Policies and rules for determining compensation paid to members of the executive bodies 53
This document is an English-translation of the French document de référence filed with the Autorité des Marchés Financiers (AMF) on April 18, 2008, in compliance with article 212-13 of the AMF’s standard regulations. Only the original French version can be used to support a financial transaction, provided it is accompanied by a note d’opération duly certified by the Autorité des Marchés Financiers. The document de référence was produced by the issuer, and the signatories to it are responsible for its contents.
Natixis generated net banking income of €6 billion and net income (Group share) of €1.1 billion in 2007. It has approximately 24,000 employees in some 60 countries.
Natixis’ activities are organized into five business divisions: Corporate and Investment Banking; Asset Management; Private Equity and Private Banking; Services; Receivables Management.
Retail banking also makes a direct contribution to Natixis’ performance via the Group’s 20%
Natixis’ development is underpinned by the growth of its various business lines and opportunities arising from the merging of entities offering a strong strategic fi t in terms of both technical expertise and business assets. With its broad range of products and services
– including structured fi nance, capital markets, asset management and fi nancial services
Thanks to its performance and solid fi nancial structure, Natixis has benefi ted from a high rating from the three main credit rating agencies (AA/Aa2/AA-).
(1) Natixis holds cooperative investment certifi cates (CCIs) representing 20% of the share capital of each of the Banque Populaire banks and each of the Caisse d’Epargne banks (with the exception of Caisse d’Epargne et de Prévoyance de Martinique and Caisse d’Epargne et de Prévoyance de Nouvelle
EXECUTIVE CHAIRMAN “ Natixis has had to cope with some particularly tough conditions in its fi rst year of existence.
views of the crisis. Although it is never advisable to distinguish between economic reality and its translation into accounting terms (or even to oppose the two concepts), scope exists to better evaluate the increased volatility that ensues from the practice of automatically marking-to-market the value of most fi nancial assets in bank’s balance sheets.
“ Is the fi nancial crisis going to cause you to make any changes in Natixis’ strategy? „ A: At this stage, it is still too soon to determine the adjustments to be made to our strategy and, in any case, any changes in this area will need to be decided and validated by all our corporate governance bodies. The severity of the crisis is bound to entail strategic revisions for most players, if only to refl ect the likely changes in the competitive and regulatory environment.
Although we are liable to make some adjustments too, a number of the main components of our strategic project will remain intact. Natixis will continue to develop a highly comprehensive range of products and services for large corporations and institutions, spanning capital market, fl ow and collective asset management products, as well as structured fi nancing, credit insurance and receivables management offerings. Likewise, retail banking will retain an important place within Natixis, not only in terms of our shares of earnings from the Caisses d’Epargne and Banques Populaires networks, but also via the products and services we supply from our industrial platforms to numerous other banks. We will also continue the organized and disciplined expansion of our business in Asia, so as to adjust our geographic balance towards fast-growing regions. Lastly, we will also maintain our extensive know-how in cutting-edge fi nancial techniques. The combination of our highly solid capital structure and the ability of our two powerful shareholders to provide the stability needed to grow our business over time, leaves Natixis well-placed to execute a strategy geared to creating lasting value.
Total assets €520.0bn €458.6bn €437.8bn * After anticipated 50% deduction of CCIs in accordance with CRD/Basel II rules.
Private Equity and Private Banking 504 449 276 * Before writedowns on subprimes and monolines.
– Lomé – Melbourne – Mumbai – New Delhi – Oran – Osaka – Ouagadougou – Rouiba – Sandton – Secunderabad – Séoul – Sétif – Shanghai – Sidi Bel Abbes – Singapore – Sydney – Taipei
– Teheran – Tlemcen – Tokyo – Tunis – Americas – Atlanta – Baltimore – Bloomfi eld Hills – Bogota – Boston – Boulder – Buenos Aires – Burlington – Caracas – Chicago – Cincinnati – Detroit
– East Windsor – Fairfi eld – Fort Lauderdale – Glendale – Greenwich – Guayaquil – Houston – Jersey City – Lima – Los Angeles – Mexico – Milwaukee – Monterrey – Montreal – New Haven
– New York – Oakland – Panama – Pasadena – Quito – San Francisco – San José – Santiago – Sao Paolo – Toronto – Washington DC
(a) Based on average number of shares outstanding during the year.
(c) Proposal to be submitted to shareholders at the May 22, 2008 Annual General Meeting.
The table below shows the growth in value of an investment in one of Natixis’ shares (Natexis Banques Populaires prior to November 17, 2006) acquired at the December 29, 2000 closing price of €9.44 (adjusted for the 10-for-1 stock split).
Total shares after reinvestment of gross dividend * Adjusted for the 10-for-1 stock split.
It prepared Natixis’ 2006 annual report and its updates, and ensured that they were fi led with the AMF (Autorité des
The Group’s results as at December 31, 2006, June 30, 2007 and September 30, 2007 were announced in press releases and at meetings with the fi nancial press and fi nancial analysts. Earnings announcements were also published in the press, in particular the fi nancial and economic press, when the annual and interim results were announced. Furthermore, an electronic version of the earnings announcement was published online on the main market, economic, fi nancial and trading sites, where visitors could link to the Natixis Web site and access both the presentation of fi nancial results and press releases.
Year 2007 was the fi rst complete fi nancial year for Natixis and, having experienced a particularly eventful time, Natixis published a number of specifi c press releases, in particular about the legal and organizational integration of the incoming businesses, the major appointments made and the events with a special impact on Natixis’ accounts.
All of the documents produced were published online on the company’s new Web site, in French and, where appropriate, in English.
In addition to regular individual meetings with institutional investors in France and abroad, organized throughout 2007, special meetings with investors and sell-side analysts were held during the conferences organized by Morgan Stanley
(annual general meeting, dividend, toll-free hotline, etc.). Three issues were published in 2007, in April, October and December. The April issue, the fi rst time the Newsletter was published, was sent out to all identifi ed shareholders.
The following two issues were sent to members of the Shareholders’ Club, with download available to all shareholders on Natixis’ Web site; a Shareholders’ Club was launched in April 2007 so that all shareholders so wishing could build a closer local relationship with Natixis. Open to all registered shareholders, as well as to those with at least 50 bearer shares. The Club has been a great success, in that over 18,000 people signed up; the “Individual Shareholders” section of Natixis’ Web site has been revamped. It provides the public with press releases and highlights from Natixis’ news. It has also been equipped with an Extranet for Club members only; Natixis’ participation in the Actionaria trade show (held in Paris on November 16 and 17, 2007) stood out for the creation of a new stand, in line with its graphic charter. In total, the trade show – for which members of the Shareholders’
natixis.fr) received an average of 10 messages per day, processed live by the Shareholder Relations team in a spirit of customiz ed contact and dialogue.
In 2008, the usual methods of communicating with individual shareholders will be boosted.
A number of Club activities are being set up: fi rst of all, training sessions on the Stock Market will be held in partnership with the Ecole de la Bourse and with certain economists from
January 2008, a quarterly activity program that enables them to be a part of Natixis’ sponsorship policy (entrance to cultural institutions partnering Natixis, discounted prices on certain services offered by the said cultural institutions). Lastly, a number of information sessions about Natixis will be held in the French regions, in order to foster direct dialogue between the shareholders and Natixis representatives.
individual shareholders, the Committee meets several times each year and makes suggestions about the range of communications tools that Natixis uses with its shareholders.
Website: www.emetline.com e-mail: emetline@natixis.fr 2008 Financial Communications Calendar 2007 Results Press Release
Holders of bearer shares are notifi ed of the Meeting through notices published in the Bulletin des Annonces Légales Obligatoires
Registered shares must be recorded in the holder’s registered share account or administered registered share account at least three days prior to the Meeting date.
Holders of bearer shares must ask the bank or broker that manages their share account to send a certifi cate of attendance (“attestation de participation”) to Natixis, which must be received at least three days prior to the Meeting date, in order to allow time for an admittance card to be sent to the shareholder.
on each resolution presented to shareholders; • giving proxy to their spouse or another Natixis shareholder to vote on their behalf.
MILHAUD Charles Chairman of the Supervisory Board of Natixis, Chairman of the Management Board of Caisse Nationale des Caisses d’Epargne et de Prévoyance
TOURRET Jean-Louis Vice-Chairman of the Supervisory Board of Natixis, Chairman of Banque Populaire Provencale & Corse
COMOLET Bernard Vice-Chairman of the Supervisory Board of Natixis, Chairman of the Executive Board of Caisse d’Epargne Île-de-France Paris and Île-deFrance Ouest
HENRY Francis Chairman of the Steering and Supervisory Board of Caisse d’Epargne de Champagne-Ardennes
de La PORTE du THEIL Yvan Chief Executive Offi cer of Banque Populaire Val-de-France
SUEUR Philippe Chairman of the Steering and Supervisory Board of Caisse d’Epargne Îlede -France Nord
Board and Supervisory Board, as set out in Articles L. 225-57 et seq. of the French Commercial Code.
Executive Board are determined by the provisions of the agreement * signed on November 17, 2006, which aims to guarantee equal representation of the two shareholders on the
* See Chapter VIII for a description of the main provisions in the Shareholders’ Agreement. * See Chapter VIII for a description of the main provisions in the Shareholders’ Agreement.
Term expires (AGM called to approve fi nancial statements for fi scal year in question)
Chairman of the Executive Board OF CAISSE NATIONALE DES CAISSES D’EPARGNE ET DE PREVOYANCE
TOURRET Jean-Louis AGM of 17.11.2006 2011 Vice-Chairman of the Supervisory Board
COMOLET Bernard AGM of 17.11.2006 2011 Vice-Chairman of the Supervisory Board
Le Ponant de Paris 5, rue Leblanc 75511 PARIS CEDEX 15
Chief Executive Offi cer of Caisse NATIONALE DES CAISSES D’EPARGNE ET DE PREVOYANCE
BOLLORÉ Vincent AGM of 17.11.2006 2011 Member of the Supervisory Board
CLOCHET Jean Supervisory Board meeting of 30.05.2007 2011 Member of the Supervisory Board
CREQUIT Jean-Claude AGM of 17.11.2006 2011 Member of the Supervisory Board
METTLING Bruno AGM of 17.11.2006 2011 Member of the Supervisory Board
Le Ponant de Paris 5, rue Leblanc 75511 Paris cedex 15
Chairman of the Executive Board of Caisse d’Epargne des Pays de la Loire 8, Rue de Bréa BP 835 44000 NANTES
PROGLIO Henri AGM of 17.11.2006 2011 Member of the Supervisory Board
SUEUR Philippe AGM of 17.11.2006 2011 Member of the Supervisory Board
Members of the Supervisory Board (excluding non-voting directors) can be divided into three groups: S even members from Groupe Banque Populaire; S even members from Groupe Caisse d’Epargne.
Groupe Banque Populaire and Groupe Caisse d’Epargne, each of which hold 34% of Natixis shares, have an equal number of seats on the Supervisory Board. This equal representation is in accordance with the agreement signed between Natixis’ two shareholders.
Vincent Bolloré heads and oversees Groupe Bolloré, a leading player in several industrial activities and services and media sectors. Jean-Charles Naouri is Chairman of Euris, the holding company to one of France’s largest retail groups.
The two non-voting directors, Ulrich Brixner and Alfonso Iozzo, of German and Italian nationality respectively, are both directors or former directors of major banking groups and provide the
Chairman of the Supervisory Board shall be a representative of the shareholder not represented by the Chairman of the
Within this context, since November 17, 2006, Chairmanship of the Supervisory Board has been held by Charles Milhaud,
Banque Populaire, Claude Cordel and Jean-François Comas, having left their positions as Chairman and Chief Executive
Populaires to appoint Philippe Queuille as standing representative on the Natixis Board.
Board, in accordance with French law, article 9 of the bylaws and the shareholders’ agreement, which states that members are chosen on the basis of their competence, irrespective of from which of the two groups they come.
The Supervisory Board meeting of November 17, 2006, appointed four Board members: Philippe Dupont,
Philippe Dupont (also Chairman and Chief Executive Offi cer of Banque Fédérale des Banques Populaires) was appointed
Executive Board, thereby temporarily bringing the number of members on the Executive Board to fi ve, François Ladam having announced that he would leave on retirement effective
Positions and directorships as at December 31, 2007 In the last fi ve years
Chairman of the Board of Directors of Matin Plus (exCompagnie de Bangor)
Chairman of the Board of Directors of DZ BANK Ireland plc.
Chairman of the Board of Directors of Natixis Global Asset Management
Chairman of the Executive Board of Caisse d’Epargne Îlede -France Paris
Permanent representative of la Caisse d’Epargne et de Prévoyance Île-de-France Paris, Director of Immobilière 3F
Permanent representative of Caisse d’Epargne et de Prévoyance Île-de-France Paris, Director of Eulia Caution
Permanent representative of Caisse d’Epargne et de Prévoyance Île-de-France Paris, Director of Socamab Assurances
Chairman of the Supervisory Board of Banque Internationale de Commerce – bred
Permanent representative of Bred Gestion on the Board of Directors of LFI 2
Representative of Banque Fédérale des Banques Populaires, Chairman of SAS Guidéo
Representative of la Banque Fédérale des Banques Populaires on the Board of Directors of Natixis Assurances
Representative of Banque Fédérale des Banques Populaires on the Supervisory Board of LineBourse
Representative of Banque Fédérale des Banques Populaires on the Supervisory Board of Novacrédit
Representative of Banque Fédérale des Banques Populaires on the Supervisory Board de ABP - Assurances Banque Populaire
Permanent representative of Banque Populaire Bourgogne Franche-Comté, Director of i-BP S.A.
Member of the Board of Directors of Caisse Autonome de Retraite
Permanent representative of Banque Populaire du Quercy et de l’Agenais, Director of i-BP S.A.
Permanent representative of Banque Populaire Bourgogne Franche-Comté, Non-voting Director of ABP-Assurances Banque Populaire
Permanent representative of Natixis Assurances, Member of the Supervisory Board of Assurances BP IARD
Permanent representative of Banque Populaire Val-deFrance, Director of i-BP (Informatique Banques Populaires)
Permanent representative of Banque Populaire Val-deFrance, Director of la Banque Populaire Développement
Permanent representative of Banque Populaire Val-deFrance, Director of la BICEC (Banque Internationale du Cameroun pour l’Epargne et le Crédit)
Chairman of the Supervisory Board of Compagnie 1818 – Banquiers Privés
Permanent representative of CNCE, Member of the Supervisory Board of GEMO-RSI
Permanent representative of CNCE, Member of the Supervisory Board of Financière Océor
Vice-Chairman of the Supervisory Board of Ixis Corporate & Investment Bank
Permanent representative of Banque Fédérale des Banques Populaires, Director of Natixis Financement
Chairman of the Executive Board of Caisse Nationale des Caisses d’Epargne
Chairman of SAS and of the Board of Directors of GCE Maroc
Chairman of the Supervisory Board of Ixis Corporate & Investment Bank
Permanent representative of CNCE, Member of the Supervisory Board of Natixis Asset Management
Vice-Chairman of the Supervisory Board of CDC Finances - CDC Ixis
Member of the Supervisory Board of Companhia Brasileira de Distribuicao (CBD)
Honorary Chairman of the Institut d’Expertise et de Prospective de l’École Normale Supérieure
Member of the Supervisory Board of Laurus (now Super de Boer)
Non-voting director of Caisse Nationale des Caisses d’Epargne et de Prévoyance
Director of Natixis Global Asset Management Corporation (ex-Ixis Asset Management US Corporation)
Chairman of the Supervisory Board and Permanent representative of Natixis on the Supervisory Board of CIFG Holding
Permanent representative of Natixis, Director of Natixis Securities (formerly -Ixis Securities)
Chairman of Natixis Financial Products Inc. (formerly -Ixis Financial Products Inc.)
Chairman of Natixis Real Estate Capital Inc. (formerly -Ixis Real Estate Capital Inc.)
Chairman of the Supervisory Board of Natixis Asset Management (formerly -Ixis Asset Management)
Chairman of the Supervisory Board of Natixis Global Asset Management Participations 1 (formerly -Ixis Asset Management Participations 1)
Chairman of the Supervisory Board of Natixis Asset Management Participations 2 (formerly -Ixis Asset Management Participations 2)
Chairman of the Supervisory Board of Natixis Multimanager (formerly -Ixis Private Capital Management)
Member of the Executive Board of Caisse Nationale des Caisses d’Epargne
Chairman of the Executive Board of Caisse d’Epargne et de Prévoyance des Pays de la Loire
Chairman of the Supervisory Board of Batiroc Pays de la Loire
Representative of CEPDL, Member of the Supervisory Board of GCE Technologies
Chairman of the Board of Directors of Banque Populaire Provençale et Corse
Chairman of the Board of Directors of Banque Privée Saint Dominique
Legal Representative of Bercy Présidence, the company that is manager-partner of Holding Bercy Investissements- H.B.I. (SCA)
Legal Representative of Elior SCA, the company that is Chairman of Elior Gestion (SAS)
Caisse Nationale des Caisses d’Epargne, held a series of management positions with a major French carmaker before joining Caisse des Dépôts et Consignations and then Groupe
Banque Fédérale des Banques Populaires, has also served as Chairman of the Board of Directors and Chief Executive
Board of Caisse d’Epargne Île-de-France Paris and previously held various positions of responsibility within the banking sector.
Jean Clochet, age 62, Chairman of the Board of Directors of Banque Populaire des Alpes, is also Chairman and Chief
Francis Henry, age 62, honorary solicitor, has been Chairman of the Steering and Supervisory Board of Caisse d’Epargne et de Prévoyance de Champagne-Ardennes since 1992.
Yvan de La Porte du Theil, age 59, Chief Executive Offi cer of Banque Populaire Val-de-France since 2002, has held a series of various executive positions within Groupe Banque
Banque Fédérale des Banques Populaires. Having been an auditor with the French Treasury until 1995, he held a variety of positions of responsibility within ministerial cabinets before joining Groupe Caisse d’Epargne in 1999, where he was a member of the Executive Board, and then Groupe Banque
Pays de Loire, held positions of responsibility at CDC Gestion until 1992 and then at Caisse d’Epargne des Pays du Hainaut and Caisse Nationale des Caisses d’Epargne.
Henri Proglio, age 59, held a variety of executive management positions at Générale des Eaux and then Vivendi, was
A professor of law, Mr Sueur also holds a number of elective positions in the Île-de-France region.
He is a member of professional and employer organizations and a local elected representative in Marseilles.
Robert Zolade, age 68, is Chairman of contract catering group Elior, of which he is one of the two co-founders. He previously held various management positions within French hotel and catering companies.
Ulrich Brixner, age 67, is of German nationality and has a doctorate in management. He has held various positions of responsibility at major German banks and was Chairman of the Board of DZ BANK AG from 2000 to 2006.
Populaire. Mr Dupont is a member of the Executive Committee of the French Banking Federation.
Supérieure and held a variety of positions of responsibility at the Banque Française du Commerce Extérieur (French Foreign
Trade Bank), of which he became Chief Executive Offi cer in 1994. He was Chief Executive Offi cer of Natexis Banques
Populaires and then of Crédit Lyonnais from November 1999, then Senior Adviser at Merrill Lynch from 2004.
Jean-Pascal Beaufret, age 57, an HEC and ENA graduate has held top responsibilities at the Ministry of Finance and
Economy (Treasury department at the Internal revenue department) and, in the banking world and in industry, in particular at Alcatel-Lucent, where he has been Chief Financial
Jean-Marc Moriani, age 50, a graduate of Ecole Centrale de Paris and Université Paris I (Economics), has served most of his career at Groupe Crédit Lyonnais and, subsequently,
Under no circumstances may this result in the completion of management actions carried out directly or indirectly by the
The Supervisory Board appoints and may dismiss members of the Executive Board, the Executive Chairman and Chief
The Supervisory Board may decide to set up Committees to look at issues submitted to it for examination by the Board itself or its Chairman. It determines the composition and duties of these Committees , which are under its responsibility.
