PRESENTATION OF NATIXIS 3 1.2 History and Natixis’ links with BPCE 5 1.3 2010 Key fi gures 7 1.4 Natixis’ business lines 9 1.6 Natixis and its shareholders 37
The Treasury Department now reports to FIC&T so as to leverage the natural synergies between the businesses. The Merger and Acquisition Advisory Services Department was folded into Corporate Solutions in order to position it selectively in Large Cap deals and certain cross-border mandates.
Operating in Europe and the United States, Real Estate Finance is specialized in advising balance-sheet transactions and arranging all types of deals (transactions, receivables, development programs). In 2010, the business line assisted Gecina with its refi nancing, Atarea Cogedim with the acquisition of the Cap 3000 shopping mall, and generated 27 new deals in Europe and 18 in the US (including two securitizations).
The range of expertise was reorganized and developed, particularly at Natixis Asset Management and Loomis. The multi-boutique model added two majority equity stakes: one in H
US and Asian asset management companies at end-2010 (assets under management in billions of dollars)
With short-term interest rates at record lows and despite worries over sovereign debt and the resulting equity market volatility, life insurance infl ows across the French market rose 4% in 2010. Natixis recorded another substantial increase in revenue, of 28%. This outperformance was driven by strong growth in the Banque Populaire network, notably for private banking customers, and by robust development in Luxembourg via Banque Privée 1818. Moreover, thanks to a signifi cant drop in paid benefi ts, net infl ows rose 75%, thereby helping to lift assets under management by 10% to €36.5 billion at year-end 2010.
Natixis’ private banking activity is fully dedicated to offering wealth management services to private investors. It operates in France, via Banque Privée 1818, and in Luxembourg via the teams of Natixis Private Banking. Private banking manages assets totaling €15.4 billion.
Natixis ranks second in the French market for mortgage guarantees for individuals, (over 170,000 guarantees issued in 2010) as well as for guarantees for property administrators and realtors under the Hoguet Law (nearly 7,000 guarantees issued in 2010). Moreover, Natixis shares the leading spot in the single-family home building sector, having guaranteed almost 21,000 houses in 2010.
Natixis offers a comprehensive range of employee benefi ts planning solutions developed by Natixis Interépargne and Natixis Intertitres. These include employee savings, pension schemes, employee share ownership, collective insurance and special payment vouchers.
Distribution of special payment vouchers expanded thanks to the development of multi-channel sales (Internet and telephone) and Caisses d’Epargne’s decision to offer its clients the Natixis Intertitres range of vouchers starting in 2011.
❚ CHANGE IN NUMBER OF TRANSACTIONS PER PREPAID CARD (HOLDERS AND RETAILERS) (IN BILLIONS OF TRANSACTIONS)
At the same time, clients reap the benefi ts of the Group’s ability to pool resources and thus invest more in innovation and in developing powerful, effi cient processing platforms. All these factors contribute to providing high-quality service and competitive solutions in the revolving credit, insurance, asset management, factoring, leasing and many other fi elds.
Another initiative geared toward young people is the NRJ cobranded payment card. Various designs are available, including a 3D image of the radio station’s famous panther. There is also a website that provides cardholders with opportunities to win concert tickets, CDs, and DVDs and to fi nd discounts for partner companies.
The Fédération Nationale des Caisses d’Epargne (FNCE) is the body providing deliberation, communication and representation for the Caisses d’Epargne and their cooperative shareholders. The FNCE’s mission includes coordinating the relationships of the Caisses d’Epargne with their cooperative shareholders, training their elected representatives and directors at the local level, and determining and promoting the corporate social responsibility activities of the Caisses d’Epargne.
Emprunts Ecureuil brought in €2.6 billion with, for the fi rst time, a loan option as part of a life insurance product. Infl ows from sales of Caisse d’Epargne cooperative shares totaled €1.1 billion.
New medium and long-term loans to small businesses grew by 28% to €2.3 billion. Average daily outstandings rose by 12% to €2.8 billion, while net excess infl ows, including Livret A savings plans, amounted to €255 million.
A memorandum of understanding relating to the CCIs issued by the Caisse d’Epargne banks and transferred to Natexis Banques Populaires (the Caisse d’Epargne CCIs) was entered into by each Caisse d’Epargne et de Prévoyance, the CNCE, SNC Champion and Natexis Banques Populaires on November 16, 2006 (the “Caisse d’Epargne CCI Memorandum of Understanding”).
The business information and receivables management businesses stabilized their revenue towards the end of the year, after recording a decline in the fi rst half.
The credit asset portfolio was assessed line by line by external advisers at the end of the fi rst half of 2009, using the following methodology: ● measurement of potential losses at completion (maturity) of underlying assets, regardless of any hedging on the basis of micro and macroeconomic assumptions comparable to those used by the US authorities as part of their stress testing of US banks; ● measurement of the recovery rate of these losses at completion for assets insured by monoline insurers on the basis of a credit analysis specific to each monoline insurer; ● analysis of the sensitivity of results on the basis of “high stress” assumptions and, as regards the monoline insurers, junior treatment of the CDS contracts compared to the financial guarantees.
Transformation of the CRPC (Comité des Risques du Portefeuille Cantonné – Segregated Portfolio Risks Committee) into a CGAC (Comité de Gestion des Actifs Cantonnés – Segregated Assets Management Committee), responsible for the whole GAPC scope, with the involvement of BPCE with respect to the sub-scope covered by the Guarantee.
