Registration Document And Annual Financial Report

Transcription

Registration Document
And Annual Financial Report
2012
This document is a free translation into English of the Registration Document (Document de
Référence) issued in French. Only the French version of the Registration Document has been
submitted to the AMF. It is therefore the only version legally binding.
The original document was filed with the AMF (French Securities Regulator) on April 26, 2013,
in accordance with article 212-13 of its General Regulation. As such, it may be used to
support a financial transaction if accompanied by a prospectus duly approved by the AMF.
This document was produced by the issuer and is binding upon its signatory.
2
Group Crédit du Nord - Registration Document and Annual Financial Report 2012
CONTENTS
1
Activity____________________________________________5
Key figures as at December 31, 2012 ......................................................................................6
2012 highlights .........................................................................................................................8
Group structure ......................................................................................................................11
2
Consolidated Financial Statements _____________________ 12
Management Report...............................................................................................................13
Chairman’s report on the preparation and organisation of the Board’s activities
and on internal control and risk management .........................................................................26
Statutory auditors’ report on the report prepared by the chairman of the board
of directors of Crédit du Nord .................................................................................................40
Consolidated balance sheet ...................................................................................................42
Consolidated income statement .............................................................................................44
Change in shareholders’ equity ..............................................................................................46
Statement of cash flows .........................................................................................................48
Notes to the consolidated financial statements.......................................................................49
Statutory auditors’ report on the consolidated financial statements .....................................132
Basel II Capital Adequacy
Ratio Information under Pillar 3.............................................................................................134
3
Individual financial statements _______________________ 136
2012 Management Report ...................................................................................................137
Five-year financial summary..................................................................................................139
Individual balance sheet at December 31 .............................................................................140
Income statement ...............................................................................................................142
Notes to the individual financial statements ..........................................................................143
Information on the Corporate Officers...................................................................................177
Statutory Auditors’ Report on the Annual Financial Statements ............................................188
Statutory Auditors’ Report on Related Party Agreements and Commitments .......................190
Draft Resolutions: Ordinary General Shareholders’ Meeting of May 16, 2013 .......................193
4
Additional information ______________________________ 195
General description of Crédit du Nord ..................................................................................196
Group activity .......................................................................................................................199
Corporate Social Responsibility (CSR) report ........................................................................201
Responsibility for the Registration Document and audit ........................................................213
Cross Reference tables ........................................................................................................214
3
Corporate governance as at December 31, 2012
Board of
Directors
Date of first
appointment
Term of mandate expires at the
Shareholders’ Meeting in May
Chairman of the Board
of Directors
Jean-François SAMMARCELLI
January 1, 2010
2013
Directors
Didier ALIX
January 7, 2010
2016
Philippe AYMERICH*
January 11, 2012
2015
Christophe BONDUELLE
May 6, 2011
2015
Séverin CABANNES
February 21, 2007
2016
Pascal COULON**
July 23, 2009
2015
Patrick DAHER
September 15, 2005
2013
Jean-Pierre DHERMANT**
November 16, 2006
2012
Bruno FLICHY
April 28, 1997
2015
Philippe HEIM
May 12, 2010
2014
Marie-Chantal JACQUOT**
December 4, 2012
2015
Alain JAFFRAIN**
February 17, 2012
2012
Thierry MULLIEZ
May 6, 2011
2015
Annie PRIGENT**
December 4, 2012
2015
Patrick SUET
May 3, 2001
2015
*
Chief Executive Officer.
**
Employee representative elected every three years and whose term expires in December of the year indicated.
The Board of Directors met six times in 2012 to examine the budget and the yearly and half-yearly financial statements,
and to discuss strategic decisions concerning commercial, organisational and investment policies and in particular the
partial asset contributions resulting from the acquisition of Société Marseillaise de Crédit in September 2010 and the
public offering on the shares of Banque Tarneaud.
The Compensation Committee, consisting of Jean-François SAMMARCELLI and Patrick SUET, met to submit a proposal
to the Board of Directors concerning fixed and performance-based compensation, including benefits, for corporate officers.