In addition to the prior authorizations required by applicable legal and regulatory provisions, it should be noted in particular that Natixis’ bylaws and the shareholders’ agreement require the prior authorization of the Supervisory Board for certain transactions: increases in share capital maintaining preferential subscription rights, immediate or in the future, including a premium of over €75 million, and an increase in Natixis’ share capital, immediate or in the future, without preferential subscription rights; extension of Natixis’ activities to include major business lines not exercised by Natixis; designation of members of the Supervisory Board and the
Executive Offi cers and Deputy Chief Executive Offi cers of the main subsidiaries; any acquisition of a stake in another company or increases in equity investments, other investments, divestments (or the creation of a joint venture) by Natixis or one of its subsidiaries representing more than €150 million; any transfers, mergers or demergers in which Natixis or one of its main subsidiaries is involved; approval of the company’s business plan as prepared by the Executive Board, comprising in particular target rates of return and the company’s risk policy, as well as any material changes in the strategic plan; proposals to the general shareholders’ meeting of any changes to the bylaws.
These Internal Rules relate in particular to: the definition of the criteria used to qualify members as ‘independent’: An independent director is a director who has no relationship whatsoever with the company, its management or the group that may compromise it exercising free judgment or create a confl ict of interest with management, the company or the group.
The company may also ask each Board member to provide any information concerning in particular the trading of shares in listed companies required to satisfy its reporting commitments to any authorities, notably stock market authorities, both in France and abroad.
CORPORATE GOVERNANCE 2 Role and rules of operation of the executive bodies
F inally, certain aspects concerning the functioning of the Board as set out in the Internal Rules: In particular, the Internal Rules state that, apart from in the case of adopting decisions concerning the inspection and verifi cation of the company and consolidated fi nancial statements, members of the Supervisory Board participating in Board meetings via videoconferencing or any means of telecommunications transmitting at least the member’s voice, the technical characteristics of which allow for continuous and simultaneous streaming of all debates, shall be deemed present for quorum purposes.
The Executive Board carries out its functions under the control of the Supervisory Board.
It is vested with the broadest powers to act under any circumstances on behalf of the company, within the limit of the corporate purpose and subject to powers expressly attributed by law and the bylaws to shareholders’ meetings and the
Management Committee and the Compensation C ommittee, each of which comprises six members, including two independent members. The Risk Management Committee is jointly chaired by the Vice-Chairman of the Supervisory Board and an independent member. By special dispensation, the fi rst joint chairmanship of the Risk Management Committee as of November 17, 2006, shall be shared by a member put forward by Caisse Nationale d’Epargne et de Prévoyance and an independent member. The Compensation C ommittee shall be chaired by an independent member.
Michel Goudard, Yves de La Porte du Theil and Robert Zolade, as Committee members.
Offi cer of Banque Fédérale des Banques Populaires, was appointed Member of the Audit Committee by the Supervisory
Natixis’ Audit Committee has the following responsibilities: it assists the Supervisory Board in its inspection and auditing of the fi nancial statements and the Chairman’s report on the company’s business activities; within this framework, it monitors the quality of information provided to shareholders and, more generally, carries out the duties set out in CRBF
Commission concerning the company and its subsidiaries; it looks at the company’s annual internal auditing schedule, including audits at subsidiaries, which should be presented to the Committee at least one week before approval; it gives an opinion on the report submitted to it each year concerning business relationships between the company or one of its subsidiaries and all or some of the entities making up Groupe Caisse d’Epargne or Groupe Banque Populaire.
Bruno Mettling, Henri Proglio and Jean-Louis Tourret members of the Compensation Committee.
The Compensation C ommittee is responsible for making proposals to the Supervisory Board concerning: the level and terms of compensation paid to the Chairman of the Supervisory Board, including fringe benefi ts, pensions and personal risk insurance; ■
Supervisory Board and the total amount submitted to the decision of the company’s general shareholders’ meeting.
It examines and gives an opinion on insurance taken out by the company in relation to directors’ responsibilities.
Committee with any documents that may help it to carry out its duties and provide additional information. At the request of the Supervisory Board, the Compensation Committee may also appoint external experts to carry out studies or analysis of compensation paid to executive directors of comparable companies in the banking sector.
All of the Executive Board members were present at all of the sessions, thus enabling the Board members to hear from them and address them all of the questions they deemed necessary.
Head of Division was also convened to provide details on the aspects broached during the session.
With regard to the internal operations of the executive bodies, the Board approved the terms of its bylaws in March 2007, as well as the bylaws of the Audit Committee.
Executive Board. It was informed of the draft resolutions to be submitted to the shareholders at the Annual General Meeting by the Executive Board.
Board was also kept regularly informed of the measures taken to institute Natixis’ structure, whether in the divisions at the parent company or in the subsidiaries.
within the Corporate and Investment Banking business, with the merger-takeover of the main subsidiary, Ixis Corporate &
The decision was ratifi ed by the shareholders at the Annual
In accordance with the regulations in effect, the Board approved, prior to the signature, a number of regulated agreements, relative to: the signing of an agreement on invoicing between Natixis and its corporate bodies; the approval of the transfer of operations from the Tokyo branch of Ixis CIB to Natixis; Natixis’ involvement, in various capacities, in a covered bond issue by Banques Populaires; the disposal of CIFG.
In this regard, the Board regularly turned to the company’s management and heard the observations of the Audit
Over the course of Year 2007, the Executive Board convened weekly. Whenever the importance of the decisions to be made so required, the Executive Board’s meetings were convened during non-customary times or during holidays. Lastly, the
Executive Board approved, at four specifi cally-convened sessions to which it summoned the auditors’ college, the company’s annual accounts for September 2006, and half-year and quarterly accounts, as well as the Group’s consolidated accounts. The approval of the budget for fi nancial year 2007 also gave rise to a special meeting. In total, the Executive
Lastly, the Executive Board, having initiated the process to fi nd an industrial backer for CIFG, made the decision to transfer the entirety of its capital to Banque Fédérale des Banques
The Executive Board was informed of the conclusions presented to the steering Committees regarding the implementation of the Natixis project. Some of its members were part of the said bodies. The Executive Board approved the procedures for the operational alliances to be formed between Natixis entities, in particular in asset management, share intermediation, insurance and leasing. The Executive Board devoted special attention to the proposed merger, in which Natixis would take over Ixis CIB, carried out on December 20, 2007.
In accordance with French law, the Executive Board approved the Group’s annual, interim and quarterly accounts and convened the shareholders to General Meetings after having set the agenda. The Executive Board approved the principles and guidelines for Natixis’ fi nancial communication. Moreover, it issued a stock option subscription plan for certain employees of Natixis, Banque Populaire and Caisse d’Epargne. It also instituted a free share allocation plan aimed at all employees across all three groups.
Lastly, the Executive Board ensured that all of the control and regulation authorities were kept informed of the company’s developments and results, the progress of proposed alliances and the implementation of both the Natixis project and management and risk control measures.
The Committee heard from the Chief Executive Offi cer about current issues and specifi cally about the impact of the fi nancial crisis. The Audit Committee had the benefi t of Natixis Chief
Financial Offi cer’s participation at each meeting, as well as that of the Chief Risks Offi cer, the Inspection managers at Natixis and that of its central bodies, the Compliance managers and
On several occasions, in particular during discussions of current events in relation to the fi nancial crisis at year-end, the
The Committee drew up its bylaws, in order to submit them to the Supervisory Board for approval.
As regards account verifi cation, the Audit Committee heard presentations from the Financial Department and the comments from the auditors upon the approval of the annual and interim accounts and, subsequently, from Third Quarter 2007, when the quarterly were approved.
Compliance function, as well as the organization and scope of work assigned to the Bank’s Inspectorate, with regular check-up points.
Natixis as a result of the subprime crisis in the United States.
During the special sessions dedicated to these topics alone, the committee heard a number of detailed accounts on the consequences of the crisis for Natixis, covering the main exposures and the items they were made of (subprimes, conduits, SPVs).
The Committee moreover paid special attention to analyzing developments in the credit enhancement market. As such, it reviewed the standing of subsidiary CIGF and the procedures for its recapitalization and disposal, in response to the requirements set out by the rating agencies. The Committee issued a very positive recommendation in favor of transferring
Their vigilance did not fl ag in early 2008, for the Committee met fi ve times, up to mid-February, in order to analyze, in detail,
Natixis’ exposure to the subprime and credit enhancement risks, as well as the consequences of the crisis on the
It also gave its opinion on the annual budget for 2008.
It shared its observations with the Supervisory Board, in charge of making the relevant decisions.
(Pursuant to Article L. 225-68 of the French Commercial Code as amended by the law of December 30, 2006).
Based on the opinion of the Compensation Committee, the Supervisory Boards made, on December 13, 2006 and
There is no variable compensation, no allocation of securities to the Chairman of the Supervisory Board and no additional payment of directors’ fees to any members of the Supervisory
Supervisory Board members and non-voting directors: fi xed portion: €10,000 per year, variable portion: €2,000 per meeting for up to fi ve meetings.
Audit Committee members: fi xed portion: €5,000, variable portion: €1,000 per meeting for up to fi ve meetings; Compensation Committee: Chairman: €10,000
Committee chairmen do not receive a variable portion of compensation in accordance with the principle that no committee meetings shall be held in their absence.
Members receive both monetary compensation and compensation in the form of stock options.
The Compensation Committee and the Supervisory Board ratifi ed the Chairman of the Executive Board’s decision to forsake the entirety of the variable compensation that could have been paid to him by Natixis for Year 2007.
CORPORATE GOVERNANCE2 Policies and rules for determining compensation paid to members of the executive bodies
The Compensation Committee and the Supervisory Board have set Anthony Orsatelli’s variable compensation at
Compensation paid to Executive Board members in the form of stock options
Populaires; 190,000 options for the Chief Executive Offi cer; 125,000 options for each of the other Executive Board members.
Dominique Ferrero, Anthony Orsatelli and François Ladam each have company cars and housing benefi ts valued at €4,262 and €23,146 respectively, for year 2007. Anthony Orsatelli benefi ted from a company car valued at €5,882 for year 2007.
Philippe Dupont receives fringe benefi ts (primarily a companyowned apartment and a company car) valued at a total of €44,602, provided by Banque Fédérale des Banques
Dupont and François Ladam, belonged to the complementary group retirement plan applicable to all Chief Executive Offi cers of Groupe Banque Populaire.
Anthony Orsatelli. In this regard, the total of all pension benefi ts payable to executives may not exceed 60% of the income they received in their last year of service, with the income fi gure capped at €335,000. This guarantee was scaled back to 50%
COMPENSATION RECEIVED BY MEMBERS OF THE EXECUTIVE BODIES OF NATIXIS AND ITS SUBSIDIARIES FOR 2007
Variable compensation paid to Natixis directors (2) Fringe benefi ts Total
Banque Fédérale des Banques Populaires Member of SB 20,000 11,550 31,550
COMPENSATION PAID TO MEMBERS OF EXECUTIVE BODIES AT NATIXIS OR NATIXIS HOLDING COMPANIES FOR 2007
Variable individual compensation (work contract or dir. comp.) paid by BFBP
CREQUIT Member of SB 0 0 0 de LA PORTE du THEIL Member of SB 0 0 0
Competence and integrity of members of the S upervisory B oard
Populaire and Groupe Caisse d’Epargne). There are extensive commercial relationships between Natixis and these two shareholder groups. Although the Group does not consider this situation to constitute a confl ict of interest, it cannot be ruled out that the interests of Natixis and of these shareholding groups may diverge at some point in the future.
Mazars et Guérard was appointed by the combined general of November 17, 2006, for a term of six years ending on the general meeting to approve the fi nancial statements for 2012.
In return for their services, the Auditors were paid the following fees: Deloitte & Associés KPMG MAZARS
Fully and proportionally consolidated subsidia ries and branches (1) 2,998 2,686 47% 35% 1,948 1,596 46% 56% 1,975 521 86% 65%
Other services relating directly to auditor’s duties 1,461 3,546 23% 46% 1,483 81 35% 3% 20 10 1% 1%
Other services provided by networks to fully and proportionally consolidated subsidiaries
Legal, tax and employee-related 367 105 6% 1% 0 69 0% 2% 8 4 0% 0%
Strong sales in the USA and expansion in Asia-Pacifi c 73
Primary Bonds: No. 2 worldwide in the jumbo covered bond market (source: IFR/Thomson Financial)
Natixis Securities: No. 2 among French brokers (source: Thomson Extel Focus France
The proposed organization is more streamlined and simpler, and is better suited to Natixis’ expansion plans.
& credit product structuring teams will facilitate a more coordinated approach towards issuers/borrowers. By strengthening the links between structured fi nance and securitization, CIB will be able to offer clients a wider array of fi nancing options, while also making better use of our balance sheet and improving ROE; two regional platforms in North America and Asia, which will have dedicated resources allowing them to grow in a more controlled manner and to work more closely with the various business lines, Coverage and support functions; CIB’s goal over the next few years is to achieve manageable, controlled and profi table growth, thanks to appropriate investments in platforms, permanent risk oversight and reinforced management tools.
Expansion and into PPP fi nancing. In the energy fi eld, Natixis
International expansion strengthened the existing network and involved the creation of new offi ces in Panama, Dubai, Sydney and Sao Paolo.
Natixis Pramex International (NPI), strengthened its reputation as an advisor for companies seeking to expand in international markets. Senior executives of client companies are provided with continuing support as they work on their most complicated projects, including the identifi cation and acquisition of foreign companies. NPI assisted clients with a number of fi ne acquisitions in China, Brazil, the USA and Italy during 2007. NPI leverages its local-country knowledge to defi ne strategy in conjunction with the client, before executing it in the fi eld. The client is assisted at each phase of the project, from market research to the creation and management of local subsidiaries.
The growth achieved by Natixis’ International business lines during the year was accompanied by an improvement in
Project Finance confi rmed its major role in the infrastructure fi nance segment as both advisor and arranger. Recognition came in the form of a stream of industry awards including the
Year for the Tyne Tunnel. In France, the business also received the award of best highway fi nancing in Europe for the A65 deal
(source: Jane’s Transport Finance). In Spain, Project Finance confi rmed its market position in the renewable energy sector via the Extresol 1, Forlosa and Andalucia deals.
Raw Materials Finance recorded a steep increase in mandates in all segments (energy, metals and agricultural commodities) and continued to expand geographically in Latin
Asia and Latin America. Highlights included fl eet fi nancings for
Air China and Shanghai Airlines and the capture of Air Finance
PME) geared to responding to the long-term fi nancing needs of the Banques Populaires’ SMB clients.
Natixis holds a longstanding, pivotal position on fixed-income and forex markets, where we market an extensive array of products on major European, American and Asian currencies.
French issues in terms of both issues and amounts in 2007
Géophysique (CGVs), Imerys, Schneider, Sodexo and Wendel all mandated the Bank to execute complex transactions.
Natixis to lead debt issues of all types, including senior, subordinated, hybrid and securitization issues. Natixis now ranks in the top 10 in Europe in this segment.
– appointed Natixis to lead manage benchmark €3-5 billion deals during the year.
Equity brokerage operates through Natixis Securities (the result of the mid-year merger of Ixis Securities and Natixis
Natixis Securities’ analysts command a strong reputation on the French market and are recognized for their coverage of major European corporations. The company moved up to third in the rankings of French brokers in December 2007, from second in 2006. During the year, it also ranked fi rst for equity sales and trading & execution, and second for research in France where it covered more than 250 companies in 25 sectors of the economy. In 2007, Natixis Securities’
Focus France – December 2007). Natixis Bleichroeder is also enhancing its reputation in three chosen specialties
Gems, which featured 80 corporations, 200 institutional investors and 600 individual investor/company discussions.
In the Equity Capital Markets fi eld, Natixis offers personalized advisory services and high value-added products on primary equity markets. Origination capacity is augmented through the partnership with Lazard in France.
December 2007). Natixis lead-managed plenty of large-scale deals, including a capital increase for Veolia Environnement, one of the fi ve largest equity transactions in France in 2007.
Natixis also enhanced its bookrunning position in mid-size deals including IPOs for Europa Corp, Vivalis, Homair Vacances,
Natixis successfully placed a number of noteworthy deals in tough conditions during the year. These involved acting as global coordinator and sole bookrunner for Eurosic’s capital increase, and handling Outremer Telecom’s IPO.
In the energy fi eld, Natixis Bleichroeder continued its benefi cial collaboration with Natixis Houston, thereby enhancing the
London teams, Natixis succeeded in expanding its international franchise in the raw materials and healthcare industries.
The equity derivatives business consolidated positions by leveraging its diverse portfolio and recognized risk management expertise during the year. It also developed options products combining hybrid underlyings, equity portfolio trading and equity fi nance components.
In addition, Natixis also operates in a broad range of arbitrage activities encompassing equities, indexes, convertible bonds, listed options and fi xed-income securities.
The Group’s equity lending/borrowing operations operating out of Paris, New York and Tokyo posted good results during the year.
Natixis launched a mainly London-based OTC commodity derivatives platform in 2007. This initiative means that we now handle a range of derivatives on an array of commodity underlyings. The commodity trading, broking and sales specialist, Natixis Commodity Markets (NCM), operates on both OTC derivatives (options, swaps) and organized markets
Attractive market conditions helped business to grow strongly in 2007, both on traditional markets and products, and also: in geographic terms, in the equity transaction fi eld (Middle
East, Eastern Europe, India); and in product terms (participation in an auto insurance portfolio securitization, structuring of life reinsurance transactions, and carbon emission certifi cates).
As at year-end 2007, the 140-strong team operated across 12 countries and in the main fi nancial centers on three continents.
Bachy for its sale to Vinci; CFF Recycling for its absorption by its subsidiary Penauille Polyservices and the subsequent creation of the Derichebourg Group; Thalès for its sale of
Faceo to Apax Partners; the Dassault Group for its sale of the
Nantes Football Club; Germany’s Haniel Group for its sale of two French subsidiaries (CWS sold to Elis and Naef Terag sold to Alsico); Sofi proteol for its acquisition of a majority stake in
Natixis is bolstering its presence on alternative fund structured products for international clients. In Europe, the business has been mostly directed toward restructuring deals. In Asia, we are consolidating our position on public offerings of hedge fund-index structures. We operates across the full spectrum of alternative investment management strategies.
The real estate investment specialist, Natixis Capital Partners, consolidated its front-ranking position in sale & leaseback deals in continental Europe during the year. It also started work on a new fund, Captiva 3, which will primarily operate in Italy and Germany.
ACTIVITIES 3 Corporate and I nvestment B anking recapitalization transactions in the USA. We also sold and securitized over $2.5 billion of commercial mortgage assets in six securitization deals totalling $18 billion.
Natixis still holds a leading position in the structuring and placement of American and European CDOs/CLOs based on a wide diversity of underlying assets. In spite of tough conditions, we structured and placed $7.5 billion in CLOs in 2007 and ranked among the world’s top 10 bookrunners in this segment.
Our strong reputation for risk management and structuring helped us retain our foremost position in the structured product fi eld during the year. Our structured funds business, which offers portfolio protection and leverage on established hedge funds and on funds of funds, grew at a modest pace in 2007. We also remained a major provider of synthetic products geared to stabilizing the value of US corporate pension funds, with an 8% share of the market.
Natixis remained active on products with less subprime correlation (CLOs of LBOs – the Vallauris range) and on higher value-added products.
We also securitized $2.9 billion of ABS, not including CDOs or mortgage loans.
We also bolstered our presence on securitization derivatives, where we systematically act as swap counterparty on our
The Economic Research team headed by Partick Artus is recognized for its expertise and in-depth analyses.
