Statutory Auditors’ report on the parent company fi nancial statements 404
LEGAL INFORMATION 433 Report of the Board of Directors on the resolutions put to the General Shareholders’ Meeting 434
Mr. Yvan de La Porte du Theil Date of birth: 05.21.1949 Natixis shares held: 1,000
J MEMBERS OF THE EXECUTIVE MANAGEMENT BOARD (1) (CDG) AS AT APRIL 1, 2010
The Chairman of the Board or the CEO are required to provide each director with all the documents and information necessary to carry out his or her duties.
For each issue submitted for review and analysis, the Audit Committee had the opportunity to hear from relevant Natixis personnel as well as to familiarize itself with reports on said issues, in particular: On several occasions the Committee had the opportunity to hear the CEO’s views on topical issues. The Audit Committee benefi ted from the presence at its various meetings of the Natixis CFO, as well as of the Chief Risk Offi cer , the audit directors of Natixis and BPCE, and the heads of compliance and internal control.
On May 14, 2009, the CEO appointed Jean-Marc Moriani, Head of the Corporate and Investment Bank (CIB), as Deputy CEO.
Thi s meeting is held annually and its objective is to inform shareholders about the running of the Company. Its principal objective is to give an opinion on the fi nancial statements of the previous fi scal year, to determine the appropriation of income, and to set the dividend and the conditions for its payment.
B – Compensation paid to the CEO in the form of stock options
For the period May 14, 2009 – December 31, 2009, Laurent Mignon benefi ted from a Company car valued at €3,022 gross.
In relation to BPCE and its subsidiaries 11,750 (d) 0 n/a n/a
In relation to BFBP and BPCE 1,600 (d) 9,605 9,605 9,936 (b)
Non-voting member of the Natixis Supervisory Board/Board of Directors 0 0 0 0
CORPORATE GOVERNANCE2 Policies and rules for determining compensation and benefi ts of all kinds paid to members of the corporate bodies
2 - Contracts binding the Company and the directors and the Executive Management
a Natixis Transport Finance is a major player in aerospace financing. Its involvement in this business goes back more than 30 years. Over that time, it has put together a full range of classic and innovative products (advance-payment financing, fiscal leasing, Islamic finance, import-export finance, export credits, etc.). In 2009, Natixis Transport Finance arranged the high-profile financing of Air France’s first A380. Jane’s Transport Finance awarded it three Deal of the Year citations for the financing of Norwegian Air Shuttle, TAM and Scandinavian Airlines.
a Based in New York, Debt Solutions North America houses the Bank’s syndication and debt-engineering businesses in the United States. It offers European clients access to the public and private American debt markets, and gives American issuers global coverage of their debt requirements. In 2009, Debt Solutions North America took part in 30 major deals, including Astoria II, in close cooperation with the Bank’s structured finance activities. These deals were syndicated on the American market.
In 2009, the interest rate teams gained traction from client appetite for restructuring transactions. Credit benefi ted from reduced volatility, lower short-term interest rates and tighter credit spreads, which brought issuers and investors back into the primary markets.
Natixis Global Associates’ distribution network currently serves clients in approximately 30 countries on all continents. It markets the entire range of products of all Natixis’ asset management companies, tailoring them to the needs of each country and rounding them out with additional services.
In insurance, Natixis provides a wide range of products for retail customers and, to a lesser extent, corporate clients. Distributed primarily by the Banque Populaire network, life insurance and pensions are the main businesses, although provident and non-life insurance are enjoying strong growth: in addition to death, cessation of work and means of payment insurance , the business has been enlarged to include dependency insurance and payment protection insurance, distributed by the Banque Populaire and Caisse d’Epargne networks. Lastly, car and multirisk home insurance offers available to retail customers in the Banque Populaire network were rounded out by a relatively broad offering aimed at professional customers in the Banque Populaire network.
Born of the merger of the Cegi, Saccef and Socamab subsidiaries in 2008, Compagnie Européenne de Garanties et Cautions is Natixis’ multi-business platform for surety bonds and fi nancial guarantees.
The Immo Pro offering, which provides guarantees on business investments (land, buildings, offi ces, etc.), has continued to expand since its launch in 2007. It allowed Natixis to record a 6% increase in issued premiums and a market share of 22% in this segment in 2009.
Natixis is continuing to build a common electronic payment platform with BNP Paribas through the Partecis joint venture.
In 2009, Natixis initiated efforts to merge GCE Paiements and Natixis Paiements to create a single payments operator for Groupe BPCE in 2010. The aim is to consolidate the Group’s position in France, develop industrial partnerships and acquire a European dimension in the electronic payments and fl ows sector.
J CHANGE IN NUMBER OF TRANSACTIONS PER PRE-PAID CARD (HOLDERS AND RETAILERS )
In e-commerce, the CyberPlus Paiement solution is among the market leaders.
The Caisses d’Epargne network has achieved a solid performance in almost all markets it addresses in terms of banking services, fl ow management, infl ows and lending.
Caisse d’Epargne is the only large French bank to pay interest on demand deposits to all its clients with a service contract. Almost 5.2 million individual customers benefi t from this, up 240,000 in 1 year.
Non-life and provident insurance cover motor and home insurance, legal protection, life protection policies, top-up health insurance, dependent insurance, provident insurance for professional customers and collective retirement and health insurance.