● Decisions are taken by the CGAC Chairman (namely the Chief Executive Officer of Natixis) following discussion.
Director First appointed: Co-opted by the Board Meeting of 04.01.2010 and ratifi ed by AGM of 05.27.2010 Term expires: 2015 AGM (b)
Chairman, BRED Banque Populaire 18 quai de la Rapée 75012 Paris
Mr. Philippe Queuille Date of birth: 11.02.1956 Natixis shares held: 68,019
Vice-Chairman of the Steering and Supervisory Board of Caisse d’Epargne Île-de-France 57 rue du Général de Gaulle 95880 Enghien-les-Bains * Independent director.
FRANCE Member of Supervisory Board (up to 04.30.2010) and member of the Board of: Natixis Chief Executive Officer of: Bolloré, Bolloré Participations Chairman of the Board of Directors of: Financière de l’Odet, Havas, Havas Média France (up to April 7, 2009) Chairman of: Bolloré Production (up to June 22, 2009), Véhicules Électriques Pininfarina-Bolloré (VEPB) Chief Executive Officer of: Omnium Bolloré, Financière V, Sofi bol Member of the Board of: Batscap, Bolloré, Bolloré Participations, Compagnie des Glénans (up to June 11, 2009), Direct 8 (formerly Bolloré Média), Direct Soir, Financière Moncey, Financière de l’Odet, Financière V, Havas, Havas Média France, Matin Plus (formerly Compagnie de Bangor), Omnium Bolloré, Sofi bol, VEPB Permanent representative for Bolloré Participations, member of the Board of: la Cie des Tramways de Rouen, la Société Anonyme Forestière and Agricole (Safa), la Société des Chemins de Fer et Tramways du Var et du Gard, la Société Industrielle et Financière de l’Artois, la Société Bordelaise Africaine, IER Permanent representative for Bolloré Participations, Member of the Supervisory Board of: la Compagnie du Cambodge Permanent representative for Bolloré to the Board of: Bolloré Média (starting December 17, 2009), Fred et Farid (formerly F.F.L. Paris) Permanent representative for Havas to the Board of: Médiamétrie (up to November 13, 2009)
Mr. François Pérol, aged 47, is a graduate of HEC and the Institut d’Études Politiques de Paris. After graduating from ENA, François Pérol started his career in 1990 at the Inspection Générale des Finances (fi nancial inspection body). In 1994, he became deputy general secretary of France’s interministerial committee on industrial restructuring (CIRI). In 1996, he was appointed head of fi nancial markets within the French Treasury. From 1999-2001, he served as General Secretary of the Paris Club, in charge of international debt negotiations. After serving as deputy corporate development and fi nancing Director within the French Treasury in 2001, in 2002 he was named deputy cabinet Director to Francis Mer, the Minister for the Economy, Finance and Industry, then deputy cabinet Director to Nicolas Sarkozy, the Minister of State for the Economy, Finance and Industry, in 2004. In 2005, he became managing partner of Rothschild & Cie. In May 2007, he was appointed Deputy Secretary General to the French President’s offi ce.
FRANCE Member of the Supervisory Board of: Natixis Chairman and Chief Executive Officer of: Veolia Environnement Chairman of the Board of Directors of: Veolia Propreté, Veolia Transport, Veolia Water Member of the Board of: EDF, Casino, Guichard-Perrachon, Dalkia International, la Société des Eaux de Marseille, Sarp Industries Member of the Supervisory Boards of: Elior, Lagardère, CNP Assurances, A and B Dalkia (SAS) Manager of: Veolia Eau – Compagnie Générale des Eaux Member and Chairman of the Supervisory Board of: Dalkia France Non-voting member of: Caisse Nationale des Caisses d’Epargne INTERNATIONAL Director of: Veolia ES Australia, Veolia Transport Australia, Veolia Environmental Services, Siram, Veolia Environmental Services Asia, Veolia Transport Northern Europe, Veolia Environmental Services North America Corp.
Mr. Philippe Sueur, aged 64, is Vice President of the Caisse d’Epargne Île-de-France guidance and Supervisory Board. Mr. Sueur is a university law professor and has held various elected positions in the Paris region.
FRANCE Member of the Supervisory Board of: Natixis Chairman of: Bagatelle Investissement et Management-BIM (SAS) Legal representative for Bercy Présidence: general managing company of Holding Bercy Investissements-H.B.I. (SCA) Legal representative for H.B.I.: chair company of Bercy Participations (SAS) Legal representative for Bercy Présidence: general Manager of H.B.I., chairman of Bercy Participations, the general managing company of Elior (SCA)
FRANCE Member of the Supervisory Board of: Natixis Member of the Board of: Natexis Banques Populaires Chairman of: Bagatelle Investissement et Management-BIM (SAS), Bercy Présidence (SAS) HBI SAS Legal representative for Bercy Présidence: general managing company of Holding Bercy Investissements-HBI (SAS)
The Board of Directors held a total of 10 meetings in 2010. The attendance rate was 78% for the year as a whole, compared with 83.5% in 2009.
The Natixis Audit Committee met six times in 2010. The attendance rate was over 77% for the year as a whole, compared with 78% in 2009.
The Committee was chaired by independent board member, Vincent Bolloré, throughout 2010.