Quantitative R esearch is geared to developing and maintaining models for valuing and managing the risk associated with fi nancial products like derivatives and complex structured deals. Quantitative R esearch acts as a vector for tailoring the product offering to client needs and is used by traders and structurers. The Natixis Foundation for Quantitative Research funds fellowships for doctoral theses and university-based research projects on subjects which directly impact the concerns of fi nancial institutions.
Natixis Securities’ E quity R esearch team has built a strong reputation with institutional investors, through a combination of high value-added equity research and energetic marketing on 350 European stocks. The team of 65 analysts, which boasts average experience of close to 10 years, was ranked fi rst in the October 2007 Starmine rankings for the quality of its forecasts and stock recommendations. Natixis Securities was also rated second for French equity research in the
Refl ecting the effects of the fi nancial crisis in the second half and of the weak dollar, total assets under management inched up to €591 billion at year-end 2007 versus €583 billion a year earlier. Net new money rose to more than €24 billion.
Natixis Global Asset Management is one of Natixis’ most highly-internationalized entities and ranks among the top 15 asset managers worldwide (1). It commands strong positions in
Europe (mainly in France), and in the USA, and is expanding in the Asia-Pacifi c region.
which manages and ensures the consistency of overall asset management operations and also has responsibility for business development – the Natixis Global Associates worldwide distribution structure and some 20 specialized asset management fi rms primarily located in France, the USA
and Asia. Headcount totals 2,800, with almost 1,700 staff based in the USA.
The organization model also responds to trends in the international asset management market and specifi cally to the growth of open architecture, (well established in the USA and taking root in Europe), the emergence of global distributors and growing demand for integrated and bespoke high valueadded solutions (especially for institutions, retail distributors and private banking clients).
(1) Source: The June 2007 Cerrulli rankings placed Natixis Asset M anagement 14th in terms of assets under management at end-2006. (1) Source: The June 2007 Cerrulli rankings placed Natixis Asset M anagement 14th in terms of assets under management at end-2006.
Natixis Global Associates is Natixis Asset Management’s global distribution platform. It markets the entire range of products of all Natixis’asset management fi rms, tailoring them to the needs of each country and overlaying them with additional services. In the USA, Natixis Global Associates mainly targets distributors of retail savings products. Internationally, it services institutional clients via teams organized on a geographic basis.
The distribution network already serves clients in about 30 countries on all continents. The products marketed have expanded steadily and represented a total portfolio of €83 billion at the end of 2007. Natixis Global Associates’ activities complement the direct distribution function exercised by the various asset management fi rms both to institutional clients in the USA and France, and to retail customers in France through the Caisses d’Epargne and Banques Populaires networks.
asset management fi rms can concentrate even more on their core business of creating performance, while reaping the benefi t of worldwide commercial fi repower and shared support functions.
“ High value-added leverage for clients „ NATIXIS ASSET MANAGEMENT: A PIVOTAL PLAYER IN EUROPE
The European asset management business managed €392 billion of assets at the end of the 2007.
(Natixis AM) in France (€367 billion of assets under management). Natixis AM is the principal asset managing entity in Europe and was created from the merger of Ixis Asset
Manager (over €6 billion of assets under management), was also set up at the end of June, through the merger of Ixis
Natixis AM is one of the largest European asset managers and now delivers a wider range of high-performing management solutions to institutions, large corporates and retail customers of Groupe Banque Populaire and Groupe Caisse d’Epargne .
2007 also brought substantial change for Ecureuil Gestion, which distributes mutual funds and principal-protected funds through the Caisses d’Epargne network. Ecureuil Gestion’s fund management function was transferred to Natixis Asset
sales & marketing subsidiaries in the UK, Italy and Germany and in Dubai, where a subsidiary was opened in 2006 to boost
Asset Management in the fi xed-income category for several funds managed on behalf of CNP, and a bronze
The 17 US and Asian asset management fi rms covering a wide range of specialties continued to grow during the year, fuelled by a combination of new product launches, new client acquisitions and improved fund performance.
Hansberger Global Investments and the takeover of two small, highly specialized asset managers, namely the hedge-equity fi rm, Gateway Investment Advisers and the quantitative and alternative management specialist, Alpha Simplex.
Natixis Global Associates also assists American asset management fi rms in expanding sales of their products in the Asia-Pacifi c region and especially in Singapore, Japan and Australia (through an exclusive partnership signed with
“ Record US intake „ The main US awards in 2007
Midcap Fund of the Year, while Ken Heebner was named Best
Manager of the Year. Kiplinger’s Personal Finance also classed the Oakmark Select, Oakmark International, CGM Focus and
(excluding Japan) and emerging-market equity management; Alpha Simplex (€0.4 billion): quantitative management.
Private banking covers three activities: wealth management serving customers with savings of over €1 million, private asset management for customers with assets of €150,000 to €1 million, and fund management.
South America and India. It operates in all areas of private equity – venture capital, expansion capital, buy-out/buy-in fi nancing and funds of funds – with 18 teams, 180 private equity professionals and over 600 investments.
With over €3 billion dedicated to the growth of SMBs, NPE is the largest source of capital for companies valued at less than €500 million. It sponsors all of the funds it manages from the time they are set up and remains the prime subscriber thanks to the active support of Natixis.
A major component of NPE’s business model is ensuring a lasting commitment to small businesses, entrepreneurs and investors, irrespective of how economic cycles or investment markets develop.
Natixis Private Equity offers international teams the opportunity to work with a key player in the private equity sector and benefi t from its experience, its network, its methods and its fi nancial support. Furthermore, in order to ensure the real sharing of experience and expertise between all of its teams in France and abroad, NPE has decided to focus on developing specifi c knowledge management and business development solutions for the sharing of expertise and opportunities.
Dedicated to high net worth customers, this business relies on the know-how of top-level professionals and offers high value added solutions via different channels, such as direct customer relationship, banking networks and independent private banking advisors.
The experience of its managers ensures capable handling of personal investment issues, as well as in-depth analysis of each individual situation. With the support of its personal investment experts, it designs tailored solutions that take account of the personal and professional circumstances of each of its customers.
It has also acquired sound knowledge of issues relating to serving companies and their executives. In this area, it has developed expertise in fi nancial engineering dedicated specifi cally to optimizing and fi nancing private aspects of corporate fi nance transactions.
Finally, it is able to offer its customers a range of products and services in the areas of insurance, tax optimization and art.
Banking International offers services to an international clientele of high net worth individuals.
Bank provides tailor-made solutions to various issues, such as business transfers, international donations and inheritances and the creation of innovative investment funds for private investors.
Natixis’ Services division employs more than 4,500 staff and houses six commercially and technically interacting businesses.
Natixis’ insurance offering covers all life and non-life segments, i.e. life insurance and provident risk insurance for personal customers, small businesses and corporate clients, and nonlife insurance for personal customers and small businesses.
Fructi-Pulse, the turnkey diversifi ed life insurance policy continued to meet strong demand during the year. This innovative product offers automatic rebalancing of assets between the different asset classes in order to maintain a constant allocation between the General Fund and the equity part, according to the chosen investor profi le.
Natixis Assurances extended this balanced-management mechanism to the whole of its life insurance range in 2007, via the introduction of the BALANCEO option.
BALANCEO enables policyholders to capitalize on fi nancial market opportunities without concern for asset management issues and with complete peace of mind. The saver selects an investment profi le according to the portion of savings he/she wishes to invest in equities. If fi nancial markets rise, capital gains are redistributed between each instrument in compliance with the chosen formula. A portion of capital gains is therefore reinvested in the General Fund, in complete security. If markets fall, the automatic rebalancing mechanism triggers the purchase of equities lesser cost.
Natixis Assurances’ dependency product, Autonomis, built an 11,500 policy portfolio in just over a year since it was launched.
Prices of automobile policies are to be reviewed in 2008 in order to make this product line more competitive.
Natixis Financement is striving to extend and renew the revolving credit product line for the Caisses d’Epargne and
It also manages personal loans for the Caisses d’Epargne using “IZICEFi”, a tool that increases opportunities to sell personal loans under optimal profi tability conditions. This activity recorded sustained growth in 2007, with sums under management rising to €3.5 billion from €1.1 billion in 2006.
Sums managed or held by Natixis Financement (personal loans and revolving credit) grew strongly from €2 billion to €4.5 billion during the year.
Natixis Garanties’ offering of guarantees is highly suited to needs in multiple business segments and is one of the most competitive in the marketplace.
Natixis Garanties commands a strong reputation for services provided to companies and professionals. This strength was underlined by overall satisfaction ratings of 8/10 earned in a survey of housebuilding clients and of 90% achieved in the
www.cautiondemarche.com allows companies to request surety-bonds in real-time, without paper formalities and thereby considerably lightens the administrative burden. Thanks to this policy, sureties for holdbacks, bids, advance-payment returns and other payment guarantees to subcontractors can be made available in less than 24 hours.
Our commitment to new technologies is also evident in our strategy for winning new business. The new site www.
(profi t-sharing, employee savings plans, collective-retirement plans, shareholding plans, etc.), complementary, group retirement and provident-insurance products (article 83 and 39, retirement benefi ts, etc.) and special payment vouchers
Natixis continued to rationalize the range of company-savings funds in order to improve productivity and enhance visibility for the offering. Natixis is also France’s largest fi nancial manager of company savings schemes, with €18.5 billion under management and nearly 20.4% of the market.
The number of vouchers issued during the year – all types combined – increased by 8%.
Payments designs, develops and manages the full spectrum of services needed to manage payment fl ows.
IT systems were also upgraded for the launch of Target 2 in
France. It manages 5.9 million bank cards and processed 1.5 billion card transactions in 2007.
Natixis delivers its high value-added, comprehensive range of retail custody services to the Banques Populaires, the Caisses d’Epargne and other Natixis entities and subsidiaries. It also helps a prestigious client base of network banks, specialized banks with or without networks, and fi nancial institutions, to expand their domestic and international business.
In less attractive conditions in 2007, the retail custody business recorded a slight reduction in the number of securities accounts managed to about 5.2 million. Sums under custody also dipped 1% to €377 billion.
Retail custody invested heavily in IT during the year in order to adapt platforms to new market and European reforms and regulations. In doing so, it successfully responded to changes in AMF regulations concerning the responsibilities of custodians, to the ESES migration (delivery regulations for the Euronext zone) and to the European Market in Financial
CACEIS, the joint venture with Crédit Agricole S.A. (institutional custody activities carried out within Natixis and Natixis Investor
Alternative Administration provides CACEIS with a full range of high-performance services for alternative fund managers and widens CACEIS’ potential client base to US asset managers.
Natixis’ SLIB subsidiary produces software solutions for brokers, banks and global clearing members, and for managing market fl ows from trades on European markets
SLIB furthered its international strategy in 2007 by winning business with European fi rms in the clearing, settlement and risk-management areas.
Receivables Management comprises the Coface Holding company, created in 2007 by combining Coface and Natixis Factor entities.
Credit insurance protects companies against the risk of non-payment of their customers’ receivables. Receivables management helps companies recover monies due to them.
Factoring allows companies to monetize their accounts receivable by transferring them to a third party, the factor, who takes responsibility for collection.
In France, products and services are distributed by the Coface and Natixis networks, by the banking networks belonging to
Natixis’main shareholders – Banques Populaires and Caisses d’Epargne – and by specialist brokers. Abroad, the same channels are used along with local partners assembled within the Credit Alliance network. All in all, Coface Holding earned almost 60% of its consolidated revenue outside France in 2007. With offi ces in 64 countries at the end of 2007 (60 at the end of 2006), Coface Holding is gradually extending its four business lines internationally and already ranks as world leader in each segment in terms of geographic coverage.
Receivables M anagement hoisted total revenues by 21% relative to 2006. The business line also enjoyed rapid international expansion, as eight new countries – Serbia, Benin,
Factoring operates in France via Natixis Factor, which consolidated its position as France’s third-largest factoring company during the year (source: ASF). Natixis Factor posted an 18.3% increase in factored receivables and fared particularly well in French overseas departments and territories
(+33%) and in the export segment (+35%). Natixis Factor now manages three brands - Banque Populaire Factorem for
Initial results at the end of 2007 were promising, whether in terms of growth in revenues and profi tability, developing the four activities in each of the countries in which we operate or the investments made to build a global computerized infrastructure. In addition to targeting revenue and profi t growth, the plan’s aims for 2008-10 involve consolidating the
Coface approved as credit rating agency 2007 saw Coface approved as an ECAI (External Credit
Development of EASY NUMBER, a unique identifi cation number for all companies in the world
Natixis’ activities include retail banking both directly through the 20% share of income from retail banking activities through CCI
Retail banking accounted for 36% of Natixis’ net income in 2007 through CCIs.
Natixis benefi ts from its affi liation to two powerful mutual banking groups – Groupe Banque Populaire and Groupe
The Banque Populaire and Caisse d’Epargne networks constitute a major growth driver for Natixis.
The strong strategic fi t between the two networks represents a major advantage for Natixis, which – as holder of CCIsbenefi ts from the individual strengths of each network and
– as a provider of products and services – their combined strength.
In addition to the imagreement on Natixis of the development of the two networks via CCIs, Natixis’ development also stems from existing strong ties with the two groups: industrial ties: Natixis provides services for the Banque
Populaire and Caisse d’Epargne banks such as custody, electronic banking, payments processing and IT support; ties as supplier-distributor: Natixis supplies products and services targeted at all customers (personal customers, small businesses, corporate clients and institutional clients)
of Groupe Banque Populaire and Groupe Caisse d’Epargne , which distribute these products; ■
(2) Except for Caisse d’Epargne de Martinique, which has not issued any CCIs. (2) Except for Caisse d’Epargne de Martinique, which has not issued any CCIs.
Customer savings of €67.4 billion (up 4%), including €32.4 billion in life insurance (up 8%) and €31 billion in mutual funds.
The 20 Banque Populaire regional banks provide a local presence to customers and have strengthened their regional ties by opening new branches, bringing the total number of branches to 2,938.
This expansion of the branch network is coupled with development of the number of cash dispensers, which offer an ever wider range of functions.
The network’s distribution capacity is also enhanced through remote banking channels.
This enhancement of the product range is not intended solely for new customers. It primarily addresses the needs of the
Winning new customers and extensive measures to ensure the loyalty of existing customers resulted in further growth in customer savings, outstanding loans and the number of products per customer which have reached 9 contracts per customer.
Historically, the leading bank for self-employed craftsmen and shopkeepers, the Banque Populaire Group is also very active with the liberal professions, farmers and players in the creation/transfer of companies, with fi rst-rate positions in all these different segments.
needs, thanks to its excellent sector knowledge. It creates innovative products that enjoy a high level of success, such as investment loans or business buyout loans with no personal guarantee required or a limited personal guarantee for buyouts.
The Group’s achievements in 2007 attest to its solid momentum in this sector, notably: confi rmation of its No. 1 position in franchise fi nance. This area has long been a favored axis for growth; the launch of a special range of products for young people on apprenticeships; the signing of an agreement with the National order of physiotherapists; stepping up sales and marketing efforts targeting selfemployed professionals.
Specialists at its 160 business centers mobilize and organize the Group’s various resources in order to offer tailor-made solutions to each client.
Thanks to the combined expertise of the Banque Populaire regional banks and Natixis, as well as the complementary know-how of Coface, the Group is able to provide support at each stage of a company’s development, from starting up to expansion in France and abroad, IPOs and buyouts. With a 35% penetration rate and fi rst principal bank for SMBs
France’s third-largest banking network with 4,352 branches, 7,165 ATMs and a full range of online banking services. Nearly one in two people in France are Caisse d’Epargne customers, over 3 million of whom are cooperative shareholders. The
Caisse d’Epargne banks are committed to the idea of social progress that led to their creation and are open to everyone.
They are continually working on innovations to make life easier for their customers and support them in their plans.
The line of personal services, Écureuil Sérénité Services, developed with the national operator Séréna, was rolled out to all of the Caisses d’Epargne at the end of 2007. In parallel, in the area of pre-fi nanced universal service-employment vouchers, the common structure with Accor has been operational since
With its strong regional positioning, Caisse d’Epargne partners all organizations involved in regional economic and social development.
They also make innovative services available to local authorities and institutions, such as the secure on-line payment service
The Caisses d’Epargne banks are also shareholders and directors of one ESH in three and are mandated in 40% of public housing authorities.
In order to provide a legal framework to negotiations on subjects common to all Group companies, a negotiating body was also created for Natixis and its subsidiaries in January 2007. The creation of this body led to the conclusion of two essential agreements: the fi rst was signed in March and covered the creation of a Group Committee, and the second was signed in
May and concerned measures to assist with changes related to employment and mobility within the Group.
This work will be continued in 2008. Negotiations will be extended to include welfare coverage (provident insurance, health insurance and retirement), as well as the implementation of a group retirement savings scheme (PERCO).
Natixis concluded its fi rst annual salary negotiation with an agreement signed by almost all union organizations in
Economic and Social Unit, as well as to 17 Group subsidiaries, and concerned more than 8,500 employees. Up to a threshold of €600 per person, profi t sharing is allocated solely according to employee presence during the year. Beyond this amount, it is allocated according to salary.
RES OURCES 4 Human R esources was sent to nearly 6,900 employees of the parent company and its subsidiaries. The document enabled all recipients to make a better distinction between direct remuneration
The Natixis Group recruited 1,159 employees directly on permanent contract during the year. Two thirds of these new hires had four to fi ve years of post-high schoo l education.
Hiring policy was tailored to the different requirements of each division or department. Thus, the Corporate and Investment
Bank recruited heavily for its international operations, particularly in Asia, and also took on specialists in selected business segments. The Services division focused hiring on certain activities, especially consumer fi nance and insurance.
The Asset Management division was keen to retain control of its recruitment policy during a period of mergers involving the various asset management business lines. Policy focused on analysts, middle-offi ce staff, asset managers and risk managers. Receivables Management concentrated on attracting experienced employees in the fi nance and arbitrage segments, as well as new graduates for the business lines and for marketing and cross-company functions. Private
Natixis have made mobility a more important aspect of human resources management. In this context, the Group employment and mobility assistance agreement signed in
The Mobility Charter signed between Natixis and the two shareholder groups provides a fl exible framework that ensures individual transfers are managed in a consistent manner according to common terms and principles of assistance.
The new charter is due to come into force in January 2008 and allows employees to continue their careers in their new company while neutralizing some of the impacts of change.
Job vacancies are posted online on the intranets of each of the three Groups.
As an illustration: the training offering was adapted to include business-line specifi c courses, such as the “hedge funds” or “market abuse” seminars; in the languages area, the range of existing courses was enhanced with self-teaching courses, group professional courses, specialized seminars and conferences, etc.; the management, communication and personal development programs were signifi cantly overhauled and structured, particularly through the development of customized initiatives.
All in all in 2007, a total of 144,250 hours of training were provided to Natixis parent company employees, of which 23% was in the form of product and market training and 23%
language training. Throughout France, 10,948 employees followed a training course, with the total amount of training dispensed amounting to 295,689 hours and 3.20% of the wage bill.
Human Resources consolidated its existing division based organization during the year. Human Resources is now organized on a highly-operational basis with a view to serving the needs of employees and line managers in each individual business line. This organization is underpinned by a Group
Human Resources Department which defi nes corporate and human resources development policies, and oversees their implementation and coordination.
With a view to making Human Resources communication more consistent, a new warm and attractive visual identity was created for the Department. The new identity is gradually being rolled out to all the human resources media throughout the
The human resources intranet, which was opened in 2006, was extended to cover almost all of the Group’s employees in 2007. By disseminating information regarding employmentrelated news, job vacancies and training, it contributes to the development of a common corporate culture, while leaving subsidiaries scope to promote their own identity.
In addition, fi ve one-day forums were held to present the new business lines and organizational methods to more than 600 senior executives and to enable each one to better acquaint himself/herself with the new combine. Lastly, a twoday seminar involving 300 senior executives and the Executive
Board discussed the strategic issues facing the Group. This approach will be continued in 2008.