Natixis drew up a “Mobility Charter” in 2009 and plans to continue its efforts in 2010 by creating a global career management solution with the introduction of personnel reviews, “Career Committees” and a mobility space accessible to employees. The career mobility C harter provides a fl exible and attractive framework. It ensures the coherence of individual mobility management through common support principles and policies.
With around 73,000 hours of training, Natixis has and will continue in 2010 to nurture the skills of its employees in anticipation of changes in employment and to enhance its competitiveness.
They are also founded on the decree of November 3, 2009 relating to the compensation of personnel whose activities are liable to have an impact on the risk exposure of credit institutions
To rationalize its real estate sites and to merge teams at the Austerlitz and Charenton locations, work was undertaken to empty four buildings in 2010. In parallel, leases were renegotiated. These measures will generate a saving of €22 million over a full year.
Lastly, to harness synergies with Groupe BPCE, a three-year contract was signed with temporary employment agencies, and agreements with companies such as Air France/KLM and Thomson Reuters were negotiated and signed. These common measures made it possible to optimize spending with these suppliers across Groupe BPCE.
Expertise in ”receivables management” of all companies a Coface provides solutions to companies, whatever their size, business sector and nationality, to manage, protect and finance their “accounts receivable” (all commercial receivables): credit insurance, factoring and services (business information and ratings and receivables management).
JULY 2009 a Creation of a new Holland Venture Capital team (Transfer) in the Netherlands.
a Third annual conference in France, initiated by Natixis Private Equity, on Venture Philanthropy in partnership with the EVPA (European Venture Philanthropy Association) and the support of the AFIC (French venture capital association) and Crédit Coopératif. The aim of this conference was to present Venture Philanthropy at the French level, to develop relations and partnerships with institutional players in the sector (foundations, journalists, private equity contacts, etc.). To this end, the program at this conference addressed the EVPA’s challenges at the European and French levels, the diffusion of philanthropic model and the presentation of concrete cases.
Credit portfolio: Notional value of €40.7 billion at June 30, 2009 .
TRS + option a Guarantee covering 85% of the net value at 06.30.2009 of the assets concerned; a Payment of a counterparty of €367 million; a Conservation by Natixis of the upside potential via the market value valuation of the option.
On the basis of the information and documentation provided to us, our understanding is that the Guarantee is split into two parts.
In 2009, 14 SRI funds managed by Natixis AM received the SRI label attributed by Novethic * whose objective is to encourage the development of the highest possible level of transparency concerning SRI funds.
Management subsidiary to access the CVs of handicapped workers and facilitate their recruitment. Additionally, Natixis has established and consolidated relations with associations that facilitate dialog between companies and disabled persons
sector (companies providing sheltered work for disabled persons). Tasks such as responding to job applications and handling the bank’s obsolete IT and offi ce automation equipment have been assigned to companies operating in this sector. Certain sites have conducted extensive experiments in several areas: The everyday management of a building, the management of green areas, the collection and recycling of paper, the purchase of pallets of paper and the ordering of meal trays. These actions will be developed in 2010 with the referencing of approximately ten EAs
Private Equity, Coface and Natixis Algé rie 5,915 5,817 +98 * Pro-forma fi gures including changes in the 2009 France scope and in particular the deconsolidation of CACEIS on June 30, 2009.
1. In France: TOTAL NUMBER OF NEW HIRES 1,101 1,362 1,907
Within Natixis S.A., the annualized workweek average is 35 hours. The collective workweek is 38 hours and employees also enjoy compensatory time off in lieu of overtime. Managers employed on the basis of a fi xed number of days rather than an hourly basis work 209 days. This includes the additional work day stipulated under the Act of June 30, 2004 concerning solidarity and the autonomy of the elderly and disabled.
In 2009 Natixis used 103,587 cubic meters of water. This volume represents a 27.6% reduction versus 2008.
Equipment handled by a specialized company. The products are either processed as waste or the materials are extracted for recycling in accordance with existing environmental regulations. 52 t 48 t
Moreover, if BPCE ceased to control Natixis, or if certain legislative or regulatory changes or other events occurred (for further information on the events of a nature to trigger this compulsory repurchase, please refer to section 8 “Signifi cant contracts”), Banques Populaires, Caisses d’Epargne or BPCE, according to the case, would also have the right to purchase its 20% holding from Natixis at a price that will be determined by taking into account, notably, the share of net assets to which this investment gives a right, and by following the valuation methods employed to value this investment when it was acquired by Natixis. The repurchase price may thus be different from the price that Natixis could obtain through a sale to an independent third party.
The Management report details: a the general principles for the granting and management of credit risks (section 5.3.1); a the measurement of risk and internal ratings, which are an integral component of Natixis’ counterparty risk monitoring and control (section 5.3.2); a the techniques for the reduction of credit risk (netting contracts, collateral, guarantees or credit default swaps) (section 5.3.3); a credit-risk monitoring, which is based on business line accountability and various control measures overseen by a dedicated team within the Risk Department with day-to-day monitoring being provided by the businesses, the middle office overseeing financing and the Risk Management Department performing second level controls (section 5.3.4); and a Natixis’ exposure to credit risk (section 5.3.5).
The monitoring and control of these risks and their impact on the assets of Natixis and its subsidiaries are described in section 5.9 of the Management report.