The Committee is responsible for submitting proposals to the Board of Directors concerning: ● the level and terms of compensation paid to the Chairman of the Board of Directors, the CEO and, where applicable, one or more Natixis Deputy CEOs (including fringe benefits, pension plans and health insurance, as well as the allocation of stock options or share purchases); ● rules for allocating board members’ fees to the Board and the total amount submitted for approval by Natixis’ General Shareholders’ Meeting; ● the general policy on stock options allocation.
Any individual or legal entity that owns, directly or indirectly, alone or jointly, a 1% share of the voting rights, or any multiple of this percentage, must notify the Company, by registred letter, of the number of voting rights that they possess. This notice must be made within a period of 15 days following each acquisition or sale of this fraction.
After each quarter in 2010, the Compensation Committee and the Board of Directors assessed whether or not there were grounds for paying attendance fees given the results for the period in question.
(a) In consideration of the individual waivers of stock options granted in 2008, given the material losses recorded over the 2008 fi scal year.
(b) The subscription price corresponds to the average price of Natixis shares in the 20 trading days prior to the date of the Executive Board’s decision.
Natixis’ internal control system is organized according to the following bodies of rules: ● a set of charters and procedures for governing and managing Natixis’ risk processes (such as the procedure governing the credit decision process, the market risk management charter, the charter for measuring, controlling and managing operational risks, the charter for managing compliance risks, etc.); ● Natixis’ audit charter; ● the general IT/data security policy establishing the governance rules for the security and continuity of IT systems, as well as the security principles to be applied; ● the charter formalizing areas of responsibility for country managers in Natixis’ foreign operations and organizing relations with heads of the business lines represented locally; ● the “compliance manual” which defines all best practices applicable to Natixis’ employees (especially concerning preventing conflicts of interest, countering money laundering, employee professional ethics, protection of confidential information, etc.)
The Internal Audit Department conducts audit assignments across the whole of Natixis (parent company, subsidiaries and branches) and covers all classes of risk arising from the business lines involved. It has full and unrestricted access to all information, confi dential or otherwise. Its fi eld of investigation encompasses all of Natixis’ operational activities (including run-off activities under the GAPC framework, for further information, please refer to Chapter 1 “GAPC”), its functional activities – notably including entities in charge of permanent control assignments – and its outsourced activities. In all business lines, it carries out in-depth analysis of operations, as well as the “front-to-back” processes by which operations are carried out. These analyses lead to an evaluation of existing control points in processes audited as well as an assessment of risks arising from the activities concerned. They lead to recommendations to strengthen the comprehensiveness and robustness of the mechanisms for controlling or managing the risks audited. These recommendations are ranked by order of priority.
Its scope of action extends to the following risks: ● credit risk; ● market risk; ● overall interest rate, liquidity and structural foreign-exchange risk; ● operational risk; and covers all entities consolidated by Natixis.
Credit risk is surveyed by making the various business lines accountable and by various control measures overseen by a dedicated team within the Risk Department.
The search for objective evidence of impairment is undertaken using analysis and close monitoring of business sectors and countries. Such evidence typically arises from a combination of micro or macroeconomic factors specifi c to the industry or country concerned. When necessary, an expert opinion is sought to improve the result obtained.
Generally speaking, the market risk monitoring system is adapted to reorganizations of business activities, thus facilitating exchanges with the business lines.
● These controls are conducted using the various accounting systems in place throughout Natixis.
As indicated above, since the creation of BPCE, Natixis’ medium-term refi nancing has been carried out through BPCE. The cost of this refi nancing is therefore dependent on the fi nancial structure and ratings of Groupe BPCE.
Pursuant to the agreements entered into at the time the CCIs were acquired, Natixis is obliged to maintain its holding in the capital of each Banque Populaire and Caisse d’Epargne at 20%. As a result, during any issue of new shares liable to dilute Natixis’ shareholding, Natixis must subscribe to additional CCIs so as to maintain its shareholding at 20%.
It consists of: ● analysis by the bank of all of its risks, including those already covered by Pillar I; ● calculation by the bank of the amount of economic capital it needs to cover those risks; ● comparison by the banking supervisor of its own analysis of the bank’s risk profile with the analysis conducted by the bank. This is done in order to adapt its own prudential measures accordingly, by setting capital requirements above minimum requirements or by applying any other appropriate technique.
The scope of prudential consolidation is established on the basis of the scope of statutory consolidation. The main difference between these two scopes lies in the consolidation method for insurance companies, which are accounted for by the equity method under the prudential scope, regardless of the statutory consolidation method.
Unrealized capital gains or losses on available-for-sale fi nancial assets are recorded in equity and restated as follows: − for capital instruments, net unrealized capital gains are deducted from Tier 1 capital net of the amount of tax already deducted. 45% of these pre-tax gains are included in Tier 2 capital. Net unrealized capital losses are not restated; − unrealized capital gains or losses recorded directly in equity due to a cash fl ow hedge are eliminated; − for other fi nancial instruments, including debt instruments or loans and receivables, unrealized capital gains or losses are also eliminated; − impairment losses on any available-for-sale assets recognized in the income statement are not restated.
● Minority interests include shares of minority interests in stakes held by Natixis.
