LEGAL INFORMATION 407 7.1 Natixis bylaws 408 7.2 General information on Natixis’ capital 413 7.3 Distribution of share capital and voting rights 417 7.4 Information from Article L.225-100-3 of the French Commercial Code 419 7.5 Draft resolutions of the Combined General Shareholders’ Meeting of May 19, 2015 420 7.6 Statutory Auditors’ special report on related-party agreements and commitments 447
ASIA 500 employees * Europe, Middle East, Africa Headcount – end of December 2014 (excluding Coface).
(c) See section 4.1.1 “Methodology” for exceptional items and Appendix to 4.1.3 “Consolidated results”.
Global Transaction Banking offers Natixis customers four product categories: V Treasury Management and Liquidity Management: tools for bookkeeping and cash management at an international scope, and solutions to increase the value of cash surpluses; V Cash Management: multi-channel and multi-format products to process flows and additional security services for the SEPA region and internationally; V Trade Finance: securitization and financing services for international trade to develop import/export businesses; (1) Collateralized loan obligation.
The platform also overcame some diffi cult market conditions in 2014, particularly the renminbi’s volatility, the revelation of large-scale fraud in Qingdao, China, and a sharp drop in the oil price.
V In the Middle East, Turkey and the Community of Independent States, including Russia, the bank has a historical presence with confirmed positions in structured financing, particularly in energy and commodities in Russia and Dubai. These sustainable operations, combined with established ties with local customers, enables the bank to offer new products and broaden its reach.
In 2014, the EMEA platform’s activity saw the major expansion of capital markets activities in London, the launch of the fi rst bond issues in Turkey and the implementation of Islamic fi nancing in the Middle East through Dubai.
The Asset Management and Private Banking division is centered on Asset Management, an area in which Groupe BPCE has global ambitions, boasting internationally acknowledged asset management expertise and distribution structures adapted to the specifi c features and regulations of the various markets in which it operates. It also aims to strengthen the positioning of the Banque Populaire and Caisse d’Epargne networks in the fi nancial savings and private banking segments in France, an seek new international growth drivers.
All told, Natixis’ European asset management companies provide a full range of products and services covering all traditional asset classes, as well as expertise in high value-added areas. They have received numerous awards for the performance and specifi c features of their investment funds and for their commitment to sustainable development.
Since April 2014, the Group’s private equity business line now reports to Natixis Global Asset Management under the name Private Equity Division to provide new alternative long-term investment solutions.
Banque Privée 1818 serves the Banque Populaire, Caisse d’Epargne and BPCE International et Outre-mer networks. It offers them sophisticated products and services to satisfy the growing needs of their customers in the areas of private banking and wealth management. Its services are wide and varied: delegated management, UCITS selection, life insurance policies via a platform, a rich real estate offering and corporate advisory. Banque Privée 1818 is Groupe BPCE’s open-architecture broker. In 2014, its gross net infl ows totaled €206 million and its assets under management increased sharply to €583 million.
Equipment leasing in mainland France, overseas territories, Spain and Italy recorded slight growth in results with nearly €1.7 billion in new leases. Front Lease, a new equipment-leasing sales tool integrated into the Banque Populaire advisor workstations, contributed to a signifi cant increase in the number of new leases.
Natixis also offers an online exchange solution, the online client range (OIC), developed as a white label for integration into each banking institution’s environment. In 2014, the range was expanded to include a mobile solution that clients can use to manage their securities accounts using any device: a computer, mobile phone or tablet.
V A dedicated e-mail address (actionnaires@natixis.com), managed directly by the Individual Shareholder Relations team, enables individual shareholders to send questions to the Company. In 2014, approximately 550 questions were processed.
V The Committee met with the Chairman of the Board of Directors, François Pérol, and with Chief Executive Officer, Laurent Mignon. Together they reviewed the latest developments at Natixis, the changes it has undergone over the last few years, as well as future business prospects. Individual shareholders were given the floor to voice their opinions and sentiments on Natixis and its overall position.
The award is in recognition of the Natixis Shareholder Relations team’s efforts and dedication to its individual shareholders.
A graduate of HEC and the Stanford Executive Program, Laurent Mignon worked for more than 10 years in various positions at Banque Indosuez, from the trading fl oor to corporate banking. In 1996 he joined Schroeders in London, then AGF in 1997 as Chief Financial Offi cer. He was appointed to the Executive Committee in 1998, then became Deputy CEO in charge of Banque AGF, AGF Asset Management and AGF Immobilier in 2002. He became CEO in charge of the Life and Financial Services and Credit Insurance divisions in 2003 and Chairman of the Executive Committee in 2006. From September 2007 to May 2009, he was associate manager at Oddo et Cie alongside Philippe Oddo.
V Permanent Representative of BPCE, member of the Board of CE Holding Promotion
A graduate of the École des Hautes Études Commerciales (HEC), Christel Bories fi rst practiced as a strategy consultant at Booz Allen & Hamilton and then moved to Corporate Value Associates (1986-1993). Next, she joined the Union Minère group as Director of Strategy and Control (1993-1995). She later joined the Péchiney group where she was successively a member of the Executive Committee, Director of Strategy and Management Control (1995-1998), and Director of Packaging (1999-2003). She was Chairman and CEO of Alcan Packaging (2003-2006), then of Alcan Engineered Products (2006-2010), while serving as a member of the Executive Committee of Alcan and then a member of the Executive Committee of Rio Tinto Alcan. In 2011 she was appointed CEO of Constellium. She chaired the Executive Committee of the European Aluminium Association between 2007 and 2009.
V Member of the BPCE Supervisory Board and member of the Audit and Risks Committee
Multicroissance V Permanent Representative of BP Occitane, manager of SNC Immocarso
V Permanent Representative of BPMC, Member of the Board of Association des BP pour la Création d’Entreprise
V Deputy Chief Executive Officer of Nexity Solutions (until May 2014) V Member of the Board of Directors of Medica (until March 2014), and Kea & Partners (until February 2015)
(a) Listed company. (b) Non-Group company. (c) 2015 AGM called to approve the fi nancial statements for the year ended 31.12.2014. (f) Formerly the Appointments and Compensation Committee.
