Registered office: 30, avenue Pierre Mendès France 75013 Paris www.natixis.com A joint company with a board of directors with share capital of €5,052,644,851.20
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INTERVIEW 2 PROFILE 4 NATIXIS BUSINESS MODEL 8 STRATEGY 10 GOVERNANCE 14 RISK MANAGEMENT 16 ESR COMMITMENTS 18
CORPORATE GOVERNANCE2 37 Governance of Natixis at December 31, 20202.1 38
Policies and rules established for determining 2.3 compensation and benefits of any kind for corporate officers 90
CAPITAL AND SHARE OWNERSHIP7 541 Distribution of share capital and voting 7.1 rights 542
Cross reference table for the annual financial 9.6 report and the management report 605
How did Natixis continue to support its clients throughout 2020 despite the health crisis?
The health and economic shock that we have been facing since the beginning of 2020 has had a major impact on our lives and our operating methods. The human toll is heavy and the lockdown and curfews have had significant economic consequences.
For Natixis, this crisis has highlighted the Natixis' solidity. The commitment and agility of our teams, in all our business lines and support functions, have been remarkable and have enabled us to continue our missions to serve our customers, whose needs have increased and diversified. We have been able to offer innovative systems to our customers throughout this health crisis in order to respond to economic challenges: EMP, orientation of our asset management funds to economic recovery plan projects, implementation of the economic recovery plan, specific insurance and payment offers for retailers, etc.
For me, the priority remains the creation of value for all our stakeholders: our customers, our employees and our investors. In the first place, our customers are at the heart of our attention; for them, let us use our expertise, all our know-how, our commitment and our agility! Next, we must support our employees, whom I would like to thank in particular for their commitment. Finally, we also demand results from our investors, to whom we must propose a sustainable growth trajectory.
+330 bps above regulatory requirements 4 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
> Investment Banking and acquisitions and disposals > Structured financing > Capital market > Trade finance and cash management > Coverage
> Issue > Acquisition > Processing > Fight against fraud > Prepaid > Asset Management > Wealth Management > Employee savings schemes
(1) The intermediate 2019 and 2020 balances were restated following the announcement of the sale of a 29.5% stake in Coface, as disclosed on April 20, 2020. The intermediate 2019 balances were restated for the sale of retail activities to BPCE SA. (2) Excluding exceptional items. (3) Asset & Wealth Management.
(1) In accordance with the ECB's recommendations, the 2019 dividend was reintegrated into Natixis' capital - see the press release of 31/03/2020. (2) Restated. (3) Proposal of an ordinary dividend per share of €0.06 submitted to the Shareholders' Meeting of May 28, 2021.
Teams that are committed… More than 16,000 women and men from various horizons.
Three values that express our identity: sustainable impact, entrepreneurial spirit, collective intelligence.
VALUE PROPOSAL: Comprehensive life and non-life insurance offer for customers of Groupe BPCE networks.
V 2nd largest European asset manager with more than €1,117 billion (excl. H20 AM) under management V €128 billion in outstandings to companies
V The business lines (savings, insurance and payments) serving customers Banque Populaire and Caisse d'Epargne networks
V Leader in the financing of renewable energies with 6.5 GW renewable electricity capacity financed in 2020
V The only bank to develop a capital allocation tool linked to the climate impact: Green Weighting Factor
V Targeted strengthening of the product range, in particular on alternative management, thematic and customized solutions
The initiatives rolled out as part of the New Dimension strategic plan, completed at the end of 2020, enabled Natixis to continue its development and strengthen its agility.
V Strengthening our expertise and capacity for innovation, particularly in our four key sectors (Energy & Natural Resources, Aviation, Infrastructure, Real Estate & Hospitality)
V Supporting customers in the energy transition thanks to the “Green & sustainable hub” global center of expertise and the development of the “Green Weighting Factor”. Structuring in 2020 of the largest social bond ever issued for €5 billion
V Strategic repositioning of certain activities: a transfer of the “Equity Cash & Research” activity adiscontinuation of the most complex products and refocusing on Groupe BPCE’s networks and strategic clients for the equity derivatives business adecision to exit from shale oil and gas activities in the United States
Becoming a leading bank in four key sectors and being recognized as a bank for innovative solutions
V Implementation of a new leadership model and an approach to simplify organizations (reduction of hierarchical layers).
V TEO program targets exceeded (~€340 million) and cost flexibility proven with the crisis.
V Unique insurance platform serving customers of the Banque Populaire and Caisse d'Epargne networks: fully‑fledged bancassurer
V Digital customer journeys of the highest standards for clients and advisors of the Banque Populaire and Caisse d'Épargne networks
V Innovative solutions in growing segments (e‑commerce) thanks to the Fintechs portfolio
V Strengthening relations with the Banque Populaire and Caisse d'Epargne networks: from producer to partner‑expert in payment solutions
Natixis launched an unprecedented approach at the height of the economic and financial crisis. Objective: identify practices and behaviors that reflect its corporate culture.
The participatory approach mobilized nearly 400 employees around approximately 40 workshops and discussion forums, as well as an upstream survey.
Result: “Purple Way” Natixis' trademark, highlighted three key values: sustainable impact,
Finalization of the merger between Ostrum Asset Management (Natixis) and Banque Postale Asset Management. Creation of a European leader in interest rate and insurance management. With €1,117 billion in assets under management, Natixis Investment Managers has become the second-largest European asset manager.
Repositioning of the equity derivatives business. Exit from most complex products and tightened exposure limits on low/medium risk products. Refocusing on Groupe
Complete exit from shale oil and shale gas by 2022 with a -25% reduction in exposure already achieved over 2020.
20% reduction in exposure to the Oil & Gas sector thanks in particular to the refocusing of the trade finance activity.
Reduction in the cost of risk related to these commitments. Greening of the portfolio in line with the development of Green Weighting Factor.
~0.4 2022 target in exposure to independent producers in the United States since 31/12/19 -25% Financing for the energy transition
Development of our business lines of perennial recurring cost savings identified by 2024
Increased interactions between clients and the economic research� team, including�sectoral� focuses�(Real�Estate,� Infrastructure,�etc.)�and� sessions�dedicated�to� “C-suites”.
SPECIAL COMMITTEES OF THE BOARD OF DIRECTORS AS AT MARCH 1, 2021 7 members
Social and Economic Committee Representatives Sylvie Pellier Laurent Jacquel Auditors Deloitte & Associés Pricewaterhousecoopers
Permanent control under the responsibility of the Secretary General Periodical controls
G rou p In tern a l C on trol C
The Compliance and Risk teams were at the forefront of deploying the Business Continuity Plan (BCP).
In a few days and at the height of the health crisis, 98% of employees were able to work remotely in a secure manner. This operation was facilitated thanks to the early adoption of teleworking, the equipment of employees with laptops and collaborative work training. More complex and unprecedented situation for market and treasury activities. Market operators have had to adopt remote working and adapt to this new environment in a context of high market volatility. This operation was successful thanks to a continuity system regularly tested by first and second level controls and recurring crisis management exercises.
The economic and financial crisis has shaken the global economy and financial markets and has had a very significant impact on risk management. Natixis has adapted its system and implemented a series of measures to continue its business in a secure environment, protect the health of our employees and respond to new requests from its customers.
Market risk is the risk of loss in value caused by any adverse fluctuations in market parameters.
Change in regulatory VaR (1-day 99% VaR) and stressed VaR (1-day 99% SVaR)
Credit risk is the risk of financial loss due to a debtor’s inability to honor its contractual obligations.
COVID-19 impacts Cost of risk excl. COVID-19 1st quarter 117 bps 2nd quarter 162 bps 4th quarter 128 bps 3rd quarter 123 bps 94 bps
RISK MANAGEMENT Risk management: a key issue 17NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Natixis places environmental and social responsibility at the heart of its strategic ambitions. ESR/ESG commitments permeate all of its business lines and functions and support customers towards a sustainable business model.
Raising employee awareness, reducing the environmental footprint, responsible purchasing, commitment to solidarity initiatives.
Contributing to the energy transition and helping clients move towards a sustainable business model.
Natixis was the first bank to publish its biodiversity commitment as part of act4nature international, an initiative launched by the French Entreprise pour l'Environnement (EPE) association. Objective: to integrate biodiversity into its activities and business lines through a series of concrete, measurable commitments over time, including: V �Supporting�clients’�environmental�transition�by�systematically�integrating�biodiversity�issues�into�the� sustainable�finance�offering�by�2021.
Natixis pursues a proactive policy to reduce the impact of its activity on the environment, by integrating the risks linked to climate change, pollution, loss of biodiversity or the increasing scarcity of resources. To comply with the scenario of limiting global warming to 2°C, Natixis leads its financing and investments towards a low carbon economy.
V Integration of climate and environmental issues in shareholder dialog V Integration of ESG criteria into the voting policies of asset management affiliates
V Natixis launches its 2018-2020 strategic plan New Dimension, founded on three pillars: Deepen, Digitalize & Differentiate
V During the health crisis, Natixis is stepping up support for its customers across all its business lines, with adapted products and services and ever more advice
V Natixis and La Banque Postale create a European leader in fixed-income and insurance-related asset management: Ostrum Asset Management, which provides an asset management offering and dedicated investment services
The first Banque Populaire bank is established. The Banque Populaire banks are founded by and for the entrepreneurs with the aim of pooling funds to finance their projects
Natixis launches its 2009-2013 strategic plan New Deal; securing its position as the corporate and investment banking, savings, solutions and specialized financial services arm of Groupe BPCE
V Natixis creates the new Payments business line aimed at becoming a major player in the payments sector in Europe
V BPCE Group and Banque Postale Asset Management hold discussions to allow Natixis to become a major European insurance manager and euro fixed income manager
Lastly, (iv) if the use of BPCE’s equity capital and these three guarantee funds is insufficient, additional amounts would be requested from all the Banque Populaire banks and Caisses d’Epargne.
There was good momentum in investment styles, strategies and geographic areas, including fixed income, growth equities, ESG, private debt and alternative investment solutions. Natixis Investment Managers achieved significant gross inflows in several markets, particularly in the United States and Asia. Despite the outflows recorded at H2O Asset Management, the European activity once again demonstrated its ability to produce results despite market headwinds: the announced merger of the fixed-income and insuranceV management activities of Ostrum Asset Management and La Banque Postale Asset Management was completed. This marks the creation of a European leader to assist liability-driven investors and bond management for large institutional clients, with more than €430 billion in assets under management. This transaction was also an opportunity to strengthen the DNCA Finance and Thematics Asset Management teams by repositioning the equity expertise of Ostrum AM; Natixis Investment Managers and H2O AM announced that theyV have begun discussions on the possible and orderly unwinding of their partnership by the end of 2021. Such evolution remains subject to consideration and approval by relevant regulatory authorities; the ambition to extend the private debt offering in recent years, inV particular with the development of Flexstone Partners, the launch of Vauban Infrastructure Partners and the acquisition of MV Credit, is bearing fruit. The activities of Natixis Investment Managers in this exposure class are now among its main profitability drivers, fueled by strong inflows; following the acquisition of a minority stake in 2019, WCM InvestmentV Management is now fully consolidated into the distribution platform, as evidenced by material contracts won in Korea and the Middle East, in addition to over US$6 billion in outstandings collected by the centralized American distribution platform; Natixis Investment Managers continues to support the ambitionsV of its affiliates to strengthen their capacities and further their international development. In the fourth quarter, Boston-based Loomis Sayles recruited a European credit team (specializing in A-rated bonds) that will step up its global footprint. The Company ended the year with record assets under management and profits; Natixis Investment Managers enjoyed a solid sales momentum inV most of the regions where it operates and continued to develop its distribution network. In the United States, Natixis IM saw a strong drive in retail activity with its main distributors and through its newly established strategic distribution partnerships. In Europe, an increase in inflows was recorded despite a challenging environment, particularly in private debt. Lastly, Natixis Investment Managers achieved significant growth in Asia, particularly in China, which confirmed the targeted strategy in the region; the Company is on track to continue the transition of its clients to aV more sustainable investment model. In 2020, Natixis Investment Managers published its first report on responsible investment, Making a difference, which presents its approach to ESG and sustainable investing, and its latest thoughts on several major challenges facing society as a responsible investor. The affiliate Mirova, specialized in ESG and impact investing, experienced strong growth in all the regions where it operates, with a 58% increase in its assets under management in 2020 and strong net inflows. At the same time, many affiliates continued to successfully develop their ESG strategies. The portion of Natixis Investment Managers’ assets invested in SRI-labeled funds now represents nearly 15% of total assets of the Company’s funds. The share of assets devoted to sustainable investment in general (funds and mandates) represents more than 10% of assets under management;
Natixis’ businesses 25NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com innovation remains a priority for Natixis Investment Managers,V which has invested in FundsDLT, a company focused on the digitization of fund distribution operations, and SmartPensions, a British technology platform specialized in pension and savings solutions. Natixis Investment Managers also appointed Renan Borne as Chief Information Officer and Digital Transformation Lead.
During this worldwide pandemic, Natixis Investment Managers launched the Natixis Access Series to provide market trends to its clients through webinars. A record amount of content was broadcast and a large number of customer events were digitized (more than 180 global events organized in a virtual setting with more than 14,000 attendants).
Natixis Investment Managers aims to consolidate its position as a leading player in the Asset Management industry, anchored by its mature leading-business in the United States and France, and grow its presence in Europe and other critical regions, including Asia-Pacific, the Middle East and Latin America. Building on its current leading market position and its differentiating multi-affiliate business model, Natixis Investment Managers will continue to diversify its line-up of offerings and further invest in digitization and technology, and expand its global footprint and capabilities, notably in Asia. The Company will also continue to invest in ESG management and impact investing, as well as diversity and inclusion, and is committed to making clearly measurable progress in both areas.
Natixis Investment Managers: more than 20 specialized investment managers in the US, Europe and Asia (as of December 2020 – assets under management in billions of euros)
Mirova (€19.6 billion), SRI equity and fixed income, infrastructure project financingV
Natixis Wealth Management works with its subsidiaries to expand its range of products and services, which can be tailor-made: VEGA Investment Managers, its preferred partner for the production of solutions for liquid asset classes, and Massena Partners. VEGA Investment Managers’ core expertise in collective management, delegated management and fund selection on an open-architecture basis complements that of Massena Partners, advising private family-owned groups and family offices, mainly in Private Equity.
In 2020, Natixis Wealth Management continued to roll out its strategic ambitions under the New Dimension plan, to reposition its direct client franchise in the “High Net Worth Individuals” segment, while growing its offering to serve the Group. In addition, the progress made in terms of cross-functionality between entities and digital transformation enabled to facilitate and streamline interactions with clients and internally during the health crisis.
Natixis Interépargne, Groupe BPCE’s reference in employee savings and pension plans, supports companies of all sizes in setting up and managing their employee savings and retirement savings plans, as well as their employee shareholding to make them a driver of performance.
Natixis Interépargne is delivering long-term performance thanks to the quality and consistency of its range and the constant work of management teams. In 2020 it was awarded first place in the Corbeilles de l’Épargne Salariale awards(4) in the Long-Term Salary Savings Basket category for the quality of the management by Natixis Investment Managers International and Mirova of the “Avenir” and “Impact SRI” fund ranges.
Corporate & Investment Banking serves corporate clients, financial institutions, institutional investors, financial sponsors, public sector entities and the Groupe BPCE networks. It advises them and develops innovative tailor-made solutions to support their strategy by drawing on the full range of its expertise in investment banking and mergers & acquisitions on Capital Markets, and in financing and transaction banking. Its objective is to develop a strategic dialogue with each of its clients over the long term by building a close working relationship with them through a strong regional and international presence.
Corporate & Investment Banking’s areas of expertise are: Capital Markets: a wide range of diversified, standard and bespokeV products and solutions on the fixed income, credit, forex, commodities and equities markets; Financing: origination, arrangement and syndication of StructuredV Financing, as well as portfolio management for all vanilla and Structured Financing under an originate-to-distribute (O2D) model; Trade and Treasury Solutions: cash management, trade finance,V export finance and trade commodity solutions; Investment Banking: acquisition & strategic finance, financing onV the primary markets for bonds and equities, financial engineering applied to holdings, and financial structure and rating advisory services; Mergers & Acquisitions: preparation and execution of disposalsV and mergers, fund-raising, restructuring and capital protection.
These areas of expertise are adapted locally across the three international platforms: Americas: Argentina, Brazil, Canada, Chile, Colombia, Mexico, PeruV and the United States; Asia-Pacific: Australia, China, Hong Kong, India, Indonesia, Japan,V Malaysia, Singapore, South Korea, Taiwan and Thailand; EMEA (Europe, the Middle East and Africa): France, Germany, Italy,V Russia, Saudi Arabia, Spain, the United Arab Emirates, and the United Kingdom.
Corporate & Investment Banking has a cross-business team dedicated to Natixis’ client coverage. This team provides long-term support to clients at each stage of their development. It anticipates their needs and advises them by drawing on all of Natixis’ expertise.
After deploying its Green Weighting Factor (GWF) in 2019, a tool not only for innovative oversight of capital allocation based on the environmental performance of its financing solutions, but also for helping clients achieve their own personal ecological transition, Natixis worked throughout the year 2020 on the active management of its own energy targets.
The Green & Sustainable Hub (GSH) continued to drive Corporate & Investment Banking’s efforts to promote green and sustainable finance, securing a position as a valued partner for corporate clients, the public sector and investors in navigating the key issues of the ecological and social transitions.
Lastly, Natixis’ green and social bond activities saw very strong growth since the beginning of the year, with a recovery in approvals for sustainable loans in the second half of 2020 – Green Loans and Sustainability-Linked Loans (or “SLL”).
Natixis offers a wide range of investment, financing and hedging products and solutions backed by proven research, to its corporate and institutional clients (private and public sectors) and clients of Groupe BPCE networks.
28 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 the further development of Global Markets’ international reach inV terms of client and market coverage, drawing on Corporate & Investment Banking’s presence in the EMEA, Americas and Asia-Pacific regions; a multi-underlying focus, illustrated by the Global SecuritiesV Financing team, which operates simultaneously on the fixed income and equity markets.
In order to provide a holistic response to its professional clients, the Natixis Global Markets Department merged its fixed income and equity derivatives sales and financial engineering teams.
In Fixed Income, the teams were heavily involved in helping industrial and institutional investors adapt their risk hedging and investment policies during the COVID-19 crisis. Institutional investors relied on sales teams to seize new opportunities, particularly in the credit market.
In equity derivatives, Natixis continued to conduct campaigns for financial savings products committed to the energy transition for various banking (BPCE) and insurance distribution networks.
The bank received two awards, one from The Banker magazine and the other from the Structured Retail Products magazine. (source: (1) Investment Bank of the Year for Equity-linked Products, (2) Deal of the Year 2020).
The pooling of expertise facilitates the development of innovative hybrid solutions to serve customers’ funding or exposure needs. The team helps the bank adapt to changes in the market and regulatory constraints (relating to balance sheet, LCR, RWA, etc.), and provides an overview of the bank’s assets, mainly equities and fixed income (collateral) in order to manage them more efficiently and comprehensively.
Global Markets Research, now CIB Research, complements Natixis’ sales strategy. It publishes analyses to guide clients in their investment decisions and contributes to creating financial solutions tailored to clients’ needs using models, such as valuation models, risk management models and quantitative asset allocation strategy models (equity derivatives, fixed income, credit, foreign exchange), all backed by technical analyses.
Quantitative Research contributes to the adaptation of our offering on the Capital Markets. It supports the bank’s financial innovation process and ensures that it remains competitive in today’s fast-changing markets. Its teams help develop pricing, risk management models and quantitative asset allocation strategies.
The Real Assets business lines (which in addition to the Aviation, Infrastructure and Real Estate & Hospitality sectors, now include the Structured Financing activities of Energy and Mining & Metals assets) proved very resilient as reflected by the cost of risk which remained at a contained level.