Pursuant to the IFRS rules and interpretations currently in force, Natixis is required to use certain estimates in the preparation of its fi nancial statements, including accounting estimates to determine provisions relating to loans and doubtful debts, provisions relating to possible litigation, and the fair value of certain assets and liabilities. If the values used for these items by Natixis should prove to be signifi cantly inaccurate, particularly in the event of signifi cant and/or unexpected market movements, or if the methods by which they are determined should be changed under future IFRS rules or interpretations, Natixis may be exposed to unanticipated losses.
Competition is intense in all of Natixis’ primary business areas in France and in other areas of the world where it has signifi cant operations. Consolidation, both in the form of mergers and acquisitions and through 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 with other entities on the basis of a number of factors, including transaction execution, products and services offered, innovation, reputation and price. If Natixis is unable to maintain its competitiveness in France or in its other major markets with attractive and profi table product and service offerings, it may lose market share in important areas of its business or incur losses on some or all of its operations. In addition, downturns in the global economy or in the economy of Natixis’ major markets are likely to increase the competitive pressure, notably through increased price pressure and lower business volumes for Natixis and its competitors. More competitive new competitors could also enter the market subject to distinct or more fl exible regulation, or other requirements relating to prudential ratios. These new market participants may therefore be able to offer more competitive products and services. Technological advances and the growth of e-commerce have made it possible for nondeposit taking 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’ market share.
Underlying operating expenses were virtually unchanged between 2008 and 2009 at €4,410.7 million.
The Corporate and Institutional Relations and Debt and Finance businesses saw numerous deals restructured in 2009, leading to high fee and commission income and generous margins, although origination remained low.
Losses recorded over the year in the CPM business due to the tightening of corporate spreads fi nally eased in the fourth quarter, thanks to the switch in focus in this area to risk management as opposed to the reduction of risk-weighted assets.
a The Structured Credit business benefited from a recovery in the credit market, with NBI increasing by 29% year-on-year on the back of stronger interest income and commissions on conduits.
An analysis of the sales performance by client segment in 2009 shows that: a the contribution of asset managers and insurance companies clients increased significantly year-on-year; a the banking sector remained the largest contributor, although its weighting fell; a the public sector was down considerably.
The arbitrage activities notched up excellent year-on-year performances in a climate of controlled risk.
a Volumes in euro funds increased by 14% over the year, driven by low short-term interest rates and the decline in interest on the Livret A savings account. This performance was slightly below that of the broader market (FFSA +17%).
NBI was €196.5 million in 2009, down 13% compared with December 2008. Revenues continued to suffer from the volatility of the capital markets, despite the rally in the fi nal quarter. Life insurance NBI was down 26% over the year. Provident Insurance NBI increased by 39% over the year.
Growth in non-European countries was 7.8% at current scope and 5% at constant scope and exchange rates. South America made the largest contribution to this growth (+20.7% at constant data).
Credit Insurance yearly aggregate NBI was €47.6 million, down 85% year-on-year. NBI suffered from a high yearly loss ratio and risk management policies implemented over the year.
The two networks’ aggregate net income (100%) was €1,641 million in 2009, down 16% year-on-year. The recovery seen in the second half was offset by writedown charges to the group’s national investments.
Given the ongoing economic downturn, work carried out in 2009 led to the inclusion of additional margins of caution in default probability scales for major counterparties.
In addition to the quantitative work done on its models, Natixis also conducted periodic controls at different levels of the bank to ensure the quality of both its internal ratings and the overall process.
Loans protected by credit-default swaps remain on Natixis’ balance sheet, but bear the counterparty risk attached to the credit-default sellers, which are generally OECD banks. These transactions are subject to the same decision-making and monitoring procedures as those applying to all derivatives.
OTC fi nancial instruments, the impact of netting agreements and other credit enhancements. It corresponds to the net value of the fi nancial assets on the balance sheet, after taking all writedowns into account (individually or collectively assessed).
Other exposure recorded in the corporate entities category 130,997 97,513 104,540 119,211
Exposure at risk by rating (S&P equivalent) for sovereign, bank and corporate entities (excluding specialized fi nancing) asset classes calculated using the IRB approach
Gross fair value of contracts/exposure at default/notional amount of credit derivative transactions
Breakdown of securitization positions on the basis of the role played by Natixis
(in millions of euros) Exposure at risk Weighted assets Regulatory capital requirements
They concern: a any breach of more than 20% to the overall VaR limit; a any overall regulatory VaR backtesting exception of more than 20%.
All operational limits are subject to day-to-day monitoring by the Market Risk Department.
Specific stress tests, calculated on a daily basis in the management tools, have been implemented for each business line. Limits have also been set for the equity, commodities, foreign exchange and exotic interest rate derivatives scopes.
Since December 31, 2008, Natixis has used so-called “new econometrics” VaR (see comment hereinabove) to calculate its regulatory capital requirements in respect to market risks on the scopes for which the use of internal models has been authorized.
Financial Stakes, Coface and Natixis Private Equity also report to the Operational Risk Department.
Furthermore, the governance of the Operational Risk sector was matched to the reorganization of the Bank’s business lines, while still focusing on the ongoing improvement to processes via corrective measures and action plans.
The Operational Risks Department maps the most critical risk situations in order to draw up preventative action plans to reduce exposure and to prioritize them.
These damages claims arise out of investigations that were performed or are currently being performed by the US Internal Revenue Service (“IRS”), the Department of Justice “DOJ” Anti-Trust division, the US Securities and Exchange Commission (“SEC”) and state prosecutors.