Attendance rate in 2014 Board of Directors: 100% Audit Committee: 100% Strategic Committee: 100%
Global Holding Limited, Centaurus Management Company Limited, Centaurus Capital International Limited
V Chairman of Agence Lucie V Chairman of the Supervisory Board of Rhône Alpes PME Gestion V Member of the Board of Siparex Associés V Permanent Representative of CERA, member of the Board of Compagnie des
Didier Patault has been Chairman of the Management Board of Caisse d’Epargne Ile-de-France since May 2013.
A graduate of HEC, Henri Proglio began his career in 1972 at the Générale des Eaux Group (now Veolia Environnement), where he held various Senior Management positions. In 1990, he was appointed Chairman and CEO of CGEA, a subsidiary specialized in waste management and transport. In 2000, he became Chairman of Vivendi Environnement (Veolia Environnement), and, in 2003, Chairman & CEO.
Energies Nouvelles (until 11.25.2014) , Edison (until 11.25.2014), Dalkia (from 07.25.2014 to 11.25.2014)
V Member of the Board of: Natixis (a), Dassault Aviation (a), FCC1 Spain (since 05.27.2010), Veolia Environnement North America Operations (until 09.13.2010)
Address: 89 Avenue Charles de Gaulle 92575 Neuilly sur Seine Cedex
V Member of the Supervisory Board and Audit and Risks Committee of BPCE V Chairman of the Board of Directors of SLE Vallée des Gardons V Member of the Board of: CE Holding Promotion, Fédération Nationale des
In addition to the duties attributed by law and the bylaws, the Chairman of the Board of Directors provides his support and expertise to the Chief Executive Offi cer, while respecting the CEO’s executive responsibilities. As such, he may attend any meeting that addresses subjects related to Natixis’ strategy and organization, and, at the CEO’s request, he may represent Natixis in its relationships with the group’s major partners so as to promote business relationships.
In addition, the Chairman of the Board of Directors sees to maintaining the quality of the relationships with shareholders, by participating in actions carried out in that arena. As such, on November 7, 2014, Mr. Pérol participated in the Shareholders’ Advisory Committee, during which he was able to discuss the overall vision of Natixis with the Committee members.
In addition, with respect to the assessment of the Board of Directors’ work, the Internal Rules specify that, at least once a year, an agenda item will be devoted to evaluating the Board’s operation, an account of which will be included in Natixis’ annual report (for 2014, see point 2.3.1.4 – Assessment of the Board’s work in 2014).
It is recommended that each director hold at least 1,000 Natixis shares. He has six months to acquire the 140 shares stipulated by the articles of incorporation and another 12 months to bring his holding to 1,000 shares.
2 CORPORATE GOVERNANCE Management and oversight of corporate governance The duty to refrain also applies if inside information is held on the securities of listed companies in which Natixis holds or may come to hold a stake.
Management and oversight of corporate governance of reports by the Internal Audit Department on Natixis and its subsidiaries is made to the Risk Committee which also receives all reports from the regulatory and supervisory authorities (specifically the ACPR) on Natixis and its subsidiaries; V to address Natixis’ annual internal audit program, including audits of subsidiaries, with this program being presented to the Committee at least one week prior to its approval; C Work of the Risk Committee in 2014
In 2014, the Strategic Committee scrutinized Natixis’ strategic plan (2014-2017) “New Frontier,” as well as the fi rst milestones or projects related to that plan.
Lastly, in mid-2014, the Senior Management Committee managed the closure of the GAPC (Workout Portfolio Management).
For holders of registered shares, such entry in the register by D-2 is suffi cient to enable them to attend the meeting.
The members of the Board of Directors of Natixis received directors’ fees for the 2014 fi scal year subject to the terms and conditions set out below.
Compensation paid to the CEO in the form of stock options or performance shares
It is reiterated that the CEO is prohibited from using hedging or insurance strategies with the intention of limiting the impact of the risks inherent in the arrangements for paying variable compensation, including the grant of Natixis performance shares.
Laurent Mignon, CEO Compensation due or granted for the fi scal year €1,821,512(a) €1,766,120(a)
Fixed compensation for corporate offi ces duties €800,000 €800,000 €800,000 €800,000
For business lines operated by the parent company, Compliance managers report directly and hierarchically to Natixis’ Chief Compliance Offi cer.
In 2014, the department focused on keeping the business continuity system in working order.
INFORMATION REGARDING THE INTERNAL CONTROL AND RISK MANAGEMENT PROCEDURES RELATING TO THE PREPARATION AND PROCESSING OF THE ACCOUNTING AND FINANCIAL INFORMATION
Table 2 – Basel 3 RWA by key Natixis business line N/A 125 3.4.7 Credit risk exposure Table 3 – Exposure and EAD by category of exposure 442 § c 131
Table 7 – EAD by asset class and by approach 442 § e
V Solvency ratio V Other regulatory ratios V Regulatory liquidity ratios
Risk-weighted assets by business line V Table 2 – Basel 3 RWA by key Natixis business line
Management of liquidity requirements and reserves V Liquidity monitoring system V Liquidity asset buffer
V Detailed information about credit risk hedging: guarantees and collateral and risk mitigation measures
Pursuant to the IFRS standards and interpretations currently in force, Natixis is required to use certain estimates to prepare 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 signifi cantly inaccurate, particularly in the event of major and/or unexpected market trends, or if the methods by which they are determined should change under future IFRS standards or interpretations, Natixis may be exposed to unexpected losses.
Liquidity risk is the risk that Natixis will be unable to honor its commitments to its creditors due to the mismatching of maturities between assets and liabilities. This risk could arise, for example, in the event of massive withdrawals of customer deposits, a crisis of confi dence, or an overall market liquidity crisis. As a Corporate and Investment Bank, this risk for Natixis results primarily from mismatched positions between transactions with contractual maturities, as Natixis has fewer stable and permanent customer resources than retail banks and partly funds its operations on the markets (for further details, please refer to Chapter [4], “Comments on the 2014 fiscal year”, section [4.2], Refinancing).
Provided below are details of debt instruments recognized in Additional Tier 1 capital and their characteristics, at December 31, 2014, as required by regulation No. 1423/2013 (Appendix II).