Executive Committee
Philippe AYMERICH, Chief Executive Officer, (1)
Philippe AMESTOY, Deputy Chief Executive Officer - Head of Marketing,
Jean-Louis KLEIN, Deputy Chief Executive Officer - Head of Business Customers,
Yves BLAVET, Head of Corporate Resources, Crédit du Nord Group,
Philippe CALMELS, Head of Human Resources,
Frédéric FIGER, Chief Financial Officer,
Gilles RENAUDIN, Head of the Central Risk Division,
Odile THOMAZEAU, Corporate Secretary,
Jérôme FOURRÉ, Head of Communications (attends Executive Committee meetings).
(1) Philippe AYMERICH a remplacé Vincent TAUPIN dont la démission de ses mandats d’Administrateur et de Directeur Général ont été actés
le 11 janvier 2012 lors du Conseil réuni à cet effet.
4
Activity
1
Key figures as at December 31, 2012 _________________________________________ 6
2012 highlights ____________________________________________________________ 8
Group structure ___________________________________________________________ 11
5
1
Activity
Key figures as at December 31, 2012
Key figures as at December 31, 2012
Group: consolidated figures
Balance sheet
31/12/2012
IAS/IFRS
31/12/2011
IAS/IFRS
% change
2012/2011
IAS/IFRS
Customer deposits
29,554.7
28,241.0
+4.7
Customer loans
35,642.4
34,227.6
+4.1
(1)
Shareholders’ equity
2,698.9
2,594.4
+4.0
Doubtful loans (gross)
2,190.7
2,038.7
+7.5
(in EUR millions)
Write-downs of individually impaired loans
-1,162.6
-1,037.3
+12.1
56,760.6
55,157.7
+2.9
24,838.0
25,858.3
-3.9
31/12/2012
IAS/IFRS
31/12/2011
IAS/IFRS
% change
2012/2011
IAS/IFRS
1,917.0
1,936.1
-1.0
Gross operating income
677.1
704.5
-3.9
Operating income before corporation tax
486.6
508.2
-4.3
Consolidated net income
308.4
314.8
-2.0
TOTAL BALANCE SHEET
ASSETS UNDER MANAGEMENT (off-balance sheet)
(1) Including income in progress
Income Statement
(in EUR millions)
Net banking income
6
1
Activity
Key figures as at December 31, 2012
Ratios
(as a %)
Cost of risk / Outstanding loans
31/12/2012
31/12/2011
0.52%
0.56%
Shareholders’ equity / Total balance sheet
4.75%
4.70%
Tier 1 ratio
9.00%
8.53%
31/12/2012
31/12/2011
A-1
A-1
Ratings
Standard and Poor’s
Fitch
ST
LT
A
A
ST
F1 +
F1 +
A+
A+
bbb+
bbb+
LT
*
Intrinsic
*
The intrinsic rating is Crédit du Nord Group’s individual rating as determined by the rating agency, i.e. separate from Societe Generale Group.
Contribution of Crédit du Nord (parent company)
(in EUR millions)
Net banking income
31/12/2012
French
31/12/2011
French
% change
2012/2011
1,083.5
1,079.2
+0.4
520.6
392.8
+32.5
Net income
344.9
226.9
+52.0
7
1
Activity
2012 highlights
2012 highlights
Strategy
In keeping with its unique regional banking model and
its “one brand, one territory” approach, Crédit du Nord
(CDN) made a decision to adjust its geographical scope
in Southern France (PACA region) and for the Banque
Courtois, Banque Rhône Alpes and Société Marseillaise
de Crédit (SMC) entities.
Through partial contributions conducted between April
and October, more than 150,000 customers had their
bank details changed and more than 400,000 accounts
were switched from Banque Courtois and CDN to SMC.
This was a challenging logistical move, leading to the
merger of around fifty branches at 24 locations. SMC
adopted the organisational structure used by Crédit du
Nord Group’s banks (creation of branches dedicated
to business customers, use of a new business line
distribution, etc.).
Between November 30 and December 20, Crédit
du Nord, which owned more than 79% of Banque
Tarneaud, launched a bid on the remaining publiclyowned shares (approximately 20%) of Banque Tarneaud.