Natixis further consolidated its strategic O2D model in 2020, while developing processes and initiatives aimed at optimizing credit risk management. As a key component of the bank’s O2D strategy, the Singular digital financing platform was extended to the active portfolio management activities. The platform’s main purpose is to improve collaboration and visibility across the O2D chain and ultimately provide a better service for clients.
The purpose of the Investment Banking business line is to strengthen strategic dialog with clients while offering them the best possible combination of solutions to meet their financing needs. Accordingly, it includes acquisition & strategic finance, financing on the primary markets for bonds and equities, financial engineering applied to holdings (strategic equity transactions, a team reporting both to the Head of Investment Banking and that of global markets). It also includes financial structure and rating advisory services.
Natixis arranges tailor-made solutions, drawing on the full range of its expertise in M&A advisory services, equity Capital Market transactions and bonds. It is also recognized for its structuring and placement capacity, thanks to its dedicated syndication and secondary-market teams.
In terms of acquisition finance, many transactions were conducted by corporate buyers. As part of the acquisition of Endemol Shine group by Banijay, allowing the group to become the world’s biggest independent producer of TV programs, Natixis set up financing of €2.4 billion as global coordinator, active joint bookrunner on all bank and bond tranches, B&D (bill & delivery) on the euro senior secured note facility, rating advisor and hedging bank. PJ Solomon acted as financial advisor. Natixis arranged as MLA Bookrunner and Underwriter the financing of £200 million for Compañía Logística de Hidrocarburos (CLH), a Spanish oil infrastructure group, for its
30 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 acquisition of the British group Inter Terminals. In the telecoms sector, Natixis acted as Iliad’s Underwriter and MLA Bookrunner in the financing of €2.3 billion and bacskstop of €1.65 billion for the acquisition of the Polish mobile operator Play Communication. In Asia, Natixis acted as arranger and bookrunner in a syndicated loan of $1.75 billion with a view to financing the acquisition of Pinehill Ltd by PT Indofood, a listed food group in Indonesia.
In 2020, Natixis furthered its development in the subordinated debt segment for financial institutions, with a total of 12 transactions, including ten in the insurance sector. This development was particularly marked in Europe, with transactions for Phoenix (RT1 in USD), Helvetia (Tier <2), Generali (Green T2 combined with a buyback of existing debt), and Ageas (T2) with a role of Global Coordinator, and Bankinter (AT1), or La Banque Postale (Tier 2 mandate).
Natixis also continues its sustainable finance strategy by positioning itself in a variety of green and social bond transactions, with a total of twelve mandates executed. Notable events include the participation in bond issues aimed at supporting activities affected by the health crisis (“COVID Bonds”) for the Spanish banks BBVA and CaixaBank. In green transactions, Natixis was largely involved in the inaugural issue of Crédit Mutuel (BFCM), as well as in the issues of the Belgian bank KBC, the Swedish bank SBAB, the German bank Commerzbank, the Spanish bank Bankinter, the Japanese bank Mizuho and ultimately Bank of China.
In the unprecedented health context, Natixis acted as structurer and bookrunner for most of the issues by French agencies, including the CADES inaugural social issue (€5 billion, with Natixis as Framework Structurer), the AFD inaugural Sustainable Bond (€2 billion, with Natixis as Framework Structurer) and the Unedic inaugural social issue (€4 billion, with Natixis as Framework Structurer).
In primary equity markets, against all odds, European volumes surged in 2020, up 75% compared to 2019, driven in particular by the need to reinforce equity or other recapitalization. On the other hand, the French market was marked by a completely different trend (issuance volumes in line with those of 2019), with many French companies applying for State-guaranteed loans rather than using the market to finance this crisis.
In Corporate Broking, Natixis recorded sustained activity: Natixis was involved in the six largest share buyback mandates active in Paris in 2020, with a total of 21 transactions for SBF120 and CAC40 issuer clients (including Vivendi, Cap Gemini, ArcelorMittal, Sanofi, Compagnie de Saint-Gobain, Accor, ST Microelectronics and Klepierre). In addition, the team also served as presenting institution, guarantor and bidder in the takeover bids of CVC investment fund for the April group, of the American fund Searchlight for the Latecoere group, of the Eurazeo PME investment fund for Easyvista. Natixis ODDO-BHF signed a liquidity agreement with Carbios and Transgene.
The Strategic Equity Transaction team, specialized in equity engineering originates, structures and implements value-added solutions on Natixis clients’ equity positions (equity investments, treasury shares, investments, etc.) by using all types of instruments directly or indirectly linked to shares.
2020 evidenced that SET is a major player in the Strategic Equity sector in the EMEA region and in ASIA with financing and protection solutions with major corporate clients.
Natixis’ mergers and acquisitions (M&A) teams help large and medium-sized commercial and industrial enterprises, institutional investors and investment funds prepare and execute disposals and mergers, fund-raising, restructuring and capital protection.
On the background of the COVID crisis, Natixis and the M&A affiliates network carried out numerous large-scale transactions this year.
In France, Natixis Partners advised Sagard on the sale of Ipackchem to SK Capital. In the United Kingdom, Fenchurch Advisory advised Hastings Group plc on the takeover bid by a consortium of Sampo and RMI. In the United States, PJ Solomon advised Mood Media, first on its restructuring under Chapter [11] and later on its sale to Vector Capital.
The Insurance division consists of a holding company, Natixis Assurances, which owns various operating insurance subsidiaries that develop and manage a comprehensive range of insurance solutions for individuals and professionals. The division is structured as two large business lines and one activity common to all of Groupe BPCE: the Personal Insurance business, which focuses on theV development of portfolios for life insurance, investment and retirement savings, and a very wide range of personal protection coverage (death benefit, work cessation and dependency) and payment protection solutions; the Non-Life Insurance business, which develops portfolios forV motor and multi-risk home insurance, personal accident insurance, legal protection, healthcare, and property and casualty insurance; Corporate Solutions handles Groupe BPCE insurance matters thatV are not dealt with by its own insurance subsidiaries, e.g. the Group’s insurance program.
The Insurance division comprises several legal entities (excluding investment vehicles): Group company Legal form Location % voting rights % ownership
The Insurance division was created in 2014, in line with Groupe BPCE’s strategic ambition to become a fully-fledged bancassurance player primarily serving clients from the two main banking networks of Groupe BPCE: the Banque Populaire and Caisses d’Epargne savings banks. This strategic drive resulted in the following major structural transactions: in March 2014, Natixis Assurances acquired 60% of BPCEV Assurances, a non-life insurance company created to serve customers of the Caisse d’Epargne network, and in 2017 bought the remaining 40% stake previously held by MACIF and MAIF. As a result of this transaction, Natixis Assurance became the sole shareholder of BCPE Assurances. With the renegotiation of the partnership agreement with Covéa, BPCE Assurances handles new non-life insurance business with the individual customers of the Banque Populaire banks in addition those of the Caisse d’Epargne banks; the renegotiation of the terms of the existing partnership betweenV Groupe BPCE and CNP Assurances, finalized in the first quarter of 2015. Accordingly, the distribution of life insurance policies for retirement savings and personal protection insurance, handled by the Personal Insurance business line, was extended to the Caisse d’Epargne network, with effect from January 1, 2016.
Non-life insurance revenues continued to show growth: premium income from property and casualty insurance totaled €1,654 million, up 5%. Growth was driven by auto (+5%) and multi-risk home insurance (+7%). The contract portfolio grew 5% to 6.4 million policies by end-2020, on the back of strong sales performances in both networks.
Natixis Payments is a payment services player backed by Groupe BPCE. It offers all economic players a complete range of payment solutions and related services.
It draws on its robust technological grounding, its fintechs and teams of experts to develop a complete range of innovative solutions with carefully selected partners.
The division has also kept the recruitment momentum going, hiring 150 new employees to expand its range of expertise and contribute new essential skills for its development (data, IT build, growth hacking, pricing).
At its “investor day” held on February 25 2020 in Paris, Coface presented its new strategic plan for 2023, “Build To Lead”. This plan aims to extend and deepen the transformation initiated by “Fit to Win”.
Coface cooperates with many countries to guarantee the availability of credit insurance
On February 10, 2021, Natixis and Arch Capital Group Ltd. announced the completion of the sale by Natixis of a 29.5% stake in Coface to Arch Financial Holdings Europe IV Limited. Natixis is no longer represented on the Board of Directors of Coface, as Arch occupies four of the Natixis seats. Natixis will hold its residual stake of 12.7% in Coface as a financial investment.
In this uncertain context, Coface’s strategy, based on excellence in credit insurance, the development of adjacent activities and agility, is thus particularly pertinent. In addition, Coface is continuing its cooperation with States that have set up dedicated credit insurance plans in order to maintain supplier credit as much as possible. Where appropriate, Coface has signed extensions to plans launched in 2020.
Summary table of the Board of 2.1.2 Directors at December 31, 2020 39
Compensation and benefits of any kind 2.3.2 for the Chairman of the Board of Directors and the Chief Executive Officer for 2020 94
2 CORPORATE GOVERNANCEGovernance of Natixis at November 31, 2020 38 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 2.1 Governance of Natixis at November 31, 2020
A Board of Directors with a separation of duties of the Chairman's Board of Directors and the Chief Executive Officer
At the Combined General Shareholders’ Meeting of April 30, 2009, Natixis changed its form of governance from a French société anonyme (a public limited company) with a Supervisory Board and a Management Board to a French société anonyme with a Board of Directors. The Company has opted for this mode of governance with the aim of creating a single custodian of Natixis’ best interests and value creation. It permits unity of action, which is an essential requirement in terms of control, responsiveness and foresight in Company management.
Majority and equal representation of the Banques Populaires and Caisses d’Epargne networks
To ensure that the governance of Natixis faithfully reflects its shareholding structure, since 2006, in accordance with the governance procedures registered with the Autorité des Marchés Financiers (AMF – French Financial Markets Authority) when Natixis was formed, the Banque Populaire and Caisse d’Epargne networks (BPCE) have majority and equal representation on Natixis’ Board of Directors, and, more specifically, there is a balanced representation of the executive and non-executive officers of the two networks, in order to accurately reflect its shareholder structure.
Governance of Natixis at December 31, 2020 39NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
First name/Last name Gender Age Nationality Number of shares First appointed
Daniel de Beaurepaire M 70 French 1,000 28/05/2019 2023 AGM 1 96% 0 ● ● ●
★ Chairman ● Member (a) Attendance rate by body detailed in the sheet of each director. (b) After canceling a meeting of the Strategic Committee organized within a very short period of time a few days after the appointment of Philippe Houdain as director, which he could not attend. (c) Directors whose terms of office ended during the financial year 2020. (d) Committee created on December 17, 2020. (e) The shares are held by BPCE.
The Company refers to the Afep-Medef Corporate Governance Code, which is available on the Natixis website: www.natixis.com.
In accordance with the “apply or explain” rule provided for in Article L.22-10-10 (4) of the French Commercial Code and addressed in Article 27.1 of the Afep-Medef Code, Natixis believes that its practices comply with the recommendations of the Afep-Medef code. However, certain recommendations in view of the specific nature of its governance mentioned above (see section 2.1.1 of this chapter) were excluded for the reasons set out in the following table: Audit Committee (Article 16.1 of the Code) “The proportion of independent directors on the Audit Committee should be at least equal to two thirds...”
Independent members do not make up two thirds of the Natixis Audit Committee, as recommended by the Afep-Medef Code, in order to represent the different components of the Company’s main shareholder (members from the Caisse d’Epargne and the Banque Populaire banks, in addition to a BPCE Group representative). Strictly following the Afep-Medef Code recommendations on the composition of the Audit Committee would require Natixis’ independent directors to sit on more than three Special Committees, at the risk of negatively affecting the quality of those Committees’ work, in light of the resulting increased workload. That is why Natixis promotes a balance of directors within the Committees, which are, additionally, always chaired by an independent director. It should be noted that the opinions and recommendations of the Audit Committee are only adopted if the majority of members present, including the Chairman, voted for them.
Compensation Committee (Article 18.1 of the Code) “It […] must mostly consist of independent directors.”
It must be noted that Natixis does not have an executive director. Nicolas Namias is the Chief Executive Officer of Natixis but not a director.
Governance of Natixis at December 31, 2020 41NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
First appointed: co-opted by the Board of Directors and appointed Chairman of the Board by the Board on 01/06/2018 and ratified at the AGM of 28/05/2019 Term expires: 2023 AGM (a)
Director of Lazard Ltd (1) (2) V (from 28/07/2009 to 19/04/2016); Chief Executive Officer of Natixis V (since May 2009); (until 31/05/2018)O Chairman of the Board of Directors of:V Natixis Investment Managers (since 01/09/2010) (until 01/06/2018)O Coface S.A. (1) (since 22/11/2012); (until 15/06/2018)O Director of Peter J. Solomon V Company LP (since 08/06/2016). (until 30/05/2018)O
Chairman of the Board of Directors of V Natixis Assurances (since 23/03/2017). (until 07/06/2018)O
Vice-Chairman of the Fédération V Bancaire Française (French Banking Federation) (from 01/06/2018 to 31/08/2018);
Chairman of the French Banking V Federation (since 01/09/2018); (until 31/08/2019)O
Chairman of the Association Française V des Établissements de Crédit et des Entreprises d’Investissement (since 01/09/2018). (until 31/08/2019)O
2023 AGM called to approve the financial statements for the year ended 31/12/2022.(a) Listed company.(1) Non-Group company.(2)
First appointed: Board Meeting of 03/08/2020 Term expires: 2024 AGM (a)
KEY ADVISORY SKILLS Mastery of issues related V to finance, corporate strategy, business development, insurance
An alumnus of the elite École Nationale d’Administration (ENA) with degrees from Stanford Graduate School of Business (Executive Program), ESSEC and Institut d’Études Politiques de Paris, Nicolas Namias began his career in 2004 in the Treasury Department of the French Ministry of Economy and Finance. He was first tasked with preparing for the international financial summits of the G8 and G20, before being named as the Government’s Substitute Commissioner to the Autorité des Marchés Financiers (AMF). In 2008, he joined the Finance division of BPCE Group, then became Head of Planning for Commercial Banking and Insurance. In 2012, he was named Technical Advisor to the Prime Minister for the funding of the economy, businesses, and international economic affairs. Nicolas Namias returned to BPCE Group in 2014 as Head of Strategic Planning at Natixis and a member of the Executive Committee. In this role, he has coordinated all acquisitions carried out by Natixis since 2014. In September 2017, he was appointed Chief Financial Officer and Head of Strategic Planning, and as a member of the Natixis Executive Management Committee.
In June 2018, Nicolas Namias was appointed as a member of the BPCE Management Board member in charge of Finance, Strategy, Legal Affairs and the Secretary’s Office of the Supervisory Board. From November 2018 to August 2020, he has been a BPCE Management Board Member in charge of Finance and Group Strategy.
Since August 3, 2020, Nicolas Namias has been Chief Executive Officer of Natixis. He also retains his office as a member of the BPCE Management Board.
Member of the Board of Natixis V Assurances (since 26/10/2017); (until 19/06/2018)O
Permanent representative of BPCE, V Director: Crédit Foncier de France (since 01/06/2018); (until 31/07/2019)O
Member of the Management Board V of BPCE in charge of Finance, Strategy, Legal Affairs and Secretariat of the Supervisory Board (from June 2018 to October 2018).
2024 AGM called to approve the financial statements for the year ended 31/12/2023.(a) Listed company.(1)
BPCE – Permanent representative Catherine Halberstadt Member of the BPCE Group Management Board in charge of Human Resources
Born 09/10/1958 Nationality: French Natixis shares held: 1,097 Address: 50 avenue Pierre Mendès-France, 75201 Paris Cedex 13
Catherine Halberstadt was Chief Executive Officer of Banque Populaire du Massif Central from September 1, 2010, to
Chief Executive Officer of Banque V Populaire du Massif Central (BPMC) (from 01/09/2010 to 25/03/2016); Permanent representative of BPMC, V Chairwoman of SAS Sociétariat BPMC (from 2011 to 25/03/2016); Permanent representative of BPMC, V Member of the Board of I-BP, Association des Banques Populaires pour la Création d’Entreprise (from 01/09/2010 to 25/03/2016); Permanent Representative of BPMC, V Member of the Committee of Banques d’Auvergne(1) (from 2010 to 25/03/2016).
Governance of Natixis at December 31, 2020 45NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
From 2009 to 2012 Daniel de Beaurepaire was Chairman of Société Locale d’Epargne PME Professionnels, then Director at Locale Épargne Économie Sociale et d’Entreprise from 2013 to 2014. In 2015 he was appointed Chairman of Société Locale d’Épargne Paris Ouest.
He became member of the Caisse d’Epargne Île-de-France Steering and Supervisory Board in April 2015 which he has chaired since April 2017.
Outside BPCE Group: Manager of GEA Conseils (from January 2005 to 25/03/2020);V Chairman of SAS International Audit Company V (from January 2005 to 25/03/2020); Member of the Board and Treasurer of Association Société V des Amis de Versailles (since 11/06/2019); Fédération française des sociétés d’amis de musées V (since 27/11/2020).
Other offices held in 2020: Within BPCE Group: Chief Executive Officer of Banque Populaire Occitane V (since October 2006); Chairman and Board Member of Fondation d’Entreprise BP V Occitane (since 20/06/2011); Director of: Ostrum Asset Management (from 28/09/2018 to V 26/10/2020), Caisse Autonome des Retraites des Banques Populaires (CAR-BP) (since 03/06/2016), Institution de Prévoyance des Banques Populaires (IPBP) (since 03/06/2016), Retraite Supplémentaire des Banques Populaires (RSBP) (since June 2019); Permanent Representative of BP Occitane, Member of the Board V of i-BP (since 2001), BP Développement (since 19/06/2018); Permanent Representative of BP Occitane, Member of the V Investment Committee of Multicroissance (since 01/11/2006); Permanent Representative of BP Occitane, Member of the V Investment Committee of Sudcroisaance (since 26/11/2019).
Outside BPCE Group: Permanent Representative of BP Occitane, Member of the Board V of IRDI (since 2006); Permanent Representative of BP Occitane, Member V of the Supervisory Board of: SOTEL (since 2001), IRDI Gestion (since 19/06/2015).
Governance of Natixis at December 31, 2020 47NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Born 10/03/1958 Nationality: French Natixis shares held: 1,616 Address: 50 rue de Laxou, 54000 Nancy
First appointed: Board meeting of 17/12/2020 (with effect as of 01/01/2021)
KEY ADVISORY SKILLS See the skills map V in section 2.2.1.1. C
A graduate of the National School of Public Works of the State (ENTPE) and having earned a postgraduate degree in Corporate Administration, Dominique Duband began his career as an engineer in the departmental infrastructure directorate, then the general council of the Meurthe-et-Moselle department in France, before joining urban planning semi-public corporation Solorem in 1989.
In 2016 he was appointed Director of the Société Locale d’Épargne Meurthe-et-Moselle.
Outside BPCE Group: Director of: Presence Habitat (since 18/06/2009), Batigère V Rhône-Alpes (from 19/06/2008 to 17/09/2020), Batigère Groupe (since 20/07/2017), Livie (since 27/06/2018), AMLI (association) (since 18/06/2008), Fédération Nationale des S.A et Fondations d'HLM (since 16/06/2016), Avec Batigère (association) (since 29/06/2017), Fondation d'Entreprise Batigère (since 22/05/2017), Coallia Habitat (since 26/06/2019), Coallia (association) (since 26/06/2019); Chairman of the Board of Directors of: Interpart V (since 28/06/2018).