“Supervisory Event” (non-compliance with regulatory ratios and/or at the discretion of the regulator)
CRR Article 63 CRR Article 63 CRR Article 63 CRR Article 63 CRR Article 63 CRR Article 63 CRR Article 63 CRR Article 63 8 Amount recognised in regulatory capital (currency in million, as of most recent reporting date)
N/A N/A N/A N/A N/A N/A N/A Decision of the Annual Shareholders’ Meeting for absorption of losses
Common Equity Tier 1 capital: instruments and reserves 7 Additional value adjustments (negative amount) (346) 34.105 8 Intangible assets (net of related tax liability) (negative amount) (3,158) 36 (1) (b), 37, 472 (4) 0 9 Empty set in the EU
64 Institution specifi c buffer requirement (CET1 requirement in accordance with Article 92 (1) (a) plus capital conservation and countercyclical buffer requirements, plus systemic risk buffer, plus the systemically important institution buffer (G-SII or 0-SII buffer), expressed as a percentage of risk exposure amount)
85 Amount excluded from T2 due to cap (excess over cap after redemptions and maturities) 0 484 (5), 486 (4) & (5)
Regulatory capital and capital adequacy ratio: The application of the new Basel 3/CRR regulations as of the start of 2014 made it necessary to establish a basis for comparison at December 31, 2013. The table below provides a summary of the transition from prudential capital and risk-weighted assets established under Basel 2 rules (published at year-end 2013*) to capital and risk-weighted assets established under the CRR at December 31, 2013 after applying transitional arrangements.
The internal rating system is an integral part of Natixis’ credit risk monitoring and control mechanism. It covers all the methods, processes, tools and controls used to evaluate credit risk. It takes into account fundamental parameters, including one-year counterparty probability of default, which is expressed as a rating, and loss given default (LGD), which is expressed as a percentage.
The backtesting procedure, which draws on these data (and sometimes external data in the case of backtesting of the banking model or the Major Corporate rating grids particularly), consists of the following stages: an analysis of the absolute performance, which is based on the default rate and internal migrations, and an analysis of the relative performance, which is based on a comparison with external ratings.
As part of its oversight function, the Risk Department makes sure the rules and commitments underpinning the Bank’s IRBA approval are respected, and also ensures the proper operation of the tools and processes used and the quality and consistency of data. It also coordinates training and provides support to Bank employees.
(a) Excluding exposures to Groupe BPCE’ affi liates, which are not rated (€62 billion).
Natixis manages the risks associated with securitization positions through two mechanisms.
The VaR level for Natixis’ trading portfolios averaged €7.2 million. It peaked at €10.6 million on January 17, 2014 and bottomed out at €4.9 million on September 10, 2014, standing at €8.3 million at December 31, 2014.
The following table presents VaR fi gures after accounting for the BPCE guarantee: (in millions of euros) Natixis trading portfolio Limit
The following chart shows results of backtesting (ex-post comparison of potential losses, as calculated ex-ante by VaR, with actual P&L impacts) on the regulatory scope, and can be used to verify the solidity of the VaR indicator: P&L Eco BT
The Operational Risk Department carries out risk mapping, alongside the business lines and the other control functions, so as to identify the most exposed business lines and the most signifi cant types of risk for Natixis and to manage them.
V “Civil Operating Liability” coverage is provided by the civil operating liability group insurance plan taken out by BPCE S.A., for up to €75 million per claim; V “Management Civil Liability” coverage is provided by the managers’ and executive corporate officers’ civil liability group insurance plan taken out by BPCE S.A., for up to €200 million per claim per insurance year; V Coverage for the buildings housing Natixis’ operations in France, their contents, IT risks and the resulting loss of banking business is provided by the “All Risks & Resulting Loss of Banking Business” group insurance policy taken out by BPCE S.A (reconstruction and/ or replacement cost, capped at €300 million per claim); V Coverage for intangible computer damage (damage to data without physical damage to the hardware containing it) and resulting loss of banking business is provided by the “Intangible Computer Damage/ Loss of Banking Business” group insurance policy taken out by BPCE S.A., for coverage of up to €60 million per claim and per year.
The ALM Committee’s monitoring scope includes: V the banking portfolios of Natixis S.A. and its credit subsidiaries for IRBB ; V Natixis’ entire scope of consolidation for liquidity risk, excluding insurance portfolios which are strictly partioned from banking and trading book, and subjected to a dedecated regulation. This perimeter does not present intrinsic liquidity risks and which are monitored and managed seperately in respect of ALM risks; V Natixis’ entire consolidation scope for structural foreign exchange risk.
(1) IRBB: Interest rate risk on the banking book. Excluding those related to banking portfolios for capital markets activities that are presented to the Market Risk Committee and approved by it.
Natixis is affi liated with the BPCE network, as defi ned by the French Monetary and Financial Code. Article L.511-31 of the French Monetary and Financial Code stipulates that central institutions are credit institutions and, as such, they must oversee the cohesion of their network and ensure the proper operation of affi liated institutions and companies. To this end, they take any necessary measures notably to guarantee the liquidity and capital adequacy of all such institutions and companies as well as the network as a whole.
Over the course of 2014, in line with Group policy, Natixis continued to diversify its funding sources, extend the maturities of funds raised and reduce its market footprint. As in 2013, efforts were focused on developing customer deposits in current accounts and structured issues placed with Asian investors.
3 RISKS AND CAPITAL ADEQUACYCompliance and reputational risk, Legal risks 3.9 Compliance and reputational risk, Legal risks 3.9.1 COMPLIANCE AND REPUTATIONAL RISK
The operating rules of the Compliance and Permanent Control Department are set out in a charter approved by Natixis’ Senior Management Committee. For business lines operated by the parent company, the business lines’ Heads of Compliance report hierarchically to Natixis’ Chief Compliance Offi cer. A “direct” reporting line exists between the compliance managers at the subsidiaries and branches and Natixis’ Chief Compliance Offi cer. Through this line, Natixis’ Chief Compliance Offi cer issues prior approval for the assignment, appointment or removal of subsidiaries’ compliance managers, participates in annual performance and career advancement reviews, approves annual work plans and fulfi lls reporting and alert requirements vis-à-vis Natixis’ Compliance Department.
In 2012, a major program to improve the management of user authorizations was initiated with the aim of reviewing all management processes, tools, the documentation of application profi les, the setting of business line profi les and the recertifi cation of rights and the associated controls. At the end of 2014, half of all business lines had been reviewed. All of the business lines excluding the IT Department are scheduled to be reviewed by the end of 2015.