At the end of this takeover period, CDN owned more
than 97% of the capital and was therefore in a position
to launch a squeeze-out on the remaining shares.
At December 31, the Crédit du Nord Group network
comprised 918 branches.
Network structure
N e w o p e r a t i n g s c o p e b ro k e n d o w n
by geographical area
The partial asset contributions led to the restructuring of
the Group’s network.
Four banks were impacted: Banque Rhône-Alpes,
Banque Courtois, Crédit du Nord and Société
Marseillaise de Crédit. Accordingly:
• In April 2012, the Société Marseillaise de Crédit
branches located in Aveyron, Aude and PyrénéesOrientales were transferred to Banque Courtois,
which was already established in these regions; the
Société Marseillaise de Crédit branches located in
Drôme were transferred to Banque Rhône-Alpes.
• In October 2012, the ten Banque Courtois branches
located in Hérault and the 54 Credit du Nord
branches located in the PACA region were switched
to the Société Marseillaise de Crédit brand.
This transfer of 64 branches helped to fill out the Société
Marseillaise de Crédit network, establishing it as a major
banking player in South-eastern France, going from
200,000 customers in 2010 to 350,000 in October 2012.
Private Banking
Now active across all regions and Group subsidiaries,
the Private Banking activity offers existing and
prospective customers the support of 23 private bankers
and a team of wealth management engineers.
Individual customers
8
February
Enhancement of the mobile offering
March
Development of the partnership with CSF
Our customers can now conduct inter nal and
external credit transfers using a list of their registered
beneficiaries.
The partnership with Crédit Social des Fonctionnaires
(CSF), concerning the provision of guarantees for its
members’ property loans, was broadened.
1
Activity
2012 highlights
April
New partnership
June
New Etoile Avance features
A new partnership was entered into with Societe
Generale subsidiary SOGECAP, offering new payment
protection insurance solutions for property and
consumer loans.
The Etoile Avance revolving credit facility offered by the
Group’s banks can now be used in three instances: via
a debit/credit card (VISA/VISA 1er) with an extension on
the manufacturer’s guarantee, automatic management,
or simple transfer.
Professional Customers
April
Agreement with the French professional
association of chartered accountants (Ordre des
Experts Comptables)
This means that purchases of less than EUR 20 can be
made by bank card (for cards equipped with contactless
technology) without the need to insert the card and enter
the pin code.
A protocol agreement was signed between the banks of
CDN Group and the French professional association of
chartered accountants (Ordre de Experts Comptables),
with the aim of facilitating access to credit for tradesmen,
merchants, independent professionals and very small
enterprises (VSEs).
September
New Internet functionalities
July
Roll-out of contactless technology
All of the electronic payment terminals offered to
merchants are equipped with contactless technology.
A secure function is now available online for registering
new credit transfer beneficiaries.
November
Partnership with the professional bailiff
association (Groupement des Huissiers de
Justice Administrateurs de Biens)
This agreement is designed to facilitate and strengthen
banking relations with bailiffs.
Business and Institutional Customers
April Launch of “Objectif Import Export” website
September
Launch of Etoile Signature
This free website is open to all businesses, whether
or not they are customers of the Group. It contains
comprehensive practical information on preparing an
international development strategy: information on
countries and sectors, research on trade partners, and
information on regulations and customs duties.
This flash drive enhances transactional security for
customers, who use it to authenticate their identity
when logging on to the internet. New functionalities
have also been added, including the input of credit
transfer beneficiaries and online validation of payment
documents transmitted by Internet or by Télétrans.
June
Launch of a revolving term account
This two-month term account is automatically renewed
on expiry, unless otherwise indicated by the customer. It
serves as an attractive complement to short-term mutual
funds used for cash management purposes by SMEs.
Launch of Webaffaires OGEC
With Webaffaires OGEC, private schools can offer the
payment of tuition by bank card on their websites.
This service has proved very popular with existing and
prospective customers alike.
9
1
Activity
2012 highlights
Financial transactions
Over the course of 2012, Crédit du Nord helped its
customers prepare and carry out many types of financial
transactions:
• IPOs;
• takeovers, public buyout offers, squeeze-outs;
• disposal/recoveries of businesses;
• LMBOs;
• debt structuring and syndication;
• acquisitions;
• sales of small companies to larger companies
operating in the same sector.
