 1 bank in franchise fi nance ■ (source: CSA survey 2008); No. 1 main bank for ■ small and medium-sized businesses
Groupe Banque Populaire works alongside the professional organizations representing the craftsmen to provide better solutions for the 320,000 craftsmen, clients of the Group, of whom 70% also have a private banking relationship with the
Groupe Banque Populaire is the number one bank with franchisees and franchisers, with respectively 25% and 51%
In 2008, the Group implemented 10 new partnerships with franchise networks and strengthened those with which it already had relationships. A full range of products and services and a system organized within the regional Banques Populaires form the basis of the relationships that exist with nearly 500 networks and some 100 partnerships.
At the end of 2008, Groupe Banque Populaire had more than 55,000 clients in agriculture, representing nearly 326,200 farms at the national level, with a rate of penetration that is constantly growing.
Groupe Banque Populaire is determined to support the activity and development of small-to-medium-sized businesses/
year, production stood at €107 million in equipment leasing (up by 14%) and at €533 million for fi nancial leasing (up by 35%); the fi nancing of renewable energy with Natixis Energéco; ■
with Coface and Natixis Factor: Business information, credit insurance, administration and loans fi nancing.
Groupe Banque Populaire is the main international banker for 17% of its clients and has strong development potential.
This service complements the electronic transfer of documentary credits via “Credoc Import Internet”, which facilitates the transmission of import transactions and reduces lead-times.
Investment, insurance, provident insurance, wealth-management, loans, real estate, payment services: Caisse d’Epargne offers all of the services and advice expected of a modern bank.
Fréquence Client program provides better availability for clients and the personalization of services.
Internet, were improved. The Internet site caisse-epargne.fr has been overhauled, merging the marketing and transaction areas in a single site, to become a real sales channel and to securely facilitate carrying out ever more numerous transactions.
It is based on 500 account executives, and on the experts in asset management and estate planning in La Compagnie 1818 -
Banquiers Privés -, those of Iselection and Ciloger for real estate and Océor for tax-exempt solutions under the Girardin industriel law in French overseas territories.
As a bank for young people, Caisse d’Epargne works to help parents prepare for their children’s futures, raise awareness of societal values, teach them to manage their budgets and support them in their projects: Livret A Kipouss, the fi rst pre-paid and rechargeable bank card for adolescents, fi nance for driving lessons or studies, purchase of portable computer, etc.
With its strong regional positioning, Caisse d’Epargne is the banking partner to public and private players participating in regional development. Its products and services call upon all of the Group’s expertise to fi nance their projects, simplify their management and optimize their investments. The organization into business centers encourages shared solutions and synergies between markets and improves functioning and marketing.
In the context of the sharp economic slowdown that began in summer 2008, the public authorities have implemented a plan to provide support to businesses. In October 2008, GCE released an exceptional budget of €1 billion for its business clients. Beyond this immediate effort, because of the measures taken by the public authorities allowing “decentralization” of all or part of the amounts collected by the network of “Livrets de développement durable” and “Livrets d’épargne populaire” accounts, Caisses d’Epargne has signifi cant margin for maneuver to continue to provide effective support to businesses.
In 2008, numerous initiatives were undertaken to structure the sector to provide better solutions to the specifi c requirements of all those involved in the social economy, from association managers to institutional clients. The expertise of the sales force dedicated to these clients was improved, giving them better understanding of the legislative and regulatory changes that impact the health/social sector and health-insurance plans.
As a player to be reckoned with in the regional public sector,
Caisses d’Epargne works with all local authorities and institutions, whatever the size of their projects and whoever is the contracting authority: municipalities, inter-municipality cooperatives, départements, regions, public health institutions and semi-public companies.
Caisse d’Epargne also makes innovative services available to local authorities and institutions, such as the secure on-line payment service ServicePublicPlus, which allows users to pay on-line for municipal services. It also offers the pre-fi nanced universal service-employment voucher in cooperation with Accor
As a historic partner of France’s low-cost housing system, Caisse d’Epargne is the leading private bank in the sector, managing over one-third of cash assets and private debt of social housing enterprises (ESH) and the HLM agencies, whose construction programs are fi nanced primarily by funds from Livret A passbook accounts.
Caisses d’Epargne participates in the governance of more than 250 public and private social-housing organizations.
Health and safety conditions (LA 9) – NRE appendices to registration document 87
2008 also saw intense activity in human resources, with the implementation of the PACEC (plan for adaptation to the competitive and economic context), the reorganization of the human-resources department, the introduction of new reporting tools and the implementation of the new Groupe Talentis assessment tool.
In the beginning of 2008, after having in 2007 merged the HR
(employee relationships, recruitment, inter-company transfers, remuneration management, and the management of Senior
In a deteriorated world economic situation, while the impact of the fi nancial crisis that occurred in 2007 was continuing to have its effect in 2008, Natixis had to take the measures necessary for restoring its profi tability. To this end, personnel representatives were consulted concerning a plan to adapt employment. The main objective of this plan was to allow Natixis to adapt to new market conditions, so as to be able to fi nance its development on a sound basis.
The plan for adaptation to the competitive and economic context was written in the form of a volume III and a volume IV given to the members of the Central Employee-Representative Committee in
May 2008. At the end of the information/consultation procedure, the Health, Safety and Working Conditions Committee and the Central Employee-Representative Committee gave their respective opinions on September 16 and 17, 2008.
Company to carry out a professional or personal project, or to take early retirement. It was opened to employees in the CIB, the functional departments (Audit Department, Compliance,
Applications that did not meet these conditions were nevertheless considered, insofar as the departure of an employee allows internal reclassifi cation of an employee belonging to a professional category within which jobs are being eliminated. The job in question was published in the “jobmart” in “C ontacts RH”.
Employees wishing to volunteer were required to send a letter of intention by registered post with return receipt to the HRD, or present it in person to their HR Representative. In this letter, they expressed their wish to volunteer for early retirement or to leave in order to undertake a professional or personal project. After their requests were studied by their HR representative and their hierarchical manager, replies were given within 15 days. If their requests were accepted, the HRD invited them to meet an adviser from the Mobility Information Center. This adviser helped them to
RESOURCES 4 Human res ources formalize their personal or professional projects. It was then up to the employees to confi rm their requests by letter (registered with return receipt); this letter had to include the formal documentation for the project and the request for voluntary departure. Finally, the requests were examined by the validation commission. Replies were given to employees within 15 days.
A Mobility Information Center was set up when the period for volunteering began, with a team of consultants available to answer employees’ questions via a single telephone number and face-to-face meetings.
A section dedicated to the adjustment plan was created on the HRD’s intranet, with regularly-updated information and an electronic mailbox. Offers of jobs available under the substitution process were also posted on the intranet. A pamphlet describing the PACEC was also sent to employees’ homes, with particular emphasis on the voluntary scheme. Managers also received a summary brochure entitled “The manager’s guide”.
In 2009, the actions that began in 2008 will be continued, with the improvement of operational reporting and the development of new simulations and analyses, as part of a study on valueadded HR indicators for use in HR policies, particularly in relation to mobility and employment policy.
Concerning the introduction of HRIS tools, three main subjects were dealt with: T ■ o improve and enhance the conduct of annual interviews and the setting of objectives, a new tool was put in place and introduced for about 8,000 employees in France and internationally, available in 5 languages. The project, which was completed in less than 6 months, involved teams from
Group and divisional HR and IT, with the help of Technomédia, the Company that develops and hosts the chosen information system.
Payroll simulations were improved using the “Scénario RH” tool, based on the “AllShare” product.
Within the scope of the parent company, the activity to transform the HR organization will continue to help the Training and Shared
HR Services department to improve its productivity and quality of service.
EMPLOYEE RELATIONSHIPS: CONTINUING TO DEFINE A FRAMEWORK FOR EMPLOYEE/MANAGEMENT DIALOG WITHIN THE GROUP
Employee relationships were the subject of intense activity, with the aim of pursuing the defi nition of a framework for employee/
14 company agreements were thus signed, to harmonize most of the collective status, particularly the measures applicable concerning: working time; ■
In 2008, the obligatory annual negotiations led to the unilateral application of the Management’s proposals, the main principles being as follows: revision to €19,000 of the minimum gross annual remuneration ■
upon hiring for full-time employees on fi xed-term and unlimitedterm contracts, other than contracts related to employment policy; revaluation of basic salaries according to the following scale: ■
minimum of €550, 1% for salaries of between €35,000 and €70,000, with a ■
minimum of €500; in-depth consideration, by managers and Human Resources ■
S.A. parent company and 22 subsidiaries of the Group. This agreement will be extended to the entire Group over the next three years.
It allows employees with at least three months of seniority in the year in question and with fi xed or indeterminate-term contracts, to benefi t from the incentive plan according to the consolidated results of the Natixis Group. The calculation of the special reserve for the incentive plan is based on a formula that is exceptional to that provided for by the law. For 2008, the legal formula, which is the most favorable, was applied.
The profi t-sharing plan signed in 2006 is still applicable within
Natixis S.A. and three attached subsidiaries, under the same conditions as the previous year, namely that 60% of the dedicated amount is paid proportionate to the salary and 40% according to the period of presence of the benefi ciaries.
In order to provide a more comprehensive overview of all benefi ts received by employees in 2007, a “Remuneration Document”
Lastly, contacts with the shareholder groups have been increased and their job offers have been widely disseminated amongst Natixis’ teams, particularly for repositioning employees in the provinces.
Management Committee to control all decisions on developments to the workforce; and through the mobility charters agreed between Natixis, its subsidiaries and the shareholder groups, which provide a fl exible and reassuring frame of reference; they provide consistency in managing individual mobility through common rules and support procedures.
In 2008, the number of work-experience courses, work-based learning contracts and VIE increased, and the Natixis parent company received 1,097 students or recent graduates.
122 persons taking part in VIE (international voluntary service in companies) were able to acquire advantageous and recognized international experience through missions lasting from 18 to 24 months. They were able to refi ne their knowledge of the Group’s business lines: structured or corporate fi nance, commodities fi nance and market activities.
704 agreements on paid work-experience courses were concluded for reception of trainees for periods of 6 to 12 months within the bank’s various business lines.
Natixis has enhanced its partnerships with higher-education establishments, taking part in 19 school forums.
The subsidiaries were associated with this approach and presented their activities on the Natixis stand.
The new communication campaign was also appreciated by our contacts in the schools, and the Paris Graduate School of
Management displayed it on the inside cover of its guide to the
This was created in association with the other large banks in the market and Natixis received 5 students studying for this master’s degree.
Natixis’ Quantitative Research to allow young researchers to continue their work. Under a partnership with the Université
E-Learning solutions, negotiating master agreements with training organizations and continuing the transition from a “catalogue”
The department’s signifi cant courses were in line with the realities concerning Natixis, both from the point of view of products and markets and concerning human resources: training support for PACEC by a dedicated team within the ■
training department; implementation of a range of E-Learning products for the Front, ■
the aim of offering consistent solutions; development of activities on individualized training courses ■
Management concerning his vision and subjects of current interest. In the second half-year, a second series of breakfasts was organized with the members of the “50 circle” to prepare for meetings of the Senior Management.