On September 11, 2008, CIC and Crédit Mutuel fi led an action against Lagardère and Natixis before the Commercial Court of Paris (Tribunal de Commerce de Paris), seeking the cancellation of contracts under which they had made forward purchases of EADS shares from Natixis involving the payment of roughly €28 million by Natixis to the plaintiffs, in exchange for the restitution by the plaintiffs of EADS shares to Natixis.
J TOTAL AMOUNT OF CAPITAL GAINS OR LOSSES ON DISPOSALS FOR THE PERIOD UNDER REVIEW
Activities excluding repurchased and reverse repurchased securities and instruments at fair value through profi t and loss were mainly fi nanced by bank debts and debt securities.
The prudential scope of consolidation is based on the statutory scope of consolidation, but with equity-method accounting for the insurance companies Coface, Natixis Assurances and Compagnie Européenne de Garanties et Cautions.
Regulatory capital totaled €15.2 billion at end 2009. The decline of €0.5 billion in Tier-2 capital, due mainly to the reduction in the gap between provisions and the amount of anticipated losses within the Basel framework, was accompanied by a €0.4 billion increase in the deduction of CCIs and the cancellation of upper Tier-2 capital (reimbursement of subordinated notes issued prior to January 1, 1998, for which the discount in Tier-2 capital was recyclable in upper Tier-2 capital).
FINANCIAL DATA 6 Information from Article L. 225-100-3 of the French Commercial Code
Financial liabilities at fair value through profi t and loss 6.1 181,531 275,380
Consolidated net income/(loss) - group share – per share, calculated on the basis of the average number of shares over the period excluding treasury shares and including shares that could be issued on the exercise of stock options and bonus shares 5.24 (0.60) (1.56)
Share of gains or losses from equity affi liates recorded directly in equity 8.1 (215) (468)
CHANGE IN CASH AND CASH EQUIVALENTS 4,254 4,878 * Including the free cash of Natixis Algérie for + EUR76 million presented as non-current assets held for sale in accordance with IFRS 5.
NOTE 8 STATEMENT OF NET INCOME/(LOSS), GAINS AND LOSSES RECORDED DIRECTLY IN EQUITY 289
(1) All of the standards adopted by the European Union are available from the European Commission’s website, at:
This standard has not had any impact on Natixis’ financial statements; a IFRIC 13 “Customer loyalty programs”, adopted by the European Commission on December 16, 2008, which addresses customer loyalty points. It does not apply to Natixis’ operations and consequently has no impact on Natixis’ financial statements; a IFRIC 14 “The limit on a defined benefit asset, minimum funding requirements and their interaction”, adopted by the European Commission on December 16, 2008. This interpretation applies to all defined benefit pension plans and other long-term defined benefit plans under IAS 19 “Employee benefits”. This interpretation clarifies the notion of the availability of future economic benefits linked to plan surpluses and the notion of the minimum financing requirement. This interpretation has had no impact on the accounting of benefits for Natixis employees.
In addition, while drawing up the consolidated fi nancial statements as at December 31, 2009, Natixis has also taken into account: a with regard to the valuation of financial instruments, the recommendation published on October 15, 2008 by the AMF, the French National Accounting Board (Conseil National de la Comptabilité), the French Banking Commission (Commission bancaire) and the French insurance regulator (Autorité de Contrôle des Assurances et des Mutuelles – ACAM), and the guide published by the IASB on October 31, 2008 entitled “Measuring and disclosing the fair value of financial instruments in markets that are no longer active”. These two texts underline the importance of using judgment to determine fair value in illiquid markets. This recommendation has led Natixis to not systematically apply models using observable data on December 31, 2009 in view of the lack of market liquidity affecting some asset classes; a with regard to financial reporting on risk exposure, the recommendations applicable in France resulting from the Financial Stability Forum (FSF). Details of risk exposure, presented in the format recommended by the French Banking Commission in its May 29, 2008 statement “Presentation note regarding the French application of the FSF’s recommendations for financial transparency”, have been incorporated in the “Risk management” chapter of the management report; a with regard to financial reporting of variable remuneration for financial market professionals, work initiated after the publication of the decree of November 3, 2009 and the professional standard issued by the French Banking Federation on November 5, 2009 and summarized in a text published by the National Accounting Standards Board (CNC). Accordingly, the accounting of deferred remuneration differs depending on whether it is subject to presence or performance conditions. Deferred variable remuneration paid in the form of cash (indexed or not) or in shares subject to presence conditions must be recorded over the period of presence required in the plan, except when the condition of presence is inapplicable in practice. The starting date of this staggered recognition is the start of the accounting period in which the employee began to provide the corresponding services; a with regard to financial accounting of variable remuneration for financial market professionals, the draft bill on the amendment of the financial law for 2010. This draft provides for a 50% tax on the variable part of individual remuneration exceeding €27,500 paid with respect to 2009, independently
When the recoverable amount is lower than the carrying amount, an impairment loss is recognized in the consolidated income statement for the period and charged fi rstly against the goodwill allocated to the CGU or group of CGUs, and then against other identifi able assets belonging to the CGU or group of CGUs, pro rata to their carrying amount in the unit. The impairment loss charged against the assets in the CGU or group of CGUs must not reduce the carrying amount of the related assets to below the higher of the following amounts: their fair value less costs to sell, value in use, and zero. Impairment loss taken on goodwill may not be reversed.