Chairman of the Supervisory Board V of Batigère-Sarel (1) (since June 2014); (until June 2017)O Chairman of the Supervisory Board V of Batigère (1) (since 29/06/2014); (until 18/06/2018)O Permanent representative of V Interpart (1), Director of Soval (1) (since 18/06/2015); (until 19/06/2018)O Permanent representative of Batigère V Île-de-France (1), Director of Novigère (1) (since 30/06/2014); (until 20/06/2018)O Permanent representative of Batigère V Sarel (1), Director of CILGERE Entreprises Habitat Constructions (1) (from 07/03/2014 to 20/05/2016); Director of AORIF (1) (association) V (from 03/12/2014 to 10/11/2016); Member of the Steering and V Supervisory Board of Caisse d’Epargne of Lorraine Champagne Ardenne CELCA (since 2016).
Born 17/12/1956 Nationality: French Natixis shares held: Address: 12 rue de Maison-Rouge, CS 10620, 45146 Saint-Jean-de-la-Ruelle
Nicole Etchegoïnberry has a PhD in Information Technology and began her career in information systems at Banque Courtois, followed by a stint at Fédération du Crédit Mutuel Midi Atlantique. She then joined the Caisse Régionale du Crédit Agricole Mutuel de Toulouse, where she held senior positions in development and markets. In 2001 Nicole joined Caisse d’Epargne de Midi Pyrénées where she oversaw the bank’s IT migration and banking operations.
From 2005 to 2008 Nicole Etchegoïnberry was Chief Executive Officer of the former Caisse d’Epargne subsidiary Gestitres, specialized in securities account management and custody of financial instruments. In 2008 she became Chairwoman of the Management Board of GIE GCE Business Services, which handles the Caisse d’Epargne group’s IT project management.
Other offices held in 2020: Within BPCE Group: Chairwoman of the Management Board of Caisse d’Epargne V Loire-Centre (CELC) (since 01/08/2009); Chairwoman of the Board of Directors of the “Les Elles du Groupe V BPCE” Association (since 01/10/2012); Director (from October 2009 to 24/07/2020), member of the Risk V Committee and the Audit Committee, Chair of the Audit Committee (from September 2019 to 24/07/2020) of Crédit Foncier de France; Member of the Board of BPCE International et Outre-Mer V (from 05/08/2013 to 08/10/2020), Association Parcours Confiance Loire-Centre (since 07/07/2009); Vice-Chairwoman of the Board of Directors of Touraine Logement V ESH (since 29/06/2017), Member of the Board (since 2009); Permanent Representative of CELC, Member of the Board V of: FNCE (since 01/08/2009), GIE IT-CE (since 21/04/2011), ALBIANT-IT S.A. (since 11/12/2015), GIE BPCE IT (since 24/07/2015), Fondation d’entreprise Caisse d’Epargne Loire-Centre (since 18/12/2015), Association Habitat en Région (since 08/12/2010).
Outside BPCE Group: Member of the Board of Financi’Elles (since 24/03/2011);V Permanent Representative of CELC, Member of the Board V of the CANCER@WORK association (since 12/04/2018); Chairwoman of the Conseil de Développement Métropolitain V de Orléans Métropole (from 13/04/2018 to 27/02/2020).
Chairman of the Board of Directors V of GIE BPCE Services Financiers (since 17/12/2013); (until 18/04/2019)O Permanent representative of CELC, V Chairman of the Board of Directors of BPCE Solutions Credit (formerly Ecureuil Crédit) (since September 2008). (until 13/12/2019)O
Permanent representative of CELC, V Chairman of the Board of Directors of BPCE Trade (since 30/06/2017). (until 14/11/2019)O
A graduate of the Sup de Co Nice, Sylvie Garcelon joined the Internal Audit Department of Banque Populaire group in 1987. In 1994 she became Corporate Secretary at SBE before joining the Finance Department of BRED in 2000. In 2003 she joined Natixis where she held positions first in Third-Party Asset Management and then at the Information Systems and Logistics Department. In 2006, she was appointed Managing Director of M.A. Bank, then Chairman of the Management Board in 2010. Sylvie Garcelon joined CASDEN Banque Populaire in April 2013 as Deputy CEO in charge of Finance, Risk and Subsidiaries.
Other offices held in 2020: Within BPCE Group: Chief Executive Officer of CASDEN Banque Populaire V (since May 2015); Member of the Board of Fondation d’Entreprise Banque Populaire V (since 14/06/2016); Member of the Board of Banque Palatine, Member of the Audit V Committee and Risk Committee (from 05/10/2016 to 27/05/2020); Treasurer of the Fédération Nationale des Banques Populaires V (since 04/04/2017); Non-voting Member of BPCE (since 20/12/2018).V
Chief Executive Officer of Bureau V du Management Financier (absorbed by CASDEN in 2017) (since April 2013). (until November 2017)O
Governance of Natixis at December 31, 2020 51NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
First appointed: Board Meeting of 23/06/2020 Term expires: 2022 AGM (a)
Chairman of the Board of Directors of Banque Populaire du Nord V (since 16/10/2016); Member of the Board of BPCE Financement (since 27/11/2018).V
Chairman of CCI Grand Lille (1) V (from February 2010 to June 2016); Director of the Groupement des Acteurs V Régionaux Ports (GARP) (1) (from 26/11/2019 to 31/12/2019).
2022 AGM called to approve the financial statements for the year ended 31/12/2021.(a) After canceling a meeting of the Strategic Committee organized within a very short timeframe a few days after the appointment of Philippe Hourdain as a (b) Director, which he did not attend. Non-Group company.(1)
Born 06/12/1963 Nationality: French Natixis Shares held: 1,000 Address: 59 rue Nationale, 75013 Paris
A graduate of the ESSEC Business School, Anne Lalou began her career as a Manager and then Assistant Director in the M&A Department at Lazard in London then Paris. She was then made Head of Outlook and Development at Havas in Paris. She was Chairwoman and Chief Executive Officer of Havas Édition Électronique before joining Rothschild & Cie as Managing Director.
Anne Lalou joined Nexity in 2002 where she served as Secretary General and Director of Development, before her appointment as Chief Executive Officer of Nexity-Franchises in 2006, then Deputy Chief Executive Officer of the Distribution division until 2011. Anne Lalou has been Dean of the Web School Factory since 2012, and Chairwoman of the Innovation Factory since 2013.
Other offices held in 2020: Dean of the Web School Factory (since April 2012);V Chairwoman of the Innovation Factory (since February 2013);V Member of the Supervisory Board (since 07/05/2010), Chair of V the CSR Committee (since 2014) and member of the Finance Committee (since 2012) of Eurazeo (1); Director (since 18/03/2014), member (since 22/06/2017) and V chairwoman (from 22/06/2017 to October 2020) of the Ethics, Quality and CSR Committee, Chairwoman of the Compensation and Appointment Committee (since October 2020) of Korian (1).
Member of the Supervisory V Committee of Foncia Holding (2) (from September 2011 to September 2016); Member of the Supervisory Board V of Foncia Groupe (2) (from February 2012 to 07/09/2016); Chairwoman of the Compensation V and Appointment Committee of Korian Medica S.A. (1) (2) (since 18/03/2014). (until 22/06/2017)O
Governance of Natixis at December 31, 2020 53NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Born 11/02/1955 Nationality: French Natixis shares held: Address: 15 boulevard de la Boutière, 35768 Saint-Grégoire cedex
KEY ADVISORY SKILLS See the mapping of expertise V in section 2.2.1.1. C
In 1983, she joined the Paris Chamber of Commerce and Industry. She held various positions including Director of Finance and Human Resources (from 1990 to 1999) and Director of Development (from
In 2001, she joined the ESSCA School of Management as Academic and Research Director. She was then appointed Deputy Dean of ESSCA in 2006, before becoming Dean in 2007 until November 2018. Within BPCE Group, Catherine Leblanc has been Chairwoman of the Board of Directors of Banque Populaire Grand Ouest since May 21, 2019. She has also been a Director at BPCE Factor since 2016.
Member of the Board of Association Saint Yves Université V Catholique de l’Ouest (since 15/06/2019).
Manager of SCI Boudou Bleu (1) V (since 2002); (until 2019)O Member of the Board of Banque V Populaire Atlantique (since 27/04/2010); (until 06/12/2017)O Member of the International V Advisory Board of the Antwerp Management School (1) (since January 2016); (until December 2019)O Member of the International V Advisory Board of Deakin University (1) (since March 2016). (until December 2019)O
2023 AGM called to approve the financial statements for the year ended 31/12/2022.The GM of May 28, 2021, will be asked to reappoint Catherine Leblanc (a) as a director, following her resignation to come at the end of the Board meeting preceding the GM (in order to avoid a group renewal of directors in 2023). Non-Group company.(1)
2 CORPORATE GOVERNANCEGovernance of Natixis at December 31, 2020 54 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
Born 05/08/1956 Nationality: French Natixis Shares held: 1,000 Address: 53 Davies Street London W1K5JH England
First appointed: co-opted by the Board of Directors on 12/11/2009 and ratified at the AGM of 27/05/2010 Term expires: 2022 AGM (a)
With a degree from the École Polytechnique, Bernard Oppetit forged his career with the Paribas group from 1979 to 2000, first in Paris, then in New York, and finally London.
Chairman of Centaurus Capital Limited (since 2000);V Director of Centaurus Capital Holdings Limited (from August 2000 V to 30/09/2020), Centaurus Global Holding Limited, Centaurus Management Company Limited (from August 2000 to 30/09/2020), Centaurus Capital group (since August 2000).
Trustee of École Polytechnique V Charitable Trust (since 2015). (until 01/11/2017)O
Governance of Natixis at December 31, 2020 55NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
2023 AGM called to approve the financial statements for the year ended 31/12/2022.(a) Listed company.(1)
2 CORPORATE GOVERNANCEGovernance of Natixis at December 31, 2020 56 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
Born 26/11/1961 Nationality: French Natixis shares held: 1,093 Address: 15, avenue de la Jeunesse, CS30327, 44703 Orvault Cedex
A graduate of ISC Paris Business School, ITB (Institut Technique Bancaire) and ICG IFG (Institut Français de Gestion), Christophe Pinault began his career in 1984 at Banque Populaire Anjou-Vendée before moving to Crédit Agricole Mayenne and Crédit Mutuel Anjou. In 2002 he joined Caisse d’Epargne des Pays de la Loire as Head of the Network and then Member of the Management Board in charge of Development. He then joined Crédit Foncier in 2007 as Deputy Managing Director in charge of Development. In 2013 he was appointed Chairman of the Management Board of Caisse d’Epargne Côte d’Azur.
He has been Chairman of the Management Board of Caisse d’Epargne Bretagne and Prévoyance Pays de Loire since April 24, 2018.
Permanent Representative of CEBPL, V Non-Voting Member of ERILIA (from 14/05/2018 to 12/11/2018).
First appointed: co-opted by the Board of Directors on 04/04/2019 and ratified at the AGM of 28/05/2019 Term expires: 2023 AGM (a)
Director at Barclays V Bank PLC & Barclays Bank PLC (2) (since 2013); (until March 2017)O General Counsel and member of the V Executive Committee of ABB Ltd (1) (since 2007); (until 11/12/2019)O Vice Chairwoman of the Board V of Directors of ABB Asea Brown Boveri Ltd (since 2007). (until 31/10/2019)O
Born 22/08/1950 Nationality: French Natixis Shares held: 1,000 Address: 89 Avenue Charles de Gaulle, 92575 Neuilly sur Seine Cedex
In 1987 he was appointed Deputy CEO of Métropole Télévision M6, where he has served as Chairman of the Management Board since 2000.
Member of the Board of Directors of V RTL France Radio (since 02/10/2017); (until 28/06/2018)O
Permanent representative of Métropole V Télévision, Director of IP France S.A. (since 02/10/2017); (until 31/05/2018)O
Permanent representative of Métropole V Télévision, Chairman of M6 Hosting (since 09/07/2018). (until 01/02/2019)O
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First appointed: Board Meeting of 04/04/2019 and ratified at the AGM of 28/05/2019 Term expires: 2023 AGM (a)
First appointed (as non-voting member): Board Meeting of 04/04/2019 Member – Strategic Committee
From 2009 to November 22, 2014, Henri Proglio was Chairman and Chief Executive Officer of EDF. Since 2015, he has been Honorary Chairman of EDF.
Governance of Natixis at December 31, 2020 61NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Thierry Cahn (until May 20, 2020) Chairman of the Board of Directors of Banque Populaire Alsace Lorraine Champagne
Other offices held in 2020: Within BPCE Group: Chairman of the Board of Directors of Banque Populaire Alsace V Lorraine Champagne (since 30/09/2003); Member (since July 2009) then Vice-Chairman of the Supervisory V Board (since 24/05/2019), Member of the Cooperative and CSR Committee (since 24/05/2019) of BPCE; Member of the Supervisory Board of Banque BCP to Luxembourg V (since 03/07/2018).
Member of the BPCE Audit V Committee (since July 2009). (until 24/05/2019)O
2 CORPORATE GOVERNANCEGovernance of Natixis at December 31, 2020 62 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
Born 19/09/1955 Nationality: French Natixis Shares held: 1,000 Address: 10 quai des Queyries, 33072 Bordeaux Cedex
First appointed: Board Meeting of 01/08/2017 Date term of office expires: after the GM of 20/05/2020
Bernard Dupouy also served as a Member of the Board of Crédit Maritime Mutuel du Littoral Sud-Ouest from 2012 to 2015, then became a Permanent Representative of BPACA, Member of the Board of Crédit Maritime, and Chairman of the Audit, Risk and Accounting Committee from 2012 to June 4, 2018, when that entity was merged into BPACA.
A well-known entrepreneur in the Aquitaine region, Bernard Dupouy is the Chief Executive Officer of DUPOUY S.A., a company specialized in exports and distribution in French overseas territories.
Elected member of the Bordeaux Chamber V of Commerce and Industry (1) (from 2006 to 23/11/2016); Director of Congrès et Expositions de V Bordeaux SAS (1) (since 2008); (until 03/18/2019)O Permanent representative of BPACA, V Director of Bordeaux Grands Events (1) (since 2013); (until 25/04/2019)O Permanent Representative of BPACA, V Member of the Board of Crédit Maritime Mutuel du Littoral Sud-Ouest (since 29/01/2015); (until 04/06/2018)O Chairman of the Audit, Risk and Accounts V Committee of Crédit Maritime Mutuel (since 2012); (until 04/06/2018)O Member of the Board of: Natixis V Interépargne (since 30/11/2016); (until 03/08/2018)O Chairman of Madikera Management 2M SAS V (1) (since 12/07/2016). (liquidated on 31/12/2018)O
Governance of Natixis at December 31, 2020 63NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Permanent representative of BPACA, V director of Bordeaux Fondation Université (since 29/11/2017). (until 14/05/2019)O
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Other offices held in 2020: Within BPCE Group: Member of the Steering and Supervisory Board of Caisse V d’Epargne Côte d’Azur (since 2003), then Chairwoman (since April 2015); Member of the Supervisory Board and Risk Committee of BPCE V (since 22/05/2015); Chairwoman of the Board of Directors of SLE CECAZ V (SLE Ouest des Alpes-Maritimes) (since 1999); Member of the Board of CE Holding Participations V (since 09/09/2015), Fondation BELEM (since 30/06/2020); Permanent Representative of Caisse d’Epargne Côte d’Azur, V Member of the Board of FNCE (since April 2015); Treasurer of the Benjamin Delessert Association (since 2015).V
In accordance with Article 9 of the Natixis bylaws, each director must own at least one hundred and forty (140) company shares during their term of office. Furthermore, in accordance with the recommendations of the Afep-Medef Code and the provisions of Article 3 of the Code of Ethics for members of the Board of Directors (see section 2.2.1.2 B of this chapter), directors are asked to hold at least one thousand (1,000) company shares within 18 months of joining the Board (refer to each director’s sheets for more details on their number of shares).
The main changes made to the Board of Directors in FY 2020 that are likely to have a material impact on the Company’s governance are as follows: on February 6, 2020, the Natixis Board of Directors:V
In accordance with the staggered appointments procedure initiated at the Combined General Shareholders’ Meeting on May 23, 2018, the current terms of office expire as follows: 2021 AGM Nicolas de Tavernost 2022 AGM Dominique Duband, Philippe Hourdain, Anne Lalou, Bernard Oppetit 2023 AGM Laurent Mignon, BPCE (represented by Catherine Halberstadt), Daniel de Beaurepaire, Catherine Leblanc, Catherine Pariset, Christophe Pinault, Diane de Saint Victor (and the non-voting member, Henri Proglio)
Diversity policy statement The objective of the Natixis Board of Directors’ diversity policy is to ensure that members of the Board are able, at all times, to make informed, judicious and objective decisions by taking into consideration Natixis’ business model, its risk appetite, its strategy and the markets in which Natixis operates, and secondly, to challenge and monitor the decisions taken by Senior Management.
Skills and expertise of the members of the Board of Directors As part of the review of the Board’s diversity, at its meeting of December 11, 2020, the Appointment Committee examined an updated mapping of the skills and expertise of Board members to assess the level of knowledge and expertise of Board members and the expertise of each director for each area of expertise considered (including the four Natixis business lines and eleven other areas of expertise).
Analysis of this mapping revealed a great diversity and complementarity in terms of the directors’ knowledge, skills and experience. In accordance with the opinion of the Appointment Committee, the Board of Directors, at its meeting of December 17, 2020: noted that the evaluation of the balance and diversity ofV knowledge, skills and experience that the Board members have, both individually and collectively, had provided satisfactory results; and determined the qualifications deemed necessary for the duties toV be performed within the Board of Directors as presented to it for fiscal year 2021.
Management and oversight of corporate governance 67NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Overall summary of the breakdown of skills of the members of the Board of Directors
C. Halberstadt � � � � � � � � � � � � � �
D. Duband � � � � � � � � � � �
A. Lalou � � � � � � � � � � � � �
D. de Saint Victor � � � � � � � � � � � � � � �
The Board of Directors took care to appraise whether the companies in which the independent directors hold corporate office have a significant business relationship with Natixis or its corporate Group.
Natixis applies the concept of a “reference banker”, i.e. “a banker essential to all requirements of the Company”, to assess the importance of business relationships, identify any situation of dependency on Natixis, and finally gauge whether these relationships are likely to affect the independence of the director’s judgment.
Furthermore, to date, the independent directors are not in a position of conflict of interest in respect of the non-executive corporate offices they hold in other companies, in accordance with the Compliance Charter applicable to all Board of Directors’ members under which they undertake to inform the Company of any conflict of interest in which they will be involved and to comply with the process related to the handling of the said conflict of interest.
Has not been an auditor of the Company in the previous five years. OK OK OK OK
Has not been a Board member of the Company for more than 12 years (independent director status is lost once a Board member has served for 12 years).
Does not receive variable compensation in cash or in shares, or any performance-linked compensation from Natixis or the Group.
Natixis went from being a Board of Directors composed of 33% women five years ago (five women and ten men) to a Board composed of 47% women (seven women and eight men).
International outreach Nine directors have international experience, either because they have held a position outside France or exercised an activity in an international group as part of their professional career, or because they hold or have held one or more mandates in foreign companies (see skills map above).
Management and oversight of corporate governance 69NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
As a follow-up to the updating of the Board member diversity policy approved by the Board of Directors at its meeting of December 17, 2020, on the proposal of the Appointments Committee, the Board adopted a policy for selecting future members of the Board of Directors of Natixis, drawn up in accordance with: guidelines and recommendations from the regulatory authoritiesV aimed at improving the formalization of director selection processes; of the Afep-Medef Code, which requires the AppointmentV Committee to organize a procedure to select future independent directors.
> �List drawn up of potential candidates likely to be approached as directors in the short- and medium-term.
> �Chairman of the Appointments Committee, the Chairman of the Board of Directors, the Chief Executive Officer and the General Secretary discuss candidate profiles.
> �Shortlisted candidates interviewed by the Appointments Committee, which makes its recommendation to the Board of Directors.