In the second half-year 2008, to support the policy of the Group
HRD, Natixis Management became the division dedicated to the development of management. Natixis Management’s actions are now aimed at all of the Group’s managers (about 2000).
Concerning support for managers, Natixis Management has reviewed the range of training courses and restructured them around three stages: young managers; ■
This range of courses has been online since January 14, 2009 on the new Natixis Management intranet site. It includes 10 seminars covering all management areas.
Concerning personalized support to managers, 2008 saw the standardization of the process of managing coaching in the
The last quarter of 2008 saw the introduction of a new annual interview system, called “Talentis”. The implementation of Talentis shows Natixis’ intention to revitalize the approach to evaluating its employees and to offer a standardized system backed by an application appropriate to the new scope of the process.
Talentis is a major factor in standardizing Natixis’ practices in the area of human resources: it concerned the employees of Natixis
S.A., and also those of certain subsidiaries of the Services division and some of the French and international subsidiaries of the CIB. In 2009, it is intended to extend the system to other entities within the Group.
The Human Resources department will continue its initiatives to support the Group’s development, defi ning standardized policies on remuneration and improving the strategic management of both human and skills resources, while keeping salary costs under control. A procedure will be implemented by Natixis
Concerning the situation of senior staff, a process covering their situation in the Company was conducted in 2008. This involved improving knowledge of the employment and professional careers of senior staff, understanding their expectations and identifying measures to be implemented, consistent with HR policies, to promote the integration and development of senior staff within the Natixis environment. These themes were tackled using an innovative approach via discussion groups led by consultants: sixty employees of the parent company and French subsidiaries took part in three meetings. The essential issue remains fi nding a balance between non-discrimination and making the best use of the special abilities of senior staff. The lines of action identifi ed also involve wider initiatives covering all employees: better knowledge of expertise, increased mobility, and more localized and individualized management.
TOTAL 22,096 * With functional departments outside France accounted for under operational divisions, only the Group consolidation is presented (i.e. without the France/International distinction and in line with the practice followed in the 2006 Registration Document).
HEALTH AND SAFETY CONDITIONS (LA 9) – NRE APPENDICES TO REGISTRATION DOCUMENT
Initiatives will be carried out in 2009 and appropriate modules have been constructed for members of the commission, Human
Resources managers, managers and lastly, for all employees. An intranet site dedicated to the HSWCC, managed by the HSWCC
commission, which includes the Management, the occupational health physicians and HSWCC representatives, met more than 10 times in 2008, because it has the advantage of being able to meet very quickly and without formalities according to the urgency of situations. Its role is to help in optimizing the conditions under
A medical insurance adviser remains available twice a week for employee consultations in the Paris metropolitan area.
2008 was the year in which the SDSS program was completed 2008 saw the new Matisse system become the reference accounting system and informational database for the Natixis parent company, in the sense of the old scope of Natexis Banque
A major overhaul of the information system was therefore completed, contributing to signifi cantly improving the strategic management of Natixis as a whole.
program, while gradually widening the scope of the summary data and the Group entities managed in these tools: Matisse thus became the accounting tool used by Natixis ■
The Group’s information security governance function is carried out through: setting up the committees mentioned in the General Policy on ■
Information Security: the ■ Information Systems Strategic Security Committee: a decision-making authority, chaired by a member of the
Its purpose is to make sure that the annual security plan is followed, to coordinate and control all actions in the sector and to pool security projects; developing the main ■ operational security policies, which specify the instructions to be complied with and now serve as a reference for all checks carried out within the Group.
The improvement of the governance of Natixis’ information systems has led to better monitoring and supervision of overall
February 2008, with a study on the framework to defi ne the conditions for integrating the Groupe Caisse d’Epargne’s securities services activities on the DEFI target platform. The last quarter was devoted to the launch phase and bringing the business and project-management teams up to speed.
The Purchasing department has extended its scope to cover the whole of the Natixis Group. This policy was confi rmed at the highest level of the Company under the cost-cutting plan.
Partnership agreements have been concluded with the businesslines to cover about 70% of Natixis France expenditure.
It ranks fi rst on the French market in the fi eld of social solidarity investment funds and is a forerunner in the socially responsible and sustainable investment (SRSI) market space.
The Group endeavors to raise employee awareness of sustainable practices in the workplace by focusing on the need to reduce consumption, recycle waste, develop green travel plans and implement responsible purchasing policies.
In addition, by supporting projects that extend beyond the confi nes of its traditional business boundaries, Natixis aims to strengthen civil society through cultural sponsorship initiatives and its commitment to the fi ght against malaria.
Compact in its own right as of July 2007 and actively works to advance the ten fundamental principles of the Global Compact in the areas of human rights, workplace standards and the fi ght against corruption. Its subsidiary, Coface, has been a member of the UN Global Compact since 2003.
Seizing the opportunities and addressing the constraints of carbon market participation
Natixis is able to satisfy a diverse range of client needs: on the European emissions trading market: Buying and selling ■
of emissions trading permits on spot and futures markets; option strategies are also employed; on carbon credit markets created by the Kyoto protocol: ■
Natixis is consolidating its leadership in fi nancing capital-intensive renewable energy projects, whether in the form of fi nancial leasing, project fi nancing or the management of specialist investment funds.
combined power output of 133.60 megawatts; provision of €27 million in fi nancing for fi ve photovoltaic solar ■
power plants with a combined power output of 9 megawatts; provision of €2 million in fi nancing for a 1.2 megawatt biogas ■
Natixis has provided fi nancing for more than 55 projects with a combined installed capacity of 6,745 megawatts.
Natixis arranged and underwrote the fi nancing for the construction and operation of a portfolio of eight wind farms in France. The wind farms are being developed by Eolinvest France, a France-regulated private equity mutual fund (FCPR) which is managed by Eolfi Asset Management, an Group subsidiary. The wind farm portfolio has a combined capacity of 84 megawatts located in six areas of France and is scheduled to come on stream in 2010. A total of €127 million in debt fi nancing was raised for the project.
In 2008, the adoption by the European Parliament of the socalled Climate-Energy Package provided a signifi cant boost to the renewable energy sector. The package defi nes practical steps to be taken to reduce greenhouse gas emissions by 20% and to establish a 20% share for renewable energy in terms of total installed capacity. The strategic direction of the funds managed by Natixis Environnement & Infrastructures is fully consistent with these objectives.
In the infrastructure funds sector, the FIDEPP fund completed several transactions involving Public Private Partnerships in 2008. The Cube Infrastructure Fund, which is managed by
Coface’s export credit backing is contingent on compliance with environmental and social standards. In accordance with the
using public resources, Coface systematically assesses the environmental and social impact of all projects that are deemed environmentally sensitive or which involve amounts in excess of €10 million. These projects must satisfy standards in force in host countries as well as the relevant international standards, including those established by the World Bank. These essentially relate to environmental stewardship in the broad sense of the term (e.g.
More generally, Coface addresses these matters in a constructive way. Wherever possible, it works closely with clients and stakeholders in order not just to meet but also to exceed the standards set. It engages a two-way dialog with civil society and with environmental NGOs in relation to these procedures and their application. As appropriate, it also provides disclosure on a project by project basis.
Finally, Coface participates in discussion groups which seek to obtain preferable fi nancing terms for renewable energy projects and other energy effi ciency measures.
A policy of non-investment in companies involved in landmines and cluster bombs
This non-investment policy applies to: fi nancing for companies involved in ■ landmines and cluster bombs; own-account investments; ■
Natixis Asset Management will also raise awareness of this issue among its customers.
Capital Ethique, the fi rst sustainability-screened employee savings fund, in 1999.
Natixis Asset Management has steadily developed a complete range of SRI-themed and solidarity mutual investment funds (2), covering the full spectrum of asset classes, from equities, bond and money market funds through to diversifi ed funds. Funds are managed according to a variety of approaches, ranging from integrated SRI strategies (3) and thematic funds through to ethical and solidarity funds.
Natixis Asset Management manages a total of 37 SRI-themed and solidarity mutual investment funds (including dedicated mandates and employee savings schemes). It operates eleven funds in the open-end fund sector, representing €2.8 billion in assets under management.
(2) An investment fund which dedicates between 5% and 10% of assets under management to the fi nancing of projects in the social and solidarity economy.
As at December 31, 2008, Natixis Asset Management had €3.6 billion in assets under management invested in SRI and solidarity-based investment funds and occupies a preeminent position in its markets: No. 1 in solidarity-based fund management ■
in France, with a 44% market share, as reported in the 2008 Baromètre des Finances Solidaires league table compiled by Finansol (1), La Croix and Ipsos; among the top-ranking SRI-themed funds in ■
Management are joint market leaders in social solidarity funds for Company sponsored employee savings schemes in France with a 54.6% market share (4).
It is continuously consolidating its core SRI research and asset management capabilities and is progressively extending
To meet these demands, Natixis Asset Management has reorganized and strengthened its specialist SRI teams: within Europe, Natixis Asset Management maintains one of the ■
SRI universe (5), Natixis Asset Management has regrouped its extra-fi nancial research and credit analysis team within a single department; a quantitative research unit has been established within the ■
Responsible Investment Forum (FIR); a joint sponsor of the 2008 edition of EUROSIF’s SRI Market ■
Natixis Asset Management made several key enhancements to its SRI offering in 2008: as of September 15, 2008, Natixis Asset Management brought ■
Natixis Asset Management uses material extra-fi nancial factors into its investment process and seeks to hone in on the key criteria that are likely to have a medium to long-term IMPACT
on valuations and risk/reward. In addition, socially responsible investors who are clients of Natixis Asset Management are keen to make a positive and concrete IMPACT on the environment, society and corporate governance.
(1) Finansol: a representative body for institutions involved in social and ethical fi nancing.
(2) Novethic: an independent think-tank on SRI and sustainable development. Novethic publishes a semiannual indicator on SRI management; February 2009.
(5) Core SRI corresponds to investment products managed according to strict SRI management rules.
(6) An initiative launched in 2006 by the United Nations under the auspices of UNEP Fi and the Global Compact.
French organization that vets social and ethical investments, in recognition of the transparency of their investment process.
Natixis Asset Management is leader in this fi eld and plays a major role in the fi nancing of social and ethical projects through the investors that it represents.
This French-regulated solidarity-based private equity mutual fund had €15.3 million in assets under management as at
December 31, 2008 and provides funding for a variety of projects promoting social insertion, social housing, people in temporary diffi culty, microfi nance and social and ethical fi nancial services.
During the year, Natixis continued to step up efforts aimed at combating the misuse of its operating units for money laundering, the fi nancing of terrorism and breaches of fi nancial embargos.
Compliance Division work actively, both at upstream (standardsetting, guidance and training) and downstream (supervisory procedures and oversight) levels within the parameters of the compliance framework.
This framework is supported by supervisory practices such as know-your-customer (KYC) checks, detection procedures for unusual or suspicious transactions, and suspicious transactions reporting (STR) mechanisms which provide for information exchange with fi nancial intelligence units and other competent authorities.