The magazine “ Impulsion” , now published every two months, is sent to employees in French or English. All these information resources are geared to uniting staff and strengthening their feeling of belonging to the Company. They can also all be consulted on “Intranatixis”, an electronic page that opens as soon as the employee connects to one of the Bank’s intranets, and which displays current information on the life of the Group.
A total of 88 young graduates were able to acquire valuable and recognized international experience under the “international voluntary work in business” scheme
(VIE) in 2007. These 18-24 month assignments gave them the opportunity to refi ne their knowledge of various areas of the Group’s business, including structured or corporate fi nancing, commodities fi nancing, capital markets, and credit insurance. Natixis also continued its policy of developing direct relationships with students and young graduates by attending 17 school forums in 2007. More than 1,300 trainees were received in various Bank departments and subsidiaries for periods of between 6 months and one year. 283 students who chose the alternate school/work learning option received practical training within Natixis and its subsidiaries while also studying for qualifi cations entailing 2, 4 or 5 years of post-baccalaureat education. All in all, these various measures enabled nearly 1,700 young people to consolidate their training in a professional environment
* With functional departments outside France accounted for under operational divisions, only the Group consolidation is presented
Natixis’ Executive Board launched a program geared to allocating free shares to employees on November 12, 2007, just a few days before the fi rst anniversary of Natixis’ inception.
According to the terms of the allocation, the 110,000 benefi ciaries will become shareholders at the end of two years providing they remain within one of the three Groups when the shares are delivered on November 12, 2009.
* New scope of consolidation including all Groupe Caisse d’Epargne subsidiaries transferred to Natixis on November 17, 2006.
“twin-level” process that involved running it alongside the existing tool over the fi rst quarter of 2008.
(ARTEMIS), and the target product and structure repositories become the reference systems for Natixis.
Lastly, the SDSS roadmap was adapted in order to factor in the changes entailed by the creation of Natixis.
Natixis will then have a modern, scalable “summary reporting system” architecture that will guarantee the consistency of the various summary reports.
In 2007, IT Systems’ governance framework was validated, and the various business lines and subsidiaries defi ned their target applications. Efforts then focused on the gradual migration of activity towards these target applications
Services (SISP) function is responsible for coordinating and steering the IT branch as mandated by the Executive
(CESI*) ; implementing a summary report covering spending, progress on key projects, tracking of IS synergies and restructuring costs, etc.; creating bodies to coordinate the IS branch and defi ne common rules.
Application convergence work focused primarily on corporate and investment banking (CIB) business lines in 2007.
Since this stage, market risks have been calculated on the target Scenarisk tool for the entire merged scope.
The B2C regulatory risk calculation tool is also operational on the entire scope.
A specifi c project covered subjects linked to the legal merger between Ixis CIB and Natixis at December 31, 2007.
by Vigeo in its 2007 ratings, an improvement compared to previous evaluations, which is verifi cation for Natixis that its actions have been relevant and effective.
It was in Human Resources that the bank obtained the best score. Vigeo especially appreciated the quality of labor relations and the management of human resources at the time Natixis was established. In terms of its behavior on the markets, the agency highlighted the work done by the Compliance Offi ce in the fi ght against the laundering of capital and the performance of the Cash Management and Operations Offi ce in terms of customer relations and service quality. An identical score was awarded on human rights.
It s record on the environment, although more limited, showed genuine improvement over the previous audit. This favorable change is linked to our having identifi ed the issues and taken the environmental impact into account in our fi nancing and investment work; this is due to an environmental appendix that we are currently using for project fi nance. Concerning the management of direct impacts on the environment (energy consumption, recycling waste, managing transportation), the measures that we set up were equally appreciated. However, in the future Natixis will have to provide detailed facts and fi gures and clearer reporting.
With this new rating, Natixis will remain in Vige o’s “ASPI
The score is the level of the Company’s CSR engagement on a 0 to a 100 scale. It is based on an analysis of the
Company’s policies and their effectiveness. The rating is the positioning of the Company’s performance compared to its sector.
In 2007, Natixis continued to take into account the needs and new opportunities connected to sustainable development, by using the principal lever of infl uence at a bank’s disposal: investments and fi nancing.
(tradable emission permits, carbon credits, Kyoto projects, etc.). Since the Kyoto Protocol took effect in 2005, Natixis has been offering its clients an operational solution that lets them manage their carbon constraints or take advantage of opportunities associated with this new market: The products developed in this area now allow Natixis to respond to the diverse needs of its clients: on the European market for CO 2 permits: spot or forward buying/selling of CO
The bank is also developing a range of structured products adapted to meet the specifi c requirements of investors interested by the carbon market.
Finally, since 2007, Natixis has been a partner in the “New
Among the measures often considered to be quick are, at the technical level, resorting to biomass, and on the economic level, broadening the quota markets to new sectors and project systems, both nationally and internationally. This is why the Chair will devote its research to two main lines: the future of biomass energy, and developing the tools of the carbon economy.
Strong g rowth in fi nancing in the e nvironmental and r enewable e nergies i ndustries
Natixis is proving its position as leader in fi nancing renewable energy, whether it be through its leasing business, project fi nance or the management of specialized investment funds.
In 2007, Natixis Lease, mainly through its Energeco subsidiary, participated in the fi nancing of 28 deals totaling €140 million
Support for e merging new s ources of r enewable e nergies
– are located in Europe and the United States. To this day, more than 46 projects for a total installed capacity of 6,200 MW were fi nanced.
Santander, Caja Madrid, Calyon and Société Générale, to arrange the fi nancing of the Solnova 1 and 3 cylindroparabolic thermo solar plants representing a cumulative capacity of 100 MW. These projects, with a senior debt of close to €520 million, will generate approximately 230 GWh of clean energy every year, which corresponds to the supply of some 52,000 homes. Both plants were developed by the
Spanish group Abengoa from the region of Seville. They are part of the world’s largest solar platform located in
Natixis Environment and Infrastructures, a Natixis subsidiary, is a management company approved by the AMF, specialized in project fi nance. It manages several investment funds in the environmental fi eld (FIDEME, €46 million and European
As FIDEME was fully invested, in 2007 Natixis Environment and Infrastructures formed EuroFideme2, a fund dedicated to fi nancing renewable energy projects in Europe.
Overall, more than twenty deals corresponding to a reduction of 55 million tons of CO
Natixis Environnement et Infrastructures received the prize for “Carbon Deal of the Year” from the magazine
These projects will lead to a reduction of 17.8 million tons in greenhouse gas emissions from the coal mines being operated in Shanxi Province. The captured methane is used to produce electricity for the site and also for a nearby alumina plant. These investments also contribute to the miners’ safety.
Taking e nvironmental r isks into a ccount in fi nancing and c redit i nsurance
An environmental statement, systematically reported by the chargés d’affaires to the credit Committees , studies the environmental impact of funding projects, whatever the amount. This rating system leads to a careful examination of the level of impact of any given project (level A, B or C depending on the industry or country) the observance of regulations, the conclusions of the environmental report and the risks that the project will be opposed.
Additionally, since 2006 the most sensitive projects in terms of their environmental impact have been monitored by a group composed of different bank divisions (P roject Finance,
Natixis Asset Management has been a pioneer in the management of SRI (Socially Responsible Investment) (5) in the broad sense, with: in 1985, the launching of North-South Development. This social solidarity fund contributes mainly to the development of emerging countries and micro credit; in 1999, in partnership with Natixis Interépargne, establishment of the fi rst employee savings fund managed using a sustainable development approach, Fructi Capital
In 2007, there was a wealth of changes in terms of the resources dedicated to SRI or in the variety of products offered.
Management consolidated its resources in SRI research and established a new, Research division outside of Financing and
(8) Finansol: “Collectif de représentation du secteur des finances solidaires” (Group representing the solidarity-based fi nancing sector).
SUSTAINABLE DEVELOPMENT5 A Proven Committment to Sustainable Development supports SRI research, as well as governance research in evaluating legal and fi nancial risks and reputation.
O, is focused on the environment and improving the quality of life; the other, Fructifonds Valeurs Européennes, on the theme of corporate governance.
Since January 2007, this latter fund incorporates into its investment process a specifi c analysis of equities based on the criteria of corporate governance, and last December achieved an “A” rating from Novethic (7), like the 13 other Natixis AM
For example, in 2007, 70 employment assistance structures were funded for a total amount of €2.8 million through the Insertion Emplois Fund and the Insertion Emplois
South co-development projects. Amounts outstanding grew from €7 million in December 2006 to more than 16 million at the end of 2007, or an increase of +130% in one year.
Partners in the Solidarity-Based savings Week in the Greater Paris Area
Natixis Asset Management and Natixis Interépargne participated for the second time in the Solidarity-Based
Natixis Interépargne spoke actively and provided much information about this form of savings to their clients and their employees.
The procedure for anti-money laundering enforcement has been updated, taking into account the changes in regulations, and with instructions mandating the minimum required of all Natixis employees, both in France (p arent c ompany and subsidiaries) and abroad (subsidiaries and affi liates)
The payment fi ltering software designed to ensure that the freezing of assets of entities suspected of fi nancing terrorism is observed and that embargoes are enforced has been extended to fi nancial fl ows. The new subsidiaries of the Group have benefi ted from the implementation of the fi ltering tool from their client base.
Finally, the work of training employees in the fi ght against money laundering continued: at the end of 2007, approximately 79% of personnel at the p arent c ompany and more than 60%
of personnel at the subsidiaries (excluding COFACE) had benefi ted from this training.
Since the creation of Natixis in November 2006, consumption has been monitored at all units of the new Group.
The gradual installation of shared, multi-function printers, set by default to duplex, ink saving mode, contributes to reducing paper and ink cartridge consumption.
Work done over the last several years to optimize waste management was continued in 2007 with the gradual generalization of selective sorting at the new company buildings. When the headquarters of the bank was changed and the merger with Ixis CIB took place, a specifi c operation to recover and recycle out-dated printed matter led to the recovery of eight tons of paper.
Equipment (WEEE) went into effect, Natixis considered setting up a subsidiary to process its computer and offi ce automation material.
The processing of used portable business telephones is handled by the Ateliers du Bocage, an association affi liated with the Emmaüs network. Equipment that is still functioning is put up for sale in Emmaüs shops or on line, while defective equipment is transferred to an affi liate for the appropriate processing.
This new channel for handling waste provides genuine guarantees with respect to traceability, as the waste is accompanied with a tracing slip and a statement of the material recovered is provided.
The bank initiated a company travel plan CTP) to develop alternatives to using the individual automobile for home to work and inter-site travel
Natixis has instituted this policy by establishing a number of measures to encourage the use of public transportation.
Ride-Share: fi rst r eport, 3 m onths after s tart-u p
Company’s carbon report in 2006 which showed that most greenhouse gases resulted, in one way or another, from the purchase of products and the delivery of services.
Employees in the Purchasing Department have taken the sustainable development training course offered by the
The offi cial eco-labels indicating the environmental characteristics of products (European Eco Label, NF
EMAS of production sites continue to be developed. The purchase of computer equipment, in addition to the criteria on energy consumption, now includes the RoHS Directive requirements that regulate the use of 6 dangerous substances in electric and electronic equipment and the WEEE rules on managing waste. A social responsibility clause has been included in consulting contracts and transporters are required to indicate the level of polluting gas produced by their vehicles.
All these criteria allow the Natixis Purchasing Department to handle almost 60% of its purchases in an eco-responsible manner.
One of the major events of the year was the distribution of a responsible purchases reference table, which sets out the criteria required of suppliers for each category of product or service purchased. This reference table supplements other bank resources, in particular the Ethical Purchases Charter and the organization and rules on invitations to bid.
In 2007 Natixis renewed the choice of products and services having less of an environmental impact. In particular: paper made from recycled fi bres or original fi bres from sustainably managed forests; use of white paper containing 75g rather than 80g was introduced; recycled envelopes labelled NF Environment; remanufactured consumable goods for printers and fax machines; offi ce supplies listed as “green products”: The percentage of green products selected in this list reached 25% in 2007.
These criteria are subject to periodic monitoring to ensure compliance with any updates in the reference tables or regulatory changes, and are revised in collaboration with
A Commission on Professional Equality was created at the corporate level during the month of July in the wake of an agreement between labor and management; the goal was
In this regard, agreements have now been signed in certain subsidiaries, including Coface or Natixis Factor, in which commitments on recruiting, training, professional growth and compensation have been incorporated. In other structures, wage and salary policies have been adopted aimed at reducing professional inequalities between male and female employees.
The management of seniors has been incorporated into this policy. Natixis carried out a study and labor and management began negotiations on the subject.
AFIDEO), as well as with partner temporary worker companies with a view to inviting handicapped workers for courses or recruiting. At Coface, jobs are posted on Agefi ph internet site, and Coface is recognized as an employer committed to diversity in the workplace in the Cadremploi site.
With regard to the Natixis policy on sustainable development, the bank’s sponsorship initiatives embody its values of solidarity with the most destitute members of society and the passing of knowledge on to future generations.
As part of its solidarity-based sponsorship , since 2005 the bank has been involved in the fi ght against malaria, as a contribution to the economic and social development of the countries affected. The fact is that solutions exist for fi ghting this forgotten disease which is responsible for more than two million deaths per year, mainly among pregnant women and young children.
Unit on Malaria at the Institut Pasteur; this project is aimed at better understanding the behavio r of parasites responsible for malaria through the use of in- vitro imaging techniques.
Health in a Tropical Environment” is working in the context of the high maternity level in Cotonou.
Collection at the French Cinémathèque. This collection of 54 fi lms dating to the inter-war period is of great interest from the perspective of fi lm heritage and the history of the
Increase fi nancing and investments in favo r of the environment
Developed expertise: negotiated quotas and carbon credits, managed funds dedicated to fi ght against global warming.
Continue fi nancing renewable energy and the fi ght against global warming through the fi nancing of projects, the EKF or Euro-fi deme 2.
Launched two thematic SRI funds: Fructifonds Valeurs Européennes and Natixis H
Discriminating environmental criteria included in the selection of suppliers and products.
Maintain level of sustainable development criteria in invitations to bid, gradually develop discriminating criteria.
Initiate study of category of services that can be delivered by protected sector.
Promote commitment to diversity in all stages of human resource management
Continue support for the battle against malaria (raise public awareness, new projects, research).
In 2007, new entities were created, as a result of the pooling of activities and teams. The consolidated presentation of Natixis
During 2007, 156 fi xed-term contracts were converted to permanent contracts.
New hires in 2007 represented almost 13.3% of total employees in France.
More than three quarters of new hires have four to fi ve years of post-high school education and the proportion of managers hired in 2007 was 78.7%.
Groupe Caisse d’Epargne or Natixis partnerships were 114 in 2007 (85% of managers).
There were 198 lay-offs in France in 2007, the same as in 2006, including 83 at the Parent Company. Most of them were for personal reasons.
Service providers were used mainly in the area of information systems (project management), fi nance and accounting.
France. The banking and insurance agreements apply to three quarters of employees.
Similarly, management-level employees on a number-of-days basis may opt for part-time arrangements of 105, 126, 147, 167 or 188 days. At December 31, 2007, 680 people or 10.5% of total staff opted for these part-time arrangements.
Nearly 6,900 employees of the parent company and its subsidiaries received an individual corporate responsibility report, a document explaining to each employee what they have received in terms of fi xed remuneration, statutory benefi ts, variable remuneration, save-as-you-earn schemes, as well as the benefi ts provided by the Company in terms of social protection (provident insurance, complementary health insurance, retirement benefi ts) and giving an overall report of other benefi ts (training, employee representative committee, family allowances, etc.).
Consultation and information processes have been undertaken since the end of 2006 in France within those entities which will merge. In particular, information and consultation procedures have been carried out concerning the merger between Natexis
In this context, an agreement concerning the creation of a negotiating authority within Natixis and its subsidiaries was signed with all the social partners in December 2006. This negotiating authority was created to give a legal framework to negotiations on subjects common to the Group’s companies.
Collective agreements were thus concluded within the perimeter, such as the Group employee agreement (see chapter Human Resources – A competitive remuneration policy) or the agreement concerning support during changes to employment and mobility within the Group. It specifi es the commitments, the measures and resources to guarantee employment in the context of organizational changes related to the creation of Natixis. The implementation, by agreement, of a Group Committee allows the personnel representatives to be kept informed of the activity, the fi nancial situation, changes to the employment situation and the economic prospects of the Group.
New agreements on profi t-sharing and incentive-plans were signed in June to harmonize these arrangements within the
competitive remuneration policy) and negotiations concerning the harmonization of statuses were undertaken, covering working hours and working time, company bonuses, the
Regulations, defi nes the rights and duties of employees concerning the IT resources made available to them by the employer.
During 2007, the new HR intranet, put on line at the end of 2006, has been gradually extended to all employees of the Group. It offers areas differentiated by entity, where all employees can read all the information on line, particularly the job offers in the
Job Mart. The number of job offers has quadrupled within the year, and the Job Mart also carries offers available within the
were designated for Caen, Lyon, Reims, Paris and the Paris region. This committee is assisted by four intermediary
A commission on “Professional behavior and the prevention of harassment and distress at work” was created. It centralizes information relating to situations involving distress at work coming from the unions’ medical and social departments, and to list psycho-social and organizational risk factors. It must also try to fi nd quick responses to situations presented and oversee the training of managers and employees on the subject. Any of the Group’s employees may approach it.
The health-support committee, created in 2006, studies risks at the human level and makes proposals to help Management in its decision-making. This committee groups representatives of the HSWCC and the human-resources, communications, logistics, and IT systems security departments of Natixis SA
and its main subsidiaries, as well as the occupational health physicians.
The application of the decree dated November 15, 2006 concerning tobacco has led to a generalized prohibition on smoking in all Natixis buildings. As it is concerned with supporting employees as much as possible, Natixis’
Security, the objectives of which are to help people who want to stop smoking.
Paris metropolitan area. Employees requiring special medical supervision will continue to be monitored on an annual basis.
A medical insurance adviser is available twice a week for employee consultations in the Paris metropolitan area.
The time devoted to training – 281,000 hours of training in 2007
In the parent company, 5,052 employees including 3,489 managers and 1,563 technicians received more than 144,000 hours of training.
Training in foreign languages, bearing in mind the internationalization of the Group’s business-lines and establishments, represented a signifi cant proportion of training hours, according to the entities. Professional training also represented a large part of the training effort, particularly concerning the commercial and marketing functions, focused on client relationships. Training on compliance and the fi ght against money-laundering continued for the benefi t of all employees.
(integration, business line cursus, managerial) and individual training actions. The 350 training actions can be consulted by all employees on the HR intranet.
Proportion of women in management level positions: Among all French employees, the proportion of women in management-level positions in France was 40.5% at December 31, 2007
Proportion of women among promoted employess 2003 2004 2005 2006 2007
Individual pay raises granted to women: Among all French employees, 51.6% individual pay raises were granted to women. This percentage is higher than the total proportion of women employees.
Training: Among all French employees, 51.8% women received training with 52.2% of training hours. Both percentages are higher than the total percentage of women employees.
The age pyramid of all permanent French employees was relatively well balanced. 34.6% of employees were under 36 years old and almost 1,100 employees, or 7.6% of the total were aged over 56 at end of 2007. Over the next few years, a signifi cant proportion of employees are due to retire, which will reduce the average age and boost mobility.
The bank and its subsidiaries in France had 136 handicapped persons among their employees on 31 December 2007.
Awareness-raising days on disabled issues were included in the 2008 training plan, which is online on the HR intranet, thus making them available to all employees.
The parent company, and a certain number of subsidiaries, has developed a partnership with associations facilitating relationships with disabled workers. Concerning the use of temporary employment agencies, the quality of their departments dealing with “disabled” issues has been taken into account in the selection of suppliers, and framework agreements signed include a non-discrimination clause.