The assets contributed by the CNCE to Natixis fall into two different categories: a shares in the corporate and investment banking and services subsidiaries; a a portion of the corporate investment certificates (CCIs) conferring entitlement to the share capital of the Caisses d’Epargne banks.
GOODWILL ARISING IN CONNECTION WITH THE BUSINESS COMBINATION ON DECEMBER 31, 2006
Goodwill generated as a result of the business combination totaled €484 million, breaking down as €229 million on IAMG, €21 million on IXIS CIB and €8 million on Novacrédit, plus the goodwill recorded in “Investments in associates” relating to the Caisses d’Epargne CCIs (€190 million) and the Banques Populaires CCIs (€36 million).
a Natixis Real Estate got ownership of the Summer Commons real-estate asset (shopping mall in Memphis) on March 3, 2009, this award following debtor default and the conclusion of attachment proceedings. A special purpose entity (Summer Commons LLC) was created in order to hold this commercial real-estate asset.
Internal restructuring a Merger of Natixis Capital Market Inc. into Natixis North America Inc.
a Creation of AEW Partners VI, AEW Senior Housing Investors Inc., Kennedy Financement Luxembourg, Natixis Securities Investment Consulting Co. Ltd.
a the euro contracts are contracts under which the insured party receives a minimum guaranteed return plus the major share of the surpluses generated by the insurance company’s main fund. Any shortfall between the fund’s return and the minimum guaranteed return is borne by the insurer which thus incurs the risks. The risks and benefits criteria are met for such funds if the insurer’s interest is a majority one. At December 31, 2009 the Natixis Assurances sub-group held a majority interest in 5 funds which are material to the consolidated financial statements and were thus consolidated in the Natixis consolidated financial statements: j ABP Actions, j ABP Croissance Rendement, j ABP Midcap, j Fructifoncier, j Nami Investment; a the unit-linked contracts are contracts under which the insured party selects the funds in which the insurer invests on its behalf. The value of the insurer’s interest in such funds in the form of unit-linked contracts is reflected in the insurance contracts, the remuneration of which is not guaranteed. The risks and benefits inherent in these investments are borne by the insured party. Such funds do not therefore require consolidation.
The fair value of instruments obtained using valuation models is adjusted to take account of counterparty, modeling and input risks.
The valuation model used for non-agency US RMBS (with or without a subprime component) held by Natixis (Natixis, Natixis Funding USA, and Natixis Capital Market North America) in 2009 is based on fi nal loss levels for each structure, estimated using a formula taking into account cumulative losses at maturity and defaults recognized. The unrealized losses are determined by projecting fi nal losses based on estimated losses to date, as calculated by the “delinquency pipeline”, the severity of loss given default and the losses already incurred based on assets and pool vintages.
The charge to writedown or amortization is recognized in the consolidated income statement under the heading “depreciation, amortization and impairment of property, plant and equipment and intangible assets”.
Unlisted equity instruments classifi ed as available-for-sale fi nancial assets primarily consist of investments in nonconsolidated companies. The fair value of investments in unlisted non-consolidated companies is obtained principally by using the P/E (price/earnings ratio) and DCF (discounted cash fl ow) valuation methods. Use of these methods requires certain choices and assumptions to be made in advance (in particular, projected expected future cash fl ows and discount rates).
6.1.1.3 - Conditions for classifi cation of fi nancial assets designated at fair value through profi t and loss
Securities designated at fair value through profi t and loss 904 5
Derivative instruments not eligible for hedge accounting (negative fair value) 103,946 4,658 98,630 658
Derivative instruments not eligible for hedge accounting (negative fair value) 594
aAt December 31, 2009, a discount of €100 million was recognized against fund units based on the sales prices observed on the secondary market.
(a) Syndicated loans: loans with a theoretical syndication date expired as at December 31, 2009 amounted to €703 million. These loans were analyzed on a case-by-case basis to take into account the market discounts observed at the reporting date within income. Cumulative discounts amounted to €71 million at December 31, 2009 and €96 million at end 2008, representing an increase of €25 million over the period.
Provisions for impairment of fi nancial assets (2,626) 665 (111) 9 (2,063) (1,686) 449 (8) 9 (1,237)
Together, these specialized management companies enable the Group to provide a full range of expertise meeting demand from all customer segments. Coverage of the various customer segments is optimized by the organization of distribution around the Global Associates platform and the business franchises developed over the long term by the management companies, mainly with various client groups. The management companies continue to handle distribution via the shareholder retail banking networks in France.
Natixis consolidates these operations via its 20% ownership of Banques Populaires and Caisses d’Epargne retail banking networks and via the business lines distributed by the networks. Both shareholder groups’ networks have distinct yet complementary market positions. The Caisses d’Epargne banks have a strong presence in the personal and small-business customer segment, offering a full spectrum of products and services. They also boast robust local roots and are prime movers in regional development, offering local authorities, social housing organizations and businesses an extensive range of products and services. The Banques Populaires network focuses on professionals , small businesses and retail customers.
Financial liabilities at fair value through profi t and loss 144,253 85 (1) 40 (1) 36,870 285 181,531
On March 18, 2009, Natixis set up a retention plan for Corporate and Investment Banking employees. The 2009 retention plan is designed to foster loyalty among key employees and encourage them to continue contributing to CIB’s activities. The rights to deferred compensation vest gradually over a period running from the grant date (March 18, 2009) to July 1, 2012. The amount settled in cash at each payment date depends on changes in performance-linked ratios relating to CIB and more generally Natixis, as well as the holding period.