Natixis’ credit risk measurement and management procedures are based on: ● a standardized risk-taking process, structured via a system of limit authorizations and decision-making Committees; ● independent analysis carried out by the Risk Department as part of the process of reviewing loan applications; ● rating tools and methodologies providing standardized and tailored assessments of counterparty risk, thereby making it possible to evaluate the probability of default within one year and loss-given default; ● information systems that give an overview of outstanding loans and credit limits.
Administrations and central banks 22,979 22,527 20,707 6,996 * Average exposure at risk represent the average of the four quarter-end fi gures (these data are not audited).
The increase in exposure observed in 2010 refl ects the change in the book value of Natixis’ credit portfolio. In particular, the rise in the exposure “Administrations and central banks” can be primarily attributed to short-term investments with the Banque de France and the Federal Reserve for liquidity management purposes.
Sovereigns Central administrations and central banks 2.8% 0.4% 4.3% 0.8% 8.3% 3.3%
Other exposure recorded in the retail customer category 63 2,437 67 336 373 3,275 2,286
❚ IMPACT OF RISK-REDUCTION TECHNIQUES ON CREDIT DERIVATIVES (DATA AS AT DECEMBER 31, 2010)
The operational unit is responsible for the following functions with regard to each business line: ● risk measurement methods; ● analysis and control of market risks and preparation of the corresponding reports; ● regular monitoring of positions and their results; ● monitoring and analysis of specific stress tests; ● proactive risk management; ● setting of limits and risk indicators; ● validation of valuation models (pricers); ● defining provisioning and fair value adjustment policies (for liquidity risk, risks related to non-hedgeable parameters, model risks, etc.).
impacts) on the regulatory scope. These results can be used to check the solidity of the VaR indicator: ❚ NATIXIS BACKTESTING – REGULATORY SCOPE
Natixis’ Operational Risk Committee is responsible for setting out operational risk management policy. As the operational extension of the executive body, the Committee is vested with all the decision-making powers required to carry out its role with regard to operational risk issues. It meets quarterly and is chaired by the Chief Executive Offi cer or his/her representative, the Chief Financial and Risks Offi cer.
Natixis’ structural balance sheet risks are managed and monitored under the authority of the Asset/Liability Management Committee (ALM Committee) chaired by the Chief Executive Offi cer, and comprised of the members of the Senior Management Committee (in charge of Finance and Risks, and Corporate & Investment Banking), the Head of Risk, the Head of Financial Management and BPCE’s Head of Asset/ Liability Management. This umbrella Committee meets every two months and its main responsibilities are to: ● validate the main asset/liability management rules (including those relating to internal liquidity pricing), agreements, indicators and limits (including liquidity budgets allocated to the business lines as part of budgetary procedure) for monitoring, managing and supervising structural balance sheet risks, all within the standard ALM framework set up by BPCE; ● validate overall refinancing policy; ● monitor the main balance sheet aggregates and changes affecting them; ● monitor structural balance sheet risks and compliance with limits.
On December 31, 2009, 735 Natixis shareholders fi led a complaint with the Commercial Court of Paris (Tribunal de Commerce de Paris) against BPCE, Natixis and Messrs Philippe Dupont and Charles Milhaud, seeking payment of roughly €4 million, alleging the dissemination of misleading information and the breach of market rules. The case was transferred to the Commercial Court of Bobigny (Tribunal de Commerce de Bobigny), which itself is considering a further transfer. The decision regarding the further transfer shall be taken at the hearing before a panel of judges of the Commercial Court of Bobigny on May 5, 2011.
The sensitivity of equity to variations in interest rates is lessened by the classifi cation of approximately €5.0 billion in interestbearing securities in the category of held-to-maturity securities.
Mortality and morbidity risks are limited by the implementation of a pricing structure appropriate for the policyholders in question and guarantees that are insured, the use of experience tables and the upstream practice of medical selection of new policyholders.
– to less than 3.3% of the group’s net assets, i.e. €50.1 million at December 31 2010. At this date, the Var of Coface and its subsidiaries was €36.4 million, within the authorized limits.
III- Specifi c verifi cation 329 4.4 PARENT COMPANY FINANCIAL STATEMENTS AND NOTES 330 4.5 STATUTORY AUDITOR’S REPORT ON THE PARENT COMPANY FINANCIAL STATEMENTS 379
At €960 million, SFS revenue was up 5.5% at constant scope of consolidation. Growth was driven by Specialized Financing, which grew by 13.9% in 2010, while Financial Services revenue fell 2.9%.
The equity method contribution totaled €474 million, an increase of 17.4% on the previous year. This increase was mitigated by a downward revision of CCI distributions (which impacted accretion profi t), in addition to the variation in revaluation adjustments (1).
From a fi nancial standpoint, 2010 results enabled a return to levels seen prior to the fi nancial crisis, despite the decline in the dividend of central institution BPCE.
Management expenses edged down 0.7% to €4,482 million, on the favorable effects of the decline in national IT expenses following the move to a single IT platform for all Caisses d’Epargne, and productivity gains achieved over the last two years. The operating ratio improved 6.4 percentage points to 64.9%.
Being the Group’s main issuer of public issuance, BPCE has provided Natixis with fi nancing for a total euro-equivalent amount of 12 billion, €5.2 billion of which was via public issues.