The fi nancial consequences, assessed at December 31, 2014, of litigation deemed likely to have, or which has in the recent past had, a material impact on the fi nancial situation of Natixis and/or Natixis and its consolidated subsidiaries as a whole, or on their profi tability or their business, have been included in Natixis’ consolidated fi nancial statements.
The class actions in which Natixis Funding is cited as one of 13 providers and brokers of derivatives will go ahead, as the requests to dismiss the plaintiffs were rejected in March 2010.
The individual municipalities’ cases against 40 defendants including Natixis Funding and Natixis will also go ahead, as the requests for dismissing the plaintiffs’ suits were rejected in April 2010.
In March 2009, the Paris public prosecutor’s offi ce (Parquet de Paris) launched a preliminary investigation into a complaint fi led by Natixis minority shareholders and coordinated by the Association de Défense des Actionnaires Minoritaires (ADAM – Association for the Defense of Minority Shareholders) As the plaintiffs have initiated civil proceedings, a judicial investigation has been opened.
Natixis is not dependent on any patent or license, or on any industrial, commercial or fi nancial supply contract.
Credit risk concerns the risk of loss generated by the portfolio of insurance policies. Coface manages credit risk through a number of procedures, whose scope includes the approval of the terms of policies relating to products, pricing, the monitoring of credit risk hedging and portfolio diversifi cation. Traditionally, Coface makes a distinction between frequency risk and event risk: V frequency risk represents the risk of a sudden and significant increase in delinquency by numerous debtors. This risk is measured for each region and country by monitoring the instantaneous loss ratio (1) and the monthly indicator that breaks down the changes in domestic/export credit by DRA (Debtor Risk Assessment) and business sector, by acceptance rate on the DRA scale, or by product line (deposit, single risks). Missed payments are analyzed weekly by the Group Management Board and monthly by Coface’s Underwriting Committee. Loss ratios for the different underwriting regions are also monitored at the consolidated Coface level; V event risk represents the risk of abnormally high losses recorded for the same debtor or group of debtors, or of an accumulation of losses for the same country. Event risk coverage is the main purpose of Coface’s reinsurance.
In addition to weekly and monthly monitoring at each region and country level, Coface has implemented a system based on: V the centralization of claims reserves exceeding a certain amount per debtor (currently €0.5 million for all of Coface’s underwriting centers), which are then analyzed ex-post to improve the information, underwriting and recovery activity’s performance; V at risk underwriting level, monitoring which, above a certain level of DRA-based outstandings, generates an approval and the setting of an overall budget by Coface’s Underwriting Department; and
CEGC held an investment portfolio of €1.3 billion on its balance sheet at December 31, 2014, versus €1.2 billion at December 31, 2013. The investment portfolio, which is fully backed by capital and technical provisions, is composed mainly of bonds (more than 72%).
The identifi cation and management of these risks are presented in Chapter [6] of this registration document.
Sensitive exposures in accordance with the recommendations of the Financial Stability Forum
In non-life insurance, this strategic ambition led to the March acquisition of the 60% stake in BPCE Assurance held by BPCE and Muracef. BPCE Assurances provides the property and casualty insurance policies distributed by the Caisses d’Epargne. The company was fully consolidated with retroactive effect at January 1. After the acquisition, Macif and Maif held a 40% stake in BPCE Assurances.
In market activities, revenues from Fixed Income, Credit, Forex, Commodities and the Treasury platform fell 19.9% compared to 2013. Restated for non-recurring items included in net revenues (3), they were down 2.3%. Net revenues from Equities activities increased by 3.4% year-on-year.
(3) First application of IFRS 13 in H1 2013 (+€72 million) and change in CVA/DVA/FVA methodology in 2014 (-€119 million).
Gains or losses on other assets, which made a positive contribution of €78 million in 2014, was mainly linked to a capital gain on the sale of an operating property in the third quarter of 2014.
Recurring net income (group share) including GAPC totaled €1,138 million versus €1,027 million in 2013 (excluding restructuring costs and pro forma of the CCI disposal).
V Amid low interest rates, revenues from Short-Term Treasury activities slid 13% due to lower repo transaction volumes.
Equities activities generated net revenues of €432 million, up 3.4% relative to 2013.
At €186 million in 2014, the provision for credit losses came down 40.5% compared to 2013, attributable in large part to run-off activities (Shipping and Corporate Solutions) and Vanilla Finance in France.
Activities were developed under strict management of capital employed. As a result, at December 31, 2014, Basel 3 risk-weighted assets (RWA) at period-end came to €72.2 billion versus €74.5 billion at end-2013. RWA related to assets transferred from GAPC amounted to €2.5 billion at December 31, 2014 after the effect of the guarantee granted by BPCE on these assets.
At December 31, 2014, Private Banking posted net inflows of €1,394 million, demonstrating strong momentum in B2B private banking in the networks as well as international and direct wealth management.
Leasing continued to refocus on providing services to the Banque Populaire and Caisse d’Epargne networks, recording a 6% increase in new business compared to 2013.
The provision for credit losses was well-managed and came down 4% to €76 million.
Business remained strong despite changes in local regulations. At constant exchange rates and on an annual average basis, short-term outstandings rose 27%, medium- and long-term outstandings 25%, and customer deposits 36% relative to 2013.
The improvement in US economic activity and the fall in unemployment enabled the Federal Reserve to continue tapering (reducing its asset purchases) throughout the year. In October, it ended its bond purchases under the QE3 program. Although infl ation is low in the United States (December’s CPI stood at 0.8% versus 1.3% in November), mainly due to the slide in oil prices, the Fed is confi dent that infl ation will achieve its 2% target over the longer term. The fi nancial markets are expecting interest rates to start rising in mid2015. At the long end of the curve, despite strong macro-economic data in the United States, the 10-year Treasury Note declined throughout 2014 (-80 points over the year) due to the slowdown in the global economy and low infl ation.
At December 31, 2014, the balance sheet totaled €454,928 million, down from €398,821 million at December 31, 2013.