FINANCIAL DATA6 Consolidated fi nancial statements and notes // Notes to the consolidated accounts a) Impact of new laws and regulations
Other items (change in consolidation scope,... ) 40 (2) (2) (58) (22)
14.2 - Start of negotiations for the sale of a portion of the Natixis Private Equity portfolio
Maturity less than 1 year 1-5 years more than 5 years Total
a Other services relating directly to auditor’s duties 235 1,560 3% 16% 7 605 0% 13% 48 99 1% 3%
IXIS SP 1 – COMPARTIMENT PRÉVIE (1) (4) Investment fund 0 0 100 100 Luxembourg
NATIXIS TRANSPORT FINANCE ** Bank FC 100 100 100 100 France
AEW PARTNERS V, INC. Asset Management FC 100 100 89 89 USA
NATIXIS ASSET MANAGEMENT FINANCE (EX-NATIXIS ASSET MANAGEMENT PARTICIPATIONS 2) */** Holding company FC 100 100 89 89 France
Institutional safekeeping - Mutual fund depositary bank 0 0 50 50 Luxembourg
Promotion and international trade operations 0 0 100 99 United States
COFACE SVERIGE (EX-AKC Norden) - SUCC (COFACE KREDIT) Insurance FC 100 100 100 100 Germany
NEM INVEST SAS (18) Private Equity FC 99 99 0 0 France
SCI ALTAÏR 2 (1) Real estate operations FC 100 100 100 100 France
FONCIÈRE DU VANUATU Lending institution/other EM 20 20 20 20 Vanuatu
CAISSE D’EPARGNE BRETAGNE-PAYS DE LOIRE (ex -Caisse d’E pargne des P ays de la L oire ) *
On November 12, 2009, BPCE put in place a mechanism that would guarantee part of the GAPC portfolios backdated to July 1, 2009. The guarantee mechanism enabled Natixis to free up considerable amounts of capital allocated to the segregated assets and protect itself against the risk of losses on these portfolios after June 30, 2009. The guarantee scheme is based on two mechanisms: a a sub-participation in terms of risk which acts as a financial guarantee on 85% of the nominal value of assets recognized as “securities held for investment”, “securities held for trading”, “securities held for sale” and “receivables”. Under this guarantee, Natixis is protected from the very first euro in default up to 85% of the default amount; a two total return swaps (TRS), one in euros and another in dollars, which transfer to BPCE 85% of the profit or loss recognized as from July 1, 2009. The instruments hedged by these TRSs are mostly represented by “held for trading” securities with a smaller volume of “held for sale” securities. In parallel, Natixis has bought an option from BPCE which, if exercised, will allow it to recover in 10 years’ time any net positive performance by the portfolio for payment of a premium.
NOTE 2 CHANGES TO ACCOUNTING METHODS AND COMPARABILITY OF FINANCIAL STATEMENTS
(a) For these categories of securities, the gross values shown in the “Securities held for sale” and “Securities held for investment” columns are redemption value.
Any losses transferred to the parent company give rise to a provision for restitution of corporate tax, deemed to offset the additional group tax incurred if subsidiaries return to profi t, and their tax contribution is decreased by the amount of the prior year losses.
In accordance with our appointment as Statutory Auditors at the General Shareholders’ Meeting, we hereby present our report for the year ended December 31, 2009, on: a our audit of the accompanying financial statements of Natixis; a the justification of our assessments; a the specific verifications and disclosures required by law.
1.4 - Sale agreement between Natixis and BFBP concerning Natixis Algérie
Corporate offi cers concerned: François Pérol, Jean Clochet, Jean-Claude Créquit, Stève Gentili, Francis Henry, Bernard Jeannin, Olivier Klein, Yvan de La Porte du Theil, Alain Lemaire, Didier Patault, Philippe Queuille, Philippe Sueur and Jean-Louis Tourret.
On November 12, 2009, the Board of Directors approved a number of agreements regarding the guarantee covering certain GAPC assets: a the Financial Guarantee agreement, under which BPCE agrees to grant Natixis a financial guarantee; a the ISDA Master Agreement and appendix, between BPCE and Natixis; a Total Return Swap agreements between Natixis and BPCE, one of which relates to euro-denominated assets and the other relates to US dollar-denominated assets; a the Purchase Option granted by BPCE to Natixis; a the “Miroir NLI” Financial Guarantee between Natixis and Natixis Luxembourg Investissements; a the “Miroir NFP” Financial Guarantee between Natixis and Natixis Financial Products Inc.; a the “Miroir NFUSA” Financial Guarantee between Natixis and Natixis Funding USA, LLC; a the “Miroir Ixis CMNA Australia” Financial Guarantee between Natixis and Ixis CMNA Australia No2 SCA; a the “Miroir NFP” Total Return Swap agreement between Natixis and Natixis Financial Products Inc; a the “Miroir NREC” Total Return Swap agreement between Natixis and Natixis Real Estate Capital Inc; a governance arrangements set up in respect of the GAPC guarantee (notably including draft operating charters for the Guarantee Supervision Committee and Segregated Assets Management Committee).