Group’s fi nancial crime and compliance software which includes sophisticated behavioral profi ling technology.
In addition, Natixis provided follow-up training for staff on the prevention of money laundering and terrorism fi nancing. A
Furthermore, Natixis’ Financial Security department participated in a series of interbank projects which aim to provide advocacy on legal and regulatory issues, such as the transposition into domestic law of the Third European Directive. This participation also enables it to keep abreast with best practices in its sector.
At Group level, Natixis’ operations may have a signifi cant impact on the environment, whether in terms of resource consumption, waste management and carbon emissions. An environmental stewardship policy was put in place to mitigate these negative impacts in 2004.
Natixis participates in eco-action initiatives coordinated by the French Environmental Protection Agency, Ademe, to raise public awareness about the contribution of greenhouse gases to climate change. It has a dedicated intranet site which encourages employees to alter their behavior in order to reduce energy, paper and fuel consumption, and optimize waste management.
The logistics department plays a role in managing the bank’s direct impact on the environment by establishing a proactive policy of controlling energy use in buildings. It uses state-of-theart operating systems to measure energy use and set targets to reduce annual consumption. Consumption is monitored on a month-by-month basis within the main corporate buildings.
Insofar as ISO 14001 requires companies to ensure compliance with quality assurance standards, the logistics department has initiated efforts to obtain ISO 9001 quality certifi cation for its property facilities management and maintenance activities. The
ISO 9001 standard has four elements: Management responsibility for facilities management and maintenance functions, quality assurance, customer satisfaction criteria, and continuous improvement (measurement and analysis of quality performance and effective implementation of corrective actions).
The Group’s waste management policy also covers IT equipment, both through purchasing initiatives and end-of-life electronics management. Carbon emissions assessments show that information technology systems account for 40% of Natixis’ total greenhouse gas emissions.
Following the entry into force of the WEEE directive on electrical and electronic waste, Natixis appointed a specialist waste treatment fi rm, APR2, to coordinate end-of-life management, reprocessing and reclamation for IT systems.
Finally, in 2008, the Group developed the new carpooling website launched in late 2007. The site uses geographical information to help employees share their vehicles and match supply with demand, whether for commuting purposes or for travel between corporate premises.
2008 results of the carpooling initiative 1,050 commuters registered throughout the Paris Region; ■
210 carpooling proposals posted since the program ■ began; 23 Natixis sites represented. ■
In 2008, the purchasing department continued to spearhead socially responsible procurement policies on behalf of the organization.
A sustainable development code of practice has also been drawn up and circulated to suppliers. The code of practice has been made available for download on the Group’s supplier extranet since the end of 2008.
Of the approximately 540 purchase orders processed by the procurement department in 2008, 265 were scored on sustainable development criteria. In value terms, the proportion of orders awarded based on sustainability criteria was 80%.
In 2008, Natixis revised its environmental purchasing policy to incorporate the following items: all paper is made from recycled or virgin wood fi ber ■ sourced from sustainably managed forests and has a base weight of 75 g rather than 80 g; use of recycled envelopes labeled according to French ■ environmental standards; use of remanufactured consumables for printers and fax ■ machines; wherever possible, offi ce supplies are purchased from ■ a green catalog. These purchases accounted for 28% of overall purchasing by volume and 22% by value.
The project brings together a cross-section of corporate sponsors, district authorities and neighborhood groups as well as students from Université Paris Diderot.
The project promotes eco-citizenship as part of the wider goals of the urban regeneration initiative underway in the 13th arrondissement of Paris. To this end, the goals pursued by the initiative can be summarized as follows: environment ■ : energy effi ciency, waste sorting, promotion of
Conservation, which is involved in activities related to conservation of biodiversity.
Following on from the creation of an equal opportunities commission within Natixis S.A. in July 2007, talks on gender equality were held with labor representatives in late 2008. A
HR managers as well as the wider workforce; in terms of external communications initiatives, Natixis organizes ■
meetings with a Natixis manager and disabled member of staff for engineering students in Paris. The purpose of meetings is to raise awareness among students of the role played by disabled employees in the workplace. As another demonstration of its commitment to promoting disability equality, Natixis also provides sponsorship for L’Officiel du Handicap, a Frenchlanguage magazine for people with disability.
Additionally, the Group has established and consolidated relations with associations that facilitate dialog between companies and disabled persons (Hanploi, Tremplin, AFIJ, AFIDEO), as well as with temporary employment agencies with a view to providing work placement and recruitment opportunities for disabled persons.
Finally, Natixis has also established contracts for supplies and services with sheltered work centers employing disabled persons. Thus, tasks such as responding to job applications and electronics recycling, collection and processing have been outsourced to ARP2, a French company providing sheltered work for disabled persons. Natixis’ procurement department remains committed to sourcing additional supplies and services from sheltered work centers.
In the area of sustainable development, Natixis’ corporate patronage activities focus on strengthening solidarity with the underprivileged and passing on knowledge to future generations.
In the area of corporate philanthropy, Natixis has been a member of the French coalition in the fi ght against malaria since 2005.
Malaria is recognized as a key barrier to economic and social development throughout the developing world. The reality is that solutions exist for fi ghting this insidious disease which causes two million deaths annually, mainly among pregnant women and infants.
organized by an association of medical students in Paris and 22 regional cities throughout France. The funds raised from these events were donated to NGOs involved in the fi ght against malaria; a temporary installation was organized in Paris by the Plan ■
France NGO, incorporating informative displays, a photo exhibition and educational activities for adults and children.
Lastly, Natixis provided funding for a project led by Dr. Ménard of the Institut Pasteur’s Malaria Biology and Genetics unit. Using images obtained with an electronic microscope, the research team was able to examine in real time a crucial phase of the infection via dynamic imaging and confi rmed the complete development cycle of the malaria parasite in human skin. The results of this research will contribute to the wider global effort to develop a vaccine against malaria.
Heritage, Today’s Treasures), Natixis has demonstrated a strong and consistent commitment to developing, studying and ensuring the transmission to future generations of lesser-known works of
In 2008, Natixis acted as a sponsor to the Babylon exhibition in the Louvre Museum. This unprecedented exhibition brought together a treasure trove of 400 works held in public and private collections around the world with the aim of reconciling Babylon’s history with its legend. Through its support for the exhibition,
Natixis helped to bring to light a unique view of the ancient city as well as the way in which its hidden treasures provide rich insights into the cultural roots of our modern world.
Comparisons with Global Reporting Initiative (GRI 3) indicators are shown between brackets.
CACEIS, and the inclusion of the workforce of M+X, following its absorption into Natixis Paiements.
WORKFORCE BREAKDOWN – PARENT COMPANY EMPLOYEES (NUMBER OF EMPLOYEES OR PERCENTAGE)
Men accounted for 54.5% of the parent company’s workforce and women 45.5%.
The staff of the parent company includes 95 civil servants on secondment.
2) Natixis’ parent company greatly reduced its recruitment activity in the second half of the year. Excluding staff transfers made in connection with business combinations, a total of 493 new hires were recruited and this fi gure included
3) During the year, there was a series of staff transfers within
After stripping out the impact of staff transfers, intercompany mobility within the Natixis Group totaled 429 in 2008. Managerial staff accounted for 77% of this total.
A total of 1,585 fi xed-term and permanent employees left Natixis in 2008 for various reasons (excluding intercompany mobility), versus 1,653 in 2007.
Finally, a total of 350 employees of Natixis in France were dismissed, versus 198 in 2007. This included 202 parent company employees and 87 redundancies made in connection with the workforce reduction plan. See “Workforce reduction and employment preservation plans” section herein for more information.
TOTAL FTE OVERTIME – PARENT COMPANY AND SUBSIDIARIES 20.9 24.9 27.2
The business activities of Natixis’ parent company and its subsidiaries in France are covered by ten collective bargaining agreements. Three-quarters of employees are covered by collective bargaining agreements applicable to the banking and insurance sectors.
Certain sectors are subject to specifi c provisions, in particular with regard to working hours.
In the parent company, the statutory workweek is 35 hours averaged over the year. The collective workweek is 38 hours and employees also enjoy compensatory time off in lieu of overtime.
The absentee rate in France was 5.1% in 2008. Sick leave accounted for 2.4% of the total absentee rate and maternity leave 1.6%. The same fi gures for Natixis’ parent company are
In 2008, the mandatory annual compensation negotiations resulted in the unilateral application of Management’s proposals as summarized below: the annual minimum amount of gross compensation for ■
worked in collaboration with subcommittees responsible for enforcing hygiene, safety and workplace conditions in the
impact of the employment support plan on work conditions, staff workloads and health risks.
Furthermore, a specifi c commission on standards of professional behavior and the prevention of harassment and bullying in the workplace has been set up to collate data on workplace bullying and identify risk factors at organizational and psychosocial levels.
To facilitate the coordination of staff transfers within the organization, a specifi c commission bringing together senior management, occupational health professionals, and representatives of the
Workplace Hygiene and Safety Committee has been set up in response to the signifi cant number of transfers which occurred in 2008, with 10,000 movements recorded over the year. The
In the area of occupational health, an autonomous medical team regularly monitors employees in Paris and its area. In addition, as part of its overall strategy for occupational health management,
Natixis carries out annual health surveillance examinations for staff. In 2008, the occupational health department took steps to develop a specialized unit to monitor the impact of stress in the workplace. This monitoring unit is now up and running. For 2009, the annual surveillance examination for staff will be further bolstered through the introduction of a 100-point questionnaire.
Within the parent company, 124,046 training hours were dispensed for 4,828 trainees, including 3,382 managerial staff and 1,446 technical staff.
Foreign language training accounts for a signifi cant proportion of total training hours within the Group’s various entities. This is indicative of the increased globalization of the Group’s business operations and operating locations. Professional training also accounts for a signifi cant share of overall training, with CRM
The overall cost of training in 2008 accounted for 3.4% of the parent company’s total payroll and 3.5% of the French payroll compared to a minimum legal requirement of 1.6%.
(intercompany training, sabbaticals, individual training rights, transforming work skills recognition and skills assessments). All
Recruitment: ■ A total of 839 women were recruited in 2008 in France, representing 49% of new hires. The percentage of women recruited to positions in the parent company was 37.1%.
Proportion of women employed in managerial positions 2008 2007 2006 2005 2004
Proportion of women in ■ promotions: Among all French employees, women received 63.8% of all promotions in 2008. This percentage is higher than the proportionate share of women in the workforce. Within the parent company, the percentage stood at 58.1%, also higher than the proportion of female employees.
Individual pay increases ■ granted to women: Among employees based in France, women accounted for 51.1% of overall pay increases granted to individual employees. This percentage is higher than the proportionate share of women in the workforce.
Within the parent company, the share of overall training dispensed to women is signifi cantly higher than their proportionate share in the workforce.
A total of 68 handicapped persons are employed by the parent company, 31% of them in managerial roles, while 37% of them are women.