Customer loans and receivables 6.5 107,224 87,975 o/w institutional operations 646 608
5 FINANCIAL DATAConsolidated fi nancial statements and notes NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9 SEGMENT REPORTING 283 9.1 Wholesale Banking 283 9.2 Specialized Financial Services 283 9.3 Investment Solutions 284 9.4 Private Equity (non-core activities) 284 9.6 Corporate Data Solutions 284 9.7 Former GAPC (Workout Portfolio Management) 284 9.8 Corporate Center 285 9.9 Segment reporting 285 9.10 Other information 287
NOTE 11 HEADCOUNT, PAYROLL COSTS, COMPENSATION AND EMPLOYEE BENEFITS 291 11.1 Number of employees 291 11.2 Compensation and employee benefi ts 291
The fi nancial statements presented for comparative purposes were published by Natixis in the 2013 registration document fi led with the Autorité des Marchés Financiers (AMF – French Financial Markets Authority) on March 14, 2014.
With the application of IFRS 12, the financial statements for the fiscal year ending December 31, 2014 contain additional information on Natixis’ interests in non-consolidated structured entities.
As a result of these new standards, the IASB has also published amended versions of IAS 27, “Separate Financial Statements” and IAS 28, “Investments in Associates and Joint Ventures”, which were adopted by the European Commission on December 11, 2012; V the amendments to IFRS 10, IFRS 11 and IFRS 12 published by the IASB on June 28, 2012 and adopted by the European Commission on April 4, 2013. The amendment to IFRS 10 clarifies the transitional provisions and eases the requirements concerning comparative disclosures by limiting restatements to the prior period. Also, for disclosures for non-consolidated structured entities, the amendments eliminate the requirement to present comparative information for periods prior to the one in which IFRS 12 is first applied; V the amendment to IAS 36 “Impairment of Assets”, published by the IASB on May 29, 2013 and adopted by the European Commission on December 19, 2013. This amendment limits the scope of information to be provided in relation to the recoverable value of depreciated assets to the recoverable amount of depreciated assets where this amount is based on the fair value less selling costs. This amendment does not impact Natixis’ financial statements at December 31, 2014; V the “Novation of derivatives and continuation of hedge accounting” amendment to IAS 39, “Financial Instruments: Recognition and Measurement”, published by the IASB on June 27, 2013 and adopted by the European Commission on December 19, 2013 This amendment continues hedge accounting in the event that a derivative designated as a hedging instrument is transferred by novation from a counterparty to a central counterparty due to legislative or regulatory provisions. This amendment has no impact on Natixis’ financial statements at December 31, 2014; (1) The complete body of standards adopted by the European Union may be consulted on the European Commission website at: internal_market/accounting/ias/index_fr.htm.
In determining whether it exercises control or signifi cant infl uence, Natixis considers all current voting rights and any potential voting rights to the extent that they are currently exercisable or convertible and to the extent that they have infl uence over relevant activities of the entity. Potential voting rights arise from stock options on ordinary shares or from the conversion of bonds into new ordinary shares. However, potential voting rights are not taken into account to calculate the percentage of ownership.
These tests resulted in a writedown of: V €50.8 million for the goodwill on entities from the former CDS CGU. The net amount of goodwill after writedown is €24.2 million versus €96 million at December 31, 2013; The discount rates were determined by factoring in the following: V for the Investment Solutions, Specialized Financial Services and Wholesale Banking CGUs, the risk-free interest rate of the Euro-
In accordance with IFRS 4, insurance technical reserves are calculated using methods stipulated by local regulations. A liability adequacy test is carried out in order to ensure that the insurance liabilities as presented in the consolidated fi nancial statements are suffi cient to cover future cash fl ows estimated at that date. The test is based on a stochastic or deterministic valuation model of discounted future cash fl ows.
Pursuant to paragraph 30 of IFRS 4, insurance policies and investment contracts with discretionary participation (life insurance) are measured using shadow accounting, which consists in recognizing the portion of unrealized gains or losses potentially attributable to policyholders as a deferred profi t-sharing reserve. The deferred profi t-sharing reserve thus refl ects the potential entitlement of policyholders to unrealized gains for Financial investments or their portion of unrealized losses. Considering prospective pay-out ratios for the duration of the 2015-2017 Medium-Term Business Plan and in accordance with the pay-out ratio recorded for 2014, the deferred profi t-sharing rate adopted at December 31, 2014 is 92.7% compared to 94.8% at December 31, 2013. This change refl ects the improved fi nancial
This option was fully exercised on July 2, 2014 by the banks in the placement syndicate, at the bid price, i.e. €10.40 per share. After the over-allotment option was fully exercised, Natixis held 41.35% of Coface share capital.
V Creation of the Natixis Loan Funding (NLF) securitization fund. This fund carries out issues backed by loans from Natixis business lines.
In 2014, Natixis disposed of investments in Coface while retaining control of this subsidiary. The following table shows the impacts of this transaction on Natixis’ equity capital.
MAXIMUM EXPOSURE TO RISK OF LOSS 9,140 17,342 5,799 2,023 34,304
“Loans and receivables” also include non-derivative fi nancial assets initially classifi ed at fair value through profi t and loss or available-forsale, but subsequently reclassifi ed as “Loans and receivables”, under the conditions set out in the “Reclassifi cation of fi nancial assets” amendment to IAS 39 and IFRS 7 published on October 13, 2008. Assets reclassifi ed in accordance with this amendment meet the
The modifi ed terms of “restructured” loans must put the borrower in a more favorable situation (e.g. suspension of interest or principal payment, extension of term, etc.) and are confi rmed by the use of amendments that modify the terms of an existing contract or by the full or partial refi nancing of an existing loan.
A scoring model was used defi ning the level of risk associated with certain structures based on a series of criteria.
Provisions booked on the liabilities side of Natixis’ fi nancial statements as at December 31, 2014, are discussed in Note 6.16.2 “Contingency reserves” and possible allocations are specifi ed in Note 7.6 “Operating expenses” and Note 7.7 “Provision for credit losses”.