> �Review of the candidate(s) by the Appointments Committee and selection of the candidate by the Board on the recommendation of� the Appointments Committee.
Definition by the Appointments Committee in conjunction with the Chairman of the Board of Directors of the profile sought with regard to: V requirements in terms of skills and experience (mapping of skills and expertise); V highly sought-after values and qualities; V gender balance; V criteria to be met in accordance with the diversity policy.
The profile of the candidate must enable the Board to have a majority and for the two networks Banque Populaire and Caisse d’Epargne to be equally represented (and more specifically for the representation of the executive and non-executive officers of the two networks to be balanced).
A – Legal and statutory requirements, and Internal Rules of the Board of Directors
A number of transactions are subject to prior authorization by the Board of Directors: the extension of Natixis’ activities to include new coreV businesses not currently exercised by the Company; any acquisition or increase in shareholdings, as well as anyV investments, divestments or the formation of joint ventures by Natixis or any of its main subsidiaries, involving an amount in excess of €100 million, in the event that the Group’s structure is modified; any asset transfers, mergers or spin-offs in which Natixis isV involved.
The Board of Directors reviews the governance framework as setV out in Article L.511-55 of the French Monetary and Financial Code, periodically assesses its effectiveness, and ensures that corrective measures have been taken to remedy any shortcomings.
The Board of Directors approves and regularly reviews theV policies and strategies governing the taking, management, monitoring and mitigation of the risks to which Natixis is or could be exposed, including the risks generated by the economic environment, social risks and environmental risks.
Under the conditions defined in Article 15 of the CompanyV bylaws, the Board of Directors may appoint a Chief Executive Officer from among the directors or otherwise, whom it may dismiss at any time. The Chief Executive Officer may delegate his powers to any corporate officer of his choosing, with or without the option of substituting one for another.
The Board of Directors appoints the effective managers (withinV the meaning of Article L.511-13 of the French Monetary and Financial Code) and convenes the General Shareholders’ Meeting, sets the agenda and implements its decisions.
It may, at the proposal of the Chairman, set up its ownV Committees to deliberate on those issues submitted for examination by the Board itself or its Chairman. It determines the structure and powers of these Committees, which conduct their activities under its responsibility.
Minutes of Board Meetings are drawn up in accordance withV legal and regulatory provisions in force.
The Board of Directors adopts and reviews the generalV principles of the Company’s compensation policy and monitors their implementation.
It determines the level and terms of compensation of theV Chairman of the Board of Directors, the Chief Executive Officer and of the Deputy Chief Executive Officer(s) after consultation with the Compensation Committee.
It sets the rules for the distribution of compensation allocated toV the directors by the General Shareholders’ Meeting.
To reaffirm its commitment to good governance, the Board of Directors has adopted a Compliance Charter for its members (appended to the Internal Rules). The purpose of this charter is to promote the application of corporate governance principles and best practices by the directors of Natixis.
Before assuming office, every one of Natixis’ directors must ensure that they are familiar with the general or specific obligations incumbent upon them, such as those resulting from laws or regulations, bylaws, Internal Rules and this charter, as well as any other binding texts.
Article 2: Directorship and Corporate Interest Each director represents all the shareholders and endeavors to act in the corporate interest of Natixis at all times. They undertake to defend and promote the values of Natixis.
Article 4: Professionalism and Efficiency Directors contribute to the collegiality and efficiency of the work of the Board and Special Committees. They make recommendations that they feel will improve the Board’s operating procedures, specifically during the Board’s periodic evaluation.
Article 6: Prevention of Insider Trading – Inside Information In accordance with Regulation 596/2014 of the European Parliament and Council (together with the delegated and enforcement regulations, the Market Abuse Regulation – MAR): “Inside information is any information of a precise nature, which has not been made public, relating, directly or indirectly, to one or more issuers or to one or more financial instruments, and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.”
If the Board of Directors has received inside information on Natixis, the directors and any individual attending Board or Committee Meetings must refrain from: performing or attempting to perform any insider trades (the termV “insider trades” refers to (i) the use of inside information by a person in possession of such information to buy or sell, for themselves or for a third party, directly or indirectly, financial instruments related to this information, and (ii) the use of the recommendations or inducements of a person in possession of inside information if the person using the recommendation or inducement knows, or ought to know, that it is based upon inside information); recommending to another person or inducing them to performV any insider trades; or unlawfully disclosing inside information.V
The duty to abstain also applies if inside information is held on the securities of listed companies in which Natixis holds or may come to hold a stake.
Members of the Board of Directors are advised of the risks posed by transactions executed on Natixis stock by persons closely associated with them, especially: a spouse, or a partner considered to be equivalent to a spouse inV accordance with national law; a dependent child, in accordance with national law;V
a relative who has shared the same household for at least oneV year on the date of the transaction concerned.
that is set up for the benefit of such a person, orV
A person’s omission from this list does not mean they areV exempted in any way from complying with the laws and regulations and in no way does it prejudice their potential insider status.
Each director and non-voting member must declare anyV trading in Company shares to Natixis and the AMF within the three business days following the date of the transaction and in accordance with the conditions set out by the MAR Regulation.
This reporting obligation also applies to closely associatedV persons as defined by the MAR Regulation.
Natixis may also ask each director and non-voting memberV to provide any information in relation to the trading of listed companies’ securities necessary for it to fulfill its reporting obligations to all authorities such as stock market authorities, both in France and abroad.
Article 7: Independence and Conflicts of Interest The Appointment Committee examines the situation of each director and non-voting member with regard to potential conflict of interest when they are first appointed and when their mandate is renewed. All directors and non-voting members endeavor to prevent, for the entire duration of their mandate, any conflict that could arise between their own interests and the interests of Natixis. As such, directors and non-voting members strive to preserve their independence in judgment, decision and action in all circumstances. They refuse to be influenced by any element that is not aligned with the corporate interest of Natixis, which it is their remit to defend.
Management and oversight of corporate governance 73NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
If a director or non-voting member finds themselves in a conflict of interest, they must abstain from participating in any discussion within the Board of Directors, or the Special Committee if applicable, connected to the area of their conflict of interest; in such instances, they must abstain from the Board’s deliberations and votes, and the section of the minutes related to the area of their conflict of interest are not submitted to their approval.
Article 8: Information/Training All directors have a duty to learn and to ask, within the appropriate time frame, the Chairman of the Board of Directors, and/or the Special Committees of which they are a member, to provide the information needed for the Board or the Special Committees to take useful action on the matters on its agenda.
In addition, all directors must receive training by attending, where necessary, the training modules provided by the Company.
Article 9: Application of the charter Should a member of Natixis’ Board of Directors no longer be in a position to perform their duties in compliance with the charter, either for their own reasons or for any other reason including those specific to Natixis’ rules, they must notify the Chairman of the Board of Directors, seek measures to remedy the situation, and, if none are found, suffer the personal consequences with respect to the performance of their duties.
Natixis’ Chief Compliance Officer is available to each Board member for any questions about the Code of Conduct.
To the best of Natixis’ knowledge, these situations do not affect those directors’ independence of judgment, decision, and action. When needed, the Internal Rules of the Board of Directors and the Compliance Charter set out a conflict-of-interest resolution system for all members of the Board of Directors. They also require Board members to notify the Chairman of the Board (or the Corporate Secretary of Natixis) of any conflict of interest and to abstain from participating in the part of the Board or Special Committee Meeting addressing the conflict of interest, and from voting on the corresponding resolution.
In addition, there is no potential conflict of interest between the duties of the members of the Board of Directors towards Natixis and their private interests and/or other duties towards third parties.
Jean-François LEQUOY 02/03/2020 Vesting of free shares (PAGA 2017) (b) 21,436 NA
Laurent MIGNON 02/03/2020 Vesting of free shares (PAGA 2017) (b) 35,894 NA
François RIAHI 02/03/2020 Vesting of free shares (PAGA 2017) (b) 37,656 NA
This charter defines the criteria for establishing “related-party agreements” in accordance with the provisions of Article L.225-38 of the French Commercial Code.
An update of the charter was presented and submitted to the Board of Directors for approval on February 11, 2021. This update follows in particular from Law No. 2019-486 of May 22, 2019 on business growth and transformation of companies known as “PACTE”. As such, it includes a procedure for evaluating agreements relating to ongoing transactions entered into under normal conditions.
The Board of Directors considers that the transaction is justified in view of the Company’s corporate interest in that it aims to implement the overall project between Natixis and La Banque Postale to create a major player in the sector. insurance management in France and in Europe through the grouping of some of their asset management activities within a joint venture. The agreement was signed on
E – Agreements entered into between an officer or a significant shareholder and a controlled company
Each director’s individual attendance rate for Board of Directors’ Meetings is provided in section 2.1.4 of this chapter (see directors’ individual fact sheets).
All documents relating to the agenda are attached to the convening notice or are sent or handed to the directors within a reasonable timeframe, prior to the meeting via a secure digital platform. Exceptionally, they may be provided at a meeting.
The year 2020 was marked by an exceptional health crisis that justified the organization of an increased number of meetings compared to previous years. In particular, the Board monitored the crisis management system put in place from January 21, 2020, in coordination with BPCE, with a dual objective: ensuring the continuation of its critical activities and protecting its employees.
Review of the quarterly and half-yearly financial statements and approval of the annual financial statements V (parent company and consolidated); Approval of the change in the allocation of income in the context of the health crisis;V Approval of the individual financial statements of Natixis S.A. at December 31, 2019 under IFRS;V Review and approval of the budgets for 2020 and 2021;V Economic and benchmark reviews/Business market review, sustainable finance review and Life of the stock;V Review and approval of press releasesV Approval of the Board’s management report including the corporate governance report and the report V on the use of authorizations to increase the Company’s share capital; Feedback on the work of the Audit Committee.V
Approval and update of the Risk Appetite Framework (RAF);V Approval of the annual review of indicators and alert thresholds defined in the Order of November 3, 2014;V Analysis and projection of cost of risk;V Presentation of internal stress tests;V Approval of liquidity risk tolerance;V Approval of strategies, policies, procedures, systems, tools and limits with regard to liquidity risk and underlying V assumptions; Approval of contingency plans, particularly in light of the results of the alternative scenarios regarding liquidity V positions and risk mitigation factors; Approval of the audit program for 2021;V Approval of the ALM standards;V Update on derivatives (impact of changes in dividends linked to the health crisis);V Follow-up on the H2O file;V Brexit update;V Approval of the Corporate & Investment Banking Booking Model policy;V Review of the activity and results of compliance control;V Updating the Compliance Charter;V Approval of AML/CFT control reports and asset freeze;V Feedback on the work of the Risk Committee and the US Risk Committee.V
Corporate governance Approval of the Board of Directors’ report on corporate governance (included in the management report);V Approval of the amendment to the documentation of the Combined General Shareholders’ Meeting of May 20, V 2020 and the organizational arrangements for the General Shareholders’ Meeting in the context of the health crisis Approval of responses to written questions from shareholders;V Update on dividend distribution;V Updating the diversity policy for Board members;V Development of the selection policy for future directors (see section 2.2.1.1. C and D of this chapter);V Renewal of the terms of office of three directors;V Co-option of three new directors;V Composition of Special Committees;V Creation of a CSR Committee, a new specialized Board Committee (see section 2.2.2.6 of this chapter);V Appointment of a new Chief Executive Officer;V Appointment of a new executive manager;V Review of independent member status;V Expected reappointment of the Statutory Auditors (see section 2.2.2.1. C of this chapter);V Review of the results of the assessment of the work of the Board of Directors and its specialized Committees for V fiscal year 2019; Launch of the assessment of the work of the Board of Directors and its specialized Committees for fiscal year V 2020; Convening of the General Shareholders’ Meeting and the Annual Meeting for holders of participating securities;V Review of the related party agreements and guarantees authorized during previous fiscal years;V Authorization to sign regulatory guarantees and agreements;V Report on the work of the Appointment Committee relating in particular to changes in the composition of the V Board and Committees as well as the CEO succession policy (see section 2.2.2.4. D of this chapter) and the succession policy for effective managers.
Compensation Compensation of the Chairman of the Board of Directors for fiscal year 2019 and principles of compensation V for fiscal year 2020; Compensation of the Chief Executive Officer for fiscal year 2019 and principles of compensation for fiscal year V 2020; Principles of compensation of the Chief Executive Officer appointed during fiscal year 2020;V Severance payments and non-compete compensation for the outgoing Chief Executive Officer;V Approval of the compensation policy for directors for fiscal year 2020;V Approval of the deferral policy (definition of performance conditions for CRD IV regulated staff in fiscal year 2020);V Review of the Risk and Compliance targets for compensation of CRD IV regulated staff (2019 summary and 2020 V targets); Approval of variable compensation for fiscal year 2019;V Approval of variable compensation allocated to control functions and to CRD IV regulated staff in fiscal year 2019;V Annual report on the compensation awarded and paid to CRD IV regulated staff in respect of 2019;V Renewal of the Long-Term Incentive in 2020 and allocation of free performance shares to members of the Senior V Management Committee; Validation of the performance conditions for the acquisition of free shares for fiscal year 2020 in favor of CRD IV V regulated staff; Approval of the rules for determining the maximum amount of variable compensation for Corporate & Investment V Banking employees for fiscal year 2020; Allocation of free shares under deferred variable compensation schemes in favor of employees (corresponding to V the deferred portion of variable compensation awarded in respect of 2019); Information on the report on compensation policies and practices in fiscal year 2020;V Feedback on the work of the Compensation Committee.V
Other Approval of the declaration related to the Modern Slavery Act;V Closing and opening of branches and representative offices abroad;V Total transfers of assets and liabilities (TUP) from Natixis subsidiaries to Natixis.V
Assessment of the work 2.2.1.4 of the Board of Directors in 2020
As in previous years, Natixis assessed the work of its Board of Directors and Special Committees, in accordance with recommendations set out in the Afep-Medef Code regarding the correct governance of listed companies.
With regard to the follow-up given at the previous assessment, the Board of Directors decided at its meeting of December 17, 2020, to create an ESR Committee, whose first meeting was held in January 2021.
The results of the interviews were collated in a detailed evaluation report, a summary of which was presented at the meeting of the Board of Directors held on February 11, 2021.
The report shows that the directors have a very positive view of the Board of Directors, and consider that the directors are involved, diligent and constructive. The directors believe that the performance of the Board of Directors is good and that it was involved and in a position to react quickly in the context of the health crisis.
Three training sessions initially planned in the 2020 training program could not be held due to the health crisis and were postponed to fiscal year 2021. They covered the following topics: the business lines, activities and operations of an assetV management company; prudential regulations: solvency and liquidity;V
Board Meetings in an advisory capacity. He also contributes to the work of the Compensation Committee and the Strategic Committee.
In accordance with Article 3.6 of the Internal Rules and the deliberation of the Board of Directors on February 12, 2019, the non-voting Board member received compensation totaling €24,000 in 2020 (same amount as the Board of Directors’ compensation for fiscal year 2019), which is deducted from the directors’ compensation.
To assist it in its review process, prepare some of its deliberations and comply with the French Monetary and Financial Code, Natixis’ Board of Directors has five Special Committees: an Audit Committee, a Risk Committee, a Compensation Committee, an Appointment Committee and a Strategic Committee, each chaired by an independent director.
At its meeting of December 17, 2020, the Natixis Board of Directors decided to set up a Corporate Social Responsibility Committee (“CSR Committee”) as from January 1, 2021 (see section 2.2.2.6 below).
Daniel de Beaurepaire (position previously held by Françoise Lemalle until 06/02/2020)
The Audit Committee’s Chairwoman and members have extensive accounting and financial expertise gained over the course of their professional careers. Catherine Pariset has an auditing career spanning 35 years. Catherine Halberstadt was Chief Executive Officer of Banque Populaire du Massif Central for several years and has in-depth knowledge of retail banking and corporate financing. Sylvie Garcelon is Chief Executive Officer of CASDEN Banque Populaire, and as such has vast financial experience.
submitting a recommendation to Natixis’ Board of Directors for theV appointment of Statutory Auditors or auditing firms; reviewing the Statutory Auditors’ work schedule, the results of theirV audits and recommendations, and any follow-up action thereof; issuing its opinion on the report presented to it on an annual basisV with regard to commercial relations between Natixis or one or more of its subsidiaries, and all or some of the entities forming BPCE Group; reporting regularly to the Board of Directors on the performance ofV its duties. It also reports on the results of the certification of the financial statements, the way in which this duty contributed to the integrity of the financial information and the role it played in this process. Any difficulty encountered is reported without delay.
80 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 consolidated budgets, as well as any related documents providedV to the Board of Directors or, if applicable, the Audit Committee of the principal subsidiaries.
Each director’s individual attendance rate at Audit Committee Meetings is provided in section 2.1.4 of this chapter (see directors’ individual fact sheets).
The Audit Committee monitored the statutory audit of Natixis’ yearly, half-yearly and quarterly, parent company and consolidated financial statements, as well as its draft budgets, before they were presented to Natixis’ Board of Directors.
Depending on the agenda, various Audit Committee Meetings were also attended by Natixis’ Chief Financial Officer, the Chief Risk Officer, the Corporate Secretary as well as the Head of Accounting and Ratios and the Natixis and BPCE Heads of Inspection Générale.
For the purposes of performing the audit the financial statements, the Audit Committee heard the presentations of the Finance Department and the comments of the Statutory Auditors at the closing of the annual financial statements and at the review of the half-year and quarterly financial statements.
Information on the tender procedure in connection with the renewal of the Statutory Auditors’ term of office
The main deadlines for the call for tenders were as follows: launch of the call for tenders in April 2020, choice of firms by BPCE and Natixis in November 2020 and appointment of the Statutory Auditors at the Natixis General Shareholders’ Meeting in 2022.
In accordance with the rules defined by BPCE, it is recommended that each BPCE Group institution has at least one statutory auditor chosen from among the networks of
After reviewing the responses to the call for tenders, the Audit Committee made its recommendation to the Board of Directors at its meeting of November 5, 2020. The Board decided, in accordance with the recommendation of the Audit Committee, to submit to the Natixis General Shareholders’ Meeting scheduled to approve the financial statements at December 31, 2021, the renewal of the term of office of PwC and the appointment of Mazars (replacing Deloitte, which has reached the limit of cumulative terms of office), for a period of six years. This choice is in line with the decision adopted by BPCE’s Supervisory Board following the recommendation of its Audit Committee.
At the proposal of the Chairman, the Risk Committee may, if deemed appropriate by the Committee and after consulting the Chairman of the Board of Directors, invite to its meetings any Natixis manager (including managers of one of the main subsidiaries or the Chairman of its Risk Committee) who is able to shed light on issues handled by the Risk Committee. It can also invite the Chief Financial Officer, the Chief Risk Officer, the Corporate Secretary, the Natixis Head of General Inspection, the BPCE Head of Inspection Générale, and Natixis’ Statutory Auditors. The Chief Risk Officer, the Compliance Officer, and the Natixis Head of General Inspection have permanent direct access to the Risk Committee.
The Risk Committee met eight times in fiscal year 2020. The attendance rate was 88% for the year as a whole.
Each director’s individual attendance rate at Risk Committee Meetings is provided in section 2.1.4 of this chapter (see directors’ individual fact sheets).