The principal and interest on the Notes (which constitute obligations under French law) are direct, unconditional, unsecured, undated and Deeply Subordinated Obligations of the Issuer and will rank pari passu among themselves and with all other present and future Support Agreement Claims and Deeply Subordinated Obligations, but shall be subordinated to the present and future prêts participatifs granted to the Issuer and present and future titres participatifs issued by the Issuer, Ordinarily Subordinated Obligations and Unsubordinated Obligations of the Issuer.
4FINANCIAL DATA Management Report for the year ending December 31, 2010 4.1.6 POST CLOSING EVENTS
Equity group share 20,931 20,918 - Share capital and reserves 10,037 12,081 - Gains and losses recorded directly in equity (1,033) (1,631)
Net gains or losses on fi nancial instruments at fair value through profi t and loss 7.3 1,184 (1,108)
In accordance with European regulation 809/2004 relating to information contained in prospectuses, the fi nancial statements for the year ended December 31, 2008 that were published in the 2008 registration document fi led with the AMF on April 7, 2009 are incorporated for reference into this registration document.
● amendments to IFRS 2 (“Share-based payment”), adopted by the European Commission on March 23, 2010. These amendments address Group cash-settled share-based payments. Specifically, they clarify a subsidiary’s accounting treatment of share-based payments in its own financial statements, where the settlement is carried out by another Group entity. These amendments have not had any impact on the accounting treatment of Natixis’ share-based payment plans; ● the amendment entitled “Improvements to IFRSs”, adopted by the European Commission on March 23, 2010. This amendment is part of the annual improvements project aimed at simplifying and clarifying International Financial Reporting Standards. Most of the changes are clarifications or corrections to standards or modifications made necessary by previous changes to IFRS. The following standards and interpretations have been modified: IFRS 2 (“Share-based payment”), IFRS 5 (“Non-current assets held for sale and discontinued operations”), IFRS 8 (“Operating segments”), IAS 1 (“Presentation of financial statements”), IAS 7 (“Statement of cash flows”), IAS 17 (“Leases”), IAS 36 (“Impairment of assets”), IAS 38 (“Intangible assets”), IAS 39 (“Financial instruments: recognition and measurement”), IFRIC 9 (“Reassessment of embedded derivatives”) and IFRIC 16 (“Hedges of a net investment in a foreign operation”). These amendments have not had any impact on Natixis’ financial statements; ● IFRIC 12 (“Service concession arrangements”), adopted by the European Commission on March 25, 2009. This interpretation clarifies the accounting treatment of public-private service concession arrangements by contracting bodies. It does not apply to Natixis’ operations and hence has no impact on its financial statements; ● IFRIC 15 (“Agreements for the construction of real estate”), adopted by the European Commission on July 22, 2009. This interpretation does not apply to Natixis’ operations and hence has no impact on its financial statements; ● IFRIC 16 (“Hedges of a net investment in a foreign operation”), adopted by the European Commission on June 4, 2009. IFRIC 16 clarifies how IAS 21 and IAS 39 should be applied when an entity hedges the foreign exchange risk arising from its investments in a foreign operation. This interpretation has not had any impact on Natixis’ consolidated financial statements; ● IFRIC 17 (“Distributions of non-cash assets to owners”), adopted by the European Commission on November 26, 2009. IFRIC 17 clarifies the accounting treatment of dividends paid in assets other than cash. This interpretation has not had any impact on Natixis’ consolidated financial statements; ● IFRIC 18 (“Transfers of assets from customers”), adopted by the European Commission on November 27, 2009. IFRIC 18 makes it possible to determine in what situations and conditions the revenues corresponding to a contractual asset transfer by a customer should be recorded. This interpretation does not apply to Natixis’ operations and hence has no impact on its financial statements.
4 FINANCIAL DATA Notes to the consolidated fi nancial statements and notes 2.2 Consolidation methods
A fi nancial agreement was signed on June 9, 2008 covering a four-year period (2007 to 2010). This agreement was subject to an amendment, signed on October 8, 2009, covering the period from January 1, 2009 to December 31, 2010, and a new fi nancial agreement is currently under negotiation.
Policies managed by the insurance subsidiaries of the Coface and Natixis Assurance sub-groups meet the defi nitions of insurance policies and investment contracts with a discretionary participation feature set out in IFRS 4. Accordingly, they result in the recognition of technical reserves in liabilities. These reserves are measured in accordance with French GAAP pending publication of an IFRS standard dealing with technical liabilities of insurance companies.
On December 31, Natixis acquired, through its subsidiary Natixis Lease, 99.91% of the capital of Cicobail, 100% of the capital of Océor Lease Tahiti and Océor Lease Réunion, and 99.09% of the capital of Océor Lease Nouméa.
● Disposal in Q4 2010 of Westpeak Global Advisors, LP and Westpeak Investment Advisors, Inc (MBO), generating a capital loss of €3.8 million.
● Partial contribution of Natixis Axeltis Ltd’s assets to Axeltis S.A. (formerly Natixis Global Asset Management Participations 4).
● Merger of Socama Haute Garrone and Socama Midi Pyrénées Ouest with Socama Pyrénées Garonne.
The Coface sub-group’s credit enhancement operations consist of insuring receivables securitized by a third party for investors via an SPE for losses in excess of a predefi ned amount. In this type of structure, the Coface sub-group has no role whatsoever in determining the SPE’s activity or in its operational management. The insurance premium received on the insurance policy is a small sum compared to all the benefi ts generated by the SPE, the bulk of which fl ow to the investors.