These transactions were completed by Crédit du
Nord’s Finance Division, some of which in cooperation
with Étoile ID, Crédit du Nord Group’s venture capital
company, and brokerage firm Gilbert Dupont.
Awards and Distinctions
April Customer satisfaction surveys
May Survey of bank import/export offers
Crédit du Nord Group received the highest rating for
Individual and Business customer satisfaction by CSA
for the eighth year in a row. It is ranked number two for
Professional customers.
Crédit du Nord was ranked first because of its close-knit
network and the availability of its teams, the quality of its
order execution and its quick response time.
(Competition surveys conducted by the CSA Institute: from February 27 to
March 30, 2012 based on a sample of 4,600 Individual customers of the
top 11 French banks; from March 1 to April 12, 2012 based on a sample
of 3,430 Professional customers of the top 10 French banks; from February
29 to April 6, 2012 based on a sample of 2,800 Business customers of the
top 10 French banks.)
(Competition surveys conducted by the CSA Institute by telephone from
February 8 to March 2, 2012 based on a sample of 751 businesses
generating revenue of more than EUR 1.5 million, among the top 30,000
import/export companies)
June Customer relations
Crédit du Nord Group took first place in the “Podium de
la Relation Clients” banking sector customer relationship
management awards. This award recognises the quality
of customer relationship management.
(Survey performed between March 30 and April 9,2012 by Bearing Point/
TNS Sofres based on a sample of 4,000 Crédit du Nord Group customers)
Sponsorship
10
Edward Hopper exhibition
Louvre-Lens Museum
Crédit du Nord sponsored an exhibition of the work of
American artist Edward Hopper. The exhibition was held
at the Grand Palais in Paris between October 10, 2012
and February 3, 2013, and attracted a record of more
than 780,000 visitors.
Crédit du Nord is a founding sponsor of the Louvre-Lens
museum, whose inauguration on December 4, 2012
was attended by the French President.
Activity
Group structure
1
Group structure
The diagram below presents the links between the main Crédit du Nord Group entities.
Direct shareholdings are listed as well as the overall percentage of capital directly or indirectly held by the Group.
The consolidation scope is presented in its entirety in Note 2.
CREDIT
DU NORD
94.48%
78.44%
99.87%
100%
BANQUE
KOLB
BANQUE
COURTOIS
5.52%
94.03%
93.29%
100%
SOCIETE
MARSEILLAISE
DE CREDIT
99.99%
100%
BANQUE
RHONE-ALPES
BANQUE
LAYDERNIER
3.18%
69.88%
7.73%
100%
100%
2.83%
KOLB
INVESTISSEMENT
ETOILE
GESTION
HOLDING
0.07%
96.82%
5.14%
5.97%
21.43 %
1.56%
64.70%
1.51%
7.08%
63.19%
BANQUE
NUGER
2.91%
2.36%
7.14%
97.57%
BANQUE
TARNEAUD
100%
100%
50%
35%
SDB
GILBERT DUPONT
NORBAIL
IMMOBILIER
ANTARIUS
BANQUE
POUYANNE
99.80%
100%
100%
100%
100%
NORBAIL
SOFERGIE
ETOILE ID
STAR LEASE
NORIMMO
0.20%
99.96%
99.80%
100%
100%
100%
NORD ASSURANCES
COURTAGE
S.F.A.G.
CREDINORD
CIDIZE
0.20%
100%
PARTIRA
0.04%
50%
100%
100%
FCT BLUE STAR GHL
FCT BS CDN ENT
50%
100%
FCT BS CDN PPI
11
Consolidated
Financial
Statements
2
Management Report ___________________________________________________________ 13
Chairman’s report on the preparation and organisation of the Board’s activities
and on internal control and risk management ______________________________________ 26
Statutory auditors’ report on the report prepared
by the chairman of the board of directors of Crédit du Nord _________________________ 40
Consolidated balance sheet ____________________________________________________ 42
Consolidated income statement _________________________________________________ 44
Change in shareholders’ equity __________________________________________________ 46
Statement of cash flows ________________________________________________________ 48
Notes to the consolidated financial statements ____________________________________ 49
Statutory auditors’ report on the consolidated financial statements __________________ 132
Ratio Information under Pillar 3 _________________________________________________ 134
12
Consolidated Financial Statements
Management Report
2
Management Report
Financial Year 2012
An economy struggling to grow
The global economy showed weak growth for the
second year in a row, marked by recession in the euro
zone and a slowdown in emerging economies.