In 2020, the Risk Committee’s duties focused on the following items: Risk management Key points from the risk dashboard and the bank’s risk environment outlook;V Regular updates on H2O;V Comments on the autocall action plan;V Update on the final SREP letter;V Summary of the main changes in risk policies;V Annual review of the Risk Appetite Framework (RAF);V Review of materiality criteria and thresholds;V Review of Natixis’ overall strategy and risk appetite, and control of its implementation;V Annual review of indicators and alert thresholds defined in the Order of November 3, 2014;V Update of cost of risk projections (COVID-19 scenario);V Presentation of the credit sector concentration risk framework;V Update on risk model management;V Presentation of the ICAAP (Internal Capital Adequacy Assessment Process);V Update on internal stress test resultsV Review of liquidity risk tolerance;V Review of strategies, policies, procedures, systems, tools and limits with regard to liquidity risk and underlying V assumptions; Results of alternative stress scenarios;V Results of reviews and analyses of changes in the liquidity situation;V Review of the ALM standards;V Annual analysis of contingency plans, particularly in light of the results of the alternative scenarios regarding V liquidity positions and risk mitigation factors; Check that the compensation policy is compatible with the risks.V
Compliance Review of the activity and results of compliance control;V Cybersecurity update and EBA guidelines on ICT risks;V Update on the compliance framework and annual update on MiFID II;V Updating the Compliance Charter.V
Other Update on the health crisis and impacts on Natixis activities;V Presentation of the CIB Booking Model Policy;V Update on risk and compliance management in the Insurance business lines;V Update on risk and compliance management of Natixis IM.V
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During fiscal year 2020, the US Risk Committee met eight times. Its work focused on the following points: update of the USRC Charter;V
examination and approval of the CUSO Risk AppetiteV Framework (RAF); review and approval of CUSO risk policies, including the riskV management framework; monitoring the progress of work on the three lines of defense;V and review and monitoring of specific work within the scope ofV Natixis IM, in particular the reorganization of the Risks & Compliance functions and the management of liquidity, investment and concentration risks.
The Compensation Committee has seven members. At December 31, 2020, the Compensation Committee was composed as follows: Nicolas de Tavernost Chairman
The Compensation Committee may have cause to review and issue an opinion on the insurance taken out by Natixis to cover its executive officers’ liability.
to be submitted to the Board of Directors or the General Shareholders’ Meeting for approval.
The Compensation Committee reviews proposals related to the employee savings plan, including plans for a capital increase reserved for Natixis employees, and, where applicable, plans for a stock subscription or purchase, or for an allocation of bonus shares
Update on employee savings plans;V Information on the allocation of free shares by the Board of Directors on April 10, 2020;V Profit-sharing bonus for fiscal year 2019.V
Three of the six members are independent (Anne Lalou, Diane de Saint Victor and Nicolas de Tavernost). The number of independent directors on the Appointment Committee is not greater than half the total number of members, despite the recommendation by the Afep-Medef code. It has a balanced composition (50% independent, 50% non-independent) and is chaired by an independent director (see summary table on compliance with Afep-Medef Code recommendations in section 2.1.3 of this chapter). Furthermore, the opinions and proposals of the Appointment Committee are adopted if the majority of members present, including the Chairman, vote for them.
Each director’s individual attendance rate at Appointment Committee meetings is provided in section 2.1.4 of this chapter (see directors’ individual fact sheets).
Opinion on the appointment of a new Chief Executive Officer of Natixis;V Examination and review of the succession plan for the Chief Executive Officer and the Chairman of the V Board of Directors; Review of the update of the director diversity policy and the policy for selecting future directors;V Review of the policy for the selection and appointment of executive officers ("dirigeants effectifs") and the V Chief Risk Officer; Opinion on the co-option of three new directors;V Opinion on the reappointment of three directors;V Opinion on the appointment of a director;V Updating the diversity policy for Board members;V Examination of the qualifications of independent directors;V Analysis of the qualifications needed for the duties carried out on the Board of Directors;V Evaluation of the balance and diversity of knowledge, skills and experience that the Board members have, V both individually and collectively; Identification of a person or a dominant group within the Board of Directors who might be detrimental to V Natixis’ interests.
The Chairman of the Board of Directors was involved in the preparation of this plan both to ensure its consistency with the practices of the Company and more broadly of BPCE Group, and to take into account the high potential internal profiles of the Group.
The responsibilities assigned to the Strategic Committee are to thoroughly examine the overall strategy of Natixis and its business lines, and to share Senior Management’s vision for BPCE Group.
Each director receives the documents related to the agenda within a reasonable timeframe via a secure digital platform.
The Natixis Strategy Committee met in 2020 to examine in particular the following points: specific strategic projects such as the planned sale by Natixis ofV its stake in Coface; update on the New Dimension strategic plan;V
At its meeting of December 17, 2020, the Natixis Board of Directors decided to set up a Corporate Social Responsibility Committee (“CSR Committee”). Aware of its responsibilities and convinced that Corporate social responsibility provides powerful long-term performance leverage, CSR is at the heart of Natixis’ strategic ambitions, which combine economic performance and responsibility.
Two of the members are independent members (Anne Lalou and Bernard Oppetit).
The CSR skills of the four members were recognized by the Board of Directors. In this respect, Anne Lalou, Dominique Duband, Sylvie Garcelon and Bernard Oppetit will provide the Committee with their expertise and experience in this area and Bernard Oppetit will also provide his expertise in terms of risks and will facilitate coordination with the Risk Committee.
In general, the CSR Committee ensures, in accordance with Article L.225-35 of the French Commercial Code, that social and environmental issues are taken into account by the Board of Directors when determining the Company’s business guidelines and their implementation.
The CSR Committee reports on its work to the Board of Directors and more specifically presents its conclusions for discussion and, where applicable, for deliberation.
Anne-Christine Champion (Co-Head of Corporate & InvestmentV Banking); Mohamed Kallala (Co-Head of Corporate & Investment Banking);V
A new member took office on February 22, 2021: François Codet, Head of the Insurance division.
An Executive Committee (Comex), an information body whose activity is detailed below (see section 2.2.3.5 below), brings together, in addition to the members of the Senior Management Committee, the heads of certain core business lines and support functions essential to the running of the Company.
Gender balance within 2.2.3.1 the Senior Management Committee and the top 10% of positions with the highest responsibility
The balanced representation of women and men on the governing bodies which, within the meaning of Article 7.2 of the Afep-Medef Code, include the Board of Directors and the Senior Management Committee, is a key issue for Natixis. The gender balance policy applied to the Board of Directors is described in section 2.2.1.1. C of this chapter.
representation of women on Natixis' Senior Management Committee was 40% as of December 31, 2020 (reduced to 36% following the assumption of duties of François Codet on February 22, 2021), compared to the previous 30%, a clear increase in the representation of women and exceeding the target set in the strategic plan.
As part of the New Dimension strategic plan, Natixis has also set itself gender diversity targets, including ensuring 20% of members on the Senior Management Committee are women. The rate of
Natixis has thus gone from a Senior Management Committee composed exclusively of men five years ago, to a Committee composed today of six men and four women, each holding strategic positions: the Chief Financial Officer, the director of Technology & Transformation, the director of Human Resources and the Co-Head of Corporate & Investment Banking. Natixis is determined to be exemplary both in terms of significantly increasing the representation of women and as regards the profiles of women who hold the highest positions in support activities and business lines.
This rise of women in governing bodies is the result of a specific action plan initiated several years ago structured around: the setting of quantified targets and monitoring in each businessV line; strong competency-based Human Resources and recruitmentV processes; succession plans that systematically include female profiles;V
Nicolas Namias therefore became executive officer of Natixis ("dirigeant effectif", as defined by Articles L.511-13 and L.532-2 of the French Monetary and Financial Code).
The Chief Executive Officer may delegate a portion of his powers to any corporate officer of his choosing, with or without the option of substituting one for another. In light of this fact, Natixis has a comprehensive system for assigning and monitoring delegations of power and of signing authority, which encompasses the delegation of Senior Management Authority to members of the Senior Management Committee. Furthermore, each business line and support function has defined and regularly updates its own signing authority rules, in keeping with the fundamental principles laid down by Senior Management.
There is no potential conflict of interest between the duties of the Chief Executive Officer towards Natixis and his private interests and/or other duties towards third parties.
Pursuant to Article L.511-13 and L.532-2 of the French Monetary and Financial Code, Natixis currently has two executive officers: Nicolas
Barring exceptions, it meets weekly, chaired by the Chief Executive Officer. It consists of the heads of Natixis' four main businesses (Asset & Wealth Management, Corporate & Investment Banking, Insurance and Payments) and heads of the main transversal support functions.
Except where circumstances prevented them from doing so, the members of the Senior Management Committee were present at all meetings in 2020. Representatives from the business lines or different support functions were invited to present projects or policies falling within their departmental remits.
2020 was the last year that the 2018-2020 New Dimension strategic plan was implemented across all Natixis business lines. New Dimension sets out three powerful initiatives to give its clients a broader range of high added-value solutions: deepening the business model transformation that it successfully began under the New Frontier plan, allocating a significant portion of its investments to digital technologies, and differentiating itself by taking the lead in the areas where Natixis’ teams are recognized for their exceptional skills. The year 2020 was also marked by structuring strategic choices, announced in November 2020, focused on the creation of long-term value and making it possible to establish a solid foundation for the next strategic plan 2021-2024.
Management and oversight of corporate governance 89NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
In this context, the Senior Management Committee examined external growth opportunities and supervised various projects or initiatives. As such, the Senior Management Committee studied and approved all the strategic operations carried out by Natixis, before presenting them to the Company’s Board of Directors.
In Corporate and Investment Banking, the equity derivatives business has been repositioned, with the most complex products discontinued and lower exposure limits on products with low and moderate risk profiles, as well as the refocusing on BPCE Group’s networks and Natixis’ strategic clients.
Furthermore, the Senior Management Committee oversaw Natixis’ adaptation to changes in the economic and regulatory environment in the banking and insurance sectors. Specifically, it regularly monitored any regulatory changes and initiatives. It launched several projects aimed at strengthening Natixis’ resilience and operational efficiency and announced a new transformation plan aimed at generating cost savings of €350 million by 2024.
The Senior Management Committee also continued to reflect on Natixis’ real estate strategy and also on new working environments and methods in partnership with BPCE.
The Senior Management Committee oversaw the management and monitoring of the impacts of the COVID-19 health crisis for employees, customers and all stakeholders. In particular, it regularly monitored business continuity, risk monitoring and measures to support customers in their economic recovery.
After in-depth discussions with the businesses and support functions involved, the Senior Management Committee approved the main management decisions, and reviewed and approved the budget and capital trajectory, the enhanced and validated Risk Appetite Framework, internal stress tests and ICAAP report. In addition, it approved the terms and conditions governing mandatory annual negotiations and the compensation review policy, the appointment of executive officers and managers, and all significant projects or investments.
Furthermore, the Senior Management Committee monitored the management, risk management and compliance measures within Natixis, and regularly reviewed changes in the Company’s risks, as well as the consequences of audits. It also focused on conduct-related issues.
The Senior Management Committee also oversaw the implementation of Natixis’ CSR strategy. Specifically in terms of combating climate change, it oversaw the roll-out of the Green Weighting Factor project, which led to a favorable adjustment of risk-weighted assets for transactions that have a positive impact on climate and the environment, and an unfavorable adjustment for those that have a negative impact. Oil & Gas exposure was actively reduced throughout the year and the decision to fully exit the shale gas and oil activity planned for 2022 was announced.
Finally, it continued the work of preparing the next strategic plan for 2021-2024 with several days of strategic dialogs to define the strategic orientations of the business lines for 2024 and the orientations on priority cross-cutting issues.
Natixis has an Executive Committee comprising the members of the Senior Management Committee and the heads of certain business lines and support functions essential to the Company’s success.
Executive Committee members contributed to the preparation of the 2021-2024 strategic plan as sponsors of cross-business initiatives on specific themes or contributors to working groups.
Pursuant to Article L.22-10-34 of the French Commercial Code, payment of variable and exceptional compensation to executive corporate officers for the 2020 fiscal year is subject to approval by the General Shareholders’ Meeting convened to approve the financial statements for said fiscal year.
It reflects the individual and collective performance of its business lines and employees, and incorporates financial and qualitative performance criteria, including non-financial criteria and specifically Social and Environmental Responsibility. It also serves to align the interests of Natixis’ various stakeholders over time, ensuring that it is not a source of conflicts of interest between employees and clients, while promoting behaviors that are in line with Natixis’ culture and rules of good conduct.
of Directors. Together, they ensure compliance with conflict-of-interest regulations pursuant to applicable legislation and the Board of Directors’ internal rules.
In order to ensure that the process for setting and amending the compensation policy is independent and relevant, the Compensation Committee (whose role is detailed in section 2.2.2.3 of this chapter) conducts an annual analysis of the principles of the compensation policy for corporate officers and formulates proposals for the Board
Pursuant to Article L.22-10-8 III of the French Commercial Code, in exceptional circumstances, the Board of Directors may adapt certain provisions of the compensation policy, in line with its principles and provided that this deviation from standard policy is temporary, in the corporate interest and necessary to guarantee the sustainability or viability of the Company.
The members of the Board of Directors of Natixis received compensation subject to the terms and conditions set out below.
On the basis of fifteen Directorships and one non-voting member, the compensation of the members of the Board of Directors complies with the following rules: Governing body
In addition, compensation is earned for participation in the Board’s various Special Committees, if applicable, as presented in the table above.
Moreover, in accordance with the rules applicable within Groupe BPCE, the portion of directors’ compensation going to BPCE directors is granted and paid directly to BPCE and not to the directors.
It is specified that pursuant to Article R.22-10-14 (II)(5) of the French Commercial Code, the term of office of the Board of Directors’ members is detailed in the composition of the Board of Directors (see section 2.1.2 of this chapter). Furthermore, the appointment and revocation conditions of the Board of Directors’ members are referred to in Article L.225-18 of the French Commercial Code. Any Board member can also resign his or her position without providing a reason. In the event of director’s vacancy by death or resignation, the Board of Directors can, between two General Shareholders’ Meetings, make temporary appointments. Appointments made by the Board of Directors are subject to ratification to the next General Shareholders’ Meeting. And finally, no director is bound by an employment contract and/or a services agreement with the Company.
The compensation of the Chairman of the Natixis Board of Directors is determined by the Board of Directors in consideration of the Chairman’s experience and by benchmarking against the market. Laurent Mignon’s gross annual fixed compensation for his duties as Chairman of the Board of Directors is €300,000 and has remained unchanged since 2018.
The only change relates to the fact that the Chairman of the Board of Directors of Natixis waived the payment of compensation as a representative director of BPCE. This compensation was paid directly to BPCE and not to the Chairman, in application of the Group’s rules.
Pursuant to Article R.22-10-14(II)(5) of the French Commercial Code, Laurent Mignon was appointed Chairman of Natixis’ Board of Directors on June 1, 2018, for the period ending with the adjournment of the 2023 Natixis General Shareholders’ Meeting held to approve the financial statements for the year ending December 31, 2022. In addition, the criteria for appointing and dismissing the Chairman of the Board of Directors are set out in Article L.225-47 of the French Commercial Code.
The fixed compensation for the Chief Executive Officer is established based on the skills and expertise required to perform his duties and is in line with market practices for similar roles.
The annual target variable compensation is maintained at 100% of the fixed compensation, i.e., a gross amount of €800,000 for a full year.
For fiscal year 2021, the criteria for determining the annual variable compensation approved by the Board of Directors on February 11, 2021, following a review by the Compensation Committee, are as follows: Rules for determining variable compensation for 2021
The deferred component of the variable compensation awarded represents at least 40% of the variable contribution granted, while 50% of the annual variable compensation is awarded in the form of shares or equivalent instruments. This rule applies to both the deferred and conditional component of variable compensation allocated and the non-deferred portion of the variable compensation.
The Chief Executive Officer is eligible for allocations under long-term compensation plans (“LTIP CDG”) for the members of the Natixis Senior Management Committee, corresponding to 20% of his gross annual fixed compensation, for which the vesting is subject to presence and achievement of performance conditions.
The Chief Executive Officer receives a family allowance in accordance with the same rules as those applied to Natixis employees in France. The Chief Executive Officer has a company car.
Severance payments The monthly reference compensation is equal to one-twelfth of the sum of the fixed compensation paid in respect of the last calendar year in activity and the average variable compensation paid over the last three calendar years of activity.
The Chief Executive Officer will not receive severance payments in the event of gross negligence or willful misconduct, or if he leaves the Company at his initiative to take another position or changes his position within Groupe BPCE, or to exercise his pension rights.
the assessment of the achievement of objectives will be carried out over the previous two fiscal years, and not on a half-year basis, in order to reflect the process of defining and monitoring budgets that are carried out over a full fiscal year. In addition, the data relating to the net income (Group share) and ROE to assess the achievement of the budget will be the underlying data: Furthermore, in line with the provisions of the Afep-Medef Code, the right to a benefit is contingent on meeting performance criteria and requirements. Satisfaction of these criteria will be verified by the Board of Directors as necessary. On 11 February 2021, the Board of Directors of Natixis defined new terms to determine the severance payment for the Chief Executive Officer, which provide that
Average underlying Natixis net income (Group share) over the1. two fiscal years prior to departure greater than or equal to 75% of the average budget for the period; Average underlying Natixis ROE over the two fiscal years prior2. to departure greater than or equal to 75% of the average budget for the period; Natixis cost/income ratio below 75% over the last half-year3. preceding departure.
On February 11, 2021, the Board of Directors decided the following: the payment of the non-compete compensation is excluded whenV the executive officer asserts his or her pension rights; in any event, no non-compete compensation may be paid beyondV age 65; it is also specified that the non-compete compensation must beV paid in installments during its term.
Disclosure required by Article R.22-10-14(II)(5) of the French Commercial Code On August 3, 2020, Nicolas Namias was appointed as Chief Executive Officer by the Board of Directors with effect from August 4, 2020, for a period of four years ending with the adjournment of the 2024 Natixis General shareholders Meeting held to approve the financial statements for the year ending December 31, 2023. In addition, the criteria for appointing and dismissing the Chief Executive Officer are set out in Articles L.225-51-1 and L.225-55 of the French Commercial Code.
The May 20, 2020 General Shareholders’ Meeting approved the components of the compensation policy for the Chairman of the Board of Directors and the Chief Executive Officer.
Chairman of the Board 2.3.2.1 of Directors – Compensation and benefits of any kind paid during the 2020 fiscal year and/or granted in respect of this fiscal year
Chief Executive Officer – 2.3.2.2 Total compensation and benefits of any kind paid during the 2020 fiscal year and/or granted in respect of this fiscal year to François Riahi (from January 1 to August 3, 2020)
The fixed compensation of the Chief Executive Officer for the fiscal year 2020 was €800,000 gross on a full-year basis (unchanged compared to the previous year), i.e. €473,118 for François Riahi in 2020 (prorata temporis).
The performance of Natixis shares versus the Euro Stoxx Banks index will be compared every year during the four-year period covered by the plan, i.e. fiscal years 2020, 2021, 2022 and 2023, for each of the annual tranches, each representing 25% of the shares allocated. Based on the relative performance of Natixis’ TSR compared with the average TSR of the Euro Stoxx Banks index, a ratio will be applied for each annual tranche, as follows: performance below 90%: no vesting of shares allocated out of theV annual tranche; performance equal to 90%: 80% of the shares of the annualV tranche shall vest; performance equal to 100%: 100% of the shares of the annualV tranche shall vest; performance greater than or equal to 120%: 110% of the shares ofV the annual tranche shall vest.
Fringe benefits In 2020, François Riahi received a family allowance in accordance with the same terms and conditions as those applied to Natixis employees, i.e. €1,625.
Pension plan Like the rest of the staff, the Chief Executive Officer is covered by the mandatory pension plan. He is not covered by the kind of supplementary pension plans described in Article 39 (defined benefit plan) or Article 83 (voluntarily defined contribution plan) of the French General Tax Code. Furthermore, François Riahi paid into an “Article 82” type life insurance policy (in reference to the French General Tax Code) put in place by Groupe BPCE. Under this scheme, the contributions of which are financed by the Chief Executive Officer and not by Natixis, François Riahi made a payment of €69,391 in 2020.
Severance payments and non-compete indemnities Upon the departure of François Riahi, the Board of Directors meeting of August 3, 2020, decided to allocate a non-compete indemnity of €400,000, corresponding to six months of fixed compensation, paid in installments over six months.