On December 18, 2008, the Supervisory Board approved an agreement providing for the distribution of Natixis products and services to the regional banks acquired by the Banque Populaire group from HSBC, pursuant to which Natixis is to be the exclusive supplier of the regional banks in the businesses concerned by the agreement as from 2009. The agreement also stipulates that the terms and conditions governing dealings with Natixis and the Banque Populaire group shall apply to the former HSBC banks.
FINANCIAL DATA 6 Statutory Auditors’ special report on related party agreements and commitments 2.7 - Sale of CIFG Holding shares held by Natixis to BFBP and CNCE
The expense recognized by Natixis in respect of this agreement totaled €8,206,352.75 in 2009.
FINANCIAL DATA6 Statutory Auditors’ special report on related party agreements and commitments 2.11 - De facto association agreement between CDC, CNCE (replacing CDC Ixis in its rights and obligations) and Ixis CIB (formerly CDC Ixis Capital Markets)
ON THE COMPOSITION AND CONDITIONS FOR THE PREPARATION AND ORGANIZATION OF THE WORK OF THE BOARD, AND THE INTERNAL CONTROL PROCESS AND RISK MANAGEMENT PROCESS SET UP BY THE COMPANY (ARTICLE L.225-68 OF THE FRENCH COMMERCIAL CODE)
Natixis is subject to the controls of BPCE its majority shareholder and central body, that oversees compliance with risk monitoring requirements on a consolidated basis. To ensure overall consistency, coordination structures and systems for the permanent and periodic control mechanisms were put in place as part of the process of establishing BPCE, from July 31, 2009. Similarly, the Risk, Compliance and Audit Departments are integrated into the corresponding Groupe BPCE department s .
3. Organizational structure a The Compliance Department reports to the General Secretary and functions independently of operational departments. The General Secretary is responsible for permanent control, as defined in regulation 97-02.
This strong functional reporting line of a hierarchical nature expresses itself through: j Natixis’ Chief Compliance Offi cer being required to issue prior approval to the secondment, appointment or removal of a subsidiary’s Compliance manager; j Natixis’ Chief Compliance Offi cer participating in annual performance and state of progress reviews; j the obligation to send information to Natixis’ Chief Compliance Offi cer.
For businesses operated by the head office, Compliance managers report directly and hierarchically to Natixis’ Chief Compliance Officer.
Finally, the Compliance Department continued to be involved in the creation of new products by verifying their compliance with regulations in force and participating in several ad hoc Committees.
The Head of ITSS for Natixis since April 1, 2009 has reported to the Head of Compliance. He works in close cooperation with Internal Audit and the Risk Department.
The IT Systems Security (ITSS) Department has initiated and managed fundamental actions relating to the strengthening and control of logical security. These actions concern: The management of identities and clearance authorizations
In 2009 ITSS conducted a review relating to the implementation of a control solution for work station compliance (encryption, USB port protection, etc.). A decision has been made to encrypt all portable computers and this will be implemented in 2010.
The 2010 information security plan includes the extension of security initiatives carried out in 2009. It should take into account guidelines issued by BPCE, the new core shareholder. It is based around four priority axes: Governance of the sector
Consistent with the organization of Groupe BPCE , the second level permanent control mechanism is organized under the authority of the Compliance sector and the Risk sector, in accordance with their respective allocations. These oversee the proper functioning of the chain of fi rst- and second-level controls.
For the parent company scope, that concentrates the major part of Natixis’ balance sheet risks, the interest rate and liquidity mismatch arising from fi nancing activities is centralized through matching internal contracts with global treasury who ensure their operational management through delegation from the ALM Committee. Market operations match their net funding requirements from global treasury under a predefi ned budget framework.
Resolutions Ten to Thirteen ask the General Shareholders’ Meeting to reappoint and appoint the permanent and substitute Statutory Auditors whose term of offi ce is expiring.
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for extraordinary business, having reviewed the report of the Board of Directors and the special report from the Statutory Auditors and pursuant to the provisions of Articles L.225-209 et seq. of the French Commercial Code: 1. authorizes the Board of Directors to cancel, on one or more occasions, in the proportions and at the timing of its choosing, up to 10% of the share capital (it being specified that this limit applies to the Company’s share capital adjusted, where necessary, to take account of transactions affecting the share capital subsequent to this General Shareholders’ Meeting), for 24-month periods, all or part of the shares that the Company holds or may hold under the share buyback program, to accordingly reduce the share capital and to allocate the difference between the purchase value of the canceled shares and their par value to the premiums and available reserves, including the legal reserve, for up to 10% of the canceled capital;
Throughout his term, each director shall own at least one thousand (1,000) Company shares.
12.2 - In addition to the operations referred to by law and regulations in force, the internal regulations of the Board of Directors will determine the decisions which will be subject to the prior approval of the Board of Directors.
When the Company’s executive management is handled by the Chairman of the Board of Directors, the following provisions concerning the Chief Executive Offi cer will apply to the Chairman of the Board of Directors who will take on the title of Chairman and Chief Executive Offi cer.
Each member of the General Shareholders’ Meeting is entitled to as many votes as he owns or represents shares.
For the purpose of a capital increase reserved for employees pursuant to Article L.225-129-6 of the French Commercial Code €16 million 26 months none, replaced on
Possibility for shares or securities giving access to capital issued with waiving of the preferential subscription rights for shareholders to be used to remunerate contributions in kind 10% of the share capital (at the time of issue) (c) 26 months none none
For the purpose of a capital increase reserved for members of employee savings plans, with waiving of preferential subscription rights in favor of said members pursuant to
At December 31, 2009, 36,205,673 stock options were exercisable or yet to be exercised.