As from 2007, a disability taskforce began organizing targeted awareness-raising efforts for human resources employees involved in the areas of HR administration, training and the integration of trainees and temporary staff. In addition, specifi c initiatives were directed towards occupational health physicians, social workers and occupational health nurses were also associated with these actions, as were members of the Group’s
The parent company and a certain number of subsidiaries have developed partnerships with non-profi t organizations which help to bring together companies and disabled persons. In the selection of temporary employment agencies, the impact of practices and policies upon disability equality is taken into account in selection procedures while master agreements systematically include nondiscrimination clauses. Temporary workers with disabilities are regularly employed within the bank.
As a result, Natixis’ website became the fi rst banking sector website to achieve bronze level certifi cation under the French
Each year, Natixis earmarks 1.5% of total payroll for the funding of social and cultural activities for employees. In addition, it provides holiday vouchers to staff based on family income criteria and number of children, the amount of which represents 0.6% of the wage bill. Operating expenses for these social, personnel and transport activities are underwritten by Natixis.
Employees who so wish pay an annual contribution to the scheme which is supplemented by an employer paid matching contribution.
In 2007, many employees took part in France’s annual Telethon fundraising campaign. The funds donated by employees on this occasion were matched by Natixis on a one-for-one basis.
Secondly, Natixis’ complementary health insurance plan is managed jointly by management and employee representatives.
The plan is anchored upon the principle of intergenerational equity between present and past employees.
METHODS USED BY THE COMPANY TO ACCOUNT FOR THE IMPACT OF ITS OPERATIONS ON EMPLOYMENT AND REGIONAL DEVELOPMENT IN FRANCE
Natixis supports regional development by providing fi nancing and building long-term relationships with clients. See section 3,
RELATIONSHIPS WITH EDUCATIONAL INSTITUTIONS AND ACTORS INVOLVED IN PROMOTING SOCIAL INCLUSION
SUBCONTRACTING POLICY AND OBSERVANCE OF THE CORE CONVENTIONS OF THE INTERNATIONAL LABOR ORGANIZATION
The Company ensures that its sub-contractors abide by legal requirements for personnel management.
France is a signatory. These principals are also included in the
Natixis’ international operations contribute to local development in the countries in which they operate. The Group has more than 10,900 employees in overseas offi ces, branches and subsidiaries.
Virtually all of these employees are recruited locally. The Group has a very limited number of expatriate employees, accounting for only 189 employees of its France-based operations.
Water consumption totaled 125,650 cubic meters. Overall consumption fell by 12% during the 2008 reporting period.
Consumption per sq. m. of usable fl oor area (cu. m.) 0.29 0.33
Raw materials used by Natixis consist primarily of paper consumption. Overall paper consumption was reduced by 7.2%
Energy consumption (electricity, heating and cooling) totaled over 141,000 megawatt hours in 2008 and was broadly stable in relation to 2007. The Group’s data center consumed 31,000 megawatt hours, a level almost unchanged from the prior year. Consumption of gas and heating oil remain low.
to 57,342 megawatt hours (versus 61,608 MWh in 2007), representing a mean energy consumption of 4.38 megawatt hours per workstation and 0.24 megawatt hours per square meter of gross usable fl oor area.
Total energy consumption for electricity, heating and cooling (MWh) 141,302 141,722
Energy consumption per sq. m. of usable fl oor area (MWh) 0.32 0.32
The logistics department has individual facilities managers who interact directly with users. Their duties include responsibility for optimizing energy consumption and, for this purpose, they use a centralized facilities management system to optimize user comfort while minimizing energy consumption. Building utility services are managed by automated systems which take account of external temperature and the thermal properties of buildings in addition to other factors.
System performance is monitored and improved via regular comparisons between actual consumption and budgeted energy requirements. Annual energy budgets incorporate quantitative targets and take account of seasonal fl uctuations and historical variations for each operating location.
Arc de Seine, Natixis’ headquarters building in the 13th arrondissement of Paris since 2007, has obtained the French
Natixis does not use renewable energy sources for the time being.
LAND USE - ATMOSPHERIC EMISSIONS - WATER AND POLLUTANT DISCHARGES - NOISE AND ODOR POLLUTION - WASTE PRODUCTION AND DISPOSAL (EN 19 TO 23)
Natixis precludes the use of air-conditioning systems using evaporative cooling in order to avoid pollutant discharges: Glycolated water from thermal exchangers is periodically recovered and reclaimed by specialized contractors. Used fl uids from combustion engines (electricity generators, vehicles, etc.)
Since 2006, the bank has taken various measures to optimize waste management processes. Selective sorting of offi ce waste has been introduced with specifi c procedures for recycling paper and the collection and reprocessing of used batteries and ink cartridges.
Systemic waste sorting and recycling Systematic use of recycled envelopes which are produced according to French environmental standards (NF label).
As a listed company, Natixis is regularly assessed and assigned solicited ratings by extra-fi nancial rating agencies. These agencies place considerable emphasis on the Company’s environmental strategy.
The bank’s operations are predominately located in urban environments and do not have a direct material impact on the natural environment. Notwithstanding this, preventive measures have been taken to avoid any accidental discharges into the atmosphere or water. To this end, the Group carries out regular maintenance of sensitive facilities and ensures that premises containing potentially polluting substances or contaminants are watertight.
Natixis observes all legal and regulatory obligations with regard to the environment. To this end, it engages the services of civil engineers and facilities management consultants. These specialists work in tandem with property occupants and are highly profi cient in the use of technical equipment. They also perform regulatory monitoring on behalf of the Group. Finally, technical installations and maintenance processes are subject to regular inspections by independent consultancies.
Environmental protection expenditures made by Natixis in 2008 were as follows: asbestos abatement: €91,000; ■
MONETARY VALUE OF SIGNIFICANT FINES AND TOTAL NUMBER OF NON-MONETARY SANCTIONS FOR NON-COMPLIANCE WITH ENVIRONMENTAL LAWS AND REGULATIONS (EN 28)
EXISTENCE OF INTERNAL DEPARTMENTS FOR ENVIRONMENTAL MANAGEMENT, TRAINING AND INFORMING EMPLOYEES - RESOURCES DEVOTED TO MITIGATING ENVIRONMENTAL RISK
(glycolated water, hydrocarbons, etc.) is recovered and treated in line with current regulations.
THE SUPERVISORY BOARD’S COMMENTS ON THE EXECUTIVE BOARD’S MANAGEMENT REPORT AND THE 2008 FINANCIAL STATEMENTS 192
Natixis operates in an environment that presents inherent risks, some of which it cannot control. However, these are not the only risks to which Natixis is exposed. The risks set out below, as well as other risks that have not yet been identifi ed or which are currently considered immaterial by Natixis, may have a material adverse impact on its operations, fi nancial position and/or results.
Adverse market or economic conditions may cause a decrease in the net banking income, profitability and financial condition of Natixis
Natixis‘ businesses are materially affected by changes in fi nancial markets and economic conditions generally in France, in Europe and the rest of the world. Consequently, its results operations and its fi nancial conditions have suffered signifi cantly, and may continue to suffer, from the exceptional disruptions that are affecting all markets throughout the world.
This situation also affected other markets as fi nancial institutions sold other assets to meet liquidity requirements. Several fi nancial institutions were weakened in this way, including
In this context, Natixis recorded a signifi cant loss in 2008. The decline in fi nancial markets in France, Europe and the rest of the world, and the increased volatility in these markets, have adversely affected revenues in fi nancial markets businesses, as well as the level of assets and commissions for asset management. A continuing worsening of the economic situation may have negative effects on Natixis’ results of operations and fi nancial condition.
As Natixis is highly dependent on the availability of credit to fi nance its operations, the signifi cant and unprecedented disruptions currently being experienced in the fi nancial markets, particularly the primary and secondary debt markets, have had, and may have in future, an adverse impact on the fi nancing of
Because of the crisis, Natixis recorded large losses in 2008, described in detail in the Management Report in chapter 6 of this Registration Document. Most of these losses resulted from provisions and writedown of assets impacted by the crisis
(such as CDOs) and on Natixis’ exposure to monoline fi nancial guarantee.
Natixis determined the amount of provisions and writedowns recorded in respect of CDOs and other risky assets on the basis of a number of assumptions resulting from statistical analyses.
The estimates resulting from the use of these methods may change and result in different valuations, which could lead to further provisions and writedown caused by factors that may not have been foreseen or correctly evaluated in the statistical models, or by further changes in market conditions. Given the magnitude of the market disruptions and the fact that international fi nancial institutions do not all use the same methodologies and assumptions the provisions recorded by Natixis and those recorded by other fi nancial institutions in relation to the same exposure may differ, possibly by signifi cant amounts.
Natixis may not be able to wind down its operations that are impacted by the financial crisis efficiently
France and internationally. The phase-down may include the sale of assets affected by the crisis to the extent market conditions permit. Natixis may fi nd itself unable to phase down these activities as quickly or effi ciently as it hopes, either because there are no buyers willing to pay a reasonable price for the relevant assets or activities, or because there is no liquid market for the relevant assets, or because the ongoing obligations of Natixis make a sale or phase-down impracticable. If Natixis is unable to wind down these business as planned, then it will not achieve (or will only partially achieve) its objective of reducing its exposure to market volatility and diversifying its revenue and income base.
Natixis’ options for maintaining or strengthening its regulatory capital could be limited
The ability of Natixis to raise equity capital may be limited by the fi nancial crisis. The share price of Natixis, which typically would be the reference price of any capital raising activity, has at times fallen below the nominal value of a Natixis share, which is the lowest price at which a new share issuance may legally take place. A reduction of the nominal value of a Natixis share would require the approval of a capital reduction by an extraordinary general shareholders meeting. A capital reduction that does not result from losses also requires a procedure that allows creditors to register objections, or to request a court to declare their debts payable or to require Natixis to provide security for such debts.
Natixis’ two main shareholders, CNCE and BFBP, announced their intention to merge in October 2008, and confi rmed their intention on February 26, 2009. Following the merger, the main shareholder of Natixis that would succeed BFBP and CNCE
Natixis has two main shareholders that have a significant degree of influence over certain corporate actions
Natixis’ two main shareholders are BFBP and CNCE, each of which owns approximately 35.62% of Natixis’ share capital. These two shareholders are therefore in a position to exert signifi cant infl uence in the election of Natixis’ directors and offi cers and other corporate actions that require shareholder approval. Pursuant to a shareholders’ agreement signed between the two groups on November 17, 2006, as amended, BFBP and CNCE have also agreed to coordinate the voting of their shares with respect to certain actions, in particular with respect to the election of members of the Supervisory Board and of the Executive Board.
as well as the Supervisory Board of Natixis. In the event of a disagreement, the shareholders’ agreement provides mechanisms for the resolution of the issue at the senior management level but it does not contain a mechanism for defi nitively resolving the disagreement. In the event of deadlock, the Executive Board may be unable to obtain Supervisory Board or shareholder approval to proceed with planned actions. Natixis’ business may therefore be subject to signifi cant disruptions in the event that BFBP and
Natixis has no voting rights with respect to the cooperative investment certificates representing 20% of the share capital of Banques Populaires and Caisses d’Epargne, and it is not the central body of Groupe Banque Populaire or Groupe Caisse d’Epargne
Natixis owns a 20% equity interest in Banques Populaires and in Caisses d’Epargne, in the form of cooperative investment certifi cates issued by each entity. These cooperative investment certifi cates are non-voting securities, with different rights from those attached to cooperative shares in Banques Populaires and Caisses d’Epargne. Although Natixis is entitled to participate in meetings of the cooperative shareholders (“sociétaires”) of
Populaires and Caisses d’Epargne. Moreover, Natixis is not the central body of Groupe Banque Populaire or of Groupe Caisse d’Epargne (the central bodies, BFBP and CNCE, respectively, have certain coordination and control powers under French banking laws and regulations).