Meanwhile, the United States saw a slight increase
in growth, but this was weak and fragile in relation
to pre-crisis levels.
In Europe, Spain, Italy and Greece in particular wallowed
in recession while Germany recorded a slowdown.
France generated near-zero GDP growth. Consumption
remained stagnant. And the job market suffered heavily
with unemployment above 10%.
Against this backdrop, both the United States and
Europe maintained accommodative monetary policies.
Because of the growth deficit and low inflation, the ECB
lowered its key interest rate to 0.75% in early July 2012,
prompting a significant easing of yields: the 10-year OAT
stood at 1.99% at the end of December 2012 compared
with 3.15% on January 1, 2012; over the same period,
the Eonia fell from 0.40% to a record low of less than
0.10%.
This central bank intervention and the announcement
of progress on the institutional front, coupled with the
implementation of the banking union, helped to calm the
situation in the euro zone, sparking a broad rally on the
stock markets.
In France, the CAC 40 gained +15% compared to
January 1, closing at 3641 points on December 31, 2012.
Despite a challenging economic
environment, Crédit du Nord Group proves
resilient with virtually stable net income
compared to 2011
Crédit du Nord Group generated consolidated NBI
of EUR 1.9 billion, down by a slight 1.0% versus 2011.
Gross operating income totalled EUR 677.1 million, while
the cost/income ratio came out at 64.7% compared with
63.6% in 2011. Cost of risk fell by -3.1%. Consolidated
net income amounted to EUR 308.4 million, down by a
slight -2.0%. ROE came out at 11.9%, with a Tier One
ratio of 9.0%.
In accordance with IFRS, the Group recognised changes
to PEL and CEL account provisions and fair value
measurements of its financial liabilities in its results.
After restatement for changes to PEL and CEL account
provisions and for the fair value measurement of its
financial liabilities, the Group generated NBI growth
of +0.4%. Through solid management of its operating
expenses (+0.7%), Crédit du Nord posted stable
restated GOI in relation to 2011.
Finally, cost of risk declined over the period (-3.1%),
resulting in a +1.3% rise in restated operating income.
Restated consolidated net income rose by +3.8% in
relation to 2011.
The margin on deposits fell by -1.5% to -EUR 9.2 million,
impacted by a significant fall in short-term interest rates
and underpinned by a volume effect on sight deposits
and special savings accounts.
The margin on loans rose by +0.5%, driven by a volume
effect and the reconstitution of margin levels.
Growth in customer bases and ongoing work to increase
the sale of products, bank services and insurance to
customers helped to buoy net fee income in a negative
market and regulatory environment.
13
2
Management Report
Société Marseillaise de Crédit confirms
its role as a major growth driver in the
coming years
Société Marseillaise de Crédit saw growth in business
and earnings. Market penetration was strong in both the
Individual Customers and the Professional and Business
Customers markets. The migration of its information
system to that of Crédit du Nord at the start of the
year was a major step in SMC’s consolidation within
Crédit du Nord Group, and enhanced the services
offered to all of the bank’s customers in support of their
activity and projects. At the same time, reconfiguration
of the network continued, and in October 2012, the
Crédit du Nord branches located in the Provence-AlpesCôte d’Azur (PACA) region and those of Banque Courtois
in Hérault joined SMC, making it the Group’s only brand
in operation in South-eastern France.
SMC provides Crédit du Nord Group with strong
development potential across all its markets; it has
access to the Group’s entire range of loans, savings
accounts, banking services and insurance products.
Meanwhile, Crédit du Nord continues
to benefit from its commercial investments
In the mid-2000s, Crédit du Nord launched an ambitious
branch opening programme.
Close to 150 new branches were opened in highpotential areas spread out across mainland France.