On February 11, 2021, the Board of Directors adopted the recommendation of the Compensation Committee following the reassessment of the financial conditions of François Riahi's departure. As a result, the Board noted that the payment of the severance indemnity to François Riahi was irregular, and therefore decided to request the repayment of such indemnity to François Riahi. It should be noted that this decision does not call into question the François Riahi's role in the development of Natixis, particularly in the context of the COVID crisis.
For the 2020 fiscal year, the Board of Directors, at its meeting of August 3, 2020, set the target of the annual variable compensation of Nicolas Namias at 100% of the fixed compensation, with a range of 0 to 156.75%. of the target, i.e. a maximum of 156.75% of the fixed compensation. The target variable compensation of Nicolas Namias was €800,000 for a full year, i.e. €333,333 euros in 2020 (prorata temporis).
The following targets were set for the 2020 fiscal year: Strategic criteria
Quantitative targets (70%), 25% of which based on financialV performance of Groupe BPCE (net revenues 4.2%, net income (Group share) 12.5% and cost/income ratio 8.3%) and 45% based on the financial performance of Natixis (net revenues 11.25%, net income (Group share) 11.25%, cost/income ratio 11.25% and ROTE – Return on Tangible Equity – 11.25%); Individual strategic targets (30%), including 10% relating to theV preparation of the new strategic plan and to enhancing distribution to the CE & BP networks; the four other strategic targets, each weighted at 5%, in relation to oversight in terms of supervision and control as provided for by regulations (including the implementation of the Risk Appetite Framework and the activation of the threshold breach remediation process), the progress of Natixis' Transformation & Corporate Culture initiatives, improving Natixis' position as a key player in CSR initiatives, and managerial performance assessed in consideration of the anticipation, decision-making and animation capacities implemented and executive management.
Part will be paid in 2021, with 50% indexed to the Natixis share price, i.e. €98,538; the other part will be deferred over three years, with 50% indexed to the Natixis share price, i.e. €92,043. This deferred amount will be paid in thirds in 2022 (100% in cash), 2023 (50% in cash and 50% indexed to the Natixis share price) and 2024 (100% indexed to the Natixis share price), provided that the presence requirement and performance conditions are met.
It should be noted that payments with respect to annual variable compensation for 2020 will only be made after the vote at the General Shareholders’ Meeting on May 28, 2021.
Year N+2 1/3 50% in cash and 50% indexed to the Natixis share price
Nicolas Namias, Chief Executive Officer from August 4 to December 31, 2020 in 2021 in 2022 in 2023 in 2024 48% of the annual variable compensation of Nicolas Namias for the 2020 fiscal year is deferred in 2022, 2023 and 2024, of which 50% will be indexed.
Nicolas Namias also receives health benefits and personal protection insurance, the terms of which are identical to those applicable to Natixis’ employees or implemented by Groupe BPCE for its executive officers. The corresponding employer contribution amount for this protection is €5,979.
Structure of the total compensation awarded for the position of Chief Executive Officer for the financial year 2020
(cumulative compensation in respect of their terms as Chief Executive Officer, for François Riahi for the period from January 1 to August 3, 2020 and for Nicolas Namias for the period from August 4 to December 31, 2020)
Individual strategic targets 5% oversight in terms of supervision and control 5% Progress on Transformation and Corporate Culture initiatives 10% Preparation of the new Strategic Plan and better distribution to the CE & BP networks 5% Improvement of Natixis' position as a key player in CSR initiatives 5% managerial performance
Pension Plan Like the rest of the staff, the Chief Executive Officer is covered by the mandatory pension plan. He is not covered by the kind of supplementary pension plans described in Article 39 (defined benefit plan) or Article 83 (voluntarily defined contribution plan) of the French General Tax Code. The “Article 82” mechanism applicable to its predecessor was not renewed for Nicolas Namias.
Natixis’ performance – underlying net revenues 7,405 9,177 9,500 9,497 8,700
Chg. vs. N-1 6.0 pp 0.4 pp 2 pp (2.5) pp 2.4 pp
CEO pay ratio vs. median employee compensation (c) 14.1 22.9 24.4 34.9 24.5
Compensation granted to the Chairman of the Board of Directors (b) 300,000 300,000 175,000 0 0
Policies and rules established for determining compensation and benefits of any kind for corporate officers 99NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com
Compensation due or granted for the fiscal year €525,119 (c) N/A
Value of performance shares granted during the fiscal year €0 N/A
Value of performance shares granted during the fiscal year 0 0
Laurent Mignon’s other compensation for his duties at BPCE €2,171,169 €2,458,800
Of which a family allowance of €1,625 in 2020 and €2,384 in 2019.(a) Corresponding to the value of the shares on the allocation date, for a fair value of €73,116 for 2020 and €79,587 for 2019.(b) Including a family allowance of €670 and 3,710 euros of benefit in kind for the company car in 2020.(c)
In the tables below: the expression “amounts due or granted” refers to compensation and benefits allocated to corporate officers in connection with their dutiesV over the year, irrespective of the payment date; the expression “amounts paid” refers to compensation and benefits actually paid to corporate officers in connection with their duties overV the year, irrespective of the date granted, including securities delivery.
François Riahi’s other compensation for his duties at BPCE N/A €57,450 N/A €111,585
Deferred securities or similar instruments portion of variable compensation for fiscal year 2017
Cash portion of variable compensation for fiscal year 2019 paid in March 2020
In accordance with the principles approved by the General Shareholders’ Meeting on May 20, 2020, the non-executive corporate officers received the compensation detailed in the tables below.
Dominique Duband (term of office since February 6, 2020) 20,257.93 13,066.66 2,000 2,000 22,257.93 N/A
Philippe Hourdain (term of office since June 23, 2020) 10,730.05 6,533.33 4,549.18 3,500 15,279.23 N/A
(in euros) Total amount awarded Total amount paid Total amount awarded Total amount paid
Bernard Dupouy (office held until June 23, 2020) N/A N/A N/A 1,800 (d)
No subscription or call options were granted or exercised by Natixis employees in fiscal year 2020.
Allocation of free shares in the process of being vested or vested in 2020 for each executive corporate officer
All shares allocated in fiscal years 2016 to 2020 inclusive are subject to performance conditions.(a) The lock-in requirement for shares allocated to corporate officers is 30% of the shares delivered until the end of their terms of office for allocations prior to May (b) 20, 2020; from this date, the lock-in obligation applies to 100% of the shares.
For Laurent Mignon, the following were previously awarded and vested before the fiscal year 2020:(c) - by the Board of Directors on November 6, 2013, 90 shares, acquired on March 1, 2016, - by the Board of Directors on July 31, 2014, 31,955 shares, acquired on August 1, 2018, - by the Board of Directors on February 18, 2015, 27,321 shares, acquired on February 18, 2019, - by the Board of Directors on July 28, 2016, 28,755 shares, acquired on March 1, 2018, - by the Board of Directors on July 28, 2016, 57,510 shares, acquired on March 1, 2019, - by the Board of Directors on April 10, 2017, 17,947 shares, acquired on March 1, 2019.
Nicolas Namias, Chief Executive Officer Term of office began: August 4, 2020 Term of office ended: the May 2024 General Shareholders’ Meeting
Components of compensation due or granted for the fiscal year ended 2.3.2.5 December 31, 2020 to the Chief Executive Officer of Natixis
The gross fixed compensation of the Chief Executive Officer for fiscal year 2020 was €800,000 gross on a full-year basis, i.e. respectively €473,118 for François Riahi and €330,159 for Nicolas Namias.
The Board of Directors assessed the level of performance with regard to the criteria defined for 2020 and, after obtaining the opinion of the Compensation Committee, decided to allocate a gross amount of €190,581 to Nicolas Namias.
in respect of BPCE quantitative criteria: €40,581, or 48.70% of the annual variable target; V in respect of Natixis quantitative criteria: €30,000, i.e. 20.00% of the annual variable V target; for the strategic criteria: €120,000 euros, i.e. 120.00% of the annual variable target.V
Part will be paid in 2021, with 50% indexed to the Natixis share price, i.e. €98,538; the other part will be deferred over three years, with 50% indexed to the Natixis share price, i.e. €92,043. This deferred amount will be paid in thirds in 2022 (100% in cash), 2023 (50% in cash and 50% indexed to the Natixis share price) and 2024 (100% indexed to the Natixis share price), provided that the presence requirement and performance conditions are met. It should be noted that payments in respect of annual variable compensation for 2020 will only be made after the vote at the General Shareholders’ Meeting on May 28, 2021. Furthermore, the Board decided not to grant annual variable compensation to François Riahi for the fiscal year 2020.
Multi-year variable compensation 0 In 2020, neither François Riahi nor Nicolas Namias received any multi-year variable compensation.
No share options were granted to François Riahi or Nicolas Namias during fiscal year V 2020; In keeping with the principle of the Chief Executive Officer’s eligibility to receiveV performance shares as part of Long-Term Incentive Plans for members of the Senior Management Committee of Natixis (“LTIP CDG”), at its meeting on May 20, 2020, the Board of Directors of Natixis allocated 77,783 performance shares to François Riahi, which can lead to the acquisition of a maximum of 93,339 shares, depending on the achievement of the performance conditions, i.e. a maximum of 0.00246% of share capital at the allocation date. This allocation corresponded to 20% of François Riahi’s gross annual fixed compensation; Vesting of these shares is contingent upon meeting the continued service requirementV with Groupe BPCE and performance conditions, which are based on both the relative Total Shareholder Return (TSR) achieved on Natixis stock and the fulfillment of CSR targets. The presence condition was lifted by a decision of the Board of Directors of August 3, 2020, on all elements of deferred variable compensation previously granted to François Riahi and in the process of vesting; the other vesting conditions were maintained; The performance of Natixis shares versus the Euro Stoxx Banks index will be comparedV every year during the four-year period covered by the plan, i.e. fiscal years 2020, 2021, 2022 and 2023, for each of the annual tranches, each representing 25% of the shares allocated. Based on the relative performance of Natixis’ TSR compared with the average TSR of the Euro Stoxx Banks index, a ratio will be applied for each annual tranche, as follows: performance below 90%: no vesting of shares allocated out of the annual tranche;V performance equal to 90%: 80% of the shares of the annual tranche shall vest;V performance equal to 100%: 100% of the shares of the annual tranche shall vest;V performance greater than or equal to 120%: 110% of the shares of the annualV tranche shall vest.
Supplementary pension plan Groupe BPCE Article 82 scheme for François Riahi
François Riahi and Nicolas Namias received a family allowance under the same terms and conditions as those applied to Natixis employees. The benefit in kind for Nicolas Namias' company car is €3,710.
The Chief Executive Officer receives insurance similar to that of Natixis employees with respect to health and personal protection coverage.
Risk management3.2 121 Organization of Natixis’ 3.2.1 internal control system 121
This chapter includes information on the risk factors set out under Prospectus Regulation 3 on the management of risks associated with financial instruments, as well as information on capital management and compliance with the regulatory ratios required under the IFRS framework as adopted in the European Union. Some information in this chapter is an integral part of the notes to Natixis’ consolidated financial statements and consequently falls under the Statutory Auditors’ certification of the consolidated financial statements. This information is identified by the phrase “Data certified by the Statutory Auditors in accordance with IFRS 7.” Natixis is subject to the supervision of regulatory authorities and to the regulatory capital requirements applicable to credit institutions and investment companies, as per Regulation (EU) No. 575/2013 of June 26, 2013. Under Pillar III of the Basel Accords, detailed, standardized information on items related to the Pillar III report and to prudential publications is published in the third part of this chapter.
3 RISK FACTORS, RISK MANAGEMENT AND PILLAR IIIRisk factors 110 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
The main types of risk to which Natixis is exposed are presented below. At present, they are identified as material risks which, by Natixis’ estimations, could adversely affect the viability of its activities, and are generally measured in terms of the impact these risks could have on Natixis’ solvency ratio or net income. The risk factors presented below have been updated to reflect the impact of the COVID-19 health crisis. The risks to which Natixis is exposed across all its business lines may arise from several risk factors related to, among other things, macroeconomic and regulatory changes to its operating environment, or relating to implementing its strategy and conducting its business.
The presentation of the risk factors below is to be assessed based on the structure of Natixis on the filing date of the Universal Registration Document. On February 9, 2021, Groupe BPCE announced its intention to file a takeover bid for around 29.3% of the share capital of Natixis that it does not hold (based on the issued and fully paid-up share capital as of December 31, 2020) at a price of €4 per Natixis share (dividend attached). BPCE has announced its intention to implement a squeeze-out procedure for all the shares not held by it in the event that the minority shareholders do not hold more than 10% of the Company's share capital and voting rights following the offer. This proposed offer would be part of an ambitious industrial project for the development of Natixis' business lines and the simplification of its functional channels, which Groupe BPCE intends to review. On February 10, 2021, BPCE S.A. filed an information document (which includes, in particular, the projected timetable of the transaction) with the French Financial Markets Authority (Autorité des Marchés Financiers), which can be consulted at the following address: qu%C3%A9%20norm%C3%A9%20du%20d%C3%A9p%C3%B4t%20du %20projet%20de%20note%20d%27information%20-%20ENG.pdf
The concentration of credit and counterparty risk may compound Natixis’ exposure Natixis is exposed to credit and counterparty risk through its financing, structuring, trading and settlement activities that are performed in large part by its Corporate & Investment Banking (CIB) division.
At 31/12/2020, therefore, Natixis’ exposure to credit and counterparty risk (Exposure at Default excl. CVA) totaled €277.7 billion, split primarily between companies (38%), banks and similar items (30%) and sovereigns (21%). At 47%, exposure to credit and counterparty risks was concentrated in France, followed by the rest of Europe (EU and non-EU) at 21%, North America at 17% and Asia at 8%.
A material increase in Natixis’ impairments or provisions for expected credit losses could adversely affect its results and financial position As part of its activities, and wherever necessary, Natixis recognizes in provisions for non-performing loans, reflecting actual or potential losses in respect of its loan and receivables portfolio, under “Provision for credit losses” on its income statement. At December 31, 2020, Natixis’ provision for credit losses was directly affected by the effects of the COVID-19 health crisis and stood at -€851.3 million (of which -€166.8 million for Stage 1 and 2 provisions), reflecting the expected medium- and long-term deterioration of the economic outlook, despite massive government-back support measures.
At December 31, 2020, non-performing loans to clients amounted to €3,596 million and were predominantly distributed as follows: 26.1% for France, 22.2% for the rest of Europe, 18.0% for North America, 9.4% for Asia, and 13.3% for Central and Latin America. Natixis’ non-performing loan ratio to gross outstanding customer was 5.52% and its coverage ratio for these non-performing loans was 32.6%.
Reduced or no liquidity of assets such as loans could it more difficult for Natixis to distribute or structure such assets and thus have a negative impact on Natixis’ results and financial position In accordance with the “originate to distribute” model, Natixis originates or acquires certain assets with a view to distribute them at a later stage by way of syndication or securitization. Natixis’ origination activity is mainly focused on financing granted to large corporates as well as specialized financing. distribution mainly concerns banks and non-bank financial institutions.
A deterioration in the financial market could generate significant losses in Natixis’ Capital Markets activities As part of its Capital Markets activities and to meet the needs of its clients, Natixis operates on the financial markets – namely the debt, forex, commodity and equity markets.
The losses that may be recorded due to high market volatility could affect several market and hedging products in which Natixis trades. The volatility of financial markets makes it difficult to predict trends and implement effective portfolio management strategies, and increase the risk of losses from net long positions when prices decline and, conversely, from net short positions when prices rise. Natixis is primarily exposed to share price fluctuations.
It should be noted that the risk associated with the market activities of the Corporate & Investment Banking business line (including CVA) made up 12% of Natixis’ total RWA at December 31, 2020.
The fair value of the derivatives portfolio includes additional valuation adjustments that could affect Natixis’ net income and equity The fair value of Natixis’ derivatives is determined by factoring in certain additional adjustments including: quality of the counterparty (credit value adjustment – CVA) byV recognizing in the valuation of the derivative instruments the credit risk corresponding to the risk of non-payment of the amounts owed by the associated counterparty; Natixis’ own credit risk (debt valuation adjustment – DVA) byV recognizing in the passive valuation of derivative instruments the risk borne by our counterparties (i.e. potential losses that Natixis causes its counterparties to incur in the event of default or the deterioration of its own credit quality); funding risk (funding valuation adjustment – FVA) by recognizingV in the valuation of uncollateralized or partially collateralized cost related to the financing costs of future cash flows.
These additional adjustments recognized in the income statement have a direct impact on Natixis’ net banking income and equity. Accordingly, the COVID-19 health crisis had especially unfavorable consequences related to the substantial widening of credit spreads of Natixis’ counterparties and the levels of financing costs on the market. For information, at December 31, 2020, the ineffective portion of hedge accounting relationships taken to profit or loss amounted to -€19.3 million versus -€18 million at December 31, 2019.
Natixis’ access to certain forms of financing may be adversely affected in the event of a financial crisis or downgrade of its rating or that of Groupe BPCE Since 2011, Natixis’ funding structure has relied on a Joint Refinancing Pool between Natixis and BPCE. Natixis secures a portion of funding for its activities from Groupe BPCE through the public and private issuance of medium- and long-term vanilla debt (senior and subordinate) by BPCE S.A. Natixis remains Groupe BPCE’s medium and long-term issuer for structured private refinancing operations.
The COVID-19 health crisis temporarily suspended term lending activity on the market, which led to an increase in credit line drawdowns by corporate clients and an increase in deposit amounts. Following central bank actions (particularly those of the ECB and the Federal Reserve), the term loan market gradually reopened, starting with the dollar and then the euro, to return to normal levels in June. Throughout the COVID-19 crisis, Natixis’ liquidity position has been closely monitored by senior management,, given its status as an entity of Groupe BPCE. Natixis’ liquidity coverage ratio (LCR) remains in excess of 100%.
In response to the impacts of the COVID-19 health crisis and the uncertainties surrounding the economic crisis, rating agencies Fitch and Standard & Poor’s lowered the outlook for multiple issuers, including banks and in particular the Groupe BPCE, from “stable” to “negative”. Against this backdrop, Groupe BPCE’s financial solidity and the strength of its diversified banking model were acknowledged by four financial rating agencies, which affirmed its long-term senior preferred debt rating: Moody’s (A1, stable outlook), Standard & Poor’s (A+, negative outlook), Fitch (A+, negative outlook) and R&I – Rating and Investment Information (A+, stable outlook).
Should Natixis fail to comply with applicable laws and regulations, it could be exposed to heavy fines and other administrative and criminal sanctions likely to have a material adverse effect on its financial position, business and reputation Non-compliance risk is defined as the risk of legal, administrative or disciplinary sanctions, but also of financial loss or reputational damage, resulting from a failure to comply with the legislative and regulatory provisions, Codes of Conduct and standards of good practice specific to banking and Insurance activities, whether national or international.
Any person working at Natixis, or at an entity at least 50%-owned by Natixis, must comply with the Code of Conduct, whether working on a permanent or temporary basis. This requirement is in addition to commitments to comply with applicable internal rules, and with national and international laws and regulations.
Natixis also requires its suppliers and contractors to comply with the key principles of the Code of Conduct.
To implement the Code of Conduct on a day-to-day basis, Natixis has established a conduct framework with its own Committee (the Global Culture and Conduct Committee) and training program. For a detailed description of the Code of Conduct and the conduct framework, see section 6.2 of this 2020 universal registration document.
But even with the adoption of a Code of Conduct and the creation of a conduct framework, Natixis is exposed to potential actions or behaviors by employees, suppliers and contractors that are unethical or not in clients’ interest, that do not comply with the laws and regulations on corruption or fraud, or that do not meet financial security or market integrity requirements.