Populaires and Caisses d’Epargne as a result of certain rights granted to it under agreements relating to the combination transactions (in particular, rights with respect to representation in or the right to be consulted on certain decisions of the governance bodies or committees of BFBP and CNCE, audit and inspection rights and rights to receive information), but these rights do not include voting rights in General Shareholders’ Meetings and are not equivalent to the powers of a central body. As a result, the ability of Natixis to guide the future development of the two groups in which it holds a substantial interest is limited.
Natixis cannot freely sell its 20% equity interests in Banques Populaires or Caisses d’Epargne, and in some circumstances could be required to sell those interests back to Banques Populaires or Caisses d’Epargne
Under the terms of the agreements relating to the combination transactions that took place on November 17, 2006, Natixis is prohibited from selling all or part of its 20% equity interests in Banques Populaires or Caisses d’Epargne without the prior consent of the board of directors of the Banque Populaire concerned or CNCE, respectively. While a bank whose board refuses to approve such a sale will be required to repurchase the relevant equity interests, the price will be based on the proportionate share of the net assets of the bank represented by the equity interests, taking into account the valuation method used to determine the initial price paid by Natixis for those interests, and thus may be different from the price that Natixis would have obtained from the proposed purchaser. In addition, the mere existence of the approval right might make it diffi cult for
Natixis has important commercial relationships with entities in Groupe Banque Populaire and Groupe Caisse d’Epargne, which might have interests that are different than those of the shareholders of Natixis
Part of Natixis’ strategy for long-term growth is to expand the products and services it provides through the retail banking networks of Groupe Banque Populaire and/or Groupe Caisse d’Epargne, in areas such as employee benefi ts planning, consumer fi nance and payment services. However, the customers
Populaire and Groupe Caisse d’Epargne, as indirect owners of substantial interests in Natixis, have a signifi cant fi nancial interest supporting Natixis’ continued development, they may from time to time have interests that differ from those of Natixis.
Credit risk. ■ Credit risk is the risk of fi nancial loss relating to the failure of a counterparty to honor its contractual obligations. The counterparty may be a bank, an industrial or commercial enterprise, a government and its various entities, an investment fund, or a natural person. Credit risk is increased in time of economic uncertainty such as that currently seen in the market, as such conditions may lead to a greater level of defaults. Credit risk arises in lending activities and Natixis is also exposed to the risk of counterparty default in various other activities, such as its trading, capital markets and settlement activities. For instance, a default by a bank could signifi cantly and directly affect Natixis through its trading and brokerage positions with this bank. Credit risk also arises in connection with the credit insurance and factoring businesses of Natixis, although the risk relates to the credit of the counterparty’s customers, rather than the counterparty itself.
Market, liquidity and financing risk. ■ Market risk is the risk to earnings that arises from adverse movements of market parameters, such as the ones that international fi nancial markets have experienced since the second half of 2007.
In instances of little or no liquidity, a market instrument or transferable asset may not be negotiable at its estimated value. A lack of liquidity can arise due to diminished access to capital markets, unforeseen cash or capital requirements or legal restrictions.
Market risk arises in trading portfolios and in non-trading portfolios. In non-trading portfolios, it encompasses: the overall interest-rate risk associated with asset and liability ■
Internal processes include, but are not limited to, human resources and information systems. External events include
FINANCIAL DATA 6 Risk factors fl oods, fi res, earthquakes, fraud or terrorist attacks. Legal risk is also a component of operational risk.
Insurance risk. ■ Insurance risk is the risk to earnings due to mismatches between expected and actual claims.
The net banking income of Caisses d’Epargne may be affected by changes to the rules governing the Livret A (a regulated savings account formerly distributed only by Caisses d’Epargne and La Banque Postale)
It is probable that the reform will lead to a reduction in the market share of the Caisses d’Epargne of deposits for Livret A, which could affect the total amount of commissions that they receive.
depositors, and not 100% as was the case before the reform.
The reform of the distribution system could have an adverse effect on the net banking income of Caisses d’Epargne, which would in turn affect the share in the income of Caisses d’Epargne that Natixis records in respect of its 20% equity interest.
A substantial increase in new provisions or losses greater than the level of previously recorded provisions could adversely affect Natixis’ results of operations and financial condition
In connection with its lending activities, Natixis periodically establishes provisions for loan losses, which are recorded in its income statement under “cost of risk”. Natixis’ overall level of provisions is based upon its assessment of prior loss experience, the volume and type of lending being conducted, industry standards, past due loans, economic conditions and other factors related to the recoverability of various loans. For further information on Natixis’ provisioning policy and its treatment of doubtful loans, see “Risk Management”.
Pursuant to IFRS rules and interpretations in effect as of the present date, Natixis is required to use certain estimates in preparing its fi nancial statements, including accounting estimates to determine loan loss reserves, reserves related to future litigation, and the fair value of certain assets and liabilities, among other items. Should Natixis’ estimated values for such items prove substantially inaccurate, particularly because of signifi cant and unexpected market movements, or if the methods by which such values were determined are revised in future IFRS rules or interpretations, Natixis may experience unexpected losses.
As part of its trading and investment activities, Natixis maintains positions in the fi xed income, currency, commodity and equity markets, as well as in unlisted securities, real estate and other asset classes. These positions can be adversely affected by volatility in fi nancial and other markets, that is, the degree to which prices fl uctuate over a particular period in a particular market, regardless of market levels.
Conversely, to the extent that Natixis has sold assets that it does not own, or has net short positions, in any of those markets, an upturn in those markets can expose it to losses as it attempts to cover its net short positions by acquiring assets in a rising market. Natixis may from time to time have a trading strategy of holding a long position in one asset and a short position in another, from which it expects to earn net revenues based on changes in the relative value of the two assets. If, however, the relative value of the two assets changes in a direction or manner that Natixis did not anticipate or against which it is not hedged,
Natixis might realize a loss on those paired positions. Such losses, if signifi cant, could adversely affect Natixis’ results of operations and fi nancial condition.
Significant interest rate changes could adversely affect Natixis’ net banking income or profitability
The amount of net interest income earned by Natixis during any given period signifi cantly affects its overall net banking income and profi tability for that period. In addition, signifi cant changes in credit spreads, such as the widening of spreads experienced recently, can impact the results of operations of Natixis. Interest rates are highly sensitive to many factors beyond Natixis’ control.
Changes in market interest rates could affect the interest rates charged on interest-earning assets differently than the interest rates paid on interest-bearing liabilities. Any adverse change in the yield curve could cause a decline in Natixis’ net interest income from lending activities. In addition, increases in the interest rates at which short-term funding is available and maturity mismatches may adversely affect Natixis’ profi tability. Increasing or high interest rates and/or widening credit spreads, especially if such changes occur rapidly, may create a less favorable environment for certain of Natixis’ businesses.
Natixis conducts a signifi cant portion of its business overseas, in particular in the United States, and its net banking income and results of operations can be affected by exchange rate fl uctuations. While Natixis incurs expenses in currencies other than the euro, the impact of these expenses only partially compensates for the impact of exchange rate fl uctuations on net
However, these transactions may not be fully effective to offset the effects of unfavorable exchange rates on Natixis’ operating income; they may even, in certain hypothetical situations, amplify these effects.
systems to accommodate an increasing volume of transactions could also constrain its ability to expand its businesses.
Such events may also make insurance coverage for certain risks unavailable and thus increase Natixis’ global risk.
Natixis is subject to country risk, which is the risk that economic, fi nancial, political or social conditions in a foreign country will affect its fi nancial interests. Natixis does business throughout the world, including in developing regions of the world commonly known as emerging markets. In the past, many emerging market countries have experienced severe economic and fi nancial disruptions, including devaluations of their currencies and capital and currency exchange controls, as well as low or negative economic growth. Natixis’ businesses and revenues derived from operations and trading outside the European Union and the
Natixis is subject to extensive supervisory and regulatory regimes in France and in the many countries around the world in which it operates; regulatory actions and changes in these regulatory regimes could adversely affect Natixis’ business and results
FINANCIAL DATA6 Risk factors governments and international agencies. Such constraints could limit Natixis’ ability to expand its business or to pursue certain activities. The nature and impact of future changes in such policies and regulatory action are unpredictable and are beyond
Such changes could include, but are not limited to, the following: the monetary, interest rate and other policies of central banks ■
and regulatory authorities; general changes in government or regulatory policy that may ■
environments creating social instability or an uncertain legal situation capable of affecting the demand for the products and services offered by Natixis.
Tax laws and their interpretation in France and in the countries in which Natixis does business may significantly affect Natixis’ results
A failure of or inadequacy in Natixis’ risk management policies, procedures and methods may leave it exposed to unidentified or unanticipated risks, which could lead to material losses
FINANCIAL DATA 6 Risk factors that position by taking a short position in an asset where the short position has historically moved in a direction that would offset a change in the value of the long position. However, Natixis may only be partially hedged, or these strategies may not be fully effective in mitigating Natixis’ risk exposure in all market environments or against all types of risk in the future. Unexpected market developments , such as the ones currently experienced in international fi nancial markets since the second half of 2007, may also affect Natixis’ hedging strategies. In addition, the manner in which gains and losses resulting from certain ineffective hedges are recorded may result in additional volatility in Natixis’ reported earnings.