These branches have enabled a number of Individual
customers in large cities, and particularly in the Paris and
greater Paris area, to transfer their accounts to branches
closer to their place of residence, thereby facilitating their
banking relations.
The new branches play a significant commercial and
financial role in Crédit du Nord Group and in 2012
they took in 16% of the Group’s new Individual and
Moreover, their customer bases continue to boast
significant potential for selling banking products and
services to customers, and their development is certain
to be a real growth driver in the years to come.
14
Crédit du Nord successfully rolls out its
information system at SMC and presses
ahead with programmes designed to
i m p ro v e c o m m e rc i a l e ff i c i e n c y a n d
customer satisfaction
SMC was successfully integrated into the Crédit du
Nord IT platform. SMC now uses the same IT systems
as the rest of the Group covering loans, payments and
accounting and management reporting. In addition to IT
migration, the project mobilised volunteer support teams
from all of the regions and regional banks.
Crédit du Nord continued to enhance the workstations
at its branches, notably with an upgrade of the newgeneration revolving credit facility, «Etoile Avance 2012»,
and a new savings product, «Antarius Sélection Multi
Capitalisation».
The incorporation of telephone services at all employee
workstations is also under way. This will allow advisors
to view customer data when making or receiving calls,
to manage call logs and to check their voice messages
directly from their workstations.
On the sales front, initiatives to improve the multichannel offer continued in 2012, with the introduction
of a new feature that allows Individual customers to
enter instant one-off credit transfers from the mobile
website, and the roll-out of new solutions, enhanced
ID authentication tools, and an online beneficiary
management system for Professional and Business
customers.
Crédit du Nord also broadened its sales offering for
Business customers with the launch of the revolving
term account.
New information was input into the sales management
application, which was deployed in 2010 and draws on
a single database.
Finally, work continued on the «Convergence» project,
aimed at building a joint information system with Societe
Generale. In 2012, this involved the establishment of
mass processing of SEPA direct debits, completion of
the EBICS migration with exchange of the first payment
flows, and the switchover of the first group of merchant
customers to the shared electronic payment platform
Transactis.
Management Report
2
Sales activity
The analysis of Crédit du Nord Group’s sales activity
covers the entire scope of the Group’s banks, i.e. Crédit
du Nord and its subsidiary banks.
The indicators shown relate to euro-denominated
businesses, which account for virtually all of the
Group’s activities. Outstanding loans and growth in
customer bases are based on end-of-period figures
(i.e. end December).
Further development of the customer base
There was further growth in the active Individual
customer base in 2012, with the addition of more than
121,000 new customers. As at December 31, 2012,
the customer base included nearly 2.1 million Individual
customers.
This expansion of the customer base drew on the
Group’s efforts to win new customers through
recommendations, and contributions from new
branches.
INDIVIDUAL CUSTOMER BASE
(at December 31)
Number of customers (in thousands) - 2011 and 2012 including SMC
1,611
1,702
1,959
2,065
2009
2010
2011
2012
Growth rates are determined based on precise figures and not on the
rounded figures presented in the charts. This comment applies to all of the
charts contained in this document.
This growth went hand in hand with the sharp pick-up in
the rate of product sales to customers. The number of
customers with six or more products remained at a high
level (47.3%).
The Livret A and Livret Développement Durable
passbook savings accounts saw an acceleration of
inflows as of mid-September following the announced
ceiling increase. The return on the Livret A was
maintained at 2.25% throughout the year. In 2012,
102,000 Livret A passbook savings accounts were
opened for customers or their children, bringing the total
number of Livret A savings passbooks sold by Crédit du
Nord to 447,000 since the product was launched. At
December 31, 2012, funds invested in Livret A and Livret
Développement Durable passbook savings accounts
totalled EUR 3.6 billion.
Life insurance inflows continued to grow, notably for the
Antarius Duo and Antarius Sélection funds, with 53,000
policies sold in 2012.
2012 also saw strong personal protection and casualty
insurance activity, with nearly 76,000 policies sold over
the period, reflecting particularly solid growth in sales
of Antarius Protection, legal protection and multi-risk
policies.