Natexis Investment Corp., a wholly-owned Natixis subsidiary, holds a series of interests in Private Equity funds. The vehicles are not consolidated given that they represent marginal interests (generally under 1%) in each fund and thus do not meet all the SIC 12 criteria (activities, decision-making powers, majority of benefi ts and majority of risks).
● SPEs may be used to hold securities on behalf of a customer.
A scoring model was used defi ning the level of risk associated with each structure based on a series of criteria.
In line with IAS 16, a specifi c depreciation schedule is defi ned for each signifi cant component of an item of property, plant and equipment which has a different useful life or is expected to consume future economic benefi ts differently from the item as
Writedowns may be reversed if there has been a change in the conditions that initially resulted in the writedown (for example there is no longer any objective evidence of impairment).
Continuing involvement is evidenced by the existence of contractual conditions such as: ● an option or obligation to repurchase the assets transferred; ● collection of financial compensation linked to the performance of the asset transferred.
Subsequently, fi nancial guarantees are stated at the higher of: ● the amount initially recognized upon inception less, where appropriate, the amount of amortization recorded in line with the principles outlined in IAS 18 “Revenue”. This amortization represents the deferred recognition of the fees received over the period covered by the guarantee; ● the value determined under IAS 37 “Provisions, contingent liabilities and contingent assets”, which is the amount that the entity would normally pay to settle the obligation or to transfer it to a third party.
Average number of shares used to calculate diluted earnings/(loss) per share 2,917,555,694 2,903,968,968
Loans and receivables designated at fair value through profi t and loss 6.1.1.2 and 6.1.1.3 1,184 1,542
At December 31, 2010, Natixis did not purchase protection to hedge against credit risk associated with loans and receivables classifi ed as fair value instruments through profi t and loss.
Loans and receivables to customers 1,175 400 775 - 1,356 262 772 322 6.1.2 FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT AND LOSS
12.31.2010 12.31.2009 Changes in the fair value of fi nancial liabilities, designated at fair value through profi t and loss, attributable to credit risk
4FINANCIAL DATA Notes to the consolidated fi nancial statements and notes 6.6.8 FAIR VALUE OF FINANCIAL ASSETS CARRIED AT FAIR VALUE IN THE BALANCE SHEET
The reclassifi cation of derivatives not eligible for hedge accounting outside Level 3, amounting to €492 million, resulted from the transition of multi-equity products with a residual maturity of less than 5 years to the observable inputs category.
Deposits from banks and customer deposits are presented by type of deposit (demand or time deposits). They are measured in accordance with IAS 39 within other fi nancial liabilities using the amortized cost method.
Provisions for loans and receivables 3,431 694 (1,042) (61) 116 41 134 3,313
Other related income and expenses 146 (107) 39 155 (101) 54 7.5.2 OTHER INSURANCE INCOME AND EXPENSES
4FINANCIAL DATA Notes to the consolidated fi nancial statements and notes 7.10 Reconciliation of the tax expense in the financial statements and the theoretical tax expense
+ Impairment of goodwill 0 9 - Share in income from associates (500) (425)
= Consolidated net income/(loss) before tax, goodwill amortization and share in income from associates 1,482 (3,356)
= Tax charge for the period (213) 1,288 o/w: current tax (212) 3 deferred tax (d) (1) 1,285
Building on the technical expertise of its teams, combined with its widely-recognized, award-winning research capabilities, Natixis designs tailored solutions for its customers incorporating the most recent market developments.
● Asset Management: Asset Management activities are grouped together within Natixis Global Asset Management. They cover all asset categories and are carried out mainly in the US and France. These activities are performed by autonomous entities (specialized management companies and specialized distribution units) coordinated by a holding company that ensures the organization’s consistency by overseeing its strategic direction. These companies are thus able to focus on their core business of achieving high performance, while retaining the option of developing their own institutional clientele and drawing on the business line’s other support functions, based on appropriate economic models. A number of them have forged a strong reputation, such as Loomis Sayles, Harris Associates, AEW and Natixis Asset Management.
● Private Equity for third party clients: The Private Equity business for third party clients is centered around a newly created Natixis department: Natixis Capital Investissement (NCI). The teams have extensive expertise in equity financing for generally unlisted small and medium-sized enterprises in France and Europe via sponsored equity holdings. NCI covers the private equity segments for third party investors, such as private equity deals (top-line funding for mature companies), venture capital (new, innovative companies) and funds of funds.
Assets at fair value through profi t or loss 127,065 21,541 11,165 906 532 161,208
Held-to-maturity fi nancial assets 5,033 0 (1) 5,032 5,485 * Including collective provisions.
Contributions paid under defi ned contribution plans are expensed for the period in which the services were provided.
Obligations in respect of long-term employee benefi ts are accounted for on the same actuarial basis as post-employment defi ned benefi t obligations, except that no “corridor” is applied to actuarial gains and losses and all past service costs are recognized immediately in income.
Change in obligation taken to income 8 21 2 49 80
Natixis’ Chief Executive Offi cer currently enjoys the retirement benefi ts plan offered to upper management offi cers (“hors classifi cation“): ● Social Security System (Tranche A)*; ● Mandatory ARRCO contributions in tranche A (overall rate 7.50%); ● Additional ARRCO contributions in tranches A* (6.563%) and B* (5.625%); ● AGIRC contributions in tranches B (20.30%) and C (20.30%).