In accordance with IAS 19, employee benefi ts are classifi ed in one of four categories: V “short-term benefits”, including salaries, social security contributions, annual leave, employee profit-sharing, incentive plans, top-up contributions and bonuses payable for the period; V “severance payments“, comprising employee benefits granted in return for termination of a staff member’s employment before the normal retirement age, resulting from a decision by the entity, or a decision by the employee to accept a severance package in exchange for terminating their employment; V “post-employment benefits”, such as pensions, other supplementary retirement benefits applicable to the banking industry, end-of-career awards and other contractual benefits payable to retirees; V “other long-term employee benefits”, including long-service awards and deferred compensation payable in cash under Employee Retention and Performance Recognition Plans.
A provision is set aside for defi ned benefi t plans based on an actuarial assessment of the benefi t obligation using the projected unit credit method. This method draws on demographic and fi nancial assumptions reviewed annually (specifi cally the discount rate based on the AA Corporate bond rate curve). The value of any plan assets is deducted from the actuarial debt. This valuation is carried out on a regular basis by independent actuaries.
Number of potential dilutive shares resulting from stock option and bonus share plans (b) 2,615,148 8,943,962
Credit risk exposure Related credit derivatives Change in fair value of loans and receivables attributable to credit risk
Instruments designated at fair value through profi t and loss 6.1.2.1 and 6.1.2.2 96,936 80,351
5 FINANCIAL DATAConsolidated fi nancial statements and notes 6.4 Available-for-sale financial assets
Provisions for impairment of non-performing outstandings (83) (134) (217) (92) (142) (234)
Following the publication of the French Ministerial Order of December 19, 2014 on the disclosure of information on encumbered assets, and in an effort to establish maximum consistency between the statements of transferred assets and the statements of encumbered assets, some management rules relating to the determination of the amount of transferred assets in accordance with IFRS 7 were modifi ed in 2014. Comparative data for 2013 were restated to account for these modifi cations.
6.7.5 Financial assets received as security and able to be sold or reused as security
The data reported in 2014 includes late payments identifi ed by the factoring entities amounting to €1.477 billion. These data now refer to all outstandings rather than the unpaid amount alone.
Derivative instruments not eligible for hedge accounting (positive fair value) 85,749 1,555 81,699 2,494 63,720 2,180 59,202 2,338
5 FINANCIAL DATAConsolidated fi nancial statements and notes 6.7.7.1 Financial assets at fair value measured using level 3 of the fair value hierarchy
Financial assets at fair value through profi t and loss 1,232 553 (66)
This heading corresponds to technical accounts, details of which are given below: 6.9.1 Other assets and liabilities
Provisions for loans and receivables 2,831 781 (252) (403) (26) (148) 2,783
TOTAL FINANCIAL LIABILITIES RECOGNIZED AT FAIR VALUE 1,649 558 112 * Amount adjusted relative to the fi nancial statements at December 31, 2013.
Net gains/(losses) on fi nancial assets and liabilities excluding hedging derivatives 1,463 1,603
This information is determined based on the accounting principles applied in accordance with IFRS as adopted by the European Union at December 31, 2014.
Financial liabilities at fair value through profi t and loss 177,181 214 2 3 8,494 154 186,048
Consolidated fi nancial statements and notes 10.2.3 Breakdown of individual and collective provisions by geographic area
Fair value of separate assets* 0 (37) 0 0 (37) 0 (36) 0 0 (36)
Obligations in respect of other long-term employee benefi ts are accounted using the same actuarial valuation method as that used for post-employment defi ned-benefi t obligations, except for revaluation adjustments, which are taken directly to profi t and loss.
Net gains or losses on fi nancial instruments at fair value through profi t and loss (2,044) 396 1,634 461 (62) (614)
Net gains or losses on available-for-sale fi nancial assets 31 246
Income and expenses from other activities (27) 3 (14) 8 (1) (15)
Tranche C corresponds to the fraction of annual compensation between €150,192 and €300,384.
Income tax corresponds to the tax payable and deferred tax excluding taxes other than on income classifi ed in operating income.
NATEXIS US FINANCE CORPORATION Issuing vehicle FC 100 100 100 100 United States
COFACE CZECH INSURANCE - SUCC (COFACE AUSTRIA) Insurance FC 41 41 100 100
(3) Newly consolidated entities in the fi rst quarter of 2014 following the application of IFRS 10.
(20) Creation of these entities in the fourth quarter of 2014.
The Group records provisions to cover employee benefi t obligations (Notes 5.14 and 5.15 to the consolidated fi nancial statements). We examined the methodology used to measure these benefi t obligations, as well as the main assumptions and parameters applied.
Commitments given to customers 20,210 19,417 24 o/w institutional operations 37 Commitments on securities 6,068 6,358 37 Other commitments given 20,532 25,956
5 ÉLÉMENTS FINANCIERSParent company fi nancial statements and notes NOTES TO THE PARENT COMPANY FINANCIAL STATEMENTS
Securities are classifi ed according to their type and the economic purpose for which they are held, into one of the following categories: held for trading, held for sale, held for investment, other long-term securities, investments in associates and investments in subsidiaries and affi liates.
5 ÉLÉMENTS FINANCIERSParent company fi nancial statements and notes Accrued interest payable relating to these issues is disclosed separately as a related payable, with an offsetting entry in the income statement.
A provision is set aside for defi ned-benefi t plans based on an actuarial assessment of the benefi t obligation using the projected unit credit method. This method draws on demographic and fi nancial assumptions. The value of any plan assets is deducted from the obligation to determine the provision to be recognized on the balance sheet. This valuation is carried out on a regular basis by independent actuaries.
Total net obligation at January 1 71 78 26 97 272 79 113 30 95 317
By signing the Equator Principles in December 2010, as a responsible bank, Natixis recognized the importance of evaluating environmental and social (E&S) risks related to the projects it fi nances and adopted a methodology recognized by many fi nancial institutions, leading its customers to manage, minimize and remediate impacts generated as much as possible.
For the most sensitive transactions (category A and, where appropriate, category B), a prior review of E&S documentation must be performed by an independent consultant, and an on-site visit and interviews must be conducted, primarily in order to validate the conclusions of the initial analysis and determine any additional actions needed to correct and mitigate the impacts as much as possible. An action plan is then drafted and added to the project’s fi nancial documentation so that the borrower is required to comply with the prescribed actions throughout the loan’s lifetime.
(2) Countries not appearing on the list of designated countries available on the website of the Equator Principles Association. Designated countries are countries deemed to have a robust legislative and regulatory framework.