Natixis may have difficulty in identifying, executing and integrating an external growth policy in its acquisitions or joint ventures
Intense competition, both in Natixis’ home market of France, where it has the largest single concentration of its businesses, as well as internationally, could adversely affect Natixis’ net banking income and profitability
France and the other countries in which it conducts large portions of its business. Consolidation, both in the form of mergers and acquisitions and by way of alliances and cooperation, is increasing competition. Consolidation has created a number of fi rms that, like Natixis, have the ability to offer a wide range of products and services. Natixis competes on the basis of a number of factors, including transaction execution, its products and services, innovation, reputation and price. If Natixis is unable to continue to respond to the competitive environment in France or in its other major markets with attractive product and service offerings that are profi table for Natixis, it may lose market share in important areas of its business or incur losses on some or all of its activities. In addition, downturns in the global economy or in the economy of Natixis’ major markets could add to the competitive pressure, through, for example, increased price pressure and lower business volumes for Natixis and its competitors. In addition, new lower-cost competitors may enter the market, which may not be subject to the same capital or regulatory requirements or may have other inherent regulatory advantages and, therefore, may be able to offer their products and services on more favorable terms. Technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that traditionally were banking products, and for fi nancial institutions and other companies to provide electronic and Internet-based fi nancial solutions, including electronic securities trading. These new entrants may exert downward price pressure on Natixis’
books corresponding to activities that were transferred to the new structure as well as the related issuer spread. Net banking income from the New CIB represents revenues from books that were not transferred to the GAPC, 2008 expenses correspond to direct expenses relating ■
(CIB) expenses. As it was impossible to use the same methodology to split 2007 expenses between the GAPC
basis of the activities to which it relates. For instance, the portion allocated to the GAPC in the fourth quarter of 2008 relates chiefl y to monoline insurers, credit derivative product companies and the Madoff fraud, for 2007 and 2008, a normative tax rate of 30% was applied ■
to income before tax derived from the “New” CIB activities, and the remaining income tax expense of the former CIB
on the basis of the average exchange rates over the quarter; the modifi cation of the methods used to determine income on ■
allocated capital and corporate costs allocated to the business segments (fi rst applied on June 30, 2008); the modifi cation of the methods used to determine income on ■
Retail Banking: 75% of amounts deducted from Tier 1 capital ■
(1) Including a €35 million deferred tax liability relating to a capital gain from a disposal.
(2) Capital gains net of taxes , before taking into account a €35 million deferred tax liability from a disposal.
For Natixis, as for all fi nancial institutions, the year 2008 can be ■
Proprietary Portfolio Management and Principal Finance business lines, and, to a lesser extent, the Capital Markets business lines. The profi tability of the other CIB business lines showed a fair measure of resilience until this time; after September 15, 2008, ■ the bankruptcy of Lehman
CIB’s accounts are now split into “New” CIB which houses core business activities due to be developed, and a segregated
The separation is intended to ensure optimal proactive management of the segregated assets, protecting the core assets to be retained within the group, and highlighting the performance of the “New” CIB. The main characteristics of the “New” CIB are as follows: a renewed refocus on core clients ■ , especially tier-one corporate institutions in France and Southern Europe, corporate midcaps in France, fi nancial institutions in Europe, and structured lending clients in the international market, a product offering tailored to the new environment, built ■
structure are the following: isolating and running off assets that no longer fi t with Natixis’ ■
they do not generate suffi cient returns relative to the amount −
so as to optimize the balance between improving returns on capital and the resale price that can be obtained for the assets.
The crisis had a total negative impact of €3,573 million on net banking income over the 2008 fi scal year as a whole.
The impact on net banking income was compounded by a €1,536 million increase in the cost of risk attributable to the crisis (see below).
Net banking income from − “New” CIB amounted to €2,857 million, up 11% compared with 2007. This includes the signifi cant revenues derived from the Credit Portfolio
The − GAPC bore most of the brunt of the crisis due to the nature of the activities it houses, particularly with respect to complex equity and interest-rate derivatives, and because of writedowns on structured credit portfolios.
Net banking income for the ■ Asset Management division amounted to €1,358 million, down 17% at constant exchange rates. The decline in net banking income is attributable to lower performance commissions compared to the high level recorded in 2007 in alternative management and real estate funds, and to the reduction in average assets under management (-6%).
Services division, both with direct customers, and with customers of the retail networks of the two shareholder groups, where the penetration rate increased.
(acquisition of CACEIS Bank Deutschland and Olympia early in the year, transfer of activities to CACEIS) and one-off items in 2007, net banking income would have been down 2%
€110 million, down 13% compared with 2007. Margins suffered from a wait-and-see approach on the part of investors, and from a decline in assets under management resulting from equity market losses.
Net banking income ■ not derived from the business lines was -€296 million, relatively stable compared with 2007.
Uderlying operating expenses (excluding restructuring expenses) totaled €4,687 million, down 9% compared with 2007. At constant scope of consolidation and exchange rates, operating expenses were down 10%.
The internal headcount remained broadly stable over the year, with 22,096 full-time-equivalent (FTE) employees as of
The headcount was cut signifi cantly in the CIB division (-194
FTEs) and in the Corporate Center (-131 FTEs), refl ecting the initial effects of the cost-cutting plan launched in
September 2008. However, headcount edged up slightly in other business lines due to ongoing recruiting in the Services division and, to a lesser extent, in Receivables Management and Asset Management.
The impact of cost-cutting measures was most evident in charges relating to external personnel, namely training and recruiting, travel and entertainment, and communications and advertising.
The cost of risk directly attributable to the crisis amounted to ■
to €281 million, refl ecting €477 million of net provisions recorded for individual risk, partially offset by €196 million of reversals of collective provisions linked to changes in various technical parameters.
Income from associates ■ amounted to €484 million at year- end , down 28% compared with 2007.
An income tax benefi t of €614 million was recorded, refl ecting ■
The Group recorded restructuring income of €70 million after tax from the sale of its institutional custody business to CACEIS
(2) Capital gains net of taxes, before taking into account a €35 million deferred tax liability from a disposal.
Expenses totaled €4,513 million, down 9%, in line with the fall in net banking income.
The contribution of the Group’s various business lines to its 2008 results breaks down as follows: (in millions of euros ) CIB New CIB GAPC
Underlying net income (Group share) (3,239) 370 (3,609) 208 342 71 (10) 285 (280) (2,622)
Cost/income ratio ns 58% ns 71% 65% 87% 89% ns ns ns * Before restructuring income and expenses.
Having already been severely affected by the crisis during the fi rst nine months of the year, the CIB division bore the full brunt of the markets’ meltdown in late September. Practically every marke – equities, credit, interest rates – was affected simultaneously. The extreme volatility in market indices, the markets’ structural illiquidity, the surge in risk and the bankruptcy of certain counterparties (Lehman Brothers) sparked large drops in mark-to-market valuations, particularly on the most complex derivatives. This was compounded by additional provisions and a fresh round of writedowns on exposure to monoline insurers and various portfolios of structured credit products.
This impact resulted primarily from: the ■ meltdown of the credit market (impairment of RMBSs and ABS CDOs, writedowns on monoline insurers, widening of spreads, syndication discount and the increase in issuer spreads), for a total of €2,430 million; the ■ surge in correlation and volatility on complex equity and interest-rate derivatives, for a total of €1,199 million, of which €1,017 million was recorded in the fourth quarter.
Aggregate net banking income ■ for the CIB division was -€595 million in 2008, of which a -€456 million was recorded in the fourth quarter alone.
Net banking income for the “New” CIB amounted to €2,857 million, against a -€3,452 million for the GAPC.
CIB and a negative impact of €3,766 million for the GAPC.
totaled €1,832 million, down 8% compared with 2007, due to the very substantial reduction in variable compensation.
The crisis added a total of €1,277 million to the ■ cost of risk, of which €911 million was recorded in the fourth quarter resulting primarily from: the ■ meltdown of the credit market (collective provisions on monoline insurers and credit derivative product companies) for a total of €306 million; counterparty defaults ■ for a total of €971 million, including €375 million relating to the Madoff fraud, €186 million on Lehman
Brothers, €317 million on counterparties in Corporate Solutions transactions and €94 million on exposure to Icelandic banks.
Basel II risk-weighted assets ■ amounted to €133.5 billion as of December 31, 2008. Action taken over the year allowed the Group to reduce credit risk, although market risk increased due to changes imposed by the regulator and the steep rise in volatility.
The “New” CIB’s expenses fell by 8%, thanks to the reduction in variable compensation.
Corporate and Institutional Relations business line, which lifted its net banking income by 3% year-on-year to €521.5 million in an exceptionally poor international fi nancial environment. The fi nancing businesses accounted for 90% of the business line’s income.
(corporate France and international, international fi nancial institutions) grew by a moderate 3%. Origination was down 35% over the year, with a very sizeable fall in the fourth quarter, in line with the new strategic plan. Margins fi rmed on new loans.
Structured fi nance and commodities now account for two-thirds of the Debt and Financing business line’s net banking income, which was close to stable over the year (-2%).
Net banking income in ■ Commodity Financing was up 27% compared with 2007. Despite the deterioration in the economic environment, with the prices of oil and base metals such as steel starting to fall in the second half, transaction volumes held fi rm. Interest income and fee and commission income drove revenues. Average volumes moved up 38% over the year, although fi erce competition among banks weighed on margins.
compared with 2007. In a very challenging environment in 2008, with European leveraged fi nance market volumes tumbling by more than 66%, our teams managed to hold on to their leading position in the French market (second-ranking player with seven MLAs including Socotec, Converteam and
The ■ Financial Engineering teams had a strong performance, recording growth of 18% over the year. Financial Engineering benefi ted from the surge in aviation and shipping fi nancing, and diversifi ed its offering. The business also relied on help from the Commodities teams to look for prospective clients.
Finance. There is nevertheless still a lot of activity in project fi nance markets throughout the world, and attractive opportunities are still being offered. New fi nancing was, however, down 45% over the year, in line with the Group’s new strategic plan.
Natixis Transport Finance is a major and respected player in the market. It can count on real opportunities for new business following the withdrawal of several banks (West LB, ING and
increase in interest income is attributable to the large increase in the volume of average assets (+51%). Fee and commission income also progressed signifi cantly, benefi ting from an increase in arranger positions internationally.
Net banking income was down 15% in Real Estate. Revenue fell in Europe as well as in the United States. Volumes of new lending were low in commercial real estate, in line with the Group’s new strategic plan.
Net banking income was up 14% in Debt Solutions, due to strong performances in syndicated loans.
Net banking income was down 11% in Structured Credit. The economic environment hurt business badly in the United States.
The Advisory Services business strengthened towards the end of the year.
Net banking income for the Capital Markets business line amounted to €1,019 million, up 10% compared with 2007.
The Cash Equity business held up well, but was hurt by the decline in market indices, which weighed on commissions, especially in Europe. Primary market activity essentially stopped, except for rights issues.
Net banking income was more than double the level achieved in 2007 in Treasury Management and Arbitrage.
and other” business line, a large increase compared to the €90.1 million registered in 2007, due to the positive valuation adjustment of outstanding Credit Default Swaps under which
CIB – SEGREGATED ASSETS (GAPC) (in millions of euros ) 2008 2007
and correlated trading losses: €1,033 million; writedowns ■ on exposure to monoline insurers and credit derivative product companies: €1,286 million; losses on complex derivatives: €838 million; and ■
The Asset Management division was hit hard by the unprecedented volatility in market indices and the signifi cant market downturn.
In the second half of 2007, Natixis Asset Management acted as as partial counterparty for redemptions on the Natixis ABS+ fund in order to ensure its liquidity.
A counter-guarantee provided to two money market mutual funds on Lehman Brothers bond debt led to the a €38.9 million cost of risk provision in 2008.
Assets under management totaled €446.7 billion as of December 31, 2008, down 24% over the year on a current exchange rate basis and down 25% on a constant-currency basis.