The grant assigned by Natixis to fi nance social and cultural activities represents 1.3% of the wage bill. To this grant must be added the assignment of holiday vouchers to all personnel according to family income/family-size criteria, the amount of which represents 0.5% of the wage bill. The functioning resources for these social, personal and logistical activities are paid for directly by Natixis.
Committee and the institutional Committees to offer all employees a certain number of services of a social, cultural and sporting character.
The purpose of the employee mutual-aid club is to help employees confronted with non-work-related accidents or serious personal diffi culties. The annual contributions paid voluntarily to this association are topped up by the company.
Natixis supports regional development by fi nancing the activities of its clients, with whom it constructs long-term partnership relationships (cf. “Natixis’ Activities” section).
Natixis maintains and develops relationships with certain higher education institutions, selected in accordance with the company’s business lines (business and engineering schools, universities), strengthening partnership relationships, such as those maintained over the last two years with the Applied
assignments were also offered by the parent company and its subsidiaries, including Coface, Natixis Asset Management and Natixis Pramex International (particularly in North America and Asia). These assignments of 12 to 24 months allow recent graduates to obtain fi rst experience abroad, on the way to subsequent employment either locally or in France.
The company has established privileged relationships with a certain number of Training and Apprenticeship Centres which have allowed employment of young people with 2 to 5 years of post-high school education, via professionalization contracts.
Payment of the apprenticeship tax (parent company) 30% of which goes directly to the Training and Apprenticeship Centers, 22% to the National Fund and 48% to schools, universities and
Grandes Ecoles allows relationships with partner organizations to be consolidated and it also fi nances educational and social projects to support young people with educational or social diffi culties.
METHODS EMPLOYED BY FOREIGN SUBSIDIARIES TO ACCOUNT FOR THEIR ACTIVITIES ON REGIONAL DEVELOPMENT INHABITANTS
Group. Only 116 employees (French scope) work abroad on expatriate contracts.
Scope: The scope was enlarged in 2007 compared to 2006 as a result of extended property, of optimized building occupancy and to take into account data from certain subsidiaries that were not accounted for last year.
Because both scopes are not comparable as such, all values are based on square meters GLA or on the number of workstations.
The 2007 scope comprises Natixis and subsidiaries in metropolitan France representing 430,000 sq.m. of space and 19,000 workstations.
Proportion of eco-paper (recyclable envelopes with the “NF environnement” eco-label) 88 tons, i.e. 7.6%
In an effort to achieve this delicate balance, qualitative and quantitative consumption targets are set annually for each building.
Building materials and technical equipment were chosen not only on the basis of the initial investment cost, but through a comprehensive approach including future operating costs over the building’s estimated useful life. This approach makes it possible to opt for modern, effi cient solutions that integrate environmental requirements linked to new construction.
The Arc de Seine building in the 13th arrondissement in Paris,
GROUND USE, DISCHARGE OF ENVIRONMENTALLY HARMFUL SUBSTANCES INTO THE AIR, WATER AND GROUND, NOISE AND ODOR, WASTE (EN 19 TO 23)
Natixis attaches particular importance to the environmental quality of its buildings in order to limit the imagreement of its activities on the immediately surrounding areas.
The replacement of sensitive installations was completed as part of the measures to prevent the spread of the legionella bacteria into the air.
Since 2006, the bank has taken various measures to optimize waste management. Selective sorting of offi ce waste was introduced with specifi c procedures for recycling paper and collecting and processing used batteries and ink cartridges.
Paper, envelopes and boxes 634 t 1,169 t Natixis uses envelopes that are recyclable and have the “NF Environnement” eco-label
Collection, transportation and treatment by an approved external service provider in line with legislation
covered the following areas: asbestos detection and removal, bacteriological testing, recovery and treatment of potentially polluting liquids, air conditioning replacement studies. As these procedures were implemented last year, environmental protection expenditures decreased in 2007.
INTERNAL DEPARTMENTS FOR ENVIRONMENTAL MANAGEMENT, TRAINING AND INFORMING EMPLOYEES, RESOURCES DEVOTED TO REDUCING ENVIRONMENTAL RISKS
European market in emission quotas were organized for employees in corporate and investment banking to provide them with the expertise required to support clients in their efforts to reduce greenhouse gas emissions.
ARRANGEMENTS FOR DEALING WITH ACCIDENTAL POLLUTION HAVING REPERCUSSIONS BEYOND THE COMPANY’S OWN OPERATIONS
Given the bank’s activities, emissions of polluting products are very rare.
Risks relating to Natixis’ operations and the banking sector 128 2007 MANAGEMENT REPORT 136
Factors that may have an impact in the event of a public offer 178
THE SUPERVISORY BOARD’S COMMENTS ON THE EXECUTIVE BOARD’S MANAGEMENT REPORT AND THE 2007 FINANCIAL STATEMENTS 179
Natixis has two principal shareholders that have a signifi cant degree of infl uence over certain corporate actions
Natixis’ two principal shareholders are BFBP and CNCE, each of which owns approximately 34.4% Natixis’ share capital.
have agreed to own an identical number of Natixis shares, and to maintain their percentage ownership at or above 34% of Natixis’ total share capital until at least November 17, 2016. Accordingly, Natixis is limited in its ability to conduct equity issuances or use its shares for acquisitions, since this requires the approval of both BFBP and CNCE, as well as a mechanism to enable both parties to maintain their percentage shareholdings following the transaction. BFBP’s and CNCE’s ownership of a large percentage of Natixis’ share capital and any coordination between them may also have the effect of delaying, deferring or preventing a change in Natixis’ control, and may discourage bids for its shares more generally (see paragraph “Factors that may have an impact in the event of a public offer”).
Natixis, as well as certain aspects of risk management such as the approval of credit limits and the classifi cation of loans to customers that are common to Natixis and one or both of the two shareholder groups as doubtful loans. The interests of BFBP and CNCE (on behalf of their respective groups) with respect to risk management may be different from those of
In the event of a disagreement between BFBP and CNCE, the business or operations of Natixis could be subject to signifi cant disruptions
Under the shareholders’ agreement signed on November 17, 2006, BFBP and CNCE have established a mechanism for the appointment of members of the Supervisory B oard and of the Executive B oard of Natixis, and have also agreed on the implementation of various corporate governance measures.
Natixis has no voting rights with respect to the cooperative investment certifi cates representing 20% of the share capital of Banques Populaires and Caisses d’Epargne, and it is not the central body of Groupe Banque Populaire or Groupe Caisse d’Epargne
Natixis owns a 20% equity interest in Banques Populaires and in Caisses d’Epargne, in the form of cooperative investment certifi cates issued by each entity. These cooperative investment certifi cates are non-voting securities, with different rights from those attached to cooperative shares in Banques
(“sociétaires”) of Banques Populaires and Caisses d’Epargne, it is not entitled to vote at these meetings and does not have control over decisions that require the consent of the shareholders of Banques Populaires and Caisses d’Epargne.
and CNCE cease to control Natixis jointly, or if certain legislative changes or other circumstances occur, then Banques
Populaires and Caisses d’Epargne will each have the right to repurchase the 20% equity interests from Natixis, at a price based on the proportionate share of the net assets of such bank represented by the equity interests, taking into account the valuation method used to determine the initial price paid by Natixis for those interests. The repurchase price may be different from the price that Natixis could have obtained through a sale to an unaffi liated third party. Moreover, following the repurchase Natixis will no longer have an economic interest in the results of the affected bank or banks, and its ability to sell products and services through the affected bank or banks could be impaired.
Part of Natixis’ strategy for long-term growth is to expand the products and services it provides through the retail banking networks of Groupe Banque Populaire and/or Groupe Caisse d’Epargne, in areas such as employee benefi ts planning, consumer fi nance and payment services. However, the customers of Groupe Banque Populaire and Groupe Caisse d’Epargne are faced with a range of savings, investment or other products from which to choose, including in some cases products and services of competitors that are offered by banks within each group. There can be no assurance that products or services provided by Natixis will be uniformly selected, or promoted, over the other services offered by the two banking networks. Although Groupe Banque Populaire and Groupe
Natixis, have a signifi cant fi nancial interest to support Natixis’
continued development, they may from time to time have interests that differ from those of Natixis.
CNCE affi liates that were not contributed to Natixis. As a result,
activities, which are summarized below and described in detail under “Risk Management” in the management report.
Credit risk. Credit risk is the risk of fi nancial loss relating to the failure of a counterparty to honor its contractual obligations. The counterparty may be a bank, an industrial or commercial enterprise, a government and its various entities, an investment fund, or a natural person. Credit risk arises in lending activities and also in various other activities where Natixis is exposed to the risk of counterparty default, such as its trading, capital markets and settlement activities.
Market, liquidity and financing risk. Market risk is the risk to earnings that arises primarily from adverse movements of market parameters. These parameters include, but are not limited to, foreign exchange rates, bond prices and interest rates, securities and commodities prices, derivatives prices and prices of all other assets such as real estate.
Operational risk. Operational risk is the risk of losses due to inadequate or failed internal processes, or due to external events, whether deliberate, accidental or natural occurrences. Internal processes include, but are not limited to, human resources and information systems. External events include fl oods, fi res, earthquakes or terrorist attacks.
Depending on the insurance product, this risk is infl uenced by macroeconomic changes, changes in customer behavior, changes in public health, pandemics, accidents and catastrophic events (such as earthquakes, industrial disasters, or acts of terrorism or war). As mentioned above, the credit insurance business is also subject to credit risk.
There are numerous examples of the specifi c risks that Natixis faces with respect to potential adverse future market or economic conditions. Financial markets in France, in Europe and elsewhere may decline or experience increased volatility, which could lead to a decline in capital markets transactions, cash infl ows and commissions from asset management.
net banking income, and, if it were unable to reduce expenses commensurately, its profi tability. Revenues and profi tability could also be depressed by market losses in Natixis’ securities portfolio or proprietary positions resulting from adverse market or economic developments.
The reduction in the availability of credit has begun to impact the overall level of economic activity, particularly in the United States, an impact that could continue despite efforts by central banks and economic policy makers to implement measures designed to stimulate the economy.
The economic outlook has had a signifi cant negative effect on stock market index levels and, consequently, on the value of securities held by Natixis in its trading book, as well as the outlook for earning commissions from equity brokerage and capital markets activities and performance-related fees from asset management activities.
There can be no assurance that the CDO provisions recorded by Natixis will be suffi cient to cover the entire loss in value of assets held by Natixis, or that Natixis will not suffer additional losses in the future, particularly if market conditions remain disrupted or deteriorate.
The French government has announced its intention to modify the rules governing the Livret A, a form of regulated savings account offered to depositors by Caisses d’Epargne and
service. The announcement follows a May 2007 decision by the European Commission that ruled that the current system, which does not allow other banks to offer the Livret A to their depositors, may be inconsistent with European competition rules.
The Livret A was developed by the French State to help fund public housing. It offers depositors a fi xed rate of interest that is tax-free. The distribution of the Livret A has been designated as a public interest function, for which Caisses d’Epargne are compensated through a mechanism equivalent to a distribution commission, set by the French State. In 2007, Groupe Caisse d’Epargne recorded €670 million in net banking income for its distribution of the Livret A.
While the terms of the modifi cation have not yet been fi nalized, the French government has announced that the reform will involve allowing all licensed banks to distribute the Livret A, as well as a signifi cant reduction in the commission rate, partially compensated by other changes that are designed to reduce the cost of the Livret A system. The French President has stated that the reform will be designed so as to ensure the economic equilibrium of the current distributors, although no assurance can be given that the new system will provide effective compensation to Groupe Caisse d’Epargne for any losses relating to the reform.
Commission’s decision before the European Court of Justice in Luxembourg. In addition, a group of French banks has challenged the distribution system before various French courts, seeking the ability to distribute the product. While these legal proceedings remain outstanding, it is possible that the reform of the distribution system will render them moot.
For further information on Natixis’ provisioning policy and its treatment of doubtful loans, see “Risk Management’’.
FINANCIAL DATA 6 Risk factors provisions, its lending businesses may have to increase their provisions for loan losses in the future as a result of increases in non-performing assets or for other reasons. Any signifi cant increase in provisions for loan losses or a signifi cant change in Natixis’ estimate of the risk of loss inherent in its portfolio of non-impaired loans, as well as the occurrence of loan losses in excess of the provisions allocated with respect thereto, could have an adverse effect on Natixis’ results of operations and fi nancial condition.
Natixis’ ability to take advantage of business opportunities or potential effi ciencies.
Natixis may incur signifi cant losses on its trading and investment activities due to market fl uctuations and volatility
As part of its trading and investment activities, Natixis maintains positions in the fi xed income, currency, commodity and equity markets, as well as in unlisted securities, real estate and other asset classes. These positions could be adversely affected by volatility in fi nancial and other markets, that is, the degree to which prices fl uctuate over a particular period in a particular market, regardless of market levels. Volatility can also lead to losses relating to a broad range of other trading and hedging products Natixis uses, including swaps, futures, options and structured products.
Market downturns are likely to lead to a decline in the volume of transactions that Natixis executes for its customers and as a market maker, and, therefore, to a decline in its net banking income from these activities. In addition, because the fees that Natixis charges for managing its customers’ portfolios are in many cases based on the value or performance of those portfolios, a market downturn that reduces the value of its customers’ portfolios or increases the amount of withdrawals would reduce the revenues Natixis receives from its asset management and private banking businesses.
Protracted market declines can reduce liquidity in the markets, making it harder to sell assets and possibly leading to material losses
If, for example, Natixis’ information systems failed, even for a short period of time, it would be unable to serve some customers’ needs in a timely manner and could thus lose their business. Likewise, a temporary shutdown of Natixis’
information systems, despite back-up recovery systems and contingency plans, could result in considerable information retrieval and verifi cation costs, and even a decline in its proprietary businesses if, for instance, such a shutdown occurs during the implementation of its hedging policies. The inability of Natixis’ systems to accommodate an increasing volume of transactions could also constrain its ability to expand its businesses. Natixis also faces the risk of operational failure or termination of any of the clearing agents, exchanges, clearing houses or other fi nancial intermediaries or outside vendors it uses to facilitate its securities transactions. As its interconnectivity with its customers grows, Natixis may also increasingly face the risk of operational failure with respect to its customers’ systems. Natixis cannot provide assurances that such failures or interruptions in its systems or in those of such other parties will not occur or, if they do occur, that they will be adequately addressed.
Natixis’ costs (such as insurance premiums). Such events may also make insurance coverage for certain risks unavailable and thus increase Natixis’ global risk.
Natixis is subject to country risk, which is the risk that economic, fi nancial, political or social conditions in a foreign country will affect its fi nancial interests. Natixis does business throughout the world, including in developing regions of the world commonly known as emerging markets. In the past, many emerging market countries have experienced severe economic and fi nancial disruptions, including devaluations of their currencies and capital and currency exchange controls, as well as low or negative economic growth. Natixis’
businesses and revenues derived from operations and trading outside the European Union and the United States, although limited, are subject to risk of loss from various unfavorable political, economic and legal developments, including currency fl uctuations, social instability, changes in governmental policies or policies of central banks, expropriation, nationalization, confi scation of assets and changes in legislation relating to local ownership.
A variety of supervisory and regulatory regimes apply to Natixis in each of the jurisdictions in which it operates. Non-compliance could lead to signifi cant intervention by regulatory authorities and fi nes, public reprimand, damage to reputation, enforced suspension of operations or, in extreme cases, withdrawal of authorization to operate. The fi nancial services industry has experienced increased scrutiny from a variety of regulators in recent years, as well as an increase in the penalties and fi nes sought by regulatory authorities. Natixis’ businesses and earnings can be affected by the policies and actions of various regulatory authorities of France, other European Union or foreign governments and international agencies. Such constraints could limit Natixis’ ability to expand its business or to pursue certain activities. The nature and impact of future changes in such policies and regulatory action are unpredictable and are beyond Natixis’ control. Such changes could include, but are not limited to, the following: the monetary, interest rate and other policies of central banks and regulatory authorities; general changes in government or regulatory policy that may signifi cantly infl uence investor decisions in particular markets in which Natixis operates; general changes in regulatory requirements, for example, prudential rules relating to the capital adequacy framework, which are scheduled to change signifi cantly in the near future; changes in rules and procedures relating to internal controls following the discovery at another French bank of signifi cant trading losses from unauthorized transactions; changes in the competitive environment and pricing practices; changes in the fi nancial reporting environment; expropriation, nationalization, price controls, exchange controls, confi scation of assets and changes in legislation relating to foreign ownership; and any adverse change in the political, military or diplomatic environments creating social instability or an uncertain legal situation capable of affecting the demand for the products and services offered by Natixis.
Modifi cations to the tax regime by the competent authorities in those countries may have a signifi cant effect on the results of
Natixis. Natixis manages its business so as to create value from the synergies and commercial capacities of its different entities.
Natixis are based on Natixis’ own interpretations of applicable tax laws and regulations, generally relying on opinions received from independent tax counsel, and, to the extent necessary, on rulings or specifi c guidance from competent tax authorities.
Natixis’ risk management techniques and strategies may not effectively limit its risk exposure in all economic market environments or against all types of risk, including risks that
Natixis’ qualitative approach to managing those risks could prove insuffi cient, exposing it to material unanticipated losses.
If any of the variety of instruments and strategies that Natixis uses to hedge its exposure to various types of risk in its businesses is not effective, Natixis may incur losses. Many of its strategies are based on historical trading patterns and correlations. For example, if Natixis holds a long position in an asset, it may hedge that position by taking a short position in an asset where the short position has historically moved in a direction that would offset a change in the value of the long position. However, Natixis may only be partially hedged, or these strategies may not be fully effective in mitigating Natixis’
risk exposure in all market environments or against all types of risk in the future. Unexpected market developments may also affect Natixis’ hedging strategies. In addition, the manner in which gains and losses resulting from certain ineffective hedges are recorded may result in additional volatility in Natixis’
Natixis may have diffi culty in identifying, executing and integrating an external growth policy in its acquisitions or joint ventures
Even though external growth is not expected to constitute the major part of Natixis’ strategy in the future, Natixis may nevertheless consider external growth opportunities from time to time. Even though Natixis expects to review the companies it will acquire or joint ventures into which it will enter, it is generally not feasible for these reviews to be comprehensive in all respects. As a result, Natixis may have to assume unanticipated liabilities, or an acquisition or joint venture may not perform as well as expected. In addition, it might have diffi culty integrating any entity with which it combines its operations. Failure to complete announced business combinations or failure to integrate acquired businesses or joint ventures successfully into the businesses of Natixis could materially adversely affect Natixis’ profi tability. It could also lead to departures of key employees, or lead to increased costs and reduced profi tability if Natixis felt compelled to offer them fi nancial incentives to remain. In the case of joint ventures, Natixis is subject to additional risks and uncertainties in that it may be dependent on, and subject to liability, losses or reputational damage relating to, systems, controls and personnel that are not under its control. In addition, confl icts or disagreements between Natixis and its joint venture partners may negatively impact the benefi ts intended to be achieved by the joint venture.
Intense competition, both in Natixis’ home market of France, where it has the largest single concentration of its businesses, as well as internationally, could adversely affect Natixis’ net banking income and profi tability
Competition is intense in all of Natixis’ primary business areas in France and the other countries in which it conducts large portions of its business. Consolidation, both in the form of mergers and acquisitions and by way of alliances and cooperation, is increasing competition. Consolidation has created a number of fi rms that, like Natixis, have the ability to offer a wide range of products and services. Natixis competes on the basis of a number of factors, including transaction execution, its products and services, innovation, reputation and price. If Natixis is unable to continue to respond to the competitive environment in France or in its other major markets with attractive product and service offerings that are profi table for Natixis, it may lose market share in important areas of its business or incur losses on some or all of its activities.