Detailed information on Natixis’ activity during the period is presented in the tables below (4): R NUMBER OF DEALS THAT REACHED FINANCIAL CLOSE
In addition to its exclusion policy, Natixis has established very specifi c criteria for the weapons sector that are applied to each transaction. These criteria pertain to the type of equipment involved and the eligibility conditions for import and export countries.
With “Just Bip,” any person with reduced mobility carrying a cell phone can notify the security station (or the receptionist) when they arrive in front of a building they wish to enter, should they require any assistance. This service has been rolled out at seven Natixis sites where disabled persons might need help entering the building.
The people responsible for the management, operation and technical maintenance of the group’s buildings receive more in-depth training in this fi eld. The systems for preventing environmental risks and pollution are notably used to conduct drills simulating the accidental spilling of pollutants in each building.
In practical terms, the Purchasing Department provides employees and suppliers with a number of tools: V a set of “responsible purchasing standards” that set out the regulatory or recommended social and environmental criteria for the most commonly purchased product categories; V a supplier relations charter incorporating its sustainable development values; V «sustainable development» clauses in invitations to tenders and contracts.
In order to convey the strategic plan and unambiguously announce this priority, Human Resources stepped up its internal and external communication initiatives throughout the year, with campaigns to raise employee awareness of career management possibilities, a youth employment campaign in France and abroad, and communications on diversity. All of these actions promoted understanding and adherence to the issues of societal engagement and diversity both in and outside the Company.
Malaria is a parasitic disease that affects more than 100 countries, mainly in tropical climates. It claims more than 600,000 victims each year, mainly pregnant women and young children, who could be saved through simple prevention and treatment measures. For the 10th year running, Natixis has actively supported prevention programs in endemic regions and research into the disease.
Natixis’ employees also devote their time to Institut Gustave Roussy, for example by taking part in the Odysséa breast cancer run in Paris. In the 2014 Odysséa event, Natixis took second place out of the participating companies with the largest number of participants from a single company.
Outside France, the inclusion of entities operating abroad depends on the relevance of indicators with respect to social and environmental regulations and their ability to integrate monitoring tools or deliver information. The scope used for HR indicators, except for headcount, is the consolidated international scope for Natixis (excluding NGAM). Indicators are broken down by geographic area.
Natixis also believes that the information about land use is not relevant as, given the layout of its buildings, which are often multi-storey, their footprint is limited.
Mandatory employee profi t-sharing (in millions of euros) * 34.2 25.7 33.5
In 2014, Natixis S.A.’s Committee for Hygiene, Safety and Working Conditions (CHSCT) for the Paris location, continued to work closely with each of its sub-Committees responsible for ensuring the application of rules on health & safety and working conditions at each of their respective sites (Charenton, Lumière, Austerlitz, Bourse). This delegation allowed the Committee’s plenary sessions to focus on matters of general interest.
Frequency of workplace accidents (a) (by number per million hours worked) 7.16 7.24 5.99
The teams in charge of training develop comprehensive as well as tailored solutions, offered through one-off initiatives or longer-term programs targeting the development of individual and collective skills. These multi-modal solutions help continuously improve the competitiveness and employability of staff. In 2014, Natixis’ employees in France received more than 220,000 hours of training.
Furthermore, Natixis is the French market leader in solidarity investment, allowing it to support companies with a high social or environmental utility, including the creation of jobs or low-income housing for disadvantaged people, organic farming projects and development in the southern hemisphere.
It should be noted that Building 1251 obtained the LEED gold-level environmental certifi cation for its design and construction. LEED is a North American high-environmental quality building standardization system.
(4) Social information: Natixis Global (headcount), Natixis France (breakdown of the headcount by gender, hires, departures including redundancies, number of training hours, percentage of women in the Managing Director category, on the Executive Committee, and in the executive category), and Environmental information: Natixis France on a consolidated basis; Societal information: Natixis Asset Management (SRI and socially inclusive assets under management).
Corporate offi cers are liable vis-à-vis the Company or third parties, either for breaches of the legal or regulatory provisions governing joint stock companies, or for breaches of these bylaws, or for misconduct in their management, under the conditions and subject to the penalties stipulated by the laws in force.
Shareholders are convened annually to an Ordinary General Shareholders’ Meeting by the Board of Directors, prior to the end of the fi fth month following the close of the fi scal year, on the date, at the time and at the location stated in the notice of the meeting.
Furthermore, at the end of each fi scal year, an inventory is drafted of the Company’s various assets and liabilities and accounting documents imposed by both the laws governing companies and by banking regulations.
Distribution of share capital and voting rights 7.3 Distribution of share capital and voting rights 7.3.1 DISTRIBUTION OF SHARE CAPITAL AT DECEMBER 31, 2014
At December 31, 2014, Natixis’ main shareholders were as follows: % capital % voting rights
Information from Article L.225-100-3 of the French Commercial Code 7.4 Information from Article L. 225-100-3 of the French Commercial Code
Approval of the financial statements for fiscal year 2014 (resolutions one and two)
“Preferential subscription right” refers to the right of each shareholder to subscribe to a number of new shares proportionate to their existing interest in the capital for a period of at least fi ve trading days after the opening of the subscription period. This right is detachable and exchangeable for the duration of the subscription period.
V Unusable authorization during public share offers 15 Issue, without PSR*, of shares and/or securities providing access to the Company’s capital* and/ or the issue of securities entitling holders to the allocation of debt securities* through an offer as referred to in Article L. 411-2(II) of the French Monetary and Financial Code 26 months
V Prices of shares or securities giving access to capital* established in the same manner as for resolution fourteen
7 LEGAL INFORMATIONDraft resolutions of the Combined General Shareholders’ Meeting of May 19, 2015 Extraordinary business
The General Shareholders’ Meeting, deliberating in accordance with the quorum and majority requirements for ordinary business, having reviewed the special report of the Statutory Auditors on the agreements and commitments subject to the provisions of Articles L.225-38 and L.225-40 to L.225-42 of the French Commercial Code, hereby approves all provisions of this report and the new agreements mentioned therein, having been authorized by the Board of Directors during the fi scal year ended December 31, 2014 or after this date up until the Board of Directors’ Meeting in which the fi nancial statements for the year ended December 31, 2014 were approved.