The insurance industry companies within Natixis’ scope of consolidation are: Coface and its subsidiaries (credit insurance, business information and debt management services), Natixis Assurances and its subsidiaries (life insurance, personal risk insurance, property and casualty insurance) and Natixis Assurance (life insurance).
● Deloitte & Associés – 185, avenue Charles-de-Gaulle – 92524 Neuilly-sur-Seine cedex; ● KPMG Audit, Département de KPMG S.A. – 1 cours Valmy – 92923 Paris La Défense Cedex; ● Mazars – Immeuble Exaltis 61, rue Henri-Régnault – 92075 La Défense cedex.
● Independent audit, certifi cation & examination of the separate and consolidated accounts 8,334 8,828 86% 95% 4,281 4,469 84% 98% 3,359 3,588 91% 97%
● Other procedures and services directly related to the Statutory Auditor’s engagement 1,016 235 10% 3% 56 7 1% 0% 125 48 3% 1%
CANZAS SECURISATION LLC (1) (7) Real estate fi nance FC 100 100 0 0
LOOMIS SAYLES MULTI-STRATEGY ALPHA FUND, Ltd (1) (12) Asset Management 0 0 100 100
NATIXIS GLOBAL ASSET MANAGEMENT, LLC Holding FC 100 100 100 100
COFACE CANADA – SUCC (COFACE S.A.) Insurance FC 100 100 100 100 Canada
COFACE HUNGARY (formerly ÖKVC FIÓKTELEPE) – SUCC (COFACE AUSTRIA) Insurance FC 100 100 100 100 Hungary
In accordance with our appointment as Statutory Auditors at the General Shareholders’ Meeting, we hereby present our report for the year ended December 31, 2010, on: ● our audit of the accompanying consolidated financial statements of Natixis; ● the justification of our assessments; ● the specific verifications required by law.
Recognition is shown as net interest income in Net Revenues. Fees and transaction costs to be recognized are included in the loan book concerned.
● Other long-term investments: investments made by Natixis in the form of securities, with the intention of forging lasting professional relationships and creating a special professional relationship with the issuing company but without any influence over the management of the corporate entities in which investments were made due to the low percentage of voting rights held. They are recognized on the acquisition date at the purchase price excluding acquisition costs. They are included in the balance sheet at the lower of historical cost or value in use. Unrealized loss is subject to an allowance for impairment.
These securities are valued individually at the lower of value in use at the reporting date or acquisition cost. Value in use at the reporting date is based on criteria such as revalued net assets and profitability of the companies concerned. Unrealized loss is subject to an amortization charge.
The accounting treatment of speculative positions is identical for interest fl ows. Contracts are marked to market value at each reporting date and any unrealized losses are taken to the income statement as provisions.
On November 12, 2009, an arrangement was introduced on July 1, 2009 by BPCE to protect assets of a portion of GAPC portfolios with retroactive effect. This guarantee mechanism enabled Natixis to free up a signifi cant portion of its equity allocated to ring-fenced assets and to protect itself against the risk of loss from these portfolios prior to June 30, 2009. This protective arrangement is based on two mechanisms: ● a sub-participation in terms of risk which acts as a financial guarantee on 85% of the nominal value of assets recognized as “securities held for investment”, “securities held for trading”, “securities held for sale” and “receivables”. Under this guarantee, Natixis is protected from the very first euro in default up to 85% of the default amount; ● two total return swaps (TRS), one in euros and another in dollars, which transfer to BPCE 85% of the profit or loss recognized as from July 1, 2009. The instruments hedged by these 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 in exchange for payment of a premium.
Advances to banks 96,321 97,911 96,038 o/w writedowns of non-performing (1) (2) (123)
Bonds and other fi xed-income securities 210 2,040 442 283 4,950 20,693 0 28,618
On May 13, 2009, the Board of Directors approved €750,000,000 in shareholder current account advances from BFBP and €750,000,000 from CNCE, accounted for as equity. Repayments on these advances amounted to €1,000,000,000 in 2009 and €500,000,000 in 2010.
Income recognized for margin calls came to €14,965,981.00 for the 2010 fi scal year.
2.2.9 DE FACTO ASSOCIATION AGREEMENT BETWEEN CDC, CNCE (REPLACING CDC IXIS IN ITS RIGHTS AND OBLIGATIONS) AND IXIS CIB (FORMERLY CDC IXIS CAPITAL MARKETS)
These measures help retain talent, and facilitate and promote professional development, all in coordination with the current and future needs of the Company. They apply throughout Natixis and complement measures laid out in the Groupe BPCE Mobility Charter.
Finally, monthly mobility committees are being set up within the business lines.
In accordance with the decision taken by the Board of Directors on February 22, 2011 based on the advice of the Compensation Committee, the following principles have been adopted: Prohibition of guaranteed variable compensation
The application of the principle of proportionality as defi ned in the fi rst paragraph of article 31-4 of rule 97-02 may lead to some variable compensation payment rules being adapted or neutralized for some employees or groups of employees, notably to allow for: ● the special nature of their activities and their lesser impact on risk assessed at a consolidated level; ● the lower level of seniority or responsibility of these employees and their lesser effective individual impact on the Company’s risk profile and the amount and structure of their compensation; ● where applicable, the level of control that the parent company exercises over subsidiaries within a group framework, notably with regard to risk management.