In addition, downturns in the French economy could add to the competitive pressure, through, for example, increased price pressure and lower business volumes for Natixis and its competitors. In addition, new lower-cost competitors may enter the market, which may not be subject to the same capital or regulatory requirements or may have other inherent regulatory advantages and, therefore, may be able to offer their products and services on more favorable terms. Technological advances and the growth of e-commerce have made it possible for non-depository institutions to offer products and services that traditionally were banking products, and for fi nancial institutions and other companies to provide electronic and Internet-based fi nancial solutions, including electronic securities trading. These new entrants may exert downward price pressure on Natixis’ products and services or may affect
Natixis conducts a signifi cant portion of its business overseas, in particular in the United States, and its net banking income and results of operations could be affected by exchange rate fl uctuations. While Natixis incurs expenses in currencies other than the euro, the impact of these expenses only partially compensates for the impact of exchange rate fl uctuations on net banking income. Natixis is particularly vulnerable to fl uctuations in the exchange rate between the United States dollar and the euro, as a signifi cant portion of its net banking income and results of operations is earned in the United States
However, these transactions may not be fully effective to offset the effects of unfavorable exchange rates on Natixis’ operating income.
This real-estate downturn triggered the subprime crisis, although the real origins date back to shortly after the recession in 2001. Against a backdrop of aggressive rate cuts
(down to 1%) by the US Federal Reserve and strong growth in real-estate prices (+13% a year on average over 20032005 ), fi nancial institutions developed a range of mechanisms enabling the least solvent households to buy a home, with subprime loans. This trend was accentuated by the fact that the banks sold on these newly-acquired receivables to the markets, via securitization techniques.
Furthermore, the US real estate crisis confi rmed the “selfsustained ” health of emerging countries, despite the slowdown experienced by the USA, their main trading partner. Like China
– and even topped – the 5% mark for the fourth year in a row, something not seen since the early 1970s.
With investors looking for “decorrelated” assets, this robust emerging-market growth propelled commodity prices to record levels. Not only did the CRB commodity index increase by 20% in 2007, oil prices also virtually doubled over the last 11 months of the year, with WTI even moving close to $100 per barrel. The main consequence of this commodityprice increase was the widespread pick-up in infl ation at the end of the year, even in the eurozone, where the sharp rise in commodity prices pushed the consumer price index up to over 3% for the fi rst time since 2001.
European growth also resisted well (over 2.5% for the second year in a row), notably thanks to the German economy. The
German economy benefi ted from strong corporate and consumer spending, and more specifi cally from strong export growth (+9%), healthy capital investment (+8%) and falling unemployment (1.5 million reduction in the number of jobless in the space of two years) to achieve a satisfactory rate of growth of 2.7%, compared with 3.1% in 2006. Within this context, the ECB which hoped to reduce eurozone liquidity, nevertheless limited the increase of its refi nancing rate to 4%, to take into account the unrest seen on the interbank markets and the prospect of a forthcoming economic slowdown.
N.B.: In light of the disposal of the financial guaranty subsidiary CIFG and in accordance with the principles set out in Sections 32 and 33 of IFRS 5, the financial guaranty activity is now presented on a specific line on the income statement (net income from discontinued operations), which includes all of CIFG’s after-tax income. This presentation applies for both 2007 and 2006.
Natixis’ other business lines enjoyed strong levels of business in 2007 and signifi cantly improved fi nancial performances: Asset Management was spurred by strong growth by the
Receivables Management continued with its global development, thanks both to organic growth and acquisitions. Net banking income advanced 9%, driven by higher revenues from the various business lines and a still-low loss ratio; Private Equity and Private Banking lifted net banking income 12% relative to an exceptionally good 2006 fi gure.
FINANCIAL DATA 6 2007 Management r eport level (+10%) and 251 in France (+2%). The majority of international recruitments were carried out by Corporate and Investment Banking (+351 FTEs), Asset Management
Management business (refl ecting higher gross operating income), offset by a reduction in the Corporate and
or €216 million compared with 2006, notably due to the rise in rents (increase in leased offi ce space), as well as to
Income from associates dipped by 1% to €672 million in 2007.
After deducting €112m of minority interests, underlying net income (Group share) came out 47% lower than the previous year at €1.130 billion. ROE was 7.1%, compared with 13.8% in 2006.
Asset Management division (which reduced the minority stake held by CNP Assurances) and €56 million linked to the sale of a 40% stake in AEW Europe to CDC; €232 million in capital gains linked to the sale of the previous headquarters on Rue Saint- Dominique; €125 million in restructuring costs, representing €180 million before tax, notably covering IT restructuring projects.
Investment Banking division totalled €1.833.5 billion for 2007, down 48% on 2006.
Financing business lines performed well, particularly structured fi nancing which lifted net banking income 32% relative to 2006. Despite highly unattractive conditions, capital markets generated €1.185 billion in net banking income over 2007, down by a modest 9% compared with 2006.
However, securitization and proprietary management business lines were hard-hit by the credit crunch.
(excluding €138 million booked to cost of risk), raising the total to €1.220 billion. The crisis also had a €413 million indirect impact on net banking income (deterioration in credit spreads on proprietary portfolios, arbitrage losses linked to volatility, depreciation of LBO portfolios pending syndication, etc.), and led to a slump in securitization origination as from the summer.
Corporate and Investment Banking recorded a gross operating loss of €161 million for 2007, including a €1.148 billion defi cit in Q4 2007.
M & A and other 29.1 4.7 ns 2006 fi gures were restated during 2007 in order to refl ect the new organization for the Corporate and Investment Banking division.
These adjustments had no impact on the division’s overall level of net banking income and are summarized in the following table: (in € millions) Reference 2006 Adjustments made in 2007 2006 pro forma
In France, revenues from commercial banking with corporate and institutional clients rose 7% to €444 million. This progress was driven by a good performance in the corporate fi nancing business line, which benefi ted from improved spreads on short-term stocks and on new loan issuance.
The development of international operations continued in 2007, with branches opened in Dubai and Panama.
Net banking income from international fi nancing and services rose 16% to €198.4 million. After restating for non-recurring items booked in 2006, revenues advanced 21%.
and Europe. The business line nevertheless grew signifi cantly over the full year, boosted by record LBO business in the fi rst half, when transaction volume exceeded that for the whole of 2006. The economic climate opened up new opportunities to join club deals in Europe and the USA and to act as bookrunner for medium-scale transactions.
Project Finance revenues made progress from 2006. A total of 12 transactions were signed and booked, four of which involved Natixis acting as lead arranger. Dealogic ranked
Financial Engineering benefi ted from the upturn in interest rates at the start of the year and from sustained M&A
activity, both by corporate customers and investment funds positioning themselves on listed targets. Business was brisk throughout the year and included high-visibility transactions, particularly in equity fi nancing.
New York for the Americas and in Dubai for the Middle East and India.
Syndication revenues expanded during the year. Despite the market downturn over the summer, which considerably tightened institutional liquidity and accentuated bank’s refi nancing constraints, Coverage France remained active in structuring small and medium-sized transactions and some acquisition fi nancing. The Syndicated Loans team structured over 70 loans, of which 69 as Lead Arranger, in 2007 compared to 67 in 2006.
revenues amounted to €1.185 billion, only 9% lower than the 2006 fi gure. After a good fi rst-half performance, the second half was adversely affected by the credit crisis, particularly in
Corporate Solutions and, to a lesser extent, by Equity Cash, failed to fully offset the downturn in other business lines.
Fixed Income and Forex lost ground relative to 2006. Tough conditions triggered a particularly pronounced downturn in the second half.
Despite sustained client business, particularly in the second half, Fixed Income retreated compared to 2006.
Credit business suffered particularly badly after the summer due to the subprime crisis and fared negatively in the second half.
Arbitrage and Commodities were affected in the second half by losses on equity derivatives (high volatility in Asia during a period of investment in the region) and on arbitrage.
Corporate Solutions hoisted revenues 72% relative to 2006 and made the largest contribution of all Capital
CPPI products performed well with revenues growing over the year. However, revenues from other activities fell sharply in 2007, with the real estate aspect of the alternative investment segment reporting lower revenues (buy and lease-back business).
The overall direct negative impact of the crisis came to €864 million. There were three kinds of direct impact: The impact on direct subprime exposure amounted to €132 million for the whole of 2007. This related mainly to the residential real estate activity (loan portfolio awaiting securitization), where the “mark-to-market” evaluation system reducing the portfolio’s net worth during the fi nal quarter of 2007.
CDO portfolios) also had indirect subprime exposure through its portfolios of structures collateralized with subprime loans.
Residual exposure to ABS CDOs (subprime part) has now been greatly reduced.
Despite tough market conditions and the increased refi nancing costs that ensued, economic revenues from cash increased by 24% compared to 2006. Natixis encountered no major diffi culties in raising the necessary funds during the liquidity crisis, particularly due to our diverse sources of refi nancing – both geographically and in terms of investor type – and to extensions of refi nancing periods.
AEW Europe and the Caisse des Dépôts Group took a 40%
Management, while the I xis Advisors Group and I xis Global
The overall impact on the Division’s accounts for 2007 was €46 million before tax.
Management. In addition, following the acquisition of the remainder of Hansberger’s capital in early 2007, Hansberger was fully consolidated instead of being treated as an equity associate as previously.
Elsewhere, NGAM acquired Gateway Investment Advisors in a deal effective from February 15, 2008, and is
This equated to a 7% like-for-like increase (exchange rates, consolidation methods and scope).
(in € billions) United States % Europe % Asia % Total %
various significant adjustments were recorded for Europe during 2007. These adjustments had a negative effect of €11 billion and concerned the harmoniz ation of portfolio accounting methods following the merger. These changes had no impact on the division’s profi ts; the slide in the dollar over the year caused a negative currency effect of €20.1 billion on NGAM’s assets under management.
Operating income advanced 11% to €427.3 million. The cost/ income ratio worked out to 75%. Excluding currency effects, gross operating income grew by 17% with average assets under management increasing by 13%, in spite of the fi nancial crisis during the summer.
Income before tax rose 11% or €41.8 million to reach €438.2 million. However, tax expense returned to a more normal level of €54.3 million in 2007, after it had been substantially reduced in 2006 by the reversal of a €25 million tax-risk provision in the US.
Europe at year-end, virtually unchanged from the €393.9 billion a year earlier. Excluding measures to harmonize portfolio accounting methods, assets under management increased 2.4% or €9.4 billion. This increase comprised €3 billion of new money and a €6.4 billion market effect.
Net new money amounted to $31.9 billion. This represented a 34% increase on the 2006 fi gure, which was itself virtually double the 2005 level of $12.4 billion. $22.7 billion (71%) of this new money came from the Natixis Global Associates distribution platform and the rest from direct infl ows from affi liates. Unlike Europe, new money remained robust in the
Services also undertook restructuring work needed to increase operational effi ciency: a large part of the work required to transfer Natixis
Services Financiers’ securities services activities (custody, fund administration and corporate trust) to CACEIS was conducted in 2007. The transfer is on course for completion in the second half of 2008; the consumer fi nance business was restructured; further IT investments were made.
Operating expenses rose 7% or €52 million to reach €820 million. The increase refl ected greater headcount
(+182 FTEs at year-end 2007, up 4% on 2006) and signifi cant
Life insurance revenues rose by 1% overall to almost €4.4 billion.
This result was signifi cantly better than the 7% decline incurred by the French bancassurers’ group, almost all of whose members reported lower business.
The overall portfolio rose 10% to almost €31 billion, spurred by growth in the group life insurance segment.
All in all, net banking income from Insurance advanced 13% or €33 million to €278 million during 2007.
Caisses d’Epargne and the launch of a new offering in the
Financement production chain, with the result that the number of loans approved more than doubled to 407,000 and year-end outstandings surged €2.4 billion to €3.5 billion during the year.
This combined growth in the employee savings portfolio and in the service vouchers business lifted net banking income by 8% or €6.4 million to €91 million during the year.
Outstanding guaranteed credit amounted to €46.6 billion at the end of 2007, an increase of 21% compared to 2006.
This included 22% growth on the personal banking market to €39.8 billion.
Securities Services had €2,869 billion of assets under custody at year-end 2007 versus €2,405 billion a year earlier. Of the €464 billion (19%) increase during the year, €392 billion resulted from the acquisition of HVB’s custody business by
Securities grew net banking income by 13% or €66.6 million to €569.9 million during the year. The main drivers were revenue growth at CACEIS (+€42 million) and in fi nancial services (+€9 million).
Of the €42 million increase at CACEIS, €15.8 million came from a 7.8% rise in commissions and €25.2 million from a 49%
Managed capital, including funds raised but not yet invested and unrealized capital gains, amounted to €3.6 billion at the end of 2007, an increase of 14% or €0.5 billion relative to a year earlier. 47% of invested capital was proprietary capital.
compared to the €856 million in 2006. This decline applied to both proprietary portfolios (€400 million), and third-party portfolios.
All in all, Private Equity posted net banking income of €378.4 million for 2007. This equated to a 7% or €24.2 million increase on the 2006 fi gure, which was boosted by exceptional revenue booked by Natixis Private Equity. Private Equity accounted for three-quarters of revenues for Private Equity and Private Banking (PEPB) as a whole.
Net banking income for private banking amounted to €125.7 million at the end of 2007, an increase of 33% or €30.8 million compared to 2006. Compagnie 1818 contributed more than half of this amount.
Revenues at Banque Privée Saint- Dominique dipped 5% to €30.4 million. A new revenue source was developed in 2007, relating to capital transfers made by business proprietors following the disposal of their business.
Natixis Private Banking International enjoyed strong asset growth and hoisted net banking income by 33% or €6.3 million to €25.7 million.
(NBPI) in Luxembourg embarked on active collaboration during the year which enabled the Private Banking teams to provide custody services in Luxembourg, especially for American and
or €829 million to €1.64 billion in 2007. Compagnie 1818 accounted for 69% or €1.13 billion of this intake (up 16% over the year), while Banque Privée Saint- Dominique posted a 106% increase to €115.6 million.
Receivables Management was restructured in 2007. The two main operations involved GCE Affacturage’s merger into
Coface continued to expand its international footprint through both organic and acquisition-led growth. The acquisition of
Despite an increasingly competitive climate for all business lines, turnover rose by 7%, boosted by fi ne showings by factoring and credit management services.
All in all, net banking income from Receivables Management rose 9% to €915.8 million. The momentum came from a stillhealthy claims picture and good business levels, particularly in factoring. More than half of turnover (53%) came from credit insurance.
Net banking income from credit insurance amounted to €485 million, an increase of 10% on a constant exchangerate and consolidation basis.
Turnover rose by 6.3% on a constant exchange rates and consolidation basis. Despite falling prices due to increased worldwide competition for credit insurance, revenues were spurred by good performances in export credit insurance, and, to a lesser extent, in sureties.
The loss ratio remained stable for the third year running at around 49%. Claim expenses increased in keeping with growth in earned premiums.
The volume of factored receivables rose by 31%, with growth abroad (+41%) outstripping that in France (+18%).
Net banking income for Information rose 7.9% to €127.2 million, boosted by the acquisitions of Kompass
The Receivables M anagement business line posted a 27% increase in net banking income to €33.6 million, thanks to a strong showing in Germany and the full-year effects of the acquisition of Newton.
All in all, operating expenses for Receivables Management as a whole amounted to €657.3 million in 2007, an increase of 8.8% compared to 2006. However, on a constant exchangerate and consolidation basis, and excluding the effect of the
Natixis previously provided credit enhancement services through its subsidiary CIFG, which covered North America and
Natixis’ two core shareholders, Caisse Nationale des Caisses d’Epargne (CNCE) and Banque Fédérale des Banques
CIFG’s capital stock by $1.3 billion on December 20, 2007 (with each shareholder participating equally). This capital increase was designed to fulfi ll the requirements of rating agencies and to cover any fi nal losses occurring in the reinsured portfolio.
Natixis’ sole remaining commitment to its former subsidiary concerns $200 million of existing credit lines.
The operating loss for the fi nancial year and the dilution profi t resulting from the above transactions appear as an overall loss of €369 million booked under “discontinued operations”.
Natixis’ share of this profi t totalled €268 million. There was also an additional accretion profi t of €38.3 million, which was partly offset by €18.6 million of revaluation surpluses on AFS
Banques Populaires network under the “Contribution from associates” line, a decrease of 2%.
Gross operating income expanded by 4.2% or €85 million to reach €2.126 billion.
Natixis’ share of this profi t totalled €319 million. There was also an additional accretion profi t of €80 million (up 10%), which was partly offset by €45 million of revaluation surpluses on
The overall cost of risk amounted to €244 million, versus €50 million for 2006. This was broken down into €55 million for specifi c risks and €190 million for collective provisions.
The bulk of the increase in the cost of risk stemmed from
The risk management information required by IFRS 7 forms an integral part of the accounts certifi ed by the statutory auditors.
Natixis’ risk management system has been implemented in accordance with banking regulations and with Groupe
Depending on the precise situation and activity, these socalled fi rst-tier controls are conducted either by the line personnel themselves, or by an ad hoc control body such as a middle-offi ce or accounting control body, or, where necessary, by both acting together; second-tier controls (as per article 6-a of regulation no. 97-02)
are carried out by dedicated bodies which act independently from operational divisions; third-tier controls, also known as periodic controls, are carried out by Internal Audit.
The senior offi cer responsible for ensuring the consistency and effectiveness of permanent control (in accordance with article 7-1, sub-point 4 of amended CRBF regulation no. 97-02) is the Chief Executive Offi cer.
The Chairman of the Executive Board chairs the committee that coordinates controls and which brings together all those involved in permanent control, together with the head of IT
The dossier submitted to the CECEI in September 2007 with a view to the merger with I xis CIB served as a reminder of the guiding principles of the system: separation of risk and control functions within the Natixis
Following this reorganization, permanent control has been the responsibility of the Risk Management and Compliance departments since November 2007. Governance of the control system comes under the supervision of the Natixis
Executive and Supervisory Boards, with the latter making use of the Audit Committee to carry out its duties.
Natixis; the general Confederal Risk Committee which approves the overall risk limits proposed by Natixis, decides on commitments in excess of the unitary large risk limit assigned to Natixis and monitors Natixis’ main risks.
Natixis’ Risk department is structured into six functions: three “operational” functions: credit risk, market risk, operational risk; two cross-functional structures in charge of: managing risk projects and implementing related tools, providing a coherent and coordinated approach to work undertaken and supervising the decision-making process for new products and new business; ■
The Risk department draws up a risk policy in accordance with the policies of the two core shareholding groups and proposes it to the Executive Board for validation.
It plays a key role within a mechanism of Committees, the main components of which are as follows: a general committee – the Group Risk Committee – which sets out the main tenets of the Group’s risk policy; the Natixis Group Credit Committee; the Market Risk Committee; the Operational Risk Committee; the New Products and New Activities Committees; the Limit Violation committee; the Counterparty Watch List Committee.
It also plays an active role in Group Provisions Committees and the ALM Committee, which is chaired and organized by the Financial department.
Natixis’ credit risk measurement and management system is based on: a standardized risk-taking process which is structured via a system of delegations and decision-making Committees; independent “contradictory” analyses undertaken by the
Risk department and forming part of the credit application review prcess; ratings tools and methods which provide a standardized assessment of the quality of counterparty risks and enable the probability of default within one year to be assessed; information systems providing a general overview of outstandings and limits obtained using a single risk consolidation tool, based on a merged counterparty database.
The internal rating system forms part of Natixis’ counterparty risk management mechanism. The system is based on: a set of methodologies designed to allocate ratings in keeping with Natixis’ risk profi le and which is revised on a permanent basis; an information system for collecting, processing and analyzing relevant data; processes, procedures and controls that place internal ratings at the heart of the risk management mechanism, starting with transaction origination and continuing to expost analysis of defaulting counterparties; lastly, a project-mode approach, which involves working with the business lines in which the Risk department plays a decisive role.