Like most of its competitors, Natixis is highly dependent on its communication and information systems, as its activities require it to process a large number of increasingly complex transactions. Although Natixis has made data transmission quality a priority, any breakdown, interruption or failure of these communication and information systems could result in errors or interruptions to the systems it uses for customer relationship management, the general ledger, deposit and loan processing transactions, and/or risk management. To the extent that interconnectivity increases, Natixis is exposed to the risk of a breakdown or operational failure of its clearing agents, foreign exchange markets, clearing houses, custodians or other financial intermediaries or external service providers. Like the other control functions, the Operational risk function contributes to the assessment of risks borne by suppliers as part of the Group’s compliance program with EBA regulations on outsourcing.
Natixis is also exposed to the risk of cybercrime. Cybercrime covers a range of malicious and/or fraudulent acts, perpetrated digitally in an effort to manipulate data (personal, banking, insurance, technical or strategic data), processes and users, with the aim of causing material losses to companies, their employees, partners, clients and counterparties. A company’s data assets are exposed to complex and evolving threats likely to have material financial and reputational impacts on all companies, and in particular those in the banking sector. Given the increasing sophistication of the criminal enterprises behind cyberattacks, regulatory and supervisory authorities have begun to highlight the importance of Information and Communication Technology (ICT) risk management. Preventing cybercrime risk is a priority for Natixis, which makes every effort to implement the guidelines established by these authorities through cooperation between its Information Systems (IS) and IT Systems Security (ITSS) Departments. This has resulted in a map of risks relating to IT Systems Security, as well as a far-reaching campaign to raise all employees’ awareness on IS security matters. In 2020, no cybercrime-related incident had a material adverse impact on Natixis’ financial position or reputation. However, as cyberattacks are constantly evolving to become increasingly advanced, the measures described above may not be sufficient in the future to fully protect Natixis, its employees, partners and clients. The occurrence of such attacks could potentially disrupt Natixis’ client services, result in the alteration or disclosure of confidential data or lead to business interruptions and, more broadly, have a material adverse effect on its business, financial position and reputation. For example, Natixis was marginally affected by the security breaches that critically affected certain products of the publisher Citrix in January 2020, by the unavailability of several services of the financial software company Finastra in France due to a ransomware attack in March 2020 and to the cyber-attack against the language services company Ubiqus in December 2020.
Any damage to Natixis’ reputation could affect its competitive position and have a negative impact on its financial position Natixis’ reputation is pivotal to its ability to conduct its business. Thanks to Natixis’ current reputation, it is able to maintain relationships with its clients, employees, suppliers, partners and investors that are built on trust.
An example of this was H2O AM, Natixis’ Asset Management subsidiary, which was exposed to illiquidity risks affecting certain funds, leading to a sharp decline in Natixis’ share price.
The ongoing COVID-19 pandemic could adversely affect Natixis’ business activity, operations and financial performance In December 2019, an epidemic of viral pneumonia emerged in China which lead the World Health Organization (WHO) to officially announce on January 9, 2020 the discovery of a new coronavirus – the virus responsible for this new disease called COVID-19 (CoronaVIrus Disease). The virus subsequently spread to numerous countries around the world and was qualified as a pandemic by the WHO in March 2020. The consequences of pandemic and of the various measures taken by governments and central banks in numerous countries (closing borders, restriction of movement, lockdowns, etc.) were, and should continue to be, potentially detrimental to the global economy and financial markets, while there are still uncertainties as to how long the pandemic will last, the deployment of vaccines and what effect the economic and monetary policies undertaken will have. The COVID-19 pandemic has been hugely disruptive for clients, suppliers and staff (production difficulties, disrupted supply chains, slowdown in investments, shocks to supply and demand, etc.), because of how it has brought economic activity to a near-standstill. The final impact on the global economy and financial markets will largely depend on the intensity of the pandemic and the effects of the decisions made by authorities to stimulate the economy and limit the spread of the virus. For example, the new lockdown measures recently announced by the various government authorities are liable to affect not only social life but also working and manufacturing conditions, as well as the economic environment in general. The COVID-19 pandemic may have a materially unfavorable impact on Natixis’ business, its financial environment, operating results, outlook, capital and financial ratings (including possible changes to its outlook or ratings).
3 RISK FACTORS, RISK MANAGEMENT AND PILLAR IIIRisk factors 116 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
Over the full-year 2020, the effects, mainly market-related, of the COVID-19 crisis impacted Natixis’ net banking income, cost of risk and CET1 ratio. The crisis had an estimated impact of around -€283 million on the net banking income of Natixis Corporate & Investment Banking, due to dividend markdowns following announcements of their cancellation for 2019 by companies and the strong movements on future dividend curves that followed.
Another impact of the crisis on Natixis’ income statement was the increase in provision for credit losses, predominantly on account of a rise in IFRS 9 provisions and individual provisions concentrated in the energy and natural resources sector, and more specifically in oil and gas. Of the €851 million recognized for credit loss provisions over the first nine months of 2020, nearly €610 million can be considered as attributable to the circumstances created by the development of COVID-19. In accordance with IFRS 9, the provisioning levels for Stage 1 and Stage 2 assets (performing loans) have been revised to take into account the specific context of COVID-19 and measures to support the economy. Natixis' internal models are based on parameters that have been adapted to take into account the specific context of COVID-19 and measures to support the economy. Natixis' base case scenario was updated based on scenarios determined by its economists and validated by Natixis' governance bodies in September 2020. This base case scenario provides for a strong recovery in GDP from 2021, gradually returning to a more usual trend in economic activity in subsequent years. Economic activity will then recover its pre-crisis (2019) level in 2023. The central scenario was supplemented with an optimistic scenario and a pessimistic scenario.With regards to individual provisions, oil price tensions combined with the shock in demand due to the economic slowdown linked to COVID-19, particularly in Asia, indirectly increased individual provisions for credit losses and numerous cases of fraud.
Other items also had a negative impact on Natixis' solvency ratios during the first quarter of 2020, before recovering during the rest of the year. These include the decrease in CET1 equity due to the decrease in OCI reserves and the increase in the deduction made in respect of Prudent Value (-€507 million in Q1 2020 and +€275 million for the full year for these two items) and the increase in RWA CVA (+€0.5 billion in Q1 2020, recovered in Q2 2020 and Q3 2020 before increasing again in Q4 2020).
Natixis' financial performance could be lower than market expectations. The market value of its securities could be adversely affected As the “New Dimension” plan was completed on December 31, 2020 and the presentation of a new medium-term strategic plan for Natixis' business lines may only be implemented during 2021, no financial targets have for the time being been communicated by Natixis to the market for the year 2021 and beyond. However, when the fourth quarter of 2020 results were announced on February 9, 2021, Natixis conducted a sensitivity test on the cost of risk. It indicated a decrease of around 6% in France’s GDP in 2021 and severe assumptions concerning Natixis’ sectors of expertise: oil price of $45 per barrel and significant discounts on the price of real assets (around 45% for aircraft and around 20-25% for real estate, for example). In this scenario, in fiscal year 2021, provisions for credit losses could be between 70 and 90 bps, i.e. still above the guidance given for through-the-cycle provisions for credit losses. Until the presentation of the next medium-term objectives, the market value of Natixis shares could be adversely affected by financial performance below market expectations (consensus), in particular with regard to the aforementioned cost of risk sensitivity.
Natixis’ risk management system, which is based on the use of models, may fail and expose Natixis to unidentified or unforeseen risks, and could result in major losses Risk management techniques which often use models may prove inadequate for certain types of risks. Certain rating or VaR measurement models (as defined in section 3.2.5.3) that Natixis uses to manage its risks are based on observed historical market behavior. To quantify its risk exposure, Natixis then conducts a primarily statistical analysis of these observations (see section 3.2.5.4 of this universal registration document for a detailed description of the risk management system). The measurement metrics and tools used may provide inaccurate conclusions on future risk exposures, mainly because of factors that Natixis may not have anticipated or correctly assessed or taken into account in its statistical models, or because of unexpected and unprecedented market trends that could reduce its ability to manage its risks. Consequently, the losses borne by Natixis could prove far greater than those forecast using historical averages. Moreover, Natixis’ quantitative models do not incorporate all risks. For instance, part of the VaR measurement model is designed on the basis of positive interest-rate environment assumptions. In early 2016, because the interest rate environment for interest rate derivatives was negative, stressed VaR was overestimated by €5 million.
Natixis’ ability to attract and retain qualified employees is critical to the success of its business and failure to do so may significantly affect its performance Natixis employs over 16,900 people around the world (excluding financial investments), located as follows: 66.6% in France, 11.9% in the EMEA region, 16.4% in the Americas and 5.1% in Asia-Pacific. The performance of Natixis’ activities is closely linked to its people. Indeed, Natixis’ business model is based on areas of expertise, which requires the recruitment of qualified employees. Moreover, stepped-up regulations on the back of the 2008 financial crisis require Natixis to strengthen and align its businesses to regulations an area of expertise that requires drawing from a tight job market (scarce and mobile profiles). Natixis’ success relies in part on its ability to retain key people, be they at management level, leaders or staff, and to continue to attract highly qualified professionals and talents. A high turnover or the departure of talent could affect Natixis’ skills and know-how in key areas, which could reduce its business outlook and consequently affect its financial results.
These businesses are sensitive to changes in the financial markets, and more generally to economic conditions in France, Europe and the rest of the world.
3 RISK FACTORS, RISK MANAGEMENT AND PILLAR IIIRisk factors 118 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 an increased rate of defaults on loans and receivables and higherV provisions for non-performing loans due to the impact on the business and operations of Natixis’ customers. A significant increase in these provisions or the realization of losses in excess of the provisions recorded could have an adverse effect on Natixis’ results and financial position; a decline in prices on the bond, equity or commodity markets couldV reduce business volumes on these markets; macro-economic policies adopted in response to actual orV anticipated adverse economic conditions could have unintended negative effects, and are likely to negatively impact market parameters such as interest rates and foreign exchange rates, which could affect the results of Natixis’ businesses that are most exposed to market risk; perceived favorable economic conditions generally or in specificV business sectors could result in asset price bubbles decorrelated from the actual value of the underlying assets; this could in turn exacerbate the negative impact of corrections when conditions become less favorable and cause losses in Natixis’ businesses; a significant economic disruption (such as the global financial crisisV of 2008 or the European sovereign debt crisis of 2011) could have a severe negative impact on all the activities of Natixis, particularly if the disruption is characterized by an absence of market liquidity that makes it difficult to finance Natixis and to sell certain categories of assets at their estimated market value or at all; an adverse change in the market prices of various asset classesV could affect the performance of Natixis Investment Managers companies, especially due to a decrease in assets on which management fees are charged; low interest rates may also negatively affect the profitability ofV Natixis’ Insurance activities, as Insurance affiliates may not be able to generate enough investment returns to cover amounts paid out on some of their insurance products. Furthermore, were market interest rates to rise in the future, a portfolio featuring significant low interest rate loans and fixed income securities would be expected to decline in value. Low interest rates may also adversely affect commissions charged by Natixis Asset Management affiliates on money market and other fixed income products. This could adversely affect the profitability and financial position of Natixis. For information, at 31/12/2020, the economic value sensitivities of the main entities within Natixis’ consolidated scope to a -200 bp shift (with the regulatory floor) and to a +200 bp shift, calculated in accordance with EBA standards, represented +€27 million and -€152 million, respectively.
In addition, the main markets on which Natixis operates may be affected by uncertainties such as those regarding the future relationship between the UK and the EU following Brexit, global trade, the geopolitical context, and any manner of uncertainty. A perfect illustration of this is the impact of the COVID-19 pandemic on the global economy. The consequences for Natixis are presented under the risk factor “The ongoing COVID-19 pandemic could adversely affect Natixis’ business activity, operations and financial performance”.
Legislative and regulatory measures in response to the global financial crisis may have a material impact on Natixis and on the financial and economic environment in which it operates Legislative and regulatory texts are constantly evolving to take into account the lessons of crises or simply to adapt to the transformation of the economic and financial environment.
rise to short-term measures by the regulatory and supervisory authorities in 2020; medium to long-term actions cannot be ruled out. In addition, the identification of new types of risks related, for example, to technological innovation may lead to new regulatory requirements.
A deterioration in market conditions, and specifically excessive up and down movements in interest rates, could have a material adverse impact on Natixis’ personal Insurance business and its income The main risk to which Natixis’ Insurance affiliates are exposed in their personal Insurance business is market risk. Exposure to market risk was mostly attributable to capital guarantees in the euro-denominated fund scope for savings products.
A mismatch between the insurer’s expected claims expense and the actual benefits paid out by Natixis to policyholders could have a material adverse impact on its non-life insurance, personal protection insurance under its personal Insurance business, as well as on its results and financial position The main risk to which Natixis’ Insurance affiliates are exposed in their activities is underwriting risk. This risk results from a mismatch between, first, the claims actually incurred and the benefits actually paid as compensation for these claims and, second, from the assumptions that the affiliates use to price their insurance products and to establish technical reserves for potential compensation.
To the extent that the actual benefits paid by Natixis to policyholders are higher than the underlying assumptions used to establish the future policy benefit reserves, or if events or trends were to cause Natixis to change the underlying assumptions, Natixis may be exposed to greater-than-expected liabilities, which may adversely affect Natixis’ non-life Insurance business, personal protection insurance under its personal Insurance business, as well as on its results and financial position.
In addition, the deterioration of the economic and financial environment - especially the drop in the equity markets and very low interest rate levels - also affected the solvency of Natixis Assurances, negatively influencing future margins. Coverage of the Solvency Capital Requirement (SCR) was nevertheless maintained at December 31, 2020. The various actions taken over the last few years, particularly in terms of financial coverage, reinsurance, business diversification or management of investments, have contributed to the resilience of Natixis Assurances’ solvency.
3 RISK FACTORS, RISK MANAGEMENT AND PILLAR IIIRisk factors 120 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020
Natixis securities holders and other Natixis creditors may suffer losses should Natixis undergo resolution proceedings The European Regulation establishing a framework for the recovery and resolution of credit institutions and investment firms, and the texts transposing these rules into French law (the BRRD regulation) aim primarily to establish a single resolution mechanism giving the resolution authorities “bail-in” powers. The purpose of these powers is to counter any systemic risk linked to the financial system and, more specifically, avoid any financial intervention by states in the event of a crisis. If a financial institution (or the group to which it belongs) subject to the BRRD defaults or is close to defaulting, these powers allow the authorities to impair, cancel or convert the financial institution’s eligible securities and commitments into shares. Other than the option of using the “bail-in” mechanism, the BRRD grants the resolution authorities more extensive powers, enabling them to (1) force the entity to recapitalize in order to comply with the conditions of its approval to operate and pursue the operations for which it has approval with a sufficient level of confidence from the markets; if necessary, by modifying the legal structure of the entity (2) reduce the value of receivables or debt instruments, or convert them into equity for transfer to a bridge institution for the purposes of capitalization, or for the sale of a business, or for recourse to an Asset Management vehicle.
If resolution proceedings were to be implemented at the Groupe BPCE level, the exercise by a competent authority of the powers provided for by the BRRD could result in: the full or partial write-down of Natixis equity instruments, leadingV to the full or partial loss of the value of these instruments; the full or partial conversion of eligible financial instruments intoV Natixis shares, resulting in the unwanted holding of Natixis shares and a possible financial loss when reselling these shares; a change to the contractual conditions of the financial instrumentsV that could alter the instruments’ financial and maturity terms; such a change could result in lower coupons or longer maturities and have a negative impact on the value of said financial instruments.
In addition to these items related to a resolution procedure, the liquidity of Natixis shares could be affected by the failure to implement a squeeze-out procedure following the proposed public offer by Groupe BPCE. As a reminder, on February 9, 2021, Groupe BPCE announced its intention to file a takeover bid for around 29.3% of the share capital of Natixis that it does not hold (based on the issued and fully paid-up share capital as of December 31, 2020) at a price of €4 per Natixis share (dividend attached). BPCE has announced its intention to implement a squeeze-out procedure for all the shares not held by it in the event that the minority shareholders do not hold more than 10% of the Company's share capital and voting rights following the offer.
1ST LINE OF DEFENSE 2ND LINE OF DEFENSE 3RD LINE OF DEFENSE
Permanent control under the responsibility of the Corporate Secretary Periodic control
The Control Functions Coordination Committee (CFCC) is chaired by the Natixis Chief Executive Officer or his substitute, the Corporate Secretary. It brings together the Chief Risk Officer, the Head of Compliance, the Inspector General, the ISS-BC manager, the Head of the Permanent Financial Control Department, a representative of the BPCE General Secretariat and, as necessary, certain managers, operational or functional. The CFCC coordinates the entire internal control system by: addressing all issues pertaining to the organization and planningV of control services; highlighting areas of emerging or recurring risk within the scopeV under consideration and reporting any significant anomalies observed to the executive body (for example, monitoring the backlog of the main corrective measures); and providing the executive body with updates on ongoing controlsV performed by internal or external control functions or by regulators, and ensuring that the conclusions from these undertakings are taken into account by the operational business lines.
The conclusions of controls carried out under this system, supplemented with the results of internal and external audits are reported to the Board of Directors via its extensions, the Audit Committee and the Risk Committee.
Second-level permanent controls are performed by four departments that are independent of operational and support function staff.
The Compliance Department is responsible for carrying out permanent controls in relation to non-compliance risks, in particular around the following areas: customer protection, professional conduct and ethics, market abuse and financial security. In addition to the risks of non-compliance, the division carries out permanent second-level controls on certain operational risks. In addition, the Compliance Department monitors the implementation by operational business lines and support functions of the recommended corrective measures (for more details on non-compliance risks, see section 3.2.8).
In this respect, the General Inspection Department is independent of all operational entities and support functions. With no operational role, it can never find itself in a position of conflict of interest. It reports to Natixis’ Chief Executive Officer. Natixis’ Inspector General is a permanent guest on Natixis’ Audit and Risk Committees. He or she has the opportunity to meet with the Chairman of the Risk Committee one-on-one. The General Inspection Department has a strong functional link with its BPCE counterpart, in accordance with the Natixis Audit Charter. In accordance with these principles, the General Inspection Department coordinates a global audit function at Natixis and is part of the Groupe BPCE Internal Audit Function.
In 2020, the General Inspection Department carried out missions on all the risk classes generated by Natixis’ activities, while strengthening the resources devoted to managing risks related to market activities and the use of models, as well as the control of credit risks caused by the deterioration of the situation linked to the health crisis. In addition, a number of projects and specialized sites have mobilized all the staff of the general inspectorate throughout the department, in order to strengthen the quality control of auditing and the implementation of recommendations, as well as to promote the use of data analysis techniques. The working methods and program of missions have been adapted to meet the constraints of the lockdown imposed by the health crisis.
The risk management function steers the risk appetite framework, recommends risk policies consistent with those of Groupe BPCE to senior management for approval, and makes proposals to the executive body on principles and rules in the following areas: risk-taking decision procedures;V
The Compliance Function’s preventative actions – advice, raising awareness and training – are a key driver to improving Natixis’ management of compliance risk.
Risk management governance is a structured organization involving all levels of the bank: the Board of Directors and its special CommitteesV (Risk Committee, Audit Committee, etc.); the executive managers and the special Risk Committees theyV chair within the bank; the central divisions, independent of the businesses;V
Risk management 125NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com a pillar focused on training with, in addition to mandatoryV e-learning modules, efforts to promote the training of all employees in specific subjects, notably relating to regulatory changes, onboarding sessions for new colleagues and a “discovery” program to give insight into the business lines and control functions, a “career path” pillar incorporating “risk culture” as a recruitmentV criterion, the introduction of cross-over business/risk pathways and the inclusion of “risk culture” as an employee appraisal criterion.