5SOCIAL AND ENVIRONMENTAL INFORMATION Sustainable development and diversity 5.2 Sustainable development and diversity
In the area of Human Resources, Natixis is thoroughly committed to a policy of diversity, whether in terms of gender equality, employment of persons with disabilities or management of older staff members.
Concerning career management, career development meetings are offered to female executives and a specifi c career path for women with high potential was introduced.
Natixis S.A.’s headcount includes 81 civil servants on secondment from the French civil service.
Among French companies subject to the agreement on obligatory annual negotiations (i.e. the French part of integrated Natixis), the average gross annual remuneration for permanent employees on an FTE basis (fi xed and variable components, but excluding profi t-sharing, incentive plans and employer’s matching contributions to the employee savings plan), was €69,382.
(a) The direct rate is the ratio of disabled workers to all staff.
As is customary every year, many employees took part in France’s annual Telethon fundraising campaign at the end of 2010. The Company also topped up these donations.
5 SOCIAL AND ENVIRONMENTAL INFORMATION NRE Appendices – Environmental information 5.4 NRE Appendices – Environmental information
Concerning the energy consumed by buildings, there were signifi cant savings in the area managed by the Real Estate and Logistics Department (75,398 MWh in 2009 – 70,300 MWh in 2010), while the consumption of gas and heating oil remained low.
Total energy consumption per m2 of usable offi ce space (in MWh) 0.39 0.29 0.31 0.32
5.4.7 MEASURES TAKEN TO MITIGATE NEGATIVE IMPACTS ON BIOLOGICAL DIVERSITY, NATURAL ENVIRONMENTS AND PROTECTED ANIMAL AND PLANT SPECIES
6LEGAL INFORMATION Distribution of share capital and voting rights 6.3 Distribution of share capital and voting rights 6.3.1 DISTRIBUTION OF SHARE CAPITAL AT DECEMBER 31, 2010
11 Cancellation of treasury shares 26 months May be used to reduce the share capital of your Company 13 Issue of shares and/or securities giving access to capital* of the Company and/or fi nancial instruments entitling the allotment of debt securities* that maintain preferential subscription rights*
− Possibility of authorizing the issue of shares or securities giving access to capital* to be issued following the issue of securities giving access to the capital of your Company by Subsidiaries*
Average of the opening listed prices of the Company’s share on the regulated market of Euronext Paris over the 20 stock market trading sessions prior to the day of the decision by your Board setting the opening date of the subscription by savings plan members.
All powers are given to the Board of Directors, with the right to sub-delegate said powers under the conditions established by law, in order to ensure the dividend payment in new shares is implemented, to specify the terms and conditions of application and execution, to report the number of shares issued pursuant to this resolution and to make all necessary amendments to the bylaws relating to the share capital and to the number of shares comprising the share capital, and more generally, to do whatever is appropriate and necessary.
RESOLUTION THIRTEEN (AUTHORIZATION TO BE GIVEN TO THE BOARD OF DIRECTORS TO DECIDE ON A CAPITAL INCREASE, THROUGH ISSUANCE – WITH PREFERENTIAL SUBSCRIPTION RIGHTS MAINTAINED – OF SHARES AND/OR SECURITIES PROVIDING ACCESS TO THE CAPITAL OF THE COMPANY AND/ OR ISSUANCE OF SECURITIES ENTITLING HOLDERS TO THE ALLOTMENT OF DEBT SECURITIES)
− formally notes the fact that the Board of Directors has the option of establishing the right to subscribe in excess of shareholder entitlements; formally notes that this authorization entails a waiver, in favor of the holders of the securities to be issued, giving access to the capital of the Company, of the shareholders’ preferential subscription rights in respect of the shares to which said securities shall entitle their holders immediately or in the future,
− resolves that the issuance of equity warrants of the Company may also be made by a free allotment to holders of old shares, it being stipulated that the Board of Directors may accordingly decide that the fractional allotment rights shall not be tradeable and the corresponding securities shall be sold; 6) resolves that the Board of Directors shall be fully empowered, with the right to sub-delegate said powers in accordance with the law, to implement this resolution, and notably to: − decide on the capital increase and determine the securities to be issued,
The proxy or vote cast before the meeting by this electronic method, as well as the receipt that is issued for it, will be considered irrevocable written documents that are enforceable in all cases, it being clearly stated that in the event of an assignment of shares before the third business day preceding the meeting at zero hour, Paris time, the Company will, as a result, invalidate or change, depending on the case, the proxy or vote cast before that date and time”.
Pursuant to Article 28 of Commission regulation No. (EC) 809/2004 of April 29, 2004, the following information is incorporated by reference in this registration document: ● the consolidated financial statements for the year ended December 31, 2009, presented on pages 206 to 352, the Statutory Auditors’ report thereon, pages 353 to 354, and the Group management report, on pages 143 to 205 of the registration document filed with the AMF on April 30, 2010 under number D.10-0375; ● the consolidated financial statements for the year ended December 31, 2008, presented on pages 195 to 334, the Statutory Auditors’ report thereon, pages 335 to 336, and the Group management report, on pages 128 to 191 of the registration document filed with the AMF on April 7, 2009 under number D.09-0208.
Balo Bulletin des Annonces Légales Obligatoires/French Bulletin for Mandatory Legal Announcements