All of this work is carried out in keeping and in liaison with
Natixis uses credit risk reduction techniques such as set-off agreements, guarantees, collateral and credit default swaps.
Collateral and set-off agreements therefore give rise to: an analysis at the time the credit application is approved or reviewed, in order to assess the suitability of the instrument or guarantee provided and the improvement in risk quality it confers; verifi cation, processing and documentation work, based on the use of standard contracts or contracts validated by the
Natixis generally keeps part of the risk on junior tranches of portfolio transactions.
All risk reduction techniques are checked during preparatory work to calculate regulatory capital requirements.
Credit risk monitoring is based on the accountability of business lines and various control measures, with the whole mechanism overseen by a specialist team within the Risk department.
Cases presenting a serious level of risk are detected as they occur and reported immediately to the Risk department, the
Special Affairs and Disputes department and to the business line concerned, in accordance with counterparty surveillance and alert procedures.
These cases may then be subject to special monitoring under the jurisdiction of the Special Affairs and Disputes department, the Risk department or the appropriate credit committee, depending on the level of exposure.
Sensitive cases are reviewed at least once a quarter and are presented to the Counterparty Watch List Committee, which meets once a quarter.
Provisions Committees are organized once a quarter for each division. They examine all cases likely to give rise to provisions or to adjustments of existing provisions and decide on the level of provisioning necessary.
In addition to individual provisions, Natixis constitutes provisions for country risk and sector-based risk from three angles: ratings for exposures on private individuals and professionals; sector risk and geographical risk for other counterparties
The table below shows the credit risk exposure for all the
Financial assets at fair value by result (excluding variable-rate securities) 177,595 177,595 152,823
Available-for-sale fi nancial assets (excluding variable-rate securities) 29,232 (175) 29,057 25,857
Loans and receivables with fi nancial institutions 112,428 37 (71) 112,394 114,879
“Exposures” correspond to the defi nition of doubtful receivables in French standards.
The tables below were drawn up based on regulatory gross exposure to “Large Risks” for the Natixis Group (not including insurance subsidiaries). This credit risk exposure is determined without taking into account non-recognized netting effects and impairments.
The portfolio’s high concentration on the banking and fi nance sector refl ects the preponderance of CIB business lines. As for the rest of the portfolio, corporate loans are highly diversifi ed.
The geographic breakdown shows that 92% of the portfolio is concentrated on Europe and North America, this percentage having remained relatively stable since 2006.
In spite of the tough conditions in the second half of 2007, the breakdown of investment-grade loans remained very satisfactory.
BREAKDOWN ON ASSETS UNDER MANAGEMENT BY INTERNAL GRADING (EXCLUDING SECURITIZATION SEGMENT)
The Market Risk function independently defi nes the methodologies for measuring risk, examines limits and monitors all of the market risks within the scope of Natixis. The market risk control system is based on a delegated architecture, in which the Group Risk Committee has overall responsibility and the Market Risk Committee plays an essential role.
The Market Risk Committee’s task is to defi ne the Bank’s market risk policy and ensure it is applied correctly. As the operational extension of the Executive Board, the Committee possesses all of the Board’s decision-making powers required to carry out its purpose. It meets on a monthly basis and there is scope to hold exceptional meetings when required. It is chaired by a member of the Executive Board. The Committee
The Committee’s market risk policy embraces the following elements: defi nition and review of VaR limits, operational limits and lossalert limits. This process is carried out in light of budgetary information supplied by front-offi ce managers; establishment of delegations for validation purposes; review of risk exposure, with a possible focus on a class of risk; review of any observed and/or unauthorized limit overruns and the rectifying actions either already taken or needing to be taken; ex-post review of delegated decisions; information on the validation of market risk and fair-value adjustment methodologies, and on model validation.
Concerning market models, Natixis’ Risk department validates the models used within the Group and regularly ensures they are consistent with market developments and best practices.
These teams are responsible for monitoring activity and also represent the department in its relationships with each front offi ce.
Each team carries out the following functions for their specifi c business line: analyzing and controlling market risks and producing the corresponding reports; regularly monitoring positions and their profi t/loss; validating valuation models (pricers); defi ning provisioning and fair-value adjustment policies (for liquidity risk, risks related to non-hedgeable parameters, model risks, etc.).
Different techniques are used to measure market risk: 1 – S ynthetic measures of Value-at-Risk (or VaR) are used to identify the potential losses that each activity may engender, based on pre-determined confi dence intervals (e.g. 99%)
and assumptions as to the length of time positions are held
Natixis uses a VaR calculated using simulation techniques based on a Monte Carlo-type method that takes into account the portfolio’s non-linear characteristics with respect to the different factors of risk. These calculation methods are harmonized using a single calculation tool,
2 – O perational indicators are used to manage activity on an overall and/or by homogenous activity basis, by focusing on more directly observable criteria (for example: sensitivity to variations in the underlying instrument, sensitivity to variation in volatility or to correlation, diversifi cation indicators). The limits corresponding to these qualitative and quantitative operational indicators thus complement the
scenarios, consist of simulating variations in market parameters on all activities using plausible assumptions for the reaction of one market in relation to another, according to the nature of the initial shock. Four overall stress tests initially in place at Ixis Corporate & Investment Bank were extended to cover the whole of Natixis.
Banking Commission for approval to use the internal model validated for Ixis Corporate & Investment Bank over the equivalent perimeter within Natixis.
The breakdown of Monte Carlo VaR by risk factor is calculated by using the breakdown derived from parametric VaR.
The chart below shows the results of this exercise for 2007.
“current” VaR) remains inferior to the corresponding statistical limit (in this case, no more than 4 excursions beyond this limit are permitted for 250 data items).
The main stress tests executed on positions at December 31, 2007, furnished the following information as regards impacts on P&L: Stress Test 1: Slump in stock-market indices – assumption of a slump in stock market indices accompanied by a modest impact on interest rates: impact: -€189 million; Stress Test 2: Increase in interest rates – assumption of a gradual rise in short-term rates and an abrupt rise in longterm rates with an increase in equity-market indices: impact: -€504 million; Stress Test 3: Increase in spreads and decline in indices and interest rates – assumption of an increase in credit spreads with a modest impact on interest rates and stock-market indices: impact: -€319 million; ■
Overall i nterest-rate, l iquidity and s tructural e xchange-rate r isks
limits validated by the ALM Committee and examined daily by the Risk Department. These limits are: (in € millions) Short Term
The ALM Committee has validated sensitivity limits for the economic value of Natixis Lease and Natixis Factor’s balance sheets of €8.00 million and €4.00 million, respectively, based on a shock of 100 basis points. For the other subsidiaries, which have more modest mismatching positions, the ALM
Treasury function via the use of internal supporting contracts managed by the Treasury function. Because of their specifi c activity, certain subsidiaries are permitted to manage their own mismatching on a delegated basis via their own ALM
The liquidity-risk monitoring system is based on calculating static liquidity gaps and mismatching ratios (1) both over the
Class of maturity 10 days 1 month 2 months 3 months 4 months 5 months
Class of maturity 12 months 2 years 3 years 4 years 5 years 6 years
Class of maturity 7 years 8 years 9 years 10 years
The ALM Committee has not formally approved limits on subsidiaries that have managerial autonomy for their liquidity mismatching. However, these subsidiaries must comply with their regulatory liquidity coeffi cients.
This system has been supplemented by liquidity stress tests carried out to test Natixis’ ability to cope with a crisis situation.
The general principle involves simulating a shock on the daily liquidity gap on a given time-horizon that depends on the type of stress (shock on assets, shock on liabilities related to a specifi c or systemic crisis). The next step is to identify the additional resources that can be used to obtain liquidity from the ECB (commercial paper or receivables not accepted for repurchasing agreements by the ECB after applying a haircut, etc.) and which thereby enable the Bank to cope with the shock in question before considering either suspending trading activities that consume short-term liquidity or, more generally, divesting assets.
These stress tests are also aggregated with those carried out by the central institutions for consolidation purposes at their level. A study is in progress concerning the defi nition of possible limits and the implementation of an emergency plan in collaboration with the central institutions as part of the liquidity guarantee that they have granted to Natixis.
Operational risk is defi ned as the risk of loss resulting from shortcomings or defaults attributable to internal procedures, persons and systems or to external events (fi res, 100-year
fl oods, fraud, etc.). It includes legal risk, but excludes strategic risk and reputation risk.
The system is based on implementing sound operational risk management practices, namely: a charter prepared by the Operational Risk function approved by Natixis’ Operational Risk Committee and validated by
Natixis’ operational risk management procedure comprises three main types of task: recording incidents: OSIRISK is Natixis’ target tool for measuring, controlling and managing operational risks. It is due to be rolled out to the entire Group during 2008 and will incorporate historical data. Incidents are recorded as they occur, from the fi rst euro. Certain incidents that are considered serious, give rise to more exhaustive investigations; ■
Natixis uses cash-fl ow hedging mainly for the overall hedging of the parent company’s interest-rate risk.
Natixis uses fi xed-rate vanilla borrower swaps in order to fi x future fl ows on variable-rate (interbank) loans and on private or public issues.
The predictive test involves constructing (by type of index and by currency): a payment schedule for cumulated sums of borrower cash at variable rates and borrower swaps at fi xed rates, by maturity band; a payment schedule for cumulated sums of lender cash at variable rates and lender swaps at fi xed rates, by maturity band.
This test can be used to check that the scope of derivatives is acceptable within a hedging relationship. Hedging is proven if the nominal amount of the hedged items is greater than the notional amount of the hedging derivatives, for each maturity band in the target payment schedule. If this is not the case, the derivative instruments cannot be justifi ed in such a hedging relationship.
On each period-end date, the ex-coupon marked-to-market variations of hedging derivatives are compared with those of hypothetical derivative instruments (synthetic instruments representative of elements of assets/liabilities and of management intention). The relationship of their respective variations must be between 80% and 125%. Outside these boundaries, the hedging relationship would no longer be justifi able in the sense of IFRS accountancy standards.
The marked-to-market variations of derivative instruments are booked to shareholders’ equity and only the ineffective part of the hedge impacts the income statement on each period-end date.
Natixis uses fi xed-rate vanilla borrower swaps to protect itself against adverse interest-rate movements.
The predictive test checks that the fi nancial characteristics of the hedged item and the hedging instrument are identical.
The insurance delegation, attached to the Corporate Secretary’s offi ce, is charged with analyzing insurable operational risks and implementing the adequate insurance coverage (self insurance/transfer insurance).
As part of this initiative, all of the former CNCE companies were integrated into Natixis’ Overall Banking, Operational and
The geographic scope of coverage is worldwide, except for professional civil liability, where the guarantee does not cover permanent establishments in the USA (this coverage is purchased locally by subsidiaries or branches).
All the policies mentioned above are purchased from insurers recognized by the market as solvent.
All the guarantees mentioned above are purchased with claims excesses (level of withholding accepted) appropriate to
In August 2004, three shareholders acting in the name of and on behalf of three investment funds (Oakmark Fund, Oakmark
Natixis Assurances identifi ed the segment of the insured population that presents a high risk of policy surrender, based on the key criteria of age, fi scal seniority and the amount of capital. As a result of this initiative, Natixis Assurances limited the perimeter covered by its Cap policies to about a quarter of its fi xed-income assets. It also subscribed to variable-rate bonds with a minimum rate.
Natixis Assurances has to deal with variations in the value of its fi nancial assets. The management of fi nancial risks involves defi ning a strategic asset allocation that takes into account liability commitments, regulatory constraints (particularly in terms of non-concentration) and commercial requirements.
impact on net equity (after taking into account the variation attributable to policyholders and taxation); a 10% decline in the real estate market has a -€3.6 million or 0.4% impact on net equity (after taking into account the variation attributable to policyholders and taxation).
Mortality and morbidity risks are limited by use of a pricing structure tailored to the population insured and the coverage provided, the use of experience tables and by the upstream practice of medical selection of new policyholders.
Coface has implemented sophisticated tools designed to control these risks rigorously and to ensure they remain within prudent limits.
The risk in this area concerns the risk of loss generated by the portfolio of insurance policies.
A distinction is traditionally made between frequency risk and peak risk: frequency risk represents the risk of a sudden and signifi cant increase in missed payments from a multitude of debtors. This risk is measured for each entity by monitoring the loss ratio (ratio between claims and premiums) by business sector (domestic credit), by country (export credit), and by product line (sureties, single risks). The loss ratios for the various underwriting centers are also monitored at Group level, as are the amounts and monthly numbers concerning missed payments; peak risk represents the risk of abnormally-high losses recorded for the same debtor or group of debtors, or of an accumulation of losses for the same country.
As well as monthly monitoring at individual underwriting-center level, a system exists at the Group level, based on the following components: centralized declarations of threatened losses liable to exceed a certain amount (currently €1 million for the two main underwriting centers - Coface SA and Coface Kredit – and €0.5 million for all the others). This involves the intervention of a specialist recovery subsidiary (RBI); ■
The new Basel II agreement published in June 2004 is structured around three pillars.
The credit risk aspect has been completely overhauled, particularly via the introduction of credit risk evaluation methods based on internal ratings.
One of Basel II’s principal novelties is the inclusion of operational risk and its coverage in terms of regulatory capital.
In terms of market risk, the existing mechanism has been rounded out in order to gauge the risk of default more effectively.
Finally, with a view to establishing market discipline, Pillar 3 obliges fi nancial institutions to make regular and transparent disclosures to the market regarding their risk policies, and especially as regards the level of risks and their coverage in terms of regulatory capital.
EXPOSURE TO RISK FOR DEBTORS ON DECEMBER 31, 2007 (EXCLUDING SURETIES)
Following the creation of Natixis, the Basel II project was reorganized in order to better refl ect the Group’s new structure.
Operational Risk function embarked on the creation of a transversal operational risk structure extending across the entire Bank. The new structure is charged with measuring operational risks and exercising permanent second-tier controls (mapping operational risks, evaluating risk situations in line with risk management mechanisms and investigating serious incidents). In parallel, the Risk department developed a tool for measuring, controlling and managing operational risks, which can be used in support of Natixis’ operational risks methodology.
In terms of credit risk, the mechanism for calculating riskweighted assets and regulatory capital requirements draws on the existing arrangements put in place by each of the former Natexis Banques Populaires entities and the former
Group entities; a dedicated data warehouse set up for the requirements of
Financial assets at fair value through profi t and loss and hedging derivatives came to €198.1 billion compared with €177.5 billion at December 31, 2006. This €20.6 billion increase stemmed primarily from trading activities. Financial assets at fair value through profi t and loss mainly comprised trading instruments
Securities held under resale agreements totaled €100.5 billion at December 31, 2007, down by a modest €3.4 billion. These assets are primarily fi nanced by securities delivered under repurchase agreements and recorded under liabilities.
Registered share capital increased by 2,178,364 shares in 2007 following the exercise of stock options and subscriptions relating to existing employee stock-ownership plans. At
Tier one capital amounted to €14.5 billion at December 31, 2007, compared with €13.1 billion at December 31, 2006, an increase of €1.4 billion.
Risk-weighted assets totaled €141.3 billion at December 31, 2007, compared with €125.1 billion at December 31, 2006.
After early application of Basel II/CRD rules, which provide for cooperative investment certifi cates to be deducted from core and supplementary regulatory capital in equal measures, the tier one ratio was 8.3% at December 31, 2007, compared with 8.9% at December 31, 2006.
The liquidity ratio is designed to ensure that liquid assets with a maturity of less than one month are equal to or exceed liabilities falling due within the same period.
Natixis nevertheless managed to complete its annual refi nancing program, and was able to concentrate most of its issues on the senior debt category on very favorable terms during the fi rst half.
Natixis again undertook senior issues on the British and domestic markets in 2007, with three-year issues of £350 million and €800 million, respectively.
The respective EMTN programs were thus merged into a single Natixis EMTN program with a ceiling of €45 billion.
The other specifi c programs designed to cover target clienteles were retained. The most active ones are the Natixis Structured
Populaires) and of Ixis Corporate & Investment Bank contain a standard negative pledge. There are no fi nancial or Natixis rating-related covenants in the EMTN terms and conditions.
(issued by the Singapore offi ce), the Natixis ECP program, the
French commercial paper (TCN) program and the extendible notes program, do not contain any covenants.
(ii) Deeply-subordinated notes (issued on October 18, 2007 — $750 million — fi xed-coupon, then variablecoupon ) contain certain covenants, notably concerning: non-payment of interest at due date under certain circumstances; a reduction in the amount of accrued interest and the nominal amount of the issue in the case of certain events affecting the issuer’s fi nancial situation or certain ratios.
The subordination clause is presented below in the language used in the prospectus: ■
In the event of liquidation, the Notes shall rank in priority to any payments to holders of any classes of share capital and of any other equity securities issued by the Issuer.
Finally, the issue prospectus provides an early redemption option as of October 18, 2017, and at each subsequent interest payment date.
One of the Executive Board’s priorities through 2007 was to implement the merger of Natixis’ constituent entities.
EMTN BMTN USMTN Bond issues Extendible notes * After reclassifying transactions executed in 2006 (€2.030 billion)
Work also commenced on merging the lease-fi nancing, custody and private banking businesses, and is scheduled for completion in 2008.
These operations are all purely internal Group operations and do have any impact on the legal scope of the Natixis Group.
The main purpose of these operations was to structure the division around Natixis Global Asset Management (NGAM), a holding company grouping together around 20 specialized asset management companies based mainly in France and the USA, and to create a global distribution platform, Natixis
Global Associates. As part of this restructuring, CNP’s minority stake in NGAM was diluted to 11.34%.
Asset Management gave birth to Natixis Asset Management, the division’s main asset management center in Europe.
These mergers were accompanied by an in-depth operational reorganization process which involved redefi ning the product range, grouping staff together on the same geographical sites and improving operational support provided to the distributor network.
The equity brokerage businesses were reorganized via the merger of Natexis Bleichroeder, Ixis Midcaps and Ixis
Securities, with a view to creating a single business line and improving the operational effectiveness and legibility of these activities.
The legal merger became effective on June 29, 2007 and took effect retroactively for accounting and tax purposes on
Natixis combined all of the Group’s insurance activities (apart from Coface and CIFG) into a single holding company, under the new name of Natixis Assurances.
On June 29, 2007, Natixis Assurances increased its capital stock to remunerate the transfer of 60% of Foncier Assurance, which had been owned by Natixis since its transfer by CNCE.
In addition to the legal, accounting and IT projects engendered by the merger, the work undertaken throughout most of 2007 resulted in a very large-scale organizational merger, implementation of which is now almost complete.
The merger was the outcome of a process that involved all
Natixis staff and particularly corporate and investment banking personnel. Projects not only concerned marketing, regulatory and accounting aspects, but also involved harmonizing risk monitoring and control procedures, and risk methodologies.
During the second half of 2007, Natixis undertook a series of operations aimed at: grouping together the specialized fi nancing companies originating from both groups (Novacrédit and Natixis
Financement) into one holding company; grouping together the activities developed in partnership with
FINANCIAL DATA 6 2007 Management r eport preserving Novacrédit for the short-term development of other consumer loans-related activities outside the partnership with Cetelem.
The construction of the “consumer loans” business line was completed during the year.
On January 8, 2008, Natixis published a press release, the terms of which were as follows: HypoVereinsbank and CACEIS conclude transfer of securities and custodial services: As planned, CACEIS, the French bank specialised in asset servicing, took over the securities processing and custodial services of
HypoVereinsbank (HVB) at the end of 2007. The transfer of the Financial Markets Service Bank Gmbh (FMSB), the
HVB subsidiary, which had already been contractually agreed in July 2007, was offi cially concluded on
Banque Populaire, the Supervisory Board of Natixis has voted for the following changes to the Executive Board; Jean-Pascal Beaufret is joining the Executive Board.