Online banking activity expanded, with 103,000 new
Internet contracts opened in 2012. Internet contracts are
now free for Individual customers with package deals.
One of Crédit du Nord’s key goals was to maintain its
focus on developing the Professional customer base at
a brisk pace. The active customer base grew by +2.1%.
This result testifies to the quality of Crédit du Nord
Group’s close-knit network, with dedicated advisors to
deal with both the private and commercial aspects of
banking relations, and a tailored offering.
The number of products and services per customer
made further improvement thanks to the success
of the “Convention Alliance” package deal, held by
57.2% of Professional customers. Moreover, 40.4% of
Professional customers maintain both a commercial
and private relationship with the bank. The Facilinvest
contract continued to make progress, with close to
10,700 contracts sold by the end of 2012. Outstanding
contracts doubled year-on-year.
The number of Plans d’Epargne Interentreprises (intercompany savings plans) created for small businesses,
individual entrepreneurs and independent professionals
posted yet another significant increase of +14.0%
year-on-year. Visits to Crédit du Nord’s Professional
customers website increased by +10.5% in relation to
2011, representing 13.7 million connections.
15
2
Management Report
PROFESSIONAL CUSTOMER BASE
New product launches and customer
satisfaction survey
(at December 31)
Number of customers (in thousands) - 2011 and 2012 including SMC
165
173
205
218
2009
2010
2011(1)
2012
The active Business customer base grew by +0.8%,
with more than one in four new customer relationships
with companies generating revenue above EUR 7.5m.
Three quarters of these hold an active Internet banking
contract. The number of visits to the Business customers
website stood at 4.7 million in 2012, up +11.0%
on 2011.
BUSINESS CUSTOMER BASE
(at December 31)
Number of companies (in thousands) - 2011 and 2012 including SMC
35
36
45.3
46.8
2009
2010
2011(1)
2012
(1) New 2011 data due to a revised segmentation of Business and
16
New products and services were launched in 2012.
The Individual customers market saw the launch of
the adapted revolving credit line “Etoile Avance” and
the issuance of a Crédit du Nord bond maturing in
July 2020, eligible for life insurance policy investments.
The Professional customers market saw the launch
of the contactless electronic payment terminal.
On both the Professional and Business customers
market, a new personal protection insurance policy for
CEOs or key personnel was launched. A renewable
term account with a maturity of two months was
launched for business and institutional customers,
offering a more attractive rate of return than money
market mutual funds and reasonable levels of liquidity.
A competition survey measuring customer satisfaction(2),
conducted in spring 2012 on a representative sample of
customers across all markets, once again gave Crédit du
Nord first place, ahead of the main French banks in the
Individual customers market, in a variety of categories:
overall customer satisfaction, image, branches,
products and services. Furthermore, Crédit du Nord
topped the survey on the Business customers market
for the second year running thanks to its commercial
set-up. In the Professional customers market, the
Group came second in terms of customer satisfaction.
The results of the survey reflect the excellent quality of
our customer relations, which are the foundation of our
growth model.
(2) Source: CSA survey institute, May 2012, competition survey (by
telephone).
Management Report
Significant rise in on-balance sheet savings
On-balance sheet savings rose significantly in 2012, by
+11.0% year-on-year.
Deposits posted a slight increase of +0.5% on the
Individual customers market due to the increased
ceiling on the Livret A. They rose by +3.6% in the
Professional and Business customer segments. This
can be attributed to outflows from money market mutual
funds, which remained unattractive due to particularly
low interest rates. Moreover, the crisis encouraged
consumers to keep their cash in their sight accounts and
short-term savings accounts.
Household savings deposits, driven by Livret A and
LDD passbook savings accounts, increased sharply,
up by +30% and +18.1% respectively to EUR 2 billion
and EUR 1.6 billion at the end of December 2012.
Outstanding household savings deposits grew by +2.0%
thanks to strong sales trends.
On-balance sheet savings deposits
(at December 31)
(in EUR billions) - 2011 and 2012 including SMC
19.2
22.0
26.9
29.9
+11.0%
5.1
+41%
7.2
In life insurance, gross inflows were down by -7.6%
compared to the strong showing in 2011. Net inflows
nevertheless remained positive, contrasting with the
overall market trend. The percentage of unit-linked policies
compared to EUR policies was limited in light of the
depressed market. Life insurance assets under management
rose by +5.5% year-on-year to EUR 15.5 billion.