Resolution fourteen (Delegation of authority to the Board of Directors to decide whether to increase share capital through the issue – without preferential subscription rights – of shares and/or securities providing access to the Company’s capital and/or the issue of securities entitling holders to the allotment of debt securities)
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 of the Statutory Auditors, and in accordance with the provisions of Articles L.225-129 et seq., especially L.225-129-2, L.225-135, L.225-136 and L.225-148, and L.228-91 et seq. of the French Commercial Code: 1) delegates to the Board of Directors, with the right to sub-delegate said power under the terms set out by law, its authority to decide whether to increase share capital, in one or more stages, in France or abroad, in the amounts and at the times it deems fit, either in euros or in any other currency or unit of currency established with reference to multiple currencies, through the issue (i) of shares, (ii) of shares providing access to other shares, whether these exist or are yet to be issued, or that entitle holders to the allotment of debt securities, and/or (iii) securities providing access to shares yet to be issued by the Company, in return for payment or free of charge, and are governed by Articles L. 228-91 et seq. of the French Commercial Code, with the understanding that shares or other securities may be subscribed for in cash, as payment for debt, or by the capitalization of reserves, retained earnings or premiums. These securities may be issued as consideration for shares tendered to the Company under a public exchange offer carried out in France or abroad in accordance with local regulations (for example, as part of a «reverse merger» in English-speaking countries) for securities meeting the conditions set in Article L.225-148 of the French Commercial Code; 2) delegates to the Board of Directors, with the right to sub-delegate said power under the terms set out by law, its authority to decide whether to issue shares not yet issued by the Company after companies in which the Company directly or indirectly holds more than half the capital issue securities giving access to shares not yet issued by the Company; This decision creates ipso jure, in favor of holders of securities that give access to shares liable to be issued by companies in the Company’s group, an obligation on the part of the Company’s shareholders to waive their preferential right to buy the Company shares to which said securities give their holders subscription rights; 3) delegates to the Board of Directors, with the right to sub-delegate said power under the terms set out by law, its authority to decide whether to issue (i) securities providing access to shares yet to be issued by a company in which the Company directly or indirectly holds more than half the capital, and/or (ii) shares providing access to existing shares or that entitle holders to the allotment of debt securities from a third-party company;
R in the event of the issue of securities as consideration for shares contributed under a public exchange offer, draw up the list of the securities contributed, set the issue terms, the exchange ratio and, where applicable, the amount of the cash balance to be paid in the event that the method for determining the price established in Paragraph 11 does not apply, and determine the terms of issue as part of a public exchange offer, an alternative tender or exchange offer, or a single bid to purchase or exchange selected securities in consideration for payment in cash and securities, or of a principle public tender or exchange offer, together with a secondary public exchange offer or tender offer or any other form of public offering in accordance with the law and regulations applicable to said public offering,
R if applicable, apply the cost of the capital increase against the related share premiums and deduct the amounts required to bring the legal reserve from this amount to a tenth of the new capital resulting from these capital increase,
V including BNP Paribas, Credit Suisse Securities (Europe) Limited, Deutsche Bank AG, London Branch, Morgan Stanley & Co. International plc (the “Joint Lead Managers and Joint Book-Runners” together with the Global Coordinators), as well as Banco Santander S.A., Crédit Agricole Corporate and Investment Bank, Commerzbank Aktiengesellschaft, ING Bank N.V. and Banca IMI S.p.A. (the “Co-Lead Managers”, and the Underwriters, together with the Joint Lead Managers and Joint Book-Runners).
1.1.2 Master agreement governing the assignment of receivables between Natixis, Caisse d’Epargne et de Prévoyance Ile de France, Bred Banque Populaire and Banque Populaire Rives de Paris, and service agreement
On February 18, 2015, the Board of Directors authorized the renewal of a non-compete agreement, in the event that Mr. Mignon’s offi ce as Chief Executive Offi cer is terminated. This non-compete agreement is limited to a period of six months, and includes a payment equal to six months’ fi xed compensation, as paid on the date when his corporate offi ce is terminated, on the understanding that the total amount of the severance payment and the non-compete payment may not exceed a cap set at 24 months’ monthly compensation, as defi ned in the commitment relating to his severance payment.
On May 11, 2011, the Board of Directors approved an agreement on the Chapel Deal between Natixis and BPCE. The Chapel Deal is part of GAPC (workout portfolio management), within a structured product called Sahara that provides a closer refl ection of the rating of high-quality assets held by GAPC. These securities are covered by the “Neptune” Guarantee entered into with BPCE in 2009. To reestablish the equivalent of the Neptune Guarantee, from which Natixis benefi ted via Sahara, it was proposed that BPCE should guarantee the Chapel security via a total return swap (TRS) at the same time as the Chapel assets were bought back by Natixis.
2.1.10 Credit and financial guarantee master agreements between (i) Natixis and BFBP and between (ii) Natixis and CNCE
IXIS CIB (previously known as CDC Marchés and then as CDC IXIS Capital Markets) was required to enter into a number of letters of joint and several commitment and guarantee with its various successive shareholders, namely la Caisse des Dépôts (CDC), CDC Finance - CDC IXIS (to which CNCE became the successor in interest following the merger dated December 31, 2004) and CNCE.
2.1.16 Current letters of joint and several guarantee and commitment between Ixis and its subsidiaries
Documents concerning Natixis (Articles of Association, bylaws, reports, mail and other documents, historical parent company and consolidated fi nancial information, for each of the two fi scal years prior to the publication of this document) are partly included in this document and may be consulted at the Company’s head offi ce, preferably on appointment.
V Information relative to the locations and activities in each country or territory 308-314 4. Declaration by the person responsible for the registration document 454 5. Statutory Auditors’ report on the fi nancial statements 364-365 6. Statutory Auditors’ report on the consolidated fi nancial statements 321-322 7. Statutory Auditors’ special report on related-party agreements and commitments 447 to 452 8. Fees paid to the Statutory Auditors 307-308 9.
Risk-weighted asset (RWA) The exposure value multiplied by its risk weight.
The equity share held by the company, especially through the share buyback program. Treasury stock does not bestow voting rights and is not included in the calculation of earnings per share, with the exception of securities held in association with a liquidity contract.
D o w n lo a d f o r fr e e a