Lucent since 2002; Jean-Marc Moriani is also joining the Board, with immediate effect. He will remain head of Corporate & Investment
Natixis’ Executive Board now includes the following members: Philippe Dupont, Executive Chairman; ■
Executive Board at the end of May 2008. The responsibility of the businesses he currently supervises will be dispatched among the other members of the Board.
Debt & Finance (part of the CIB business), were appointed to Natixis’ Executive Committee.
Natixis’ teams have successfully led the important integration and organization projects in 2007. This time is now over.
In accordance with European regulation n°809/2004 implementing the Prospectus Directive, there have been no signifi cant changes in Natixis’ fi nancial or commercial situation since the end of the last fi nancial year for which audited fi nancial statements were published.
INFORMATION ON THE PARENT COMPANY AND PROPOSED DISTRIBUTION OF NET INCOME
Information on the Natixis parent c ompany 2007 featured the legal merger of Natixis and I xis Corporate
Operating expenses rose by 4% compared with the 2006 proforma fi gure.
The cost of risk climbed to €175 million from a 2006 proforma fi gure of €15 million.
Net income was negative at €467 million, compared with a positive €1.300 billion on a proforma basis in 2006.
Natixis parent company reported negative net income of €467,183,610.92 for the year ended December 31, 2007.
The third resolution to be put to the General Meeting of Shareholders on May 22, 2008 proposes to charge the €467,183,610.92 loss for the fi scal year as follows: €434,333.00 against retained earnings, €299,853,371.45 against the general banking reserve and €166,895,906.47 against the issue premium.
Shareholders will also be asked to approve the deduction of €549,919,212.30 from the issue premium, in order to permit the payment of a dividend of the same amount.
FACTORS THAT MAY HAVE AN IMPACT IN THE EVENT OF A PUBLIC OFFER
BFBP and CNCE each own 34.45% of Natixis’s share capital and 34.66% voting rights and exercise joint control of Natixis.
Pursuant to the shareholders’ agreement of November 17, 2006, BFBP and CNCE have also made a commitment to maintain strictly equal stakes in Natixis’s share capital for a stability period of 10 years, which may be extended for successive periods of fi ve years, as well as to maintain the percentage held of Natixis’ share capital at a minimum of 34%
Financiers, Natixis’ Supervisory Board, notwithstanding the existence of an agreement not to sell the shares, subject to the double majority of members present and represented and members representing each of the parties bound by the agreement, shall express an opinion on the recommendation to shareholders whether or not to tender their shares to their offer. If necessary, BFBP and CNCE may decide, on the recommendation of Natixis’ Supervisory Board subject to the double majority rule described above, to amend the terms of the shareholders’ agreement with a view to tendering all
BFBP’s and CNCE’s joint control of Natixis, as well as the terms of the shareholders’ agreement signed on November 17, 2006, prevent any takeover of Natixis by means of a public offer should BFBP and CNCE decide not to tender their shares to the offer jointly.
The takeover of Natixis by means of a public offer would result in the right to buy back cooperative investment certifi cates
Natixis would lose its equity interest in the Banques Populaires and Caisses d’Epargne networks and its share of income corresponding to these interests, which is consolidated under the equity method. The risk of a buyback of cooperative investment certifi cates in the event of a takeover of Natixis could therefore discourage an offer for the Natixis shares.
The Supervisory Board’s comments on the Executive Board’s management report and the 2007 fi nancial s tatements
The Board has been informed of the fi ndings of the Audit Committee, and of the reports concerning the conditions under which internal control is exercised and risk is measured and monitored.
The Board has also analyzed the information provided in the Executive Board’s management report and has no particular comments to make regarding this information.
We ask you to approve the 2007 fi nancial statements, the proposed allocation of income and the various resolutions presented to you.
Additionally, the SEC is seeking to determine whether there has been any violation of disclosure obligations in this respect.
Basel I standards) makes it one of the best capitalized banks in the sector. This highly solid capital structure provides Natixis with a sound platform for funding its expansion.
Populaires (BFBP) – have granted it an advance treatable as equity, in anticipation of the forthcoming issues.
Cash and balances with central banks and post offi ces 961 323
Equity attributable to equity holders of the parent 16,885 17,477 - Share capital and reserves 14,118 14,394 - Unrealized or deferred gains or losses 55 620
Net gains or losses on fi nancial assets available for sale 9.4 334 247
Consolidated net income - attributable to equity holders of the parent - per share, calculated on the basis of the average number of shares over the period excluding treasury shares and including potential shares arising from the exercising of stock optio n
Equity at December 31, 2005 before appropriation - IFRS 2005 784 2,439 (166)
Equity at January 1, 2006 - EU IFRS 784 2,564 (166)
Change in fair value of fi nancial instruments through equity 2006 net income - EU IFRS
Equity at December 31, 2006 before appropriation - EU IFRS 1,952 12,435 0
Equity at January 1, 2007 - EU IFRS 1,952 12,472 0
(3) Treasury shares were eliminated through a reduction in share capital.
+/- Net charge to depreciation and amortization of property, plant & equipment and intangible assets 164 97
+/- Net charge to other provisions (including technical reserves) 3,500 3,246
+/- Decrease/(increase) in fi nancial assets and investments in associates (6,471) (18,799)
+/- Decrease/(increase) in property, plant & equipment and intangible assets (305) (160)
Net increase/(decrease) in cash & cash equivalents (A + B+ C + D) 8,938 (14,618)
Effect of exchange rate changes on cash and cash equivalents (D) (84) (109)
Cash, central banks, post offi ces (assets & liabilities) (335) (193)
2007 was marked on the one hand by the continued process to integrate the various entities contributed on November 17, 2006 (*) within Natixis and on the other hand by the fi nancial crisis resulting from the deterioration in the residential real estate sector in the US.
(*) For reference, the business combination carried out on November 17, 2006 with the Groupe Caisse d’Epargne involved the following legal operations: – the contribution by Caisse Nationale des Caisses d’Epargne (CNCE) of some of its subsidiaries and equity interests in the corporate and investment banking and services businesses, as well as part of the cooperative investment certifi cates (Caisse d’Epargne CCIs) issued since 2004 by each Caisse d’Epargne et de Prévoyance (with the exception of the Caisse de Martinique and Caisse de Nouvelle Calédonie), representing 20% of their capital; NOTE 1 SIGNIFICANT EVENTS OF THE YEAR 187
Financial data 1.1 – Continued integration process for the various e ntities contributed on November 17, 2006
Ixis Midcaps have transferred their activities to Ixis Securities, which is now Natixis Securities.
Ixis Asset Management and Natexis Asset Management has resulted in the reorganisation of the Asset Management division at Natixis. The Natixis Group’s asset management activities have been consolidated within Ixis Asset Management Group, whose name was then changed to Natixis Global Asset
Banking division over 2007. A project to restructure Corporate and Investment Banking is accompanying the merger of
Fixed Income (trading and distribution) on the other; it will also integrate Cash Management; the Debt and Financing division, which will group together the Structured Financing and Commodities activities with the Principal Finance business.
The new organiz ation for the Risk function has been rolled out and is in line with the system for joint control with the two central bodies that Natixis is affi liated with.
Over the second half of the year, Natixis sold the offi ces on Rue Saint- Dominique in the 7th district of Paris, used as the headquarters up until December 31, 2007. Natixis’
Mendès France in the 13th district as of January 1, 2008.
Legal business combination operations will continue over 2008, including the integration of the Natixis Altaïr subsidiary into Natixis SA in order to consolidate the Technology and
All of the impacts of the crisis on Natixis’ accounts at
2.1 – IFRS and IFRIC i nterpretations applied by the Group
As required by European regulation 1606/2002 of July 19, 2002, Natixis has prepared its consolidated fi nancial statements for the year ended December 31, 2007 using the
International Financial Reporting Standards (IFRS), as adopted in the European Union and applicable on that date (1). These standards include IAS 1 to 41, IFRS 1 to 8 and the related
Natixis’ consolidated fi nancial statements include a balance sheet, income statement, statement of changes in equity, cash fl ow statement and notes to the fi nancial statements.
All of the impacts of the fi rst application of IFRS on shareholders equity, equity capital, the balance sheet and earnings, as well as the fi rst application options retained under IFRS 1 First
Note 8.1.2.2 – Conditions for classifi cation of fi nancial liabilities designated as at fair value,
The IFRIC interpretations applicable for the fi rst time as at January 1, 2007 have not had any impact on Natixis’
fi nancial statements: Interpretation IFRIC 7 specifi es the practical arrangements for restating fi nancial statements in line with IAS 29
Natixis’ practice is consistent with this interpretation, and the application of these standards has not had any impact on the Group’s consolidated fi nancial statements; Interpretation IFRIC 10 covers the write-back of value impairments recorded for an interim period concerning goodwill or shares classifi ed as assets available for sale or recorded at cost. The application of this interpretation has not had any material impact on Natixis’ consolidated fi nancial statements.
Commission on November 21, 2007, with compulsory application as of January 1, 2009. This standard replaces
The consolidated fi nancial statements have been prepared in accordance with the measurement and presentation principles presented in Notes 3, 6 and 7 hereafter.
Note 5 presents the contributions to the pro forma income statement for 2006, which include earnings posted by entities contributed since January 1, 2006.
The consolidated fi nancial statements are based on the individual fi nancial statements as at December 31, 2007 of the entities included in the Natixis Group’s consolidation scope.
The materiality of a subsidiary is not assessed with respect to numerical thresholds, but based on a qualitative appraisal of the relevance of its contribution to the consolidated fi nancial statements.
The scope of consolidation includes all signifi cant entities over which the consolidating entity exercises control or infl uences its management. Three types of control are identifi ed under
A review of the potential voting rights held by Natixis has not had any impact on the basis for consolidation in 2007.
Decision-making: Natixis has the decision-making powers to control or to obtain control of the SPE or its assets, including certain decision-making powers coming into existence after the formation of the SPE. Such decisionmaking powers may have been delegated by establishing an “autopilot” mechanism.
Benefits: Natixis has rights to obtain a majority of the benefi ts of the SPE’s activities distributed in the form of future net cash fl ows, earnings, net assets or other economic benefi ts, or rights to a majority of residual interests.
Risks: Natixis substantially retains the majority of residual or ownership risks in order to obtain the economic benefi ts of the SPE’s activities.
As part of the formation of the new Natixis group, the subscription for the Banques Populaires CCIs and the contribution of the Caisses d’Epargne CCIs give Natixis signifi cant infl uence over the Banque Populaire and Caisses d’Epargne banks. The fi nancial statements of these entities are therefore accounted for under the equity method in Natixis’
Since the Banques Populaires and Caisses d’Epargne CCIs do not carry any voting rights, Natixis’ signifi cant infl uence over the Banque Populaire banks is characterized by (i) legally enforceable infl uence resulting from Natixis’ participation in the operational and fi nancial management of the Banques
Caisses d’Epargne board of directors (Banques Populaires: federal delegate, Caisses d’Epargne: non-voting director); Participation in the intra-group Committees of the Groupe
CCIs; federal delegate and non-voting director reporting); Natixis’ right to audit the Banques Populaires and Caisses d’Epargne; ■
In addition, Natixis and the Banque Populaire banks have agreed to maintain the existing industrial and commercial relationships for at least ten years from the subscription date for the Banques Populaires CCIs: provision of IT infrastructure; supply of industrial services (custodial services, payment system, operational management of foreign currency accounting); design and management of customer products on behalf of the Banque Populaires banks (asset management, insurance products, factoring, leasing, fi nancial engineering, expansion capital, employee benefi ts planning, international engineering, credit insurance and business information).
Lastly, Natixis and Caisses d’Epargne banks have also agreed to maintain their existing industrial and commercial relations presented below for at least 10 years from the date of the contributions: custodial services; design and management of customer products (asset management, revolving credit facilities, guarantee insurance for borrowers, factoring and equipment lease fi nancing, fi nancial engineering and capital market products, local authority fi nancing, debt management); securities and derivative brokerage.
The balance sheets of foreign subsidiaries and branches whose functional currency is not the euro are translated into euros at the closing rates, except for share capital, reserves and capital allocations, which are translated at historical rates.
IFRS 3 on business combinations requires all identifi able assets, liabilities and contingent liabilities acquired to be measured at their fair value on the acquisition date. Adjustments may subsequently be made to these initial fair values for a period of twelve months from the acquisition date.
The excess of the cost of the business combination over the acquirer’s interest in the net fair value of the acquiree’s identifi able assets, liabilities and contingent liabilities is recognized as goodwill, which is allocated on the acquisition date to one or more cash-generating units (CGUs) expected to benefi t from the acquisition.
Goodwill is tested for impairment at least once a year and whenever there is objective evidence that the goodwill might be impaired. Impairment testing consists of comparing the carrying amount of the CGU or group of CGUs including goodwill with its recoverable value.
CGUs and then against other identifi able assets belonging to the CGU or group of CGUs.
Negative goodwill is recognized immediately in the income statement under “changes in value of goodwill”.
While IFRS 3 recommends accounting for business combinations by applying the purchase method (i.e. at fair value), this does not cover the formation of joint ventures subject to joint control, since paragraph 3 of IFRS 3 states that: “This IFRS does not apply to a) business combinations in which separate entities or businesses are brought together to form a joint venture”.
majority control over Natixis’ activities and there is a contractual agreement between these two groups that notably: sets out Natixis’ corporate governance rules, by providing for equal representation of both groups on Natixis’ governing bodies; structures Natixis’ decision-making processes, thereby entailing the agreement of both groups on key decisions; defi nes the future relationships between both groups and
Basis of measurement adopted for other structural t ransactions as presented in Note 1
CCIs and the acquisition of Novacrédit – have been accounted for under the purchase method for consolidation purposes.
Financial data amount. Each of the differences observed were recognized in consolidated retained earnings.
Hence, an amount of €3,170 million was charged against the issue premium, as follows: €1,862 million in respect of Ixis AMG, €833 million in respect of Ixis CIB, €150 million in respect of Natixis Garanties, €132 million in respect of CEFI, €111 million for the Caisses d’Epargne CCIs, €78 million for CACEIS, €45 million for La Cie 1818, €1 million for GCE Bail, €1 million for GCE Affacturage.
and €4 million in respect of Gestitres led to a corresponding increase in the issue premium.
At December 31, 2006, the goodwill generated through the business combination operation represented €633 million, broken down as follows: €229 million on Ixis AMG, €21 million on Ixis CIB and €8 million on Novacrédit, in addition to the goodwill included under “investments in associates”, representing €237 million for Caisses d’Epargne CCIs and €138 million for Banques Populaires CCIs.
At December 31, 2007, the goodwill on the CCIs was defi nitively allocated to the following goodwill accounts: valuation goodwill on Banques Populaires land and buildings, representing €102 million for Banques Populaires CCIs; valuation goodwill on Caisses d’Epargne land and buildings, representing €47 million for Caisses d’Epargne CCIs.
In 2007, goodwill increased by a total amount of €546 million, excluding conversion gains and losses, with: €200 million in goodwill recorded on the Asset Management division, with €132 million generated on group restructuring operations, €25 million on the acquisition of a 5% stake in
All the goodwill is tested for impairment based on the value in use of the cash-generating units (CGUs) to which it is allocated.
OAT), the risk premium and the historical sector beta, both of which are calculated using a representative sample of listed companies in the sector.
These tests did not give rise to the recognition of any impairment. Likewise, a 1% increase in the discount rates and a 1% reduction in the perpetual growth rate did not lead to the recognition of any impairment.
(2) For certain businesses (asset management, securities, payments), value in use is calculated through combined use of the DCF model and a peer comparison. For the private equity business, value in use is calculated on the basis of net assets.
Real estate companies not allocated to the CGUs 21 21 3.6 – Dilutive/accretive impact generated by o wnership of the CCIs
Further to the capital increase subscribed for on December 20, 2007 by Banque Fédérale des Banques Populaires and
December 31, 2007, as well as the impacts of its sale.
Prior to consolidation, the individual fi nancial statements of companies included in the scope of consolidation are restated to bring them into line with the group accounting policies described below. Intra-Group balances and gains and losses arising on intra-group transactions are eliminated.
Contracts managed by the insurance subsidiaries of Coface and Natixis Assurances sub-groups meet the defi nition of insurance contracts or investment contracts with a discretionary participation feature provided for in IFRS 4. Accordingly, they give rise to the recognition of an insurance liability measured in accordance with French GAAP, pending publication of an
The equalization reserve recognized on credit insurance, nonlife and personal protection is a technical reserve permitted under French GAAP to protect insurance companies against catastrophic risks. Under IFRS, this type of reserve does not represent a liability. Accordingly, the equalization reserve and the corresponding charges recorded in the individual fi nancial statements drawn up under French GAAP have been eliminated from the IFRS consolidated fi nancial statements. A
The main changes to scope that occurred during 2007 were as follows: 4.1 – Natixis (excluding intermediate t iers)
Entry of Coface Belgium Services holding, which is in the business of commercial and capital-adequacy information.
First consolidation of Opéra Sentier SAS, which is in the business of property development and renovation,
Creation of Coface Chile, a branch of Coface SA, which is in the business of insurance,
Creation of Natixis Dubai, a branch of Natixis, which is in the business of fi nancing and investment.
The Natixis Group has defi ned reference thresholds by business-line: Business-line / Division Total balance sheet Net Banking Income /
Markets and fi nancing > €250 million > €15 million > +/-€2 million
Private E quity and Private B anking > €60 million > €12 million > +/-€2 million
About sixty entities were excluded from the Natixis Group’s consolidation scope as they no longer reach the reference thresholds (including 43 subsidiaries at the Coface level).
Management, which changed registered company name, becoming Natixis Global Asset Management.
Creation of Ecrinvest 11 by Natixis following the contribution of securities of Natixis Financing and Novacrédit.
Coface: merger of Coface Expert and Kompass Holding with Coface SA; Others: transfer of all of Segex’s assets and liabilities to
Merger of Natixis SA and Ixis Corporate & Investment Bank with retroactive effect on January 1, 2007.
Entries into s cope and v ariations in p ercentage of i nterest
Divestiture of 40% of the voting rights of Ixis AEW Europe
SA, each holding 50% of the capital. It will operate a direct business of fi nancial investment in credit risks. It was founded in May 2007 and has been consolidated since the 3rd quarter 2007.
Creation of three ad hoc entities for the Real Estate Proprietary
Investments International S.A, which retroactively entered scope on January 1, 2007.
Compagnie 1818 tier bringing the interest percentage from 73.40% to 74.15% and generating goodwill of €0.5 million.
On June 30, 2007, transfer of all assets and liabilities of the European Insurance Centre to the Centre Français du
Deconsolidation of the CIFG tier following the capital increase by €882.5 million underwritten by the Caisse Nationale des
December 2007, which is in the business of the management of insurance-investment mutual funds.
Caceis SAS, thus bringing the holding from 35% to 47% and generating goodwill of €1 million.
Acquisition of the Groupe Olympia Capital, which generated goodwill of €117.2 million
Merger of SGPC - Société de Gestion Provençale et Corse with the BP Provençale et Corse at the end of the second quarter 2007.
Merger of the Banque Populaire des Pyrénées Orientales de l’Aude et de l’Ariège with BP Occitane.
Merger of SOCAMI Haute Savoie and SOCAMI Savoisienne creating SOCAMI des Alpes.
Creation of the Caisse d’Epargne Rhône-Alpes from the merger of Caisse d’Epargne des Alpes and Caisse d’Epargne
Creation of the Caisse d’Epargne Aquitaine Poitou Charente from the merger of the Caisse d’Epargne Aquitaine Nord and the Caisse d’Epargne du Pays de l’Adour.
Creation of the Caisse d’Epargne Loire Centre from the merger of the Caisse d’Epargne Centre Val de Loire and the