(-€2.5 billion); the impact of the withdrawal of funds managed on behalf of ■
(the impact on net banking income was nevertheless slight, at only €7 million over the year as a whole). The withdrawal was carried out in two stages, with an initial €7.9 billion withdrawal in the second quarter of 2008 followed by an additional withdrawal of €64.3 billion in the fourth quarter.
In response to the deterioration in the equity markets, there were changes in the breakdown among investment vehicles, with a higher proportion of money-market and fi xed-income funds in the overall product mix.
At constant exchange rates, net banking income was down 17%, due mainly to the following: a 75% drop in performance-related fees ( ■ at constant exchange rates). The drop was particularly marked in the
Excluding the impact from the dollar, the fall was limited to 4%.
€55.7 million in the year ended December 31, 2008, compared with €2.9 million in 2007. This is attributable to the impact of the guarantee given money market funds in respect of Lehman Brothers debt securities (€38.9 million), and the credit-risk provision on AFS fi xed-income securities originally held by dynamic money-market funds but now directly owned (€17.9 million).
In Europe, assets under management amounted to €294 billion as of December 31, 2008, down from €391.5 billion a year earlier, a 25% or -€97.4 billion fall over the year.
The year saw net outfl ows limited to €2.6 billion, or less than 1% of assets under management (excluding the withdrawal of
December 31, 2008, down from $291 billion a year earlier, a 26%
The market’s losses nevertheless took a heavy toll, decreasing the value of assets under management by $79.2 billion over the year.
mortgage protection insurance, property and casualty insurance, and sureties and fi nancial guarantees; Specialized Finance: leasing and consumer fi nance; ■
servicing, issuer services; International Services: international advisory services and retail ■
The fi nancial crisis and the signifi cant worsening of the ■
CACEIS, and (iii) a compensatory payment made to former client LCL.
Services business lines. At the same time, the fi rst synergies started fl owing through in the Securities Services business line.
Underlying ■ net income (Group share) amounted to €341.9 million, down 5% compared with 2007.
backdrop of a signifi cant deterioration in the economic and fi nancial environment in 2008.
Revenues in individual life insurance, which exceeded €3 billion, were down 20%, amidst falling global markets.
By contrast, Provident Insurance (including mortgage protection insurance) recorded a very good performance.
Less sensitive to the economic environment, premium income increased by 22% to €251 million, thanks to continued efforts to sell mortgage protection, accident and dependency insurance products to customers of the Banques Populaires and Caisses d’Epargne networks.
Net banking income ■ came to €225 million in Insurance, down 20% or -€58 million compared with 2007 due to the decline in life insurance, which suffered from the deterioration in the capital markets (fi nancial spread, provision for a prolonged decline in value and the impact of fair-value accounting) and to a lesser extent from slower business.
Business was broadly stable among retail customers, advanced slightly in the corporate market and increased strongly among realtors and property administrators (+16%), due to the arrival of new partners.
Outstanding guaranteed loans amounted to €53.8 billion at end-December, up 15% compared with 2007, with increases of 15% in the retail market and 10% in the corporate market.
The ■ loss ratio remained moderate despite higher claims. Net banking income advanced by 6% or €7 million to €124.5 million on the back of an 18% increase in earned premiums.
amounted to €2.77 billion in 2008, a 14% increase year-onyear, driven by sales made through the shareholder networks.
Banques Populaires network and to continued brisk business for the Caisses d’Epargne network’s Teoz card. Outstanding loans amounted to €1.1 billion as of December 31, 2008, up 9% year-on-year.
Impacted by the fi nancial crisis and a government measure allowing people to cash in part of their employee savings plans early, funds under management in employee savings plans fell by a substantial 22% or -€4 billion to €14.5 billion in the year ended December 31, 2008.
Natixis Interépargne nevertheless pressed ahead with its expansion in all customer segments, signing 8,857 new contracts (+5% compared with 2007). The number of employer clients under management increased by 6% and the number of client employers was up 13%.
The Service Vouchers business continued to grow strongly, thanks largely to new contracts with local government and social organizations. The number of vouchers issued (nearly 64 million) increased by 13% and the number of CESU
Since the end of 2007, this business has benefi ted from new fl ows of capital market transactions for settlement in its systems.
The Payments business line recorded ■ net banking income of €168 million, up 3%, or €5 million, over the year.
Deutschland (formerly HVB’s custody business) and Olympia, acquired at the end of 2007, the 2008 fi scal year was marked by the restructuring of the Securities Services business line.
On July 1, 2008, the legal merger between Natixis and its subsidiary Gestitres gave birth to the EuroTitres Department specializing in retail custody.
The Securities Services business line’s ■ net banking income amounted to €615.2 million, up 7% or €41 million compared with 2007.
Restated for change in the scope of consolidation and the departure of LCL, a former client, the Securities Services business line’s net banking income was stable compared with 2007.
Natixis Algérie’s retail banking business continued to enjoy strong growth. The branch network continued to grow in a high-potential market (at the end of December 2008, 12 branches had opened, and another six were awaiting the green light from the Bank of Algeria).
The results of the Private Equity and Private Banking division were heavily affected by the fi nancial crisis. The division’s net banking income amounted to €190.5 million in 2008, compared with €510.6 million in 2007, a drop of 63%. The fourth-quarter results were hit hard by the aggravation of the economic downturn, with net banking income moving into negative territory in Private
The division’s gross operating income fell by 94% or -€318.6 million to €20.8 million. Its cost/income ratio was 89%.
The cost of risk amounted to €13.2 million, hit hard by risk on
of the total) concerned proprietary investments. The decline in divestments related mainly to client assets.
Managed capital, which includes funds raised at the time of subscription and any unrealized capital gains, amounted to €4.0 billion, up 11% or €0.4 billion compared with 2007. This breaks down as €1.9 billion in proprietary capital (48% of the total) and €2.1 billion in client funds.
Net banking income in Private Equity amounted to €80.3 million in 2008, down 79% compared with 2007.
By contrast, the stock of unrealized capital gains contracted by €69.7 million (as opposed to an increase of €182.5 million in 2007). Unrealized capital gains amounted to €267 million at year’s end. The revaluation of the portfolio on December 31, 2008 was largely offset by the realization of formerly unrealized capital gains
Concurrently, provisions on portfolio investments increased sharply, standing at €141.9 million, compared with €21 million in 2007, meaning new provisions were €120.9 million over the year, mainly in the real estate and textile industries.
Despite challenging market conditions, net inflows remained positive, amounting to €0.5 billion, driven by wealth management.
Volumes of customer loans reached €931 million in the year ended December 31, 2008, not far off the level of 2007.
The economic environment weighed on results, with the impact of the crisis becoming even more pronounced in the second half. Margins suffered due to competition and ongoing falls in the equity markets.
The aggravation of the global credit crisis in the fourth quarter of 2008 nevertheless took a heavy toll on the division. Claims were up sharply, revenue growth slowed and interest rates started falling in most countries.
An increase in delinquencies was matched by a surge in claims, which are now affecting all countries. Over the year as a whole, the lo ss ratio was at 72.6%, up from 49.1% in 2007, an increase of 23.5 points.
plan, which included action to rein in risk exposure and increase premiums (targeted reduction in poorly rated exposure, caps on acceptance levels, action on premiums), was extended in
Already a leader in unsolicited corporate credit ratings, Coface began offering solicited credit ratings half way through 2008, as an alternative to the traditional rating agencies. Towards the end of the year, as part of the French government plan to bolster intercompany credit(2) announced by Finance Minister Christine
Charter covering its dealings with rated fi rms. The Charter includes four commitments: communicate to each fi rm, free of charge and on demand, its ■
date information that the fi rm may wish to make available to
The division also pressed ahead with the global expansion of its four business lines. The factoring business now operates in 28 countries, compared with 16 countries previously, with launches in Australia, China, Portugal, Lithuania and Luxembourg. Creditinsurance operations now cover 93 countries, with the recent move into Cameroon and Venezuela. In May, Coface acquired
Growth in net banking income was fueled by international operations (+35%), thanks in large part to the acquisition of
(+5%) due to the effects of competition on margins and slower business in the fourth quarter in a sluggish market.
Net banking income for the Information business line amounted to €134.3 million, compared with €127.5 million in 2007, a 5% increase attributable to the acquisition of
Net banking income for the Receivables Management business line amounted to €37.3 million, compared with €33.6 million in 2007, an 11% increase fueled by international operations.
French state totaled €66.5 million in 2008, compared with 60.8 million in 2007, a signifi cant 9% increase. The business line benefi ted from the favorable outcome of negotiations concerning the renewal of the fi nancial agreement with the
French state, which also led to a €3 million upward adjustment to 2007 revenue in 2008.
compared with the total of €668.3 million in 2007. Restated for change in the scope of consolidation (Kompass, Midt Factoring and Polish entities) and exchange rates, the increase in operating expenses was limited to 2%, thanks to the implementation of cost-cutting measures.
Two technical factors affected the share of net income from associates, namely the drop in accretion gains which was offset by lower consolidation adjustments of capital gains on availablefor -sale securities.
Accretion gains fell by €15 million compared with 2007, including a €12.9 million reduction in respect of Banques Populaires.
The negative impact of value adjustments(3) declined by €20 million, with a positive net impact on the two networks’
(4) Aggregate fi nancial statements of the Banques Populaires, i.e. Retail Banking excluding Société Marseillaise du Crédit (SMC) and other Regional Banks contributing 49% of their earnings to net income (Group share).
July 2008 (5), representing a total of 249 branches and nearly 1,700 FTEs.
The Banques Populaires network maintained a strong pace of lending growth in 2008, with total outstanding loans advancing by 12% year-on-year (+9% excluding change in the scope of consolidation).
In savings, overall volumes increased by 5% (+1% excluding change in the scope of consolidation). Deposits increased by 11% (+6% excluding change in the scope of consolidation), driven by growth in both the private individual market and other markets, despite outfl ows on home purchase savings plans. By contrast, private individual funds invested in managed savings products were down 2% overall (-6% excluding change in the scope of consolidation), largely because of outfl ows on mutual funds attributable to the unfavorable market conditions.
Groupe Banque Populaire’s net banking income amounted to €5,698 million in 2008, down 2% compared with 2007.
Despite stable interest margins and sustained growth in fee and commission income, results were hurt by the negative impact of the fall in the equity markets and unfavorable yield curve trends that affected instruments accounted for on a mark-to-market basis.
or 2% excluding the impact of the change in the scope of consolidation.
Groupe Banque Populaire’s gross operating income amounted to €1,895 million, down 13%.
The cost of risk was €529 million, up 36% or €141 million due to exposure to Lehman Brothers and Icelandic banks.
Excluding these elements and expressed as a percentage of average loans outstanding, the cost of risk worked out at 35 basis points.
Natixis’ share of Groupe Banque Populaire’s net income on the contributions from associates line amounted to €203.5 million, down 29%.
(5) Banque de Savoie (BP Alpes), Banque Chaix (BP Provençale et Corse), Banques Marze and Dupuy, de Parseval (BP Sud) and Banque Pelletier and CCSO (BP Sud Ouest).