Four guiding principles serve as the building blocks of Natixis’ DNA and are adapted to each profession and function. The rules fall into the following themes: being client-centric;V
It is consistent with Natixis’ strategic plan, budget process and business activities, and falls within Groupe BPCE’s general framework on risk appetite which is based on two items: the Risk Appetite Statement (RAS), which sets out, in1. qualitative and quantitative terms, the risks that the Bank is prepared to take based on its business model; the Risk Appetite Framework (RAF), which describes the2. interface between the organization’s key processes and the implementation of the governance that puts the RAS into action.
Risk appetite is reviewed annually by senior management and approved by the Board of Directors after consultation by the Risk Committee.
The business model developed by Natixis is based on its recognized areas of expertise (corporate financing, capital market activities, Asset & Wealth Management, Insurance and Payments), in response to the needs of its clients and those of Groupe BPCE.
3 RISK FACTORS, RISK MANAGEMENT AND PILLAR IIIRisk management 126 NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020 operational risk, due to its nature, is present across all the bank’sV business lines and functions. It is managed through a system, which has been rolled out across the business lines and geographic regions, using a shared data collection tool to map risks on an annual basis and provide feedback on losses and incidents, in collaboration with the other control functions, which enables to implement corrective and preventive action plans accordingly; As a rule, Natixis has no particular appetite for operational risk and manages it very closely; Natixis is exposed to non-compliance risks in respect of bankingV and financial regulations, which it is committed to control through the implementation of a Code of Conduct and strict compliance with the laws, regulations and standards governing its activities, in France and internationally, in the realm of financial security, ethics and client protection; Natixis’ most important asset is its reputation and its relationshipV with its clients. Clients’ interests are therefore put first and the bank – irrespective of the business activity, entity or geographic region – is dedicated to operating at the highest level of ethical standards, and in line with the best transaction execution and security. This risk arising from the existence of other “direct” risks such as financial, legal or operational risks is closely using indicators that combine an ex-ante/ex-post approach; model risk concerns both internal models within the meaning ofV Directive 2013/36/EU (CRD IV) and all other models by the bank (including those used for the valuation of financial products) within the meaning of the definition of a model under Directive SR 11-7 of the Board of Governors of the Federal Reserve System. It mainly concerns the Corporate & Investment Banking market activities and is subject to specific governance and monitoring through ad hoc indicators; Natixis brings together the risks related to Insurance activitiesV (Natixis Assurances), Asset Management (Natixis Investment Managers) and those related to Payments activities, under specific scopes. With regard to Insurance activities, the main risks incurred by the bank concern underwriting risk, in particular for non-life risks and market risks arising from the investments of insurance companies (interest rate risk, equity risk, spread risk, real estate risk and foreign currency risk).
Each risk identified and considered material for the bank is monitored using an indicator and tolerance thresholds: a threshold setting the risk exposure allocated to each businessV line; and a limit stating the maximum risk that, if exceeded, would pose aV risk to Natixis’ business continuity and/or stability (in terms of solvency, liquidity, results and reputation).
Any breach of the tolerance thresholds (thresholds and limits) defined in the Risk Appetite Framework is subject to a notification and escalation procedure with executive managers and subsequently the supervisory body. This operational framework is applied by type of risk (credit and counterparty risk, market risk, structural balance-sheet risks, including liquidity risk and leverage risk, operational risk, solvency risk, etc.) and draws on Natixis’ pre-existing measuring and reporting systems.
In accordance with regulations concerning systemically important financial institutions, Groupe BPCE has drawn up a recovery prevention plan (PPR).
In general, securitizations have the following characteristics: they result in a material transfer of risk where the transaction isV originated by Natixis; payments made in the course of the transaction depend on theV performance of the underlying exposures; the subordination of tranches, defined by the transaction,V determines the distribution of losses over the term of the risk transfer.
The Groupe BPCE Insurance Department is tasked with analyzing insurable operational risks and taking out appropriate insurance coverage. Natixis and its subsidiaries benefit from insurance policies pooled with Groupe BPCE against potentially significant consequences resulting from fraud, embezzlement and theft, operating losses or the incurring of Natixis’ civil liability or that of its subsidiaries or the employees for which it is responsible.
Non-compliance risk is defined in French regulation as the risk of a legal, administrative or disciplinary penalty, accompanied by significant financial losses or reputational damage, that arises from a failure to comply with the provisions specific to banking and financial activities, whether these are stipulated by national or directly applicable European laws or regulations, or by instructions from executive managers, issued in accordance with the policies of the supervisory body. This risk is a sub-category of operational risk, by definition.
Reputational risk is the risk of damage to the confidence shown in the Company by its customers, counterparties, suppliers,
Legal risk is defined under French regulations as the risk of any legal dispute with a third party, arising from an inaccuracy, omission or deficiency that may be attributable to the Company’s operations.
Liquidity risk is the risk that Natixis will be unable to honor its commitments to its creditors due to the positive difference of maturities between assets and liabilities. This risk could arise, for example, in the event of massive withdrawals of customer deposits, a crisis of confidence, or an overall market liquidity crisis. As a corporate and investment bank, this risk results primarily from mismatched positions between transactions with contractual maturities, as Natixis has fewer stable and permanent customer resources than retail banks, and partly funds its operations on the markets.
Insurance business-related risk is the risk to profits of any difference between expected and incurred claims. Depending on the insurance product in question, the risk varies according to macroeconomic changes, changes in customer behavior, changes in public healthcare policy, pandemics, accidents and natural disasters (such as earthquakes, industrial accidents or acts of terrorism or war).
Strategic risk is the risk inherent to the strategy chosen or resulting from Natixis’ inability to implement its strategy.
The scenarios proposed by the Economic Research team are discussed and approved at a Groupe BPCE Executive Management Committee Meeting and presented at a Natixis Senior Management Committee Meeting.
They are converted into levels or shocks to economic and financial variables, such as GDP, inflation, employment and unemployment, interest and exchange rates, main stock market indice levels, and commodity prices, over a three-year period. These variables are factored into projection models used by Natixis to apply stress to the various aggregates on the income statement, risk-weighted assets and equity.
The baseline scenario’s trajectory is derived from market consensus, forwards and futures.
As part of the global internal stress tests conducted in 2020, the scenarios are designed using impact assumptions in years 2021 to 2023 with respect to the COVID-19 crisis.
The first adverse scenario features an "L" shape economic recovery: the health crisis continues in 2021, followed by a limited recovery in the following years, without any significant improvement, due in particular to deflationary pressure in 2021 and 2022, before a gradual return to normal in 2023.
The second adverse scenario simulates tensions in the euro zone in 2021 and 2022, such as those observed in 2012 and 2013, related to the debt contracted by the member countries, following the health crisis experienced in 2020. In 2021, there is no economic improvement in the euro zone, unlike other main geographic areas. Southern euro zone countries, including France, are suffering from a sharp rise in unemployment and a further decline in GDP. Following the weakening of the euro and Brent prices, inflation is rising in the euro zone.
These projections are based on internal models, based on the sensitivities and trends observed in financial and economic variables, or on internal historical data.
The results of the stress tests were approved by the Senior Management Committee and presented to the Risk Committee of the Board of Directors. They have been analyzed as part of the process of calculating Natixis’ solvency trajectory. This impact was measured in terms of net income group share, net revenues and Common Equity Tier 1.
These tests help evaluate the areas where Natixis shows vulnerability or weakness and contribute to the establishment of adaptive or remedial measures.
These trajectories were validated by the Executive Management Committee and presented to the ECB.
The specific stress test exercises run by the Natixis Risk division are detailed in the dedicated sections of this document (and in particular the credit stress tests detailed in section 3.2.3, subsection 3.2.3.9 “Commitment monitoring framework”, as well as the market stress tests detailed in section 3.2.5, subsection 3.2.5.3 “Market risk measurement methods”).
In conjunction with BPCE, Natixis has defined the rating methods applicable to the asset classes held jointly.
Natixis’ risk policies have been defined as a component of the bank’s overall risk appetite and credit risk control and management framework. The policies are the product of consultation between the risk division and the bank’s various business lines, and are intended to establish a framework for risk-taking while applying risk appetite and Natixis’ strategic vision by business line or by sector.
Natixis now has some 20 risk policies, which are regularly revised and cover the various Corporate & Investment Banking businesses (corporates, LBO, aircraft finance, real estate finance, project finance, commodities finance, banks, insurance, etc.) and those of the subsidiaries.
This framework helps monitor the concentration of the bank’s commitments in relation to a given sector or type of risk.
Natixis’ credit risk measurement and management procedures are based on: a standardized risk-taking process, structured via a system of limitV authorizations and decision-making Committees; independent analyses carried out by the risk division during theV loan application review process; rating tools and methodologies providing standardized andV tailored assessments of counterparty risk, thereby making it possible to evaluate the probability of default within one year and the loss given default; information systems that give an overview of outstanding loansV and credit limits.
The principles of counterparty risk management are based on: measurement of exposure to counterparty risk;V
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For the purpose of determining capital requirements for counterparty risk, the European Central Bank has partially authorized Natixis S.A. to use the internal EEPE (Effective Expected Positive Exposure) model to calculate exposure. For other entities, as well as the scope of operations for which Natixis S.A. is not authorized to use the EEPE model, exposure is determined using the mark-to-market method.
These adjustments comprise the expected loss as per a counterparty’s default risk and aim to account for the fact that Natixis cannot recover the entire market value of the transactions.
From a regulatory standpoint, this risk is presented as two concepts: specific wrong-way risk, i.e. the risk generated when, due to theV nature of the transactions entered into with a counterparty, there is a direct link between its credit quality and the amount of the exposure; general wrong-way risk, i.e. the risk generated when there is aV correlation between the counterparty’s credit quality and general market factors.
Since September 30, 2010, Natixis has used specific internal rating methods for each asset class that are approved by the Autorité de Contrôle Prudentiel et de Résolution (ACPR – French Prudential Supervisory Authority), and that use the advanced internal ratings-based method (A-IRB) to rate “corporates”, “sovereigns”, “banks”, “Specialized Financing” exposure categories.
Ratings are established based on two approaches: statistical, and an approach based on expert appraisals.
The rating scale varies according to the type of counterparty and includes 21 notches for major corporates, banks and Specialized Financing institutions. It should be noted that internal ratings are also one of the criteria used to determine the level of authority required to approve credit applications.
For outstandings measured using the standardized approach, Natixis uses external rating systems of the agencies Fitch Ratings, Standard & Poor’s, Moody’s and DBRS (Dominion Bond Rating Service).
When a bank portfolio exposure does not have a directly applicable external credit rating, the Bank’s customer standards allow – on a case-by-case basis and after analysis – the application of a rating based partially on an internal or exposure rating of the issuer (or of the guarantor, if applicable).
As part of the Model Risk & Risk Governance which reports to the Chief Risk Officer, Model Risk Management (MRM) is responsible for the governance and standards applicable to a model’s life cycle. The various stages of a model’s life cycle – design, IT development, validation, and use – are clearly presented and the roles and responsibilities of each participant specified and detailed.
Internal counterparty risk models and rating models are validated by the validation team of the Groupe BPCE risk department or, acting with the authorization of the Groupe BPCE Group MRM Committee, by the Natixis risk division’s Risk Model Validation team. The Natixis Risk Model Validation team uses a six-fold validation process: data and parameters applied by the model: analysis of data qualityV and representativeness, integrity of controls, error reports, comprehensiveness of data, etc.; methodology: analysis of model’s underlying theory, analysis ofV estimates, sizing methods, risk indicators, aggregation rules, model benchmarking, analysis of precision and convergence; usage and robustness test: the validation team ensures that theV internal models are used by qualified staff, that usage procedures are documented and up to date, and conducts independent ex-post controls and stress tests; IT development: counter-implementation, code analysis, tests;V
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This Model Risk Management Committee is tasked with supervising the risk model for all of Natixis’ activities by, on one hand, approving validation reports and the related remediation plans and, on the other hand, monitoring consolidated risk model indicators. The Risk Model Oversight Committee is chaired by the Head of the Model Risk & Risk Governance Department. The Model Risk Management Committee is chaired by the Chief Executive Officer of Natixis, directly or indirectly through a specific delegation of authority.
The rating methods are periodically checked and undergo external benchmarking to ensure the consistency of ratings produced using expert appraisal methods, as well as their robustness over time according to regulatory requirements. The monitoring methods are defined through a backtesting procedure tailored to each type of model.
These checks are conducted by backtesting the various rating models once a year by scope and the results are presented to the Credit Risk Model Monitoring Committee (CRMMC) which meets at least quarterly. Subsequently, the results are submitted to the
The severities observed between internal ratings and agency ratings are studied. Natixis analyzes all internal ratings of counterparties, which are also rated by rating agencies (Standard and Poor’s, Moody’s and Fitch). The extent to which the risk assessments are aligned can be determined through these analyses.
LGD, CCF and ELBE backtesting is carried out by the risk division’s teams to: verify that the model is correctly calibrated;V
The inputs of the models for the scope of Specialized Financing and collateral (financial or other) are regularly updated, so that they reflect actual conditions as accurately as possible. Both the market inputs and collection inputs are updated.
The indicators defined for backtesting are used both to validate the model and measure its performance. Two main types of indicators are used: population stability indicators: these analyses are used to checkV that the population observed is still similar to the population that was used to build the model. The model may be called into question if the segmentation variables or the LGDs result in excessively large distribution differences. All of these indicators are compared against the benchmark indicators (usually those calculated when the model was built or those issued by external data or agencies). These analyses are applicable to both expert appraisal-based models and statistical models;
Risk management 133NATIXIS UNIVERSAL REGISTRATION DOCUMENT 2020www.natixis.com model performance indicators: the model’s performance isV measured to validate the segmentation and also to quantify, overall, the differences between the forecast and actual figures. This is achieved by using statistical indicators, which are compared against those calculated during modeling.
Once complete, a backtesting report is produced to represent: all the results of the backtesting indicators used;V
The report is then submitted to the internal validation teams (Model Risk Management) for their input, and subsequently presented to the various Committees to inform the bank’s management.
The counterparty risk backtesting program is designed to validate the key assumptions on which the exposure model is built – stochastic processes for market risk factors, correlations and pricing models – and to identify notable discrepancies in specific model elements.
In respect of the market risk factor, backtesting uses historical trends to test risk factor predictions based on the stochastic processes. Backtesting can be performed ex-post by taking the aggregate historical market data for the selected backtesting period, or, to expand the results over wider time horizons and/or cover a broader range of market conditions. It may also be performed retroactively: this specific approach is called retro-backtesting. Here, the aim is to demonstrate that the models would have worked correctly had they been implemented in earlier periods and are thus suitable for future use.
In terms of exposure, the backtest applies historical Mark-to-Market (MtM) values of static backtesting portfolios to test the predicted future MtM values. In terms of risk factors, exposures are backtested ex-post by gathering the historical prices achieved, even though retro-backtesting capacities have been introduced for a sub-group of products. The ex-post approach involves duplicating the transactions in the dedicated backtesting portfolios directly in the front-office systems. The ageing process is thus similar to that of real portfolios. Retro-backtesting uses a specific tool to retro-backtest MtM on the main product categories.
PD Sovereigns 1 Expert analysis-based rating models using macroeconomic criteria and the assessment of legal and political risks
Banks 3 Expert analysis-based rating models based on quantitative criteria (accounting balance sheet) and qualitative criteria (questionnaire). Model by type of counterparty and by geographic area
Volatility correction Financial and other collateral 4 Stochastic models based on historical market prices with assumptions based on internal data and expertise
The model mainly applies the following elements: pricing models for reassessing products on various trajectories;V
Risk mitigation techniques involve two types of guarantee: non-financial or personal collateral:V
One or more guarantors commit to pay the creditor in the event of borrower default. It includes personal guarantees, on-demand guarantees and credit derivatives; financial or real collateral, or secured loans:V
In terms of monitoring, collateral and netting agreements are: analyzed, when a loan application is approved or reviewed, toV ascertain the suitability of the instrument or guarantee provided as well as any associated improvement in risk quality; checked, processed and documented based on standard contractsV or contracts approved by the legal department; subject to registration and monitoring procedures in the riskV administration and management systems.
Natixis may take steps to reduce commitments in order to lower concentration risk by counterparty, sector and geographic area. Concentration risk is rounded out with an analysis, based on stress test methodologies (migration of ratings according to macroeconomic scenarios). Natixis may buy credit-default swaps and enter 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. CDS-protected loans remain on Natixis’ balance sheet but bear the counterparty risk attached to the credit-default swap sellers, which are generally OECD banks. Transactions with non-bank third parties are fully collateralized in cash. These transactions are subject to decision-making and monitoring procedures that apply to derivative transactions.
Natixis reduces its exposure to counterparty risk using three measures: use of bilateral netting agreements under which, if a counterpartyV goes into default, only the balance of the positive and negative valuations of the transactions carried out with the counterparty in question is considered as risk; riders to these agreements that govern the use of collateral swapsV that fluctuate according to the daily valuation of the portfolios of transactions carried out with the counterparties in question; the use of clearing houses, which stand in for their members byV bearing most of the counterparty risk. To do this they use an initial margin and variation margin call system.
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The risk division provides senior management and the Bank’s business heads with reports analyzing Natixis’ risks: trend analyses, indicators, stress test results, etc.
Credit risk supervision is based on: accountability of the business lines;V
events relating to the Company’s development (e.g. placing on aV watch list).
Since the implementation of the new European guidelines on default, Natixis has been sending BPCE its cases of unpaid bills, overdrafts, bankruptcy proceedings and forbearance on a daily basis and receives in return, after aggregation with the data reported by the other Group institutions, the status (sound, sensitive or default) applicable to all of its third parties.
Exposures showing deterioration in the level of risk are identified as they arise and reported immediately to the risk division and the business concerned, in accordance with both the counterparty watchlist, specific provisioning and alert procedures.
The sector and country rating process is centered on a Geo-Sector Committee comprising the finance division, the risk division and Corporate & Investment Banking representatives. The main objective of this Committee, established for the purpose of implementing IFRS 9, is to validate sector ratings as well as country and sovereign scores on a quarterly basis. These ratings then serve as a basis for calculating ECL. Sector ratings in particular are based on the results of the semi-annual economic environment reports.
Stress tests The credit stress test system covers Natixis scopes subject to the A-IRB, F-IRB and standardized approaches. It is based on choosing scenarios that replicate plausible crisis situations and high degrees of severity, in keeping with market practices, while taking past events, market trends and the environment into account so that purely historical or theoretical scenarios are eliminated.
The system is a true risk management tool, with scenarios that are regularly introduced and revised. The risk division regularly works on improving the methods used and adding to the scopes defined for the stress scenarios, with particular attention paid to the market stress requirements.
EAD, RWA and capital requirements by Basel approach and exposure class (NX01)
Exposures to institutions and corporates with a short-term credit assessment 87 51 4 100 46 4
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Exposures secured by mortgages on immovable property 282 5 279 3 238
(*): As of 31/12/2020 the United Kingdom is still considered in the EU
the first involves the daily identification of all rating downgradesV (where applicable) affecting Natixis’ securitization positions as well as the associated potential risks and, if necessary, deciding on an appropriate course of action; the second is based on the analysis of securitization positionsV according to quantitative (resistance to portfolio downgrades and credit quality, rating if available, valuation) and qualitative criteria (analysis).
With regard to activities recognized in the trading book, Natixis may hold securitization positions (secondary market), resulting from purchase and sale transactions with its clients. The activity is governed by a Volcker manual as well as a limit mandate, which specifies the types of risks borne, as well as their holding procedures.
The risk department, via the Market Risk Department, places great importance on the formal definition of all risk policies governing market transactions based on both a qualitative and forward-looking analysis. This approach is mainly based on the strategic review of global risk budgets, business targets and market trends and relies on a proactive early warning system for the most sensitive areas at risk.
Market risk control is based on a limit authorization structure that is overseen by the Global Risk Committee and in which the Market Risk Committee, chaired by the Chief Executive Officer or the delegated representative, plays an essential role.