INDIVIDUALS OR LEGAL PERSONS EXERCISING OR POTENTIALLY EXERCISING CONTROL OVER NATIXIS
The buyback value of Banques Populaires CCIs will be calculated using the method of valuation used when they were issued, particularly as regards the calculation of revalued net assets, and must take account of the profi tability of Banques Populaires and of the proportion of the net assets to which the Banques Populaires CCI s confer a right. If an agreement between Natixis and Banque Populaire concerned cannot be reached , this buyback value will be determined by an expert.
In addition, without prejudice to the benefi t of paragraph (iii) , in the event of a legislative amendment conferring a voting right to the holders of CCI s, Natixis undertakes to act in concert with BPCE and the Caisses d’Epargne , to make the necessary adaptations while either maintaining the rights and characteristics of the securities issued or replacing Caisses d’Epargne CCI s with securities having the same characteristics, and particularly without voting rights and with Natixis having the ability to consolidate the results of Caisses d’Epargne in proportion to its investment in the capital.
INTERNATIONAL Chairman of Plantations des Terres Rouges Deputy Chairman of Nord Sumatra Investissements; Vice-Chairman of Société des Caoutchoucs de Grand Bereby (SOGB) and Bereby Finances Director: BB Group, Centrages, Compagnie Internationale de Cultures, Liberian Agricultural Company (LAC), Mediobanca, Plantations Nord Sumatra Limited, Plantations des Terres Rouges, Red Lands Roses, SDV Gabon, SDV Sénégal, Socfi n, Socfi naf, Socfi nal, Socfi nasia, Socfi nco, Socfi ndo, Socfi ninter, Socfi n Plantations Sendirian Berhad, Société de Gestion pour le Caoutchouc et les Oléagineux (Sogescol) Financière Privée Permanent Representative: Bolloré Participations on the Boards of Directors of SDV Cameroun, SDV Congo, SDV Côte d’Ivoire and Immobilière de la Pépinière Permanent Representative of Bolloré on the Board of Afrique Initiatives
Chairman of the Executive Board of Caisse d’Epargne Côte d’Azur Member of the Supervisory Board of Natixis Member of the Board of Directors of the FNCE Director of Siparex Associés Vice-Chairman of the Supervisory Board of GCE Capital Chairman of the Management Board of SAS Alliance Entreprendre Chairman of SAS Alliance Entreprendre Développement Chairman of the Supervisory Board of Masseran Gestion Director and Chairman of Nouveau Logis Azur (S.A. HLM)
Deputy Chief Executive Offi cer of BP Participations (since 0 7.31.2009)
Member of the Executive Board, Chief Executive Officer of Natixis Chairman of the Executive Board of Ixis Corporate & Investment Bank (Ixis CIB) Member of the Supervisory Board of Atos, now Atos Origin Director of Vinci Permanent Representative of Natixis on the Board of Directors at Natixis Global Asset Management
Member of the Supervisory Board: Caisse Nationale des Caisses d’Epargne (from 05.28.2009 to 07.31.2009)
Chief Executive Officer of Banque Populaire Bourgogne Franche-Comté Director: Banque Fédérale des Banques Populaires, Natexis Banques Populaires, Natexis Assurances, Natexis Paiements, Natexis Lease, C.A.R, IPMPE, Institution de Prévoyance du Groupe Banque Populaire Director representing Banque Populaire Bourgogne Franche-Comté on the Board of Directors of i-BP
Bruno Mettling, aged 51, was Deputy Chief Executive Offi cer of Banque Fédérale des Banques Populaires until March 2009. Inspector of Finances with the French Treasury until 1995, he held various positions of responsibility within ministerial cabinets before joining Groupe Caisse d’Epargne in 1999 as a member of the Executive Board, and then Groupe Banque Populaire in 2004.
Deputy Chief Executive Officer of Banque Fédérale des Banques Populaires Member of the Supervisory Board: Natixis Director: Natixis Private Banking Chairman of the Board of Directors: Banque Commerciale Internationale (BCI)
Chairman of the Supervisory Board: SODERO Gestion, BATIROC Bretagne – Pays de Loire
Director: BP Participations, CE Participations (since 0 7.31.2009), CNP Assurances (since 04.21.2009), Sopassure (since 03.23.2009), Crédit Immobilier et Hotelier-CIH (Morocco) (since 05.28.2009)
FRANCE Member of the Supervisory Board of Natixis Director of Natexis Banques Populaires Chairman: Bagatelle Investissement et Management-BIM (SAS), Bercy Présidence (SAS) of HBI SAS Legal Representative: Bercy Présidence, the company that is managing partner of Holding Bercy Investissements-HBI (SAS) Legal Representative of HBI, the Chairman company of Bercy Participations (SAS) Legal Representative of Bercy Présidence, the company that is managing partner of HBI, itself Chairman of Bercy Participations, manager and associate partner company of Elior (SCA) Manager of: Bercy Patrimoine, MBOB (SCI), LMDB (SCI) Chairman and Director of Avenance (SAS) and of Eliance (SAS) Legal Representative: Avenance SAS, the Chairman company of Bercy Services I (SAS) and Bercy Services V (SAS) Legal Representative: Elior SCA, the Chairman company of Elior Gestion (SAS) Member of the Supervisory Board of Pragma Capital (S.A.)