In the other markets, total loans increased by 11%, with a large increase in new medium- and long-term loans (+7%).
Growth was also strong in savings. Customer savings were up 6% over the year, driven by strong growth in Livret A passbook accounts, as well as the increase in life insurance.
Despite healthy fee and commission income, net banking income declined as a result of narrower interest margins and the fall in revenues from fi nancial activities.
Natixis’ share consolidated under the equity method amounted to at €245.5 million, down 31%.
The cost of risk totaled €1,817 million in 2008, including €1,707 million for individual risk and €110 million for collective risk.
CIB division (€1.5 billion), fuelled by exposure to banking and fi nancial institutions. The main risks related to the Madoff fraud
Total provisions covering collective risk increased to €966 million, up 15% compared with 2007.
BY REGION, CHANGE IN THE INDIVIDUAL COST OF RISK WAS AS FOLLOWS
The information provided in the following sections is an integral part of the fi nancial statements certifi ed by the Statutory
Auditors: 5.1 Natixis’ general risk management system 5.2 Natixis’ Risk Management Department 5.3 Credit risk (for audited data only)
Depending on the precise situation and business line, fi rst-tier controls are conducted either by personnel themselves or by an ad hoc body, such as a middle offi ce or an accounting control department, or, where appropriate, by both acting together; second-tier controls (in accordance with Article 6-a of CRBF ■
regulation 97-02) are carried out by dedicated bodies acting independently from operational management; third-tier controls, also known as periodic controls, are carried ■
The Chief Executive Offi cer is responsible for ensuring the consistency and effectiveness of permanent controls (in accordance with Article 7-1, sub-point 4 of CRBF regulation 9702 as amended).
The Chairman of the Executive Board chairs a committee that coordinates controls and includes all people involved in permanent controls, the head of IT Systems Security, the Chief
In keeping with commitments made to the Credit Institutions and Investment Firms Commission (CECEI), Natixis now has an additional control system based on: the separation of risk and control functions within the Natixis ■
Similarly, it makes proposals to the Executive Board concerning principles and rules in the following areas: risk-acceptance procedures; ■
It plays a key role within a system of Committees, including: a General Committee, the Group Risk Committee, which draws ■
up the outlines of the Group’s risk policy; the Natixis Group Credit Committee; ■
It also plays an active part in the Group Provisions and ALM
Lastly, it reports regularly on its work, submitting its analyses and fi ndings to Natixis’ executive and decision-making bodies, and to the Caisse d’Epargne and Banque Populaire Groups.
Management Department helps design the management tools used at the operating level in order to ensure the quality and relevance of the data provided.
In 2008, given the deterioration in the fi nancial environment, the
counterparties, and remedial action where necessary; redefi ning and drawing up stress scenarios, and measuring ■
their impact, taking into account recent changes in the markets, in terms of both credit and market risk; risk monitoring within the process of the segregation of some ■
VaR, taking into account the fi ndings of studies devoted to changes in market behavior following the bankruptcy of
Lehman Brothers; the fi nalization of the rollout of Natixis’ tool for measuring, ■
Group; the continuation of work aimed at developing risk monitoring ■
management bodies, its central institutions and, where necessary, the French Banking Commission (work on VaR and Basel II).
5.3 – Credit risk 5.3.1 – General principles governing the allocation and management of Credit risk
Natixis’ credit-risk measurement and management procedures are based on: standardized risk-taking processes governed by a system of ■
out by the Risk Management Department as part of the loan request review process; rating tools and methodologies providing standardized ■
Natixis received permission from the French Banking Commission to use the internal rating based foundation approach (IRBF) to calculate its regulatory capital requirements for credit risk as of
The rating system is an integral part of Natixis’ counterparty-risk monitoring and control mechanism.
In accordance with regulatory requirements, all counterparties in the banking portfolio must have an internal rating when they: incur a loan or ■ are assigned a limit; guarantee a loan; ■
The process of evaluation and updating counterparty ratings involves several Departments.
After conducting his or her own independent analysis, the credit analyst issues an opinion or a recommendation, including the rating. The Risk Management Department validates the rating on the basis of a decision taken either under delegations or authorizations given to the various business lines and certain members of the Risk Management Department, or by the appropriate credit committee, after a second opinion has been obtained.
the business lines in which the Risk Management Department plays a decisive role.
At the end of 2008, Natixis drew up internal rating methods for the various Basel asset classes with a view to complying with the
IRBF approach for the following categories: sovereigns, banks and corporate entities.
The Natixis Group uses internal rating systems for exposure to securitization issues. The Natixis Group acknowledges its use, in determining securitization exposure limits, of assessments provided by the following three external credit rating agencies: Fitch Rating ■ ; Moody’s; ■
For exposure to non-OECD banks and corporate entities with consolidated revenue of less than €1 billion, internal rating models are statistics-based and use available fi nancial data to assign the exposure to a specifi c class of risk. In 2008, the parameters of these models were reviewed with a view to improving their performances on the basis of new samples.
Default probability thresholds are established: using statistics models based on mapping between internal ■
Back-testing and performance-monitoring programs are also used to ensure the quality and reliability of rating models and default probability thresholds. They include a detailed analysis conducted using indicators such as differences in terms of the severity and migration compared with agency ratings, actual defaults and change in ratings prior to default, and the predictive power of indicators used in statistics-based models.
Natixis checks whether default probability thresholds are consistent with actual default rates in its portfolio.
In addition to the quantitative work done on its models, Natixis also conducts periodic controls at different levels of the bank in order to ensure the quality of both its internal ratings and the overall process.
Natixis uses credit risk reduction techniques including set-off agreements, guarantees, collateral and credit-default swaps.
The principles for identifying, measuring and managing credit-risk hedging instruments comply with the recommendations of the
Collateral and set-off agreements give rise to: analysis, when a loan application is approved or reviewed, ■
Guarantors are assessed, rated and monitored in the same way as debtors.
Natixis buys credit-default swaps and enters into synthetic securitization transactions in order to reduce all or part of the credit-risk exposure attached to some assets by transferring the risk to the market.
The business lines carry out day-to-day monitoring, the middle offi ce oversees fi nancing, and the Risk Management Department conducts second-tier controls.
A decision as to whether these cases are subjected to special monitoring is then made by the Special Affairs and Disputes
Provisions Committee Meetings are held quarterly in each division. They look at all cases liable to give rise to provisions or adjustments to existing provisions, and decide on the amount of provisions necessary.
Natixis also constitutes provisions to cover country risk and sector risk assessed from two angles: ratings for exposure to private individuals and professionals; ■
Objective impairment indices generally comprise a range of micro- or macroeconomic indicators specifi c to the sector or country concerned. When necessary, an expert opinion is sought to fi ne-tune the result.
5.3.4 – Exposure to credit risk and breakdown of outstanding loans
The following table sets out the exposure of all the Natixis Group’s fi nancial assets to credit risk. This exposure does not take into account guarantees, sureties, credit-default swaps, collateral OTC fi nancial instruments, the impact of master netting agreements for and other credit enhancements. It corresponds to the net value of the fi nancial asset on the balance sheet, after taking all provision into account (individually or collectively assessed).
Amounts exposed to credit risk by asset class, excluding securitization, deducted from equity.
Small and medium-sized businesses listed in the corporate category 5,898 6,414
Small and medium-sized businesses listed in the retail customer category 1,770 1,585
Other banks 1,168 1,767 * EAD averages correspond to the average of the four quarter-end fi gures ( these data are not audited).
Exposure at default at the end of 2008 was slightly higher than the average for the year. The increase in the weighting of securitized assets classifi ed in EAD at year’s end stems primarily from the move to the banking portfolio from the trading portfolio, in accordance with International Accounting Standards, for a total of €8 billion. The increase in securitized assets classed as EAD also stems from transactions aimed at reducing riskweighted assets by means of the synthetic securitization of corporate debt, which caused these assets to be moved from the corporate segment to the securitized segment.
Breakdown of exposure at default by category for the main geographic areas (after deducting other assets and generic risk-adjustment factors)
Small and medium-sized businesses listed in the corporate category 1.7% 0.2% 0.1%
Small and medium-sized businesses listed in the retail customer category 0.7% 0.0% 0.0%
Other exposure listed in the retail customer category 0.3% 0.0% 0.0%
(data certified by the Statutory Auditors in accordance with IFRS 7)
* Including 5.8% in respect of Caisses d’Epargne and Banques Populaires central bodies and affi liates: 5.8% in 2008.
(Breakdown of exposure at default with the exception of other assets that do not represent a credit obligation, equities and securitization positions)
Small and medium-sized businesses listed in the corporate category 1,083 458 340 1,363 2,651 2 5,898
Small and medium-sized businesses listed in the retail customer category 28 35 178 780 749 1,770
BREAKDOWN OF COLLECTIVE PROVISIONS BY SECTOR AS OF DECEMBER 31, 2008
(in millions of euros ) Total provisions as of 31.12.2007 New provisions (-)
Category of exposure IRBA approach IRBF approach Standard approach Total 2A - Financial institutions and investment fi rms 0 83,921 4,948 88,870 3A - Small and medium-sized businesses listed in the corporate category 0 2,962 2,936 5,898 3C - Other exposure listed in the corporate category 0 110,654 8,557 119,211 4A - Small and medium-sized businesses listed in the retail customer category 0 0 1,770 1,770 4D - Other exposure listed in the retail customer category 772 0 2,879 3,651
EAD BY RATING (S&P EQUIVALENT) FOR SOVEREIGN, BANK AND CORPORATE (EXCLUDING SPECIALIZED FINANCE) ASSET CLASSES CALCULATED USING THE IRB APPROACH
(rate of loss in the event of default), the nature of off-balancesheet commitments (credit conversion factor) and the maturity.
Exposures calculated using the IRB approach have an average risk weighting of 40%.
EXPOSURE AT DEFAULT FOR RETAIL CUSTOMERS ON THE BASIS OF THE EXPECTED RATE OF LOSS AS OF DECEMBER 31, 2008
Expected rate of loss (within a year), covering default and dilution risk, on retail factoring pools. Factoring (Natixis Factor) is the only retail exposure Natixis calculates using the IRB approach. Other retail exposure is calculated using standard methods.
Gross value of contracts on a mark-to-market basis / exposure at default / notional amount of credit derivative transactions
TECHNICAL IMPACT OF THE REDUCTION IN RISK ON CREDIT DERIVATIVES (DATA AS OF DECEMBER 31, 2008)
EXPOSURES COVERED BY PLEDGES OF COLLATERAL BY CATEGORY OF EXPOSURE (CLIENT ASSET CLASS) AS OF DECEMBER 31, 2008
Small and medium-sized businesses listed in the corporate category 615 45 8
Small and medium-sized businesses listed in the retail customer category 47 - 47
Financial collateral includes securities and other instruments constituting physical collateral in accordance with lines b) to f) of
The Market Risk Committee is tasked with defi ning the bank’s market risk policy and ensuring compliance. As the operational extension of the Executive Board, the Committee is endowed with all the decision-making powers required to carry out its role.