Medium-and long-term mutual fund assets under
management fell by -6.9% year-on-year, posting
negative net inflows in a turbulent market environment
over the year. Medium- and long-term mutual fund
assets under management amounted to EUR 1.9 billion.
Short-term mutual fund assets under management
declined by -42.8% year-on-year across all customer
bases, as returns on money market SICAVs were
severely affected by money market rates.
On the whole, inflows from on-balance sheet
savings and life insurance helped to offset mutual
fund redemptions, giving rise to growth of +3.7% in
managed savings deposits (on and off-balance sheet)
year-on-year.
(at December 31)
25.7
3.0
6.3
of EUR 3.9 billion at end-December 2012, stemming
predominantly from money market mutual funds.
Off-balance sheet savings deposits
4.2
8.3
+6.1%
24.7
25.9
8.8
24.8
-3.9%
6.7
2.9
2.6
2.1
4.3
9.8
11.1
2009
2010
Sight deposits
2
CERS
13.5
2011
+2.5%
13.8
7.2
The passbook savings account for institutional
customers and the term deposit account offering
progressive rates of return remained highly popular
with companies, giving total on-balance sheet savings
2.0
-42.8%
2.5
5.3
2012
Other deposits
-6.9%
+5.5%
11.1
12.1
14.7
4.5
4.7
4.7
2009
2010
2011
Other Custody
Life insurance
ST mutual funds
15.5
+3.9%
4.9
2012
MLT mutual funds
17
2
Management Report
Slowdown in new loans to Individual
customers, resulting from a particularly
high comparison base in 2011
New personal loans
(at December 31)
(in EUR millions) - 2011 and 2012 including SMC
New housing loans declined in 2012 owing to a
particularly high comparison base in 2011: total
withdrawals amounted to EUR 3.7 billion, down -26.9%
in relation to 2011. This decrease in new housing loans
was nevertheless well below the decline in the overall
market and outstanding loans even increased by +6.5%
year on year, amounting to EUR 17.9 billion at December
31, 2012.
-9.9%
360
Crédit du Nord continued to implement a selective risk
policy, setting thresholds for customer contributions
and reasonable debt ratios, and offering only fixed- or
adjustable-rate loans limited to terms of under 25 years.
New personal loans declined due to the dip in household
consumption. Overall, outstanding loans fell slightly, by
-2.6% year on year.
New housing loans
743
825
743
2010
2011
2012
Outstanding loans to Individual customers
(at December 31)
(at December 31)
(in EUR millions) - Change including SMC
(in EUR billions) - 2011 and 2012 including SMC*
13.3
-26.9%
13.9
18.7
19.8
+5.6%
360
0.17
0.17
1.7
1.8
-2.5%
0.30
1.64
4,261
5,051
3,694
2010
2011
2012
There was a decline in revolving loans in the wake of
a lacklustre 2011. Outstanding revolving loans dipped
by -1.5% year-on-year, attributable to a lower level of
activation of existing contracts and consumer lending
reforms which had a negative impact on the sale of new
contracts.
18
0.29
1.61
11.3
12.0
16.8
2009
2010
2011
Housing loans
Consumer loans
* New source for 2011 and 2012 data.
Overdrafts
+6.5%
17.9
2012
Management Report
Crédit du Nord helps finance the French
economy
Crédit du Nord contributes to the financing of
the economy and the development of SMEs, as
demonstrated by the +2.8% year-on-year growth in
outstanding investment loans.
However, the crisis led to a slowdown in demand for
credit in 2012. Against this backdrop, new investment
loans fell by -13.5% in relation to a particularly high level
in 2011.
2
Outstanding business loans
(at December 31)
9.8
9.6
11.8
12.1
+2.8%
1.5
1.4
+6.5%
1.7
+0.1%
1.7
+2.8%
9.0
1.5
1.3
1.3
1.3
7.0
7.1
8.7
2009
2010
2011
New equipment leasing activity was up by +1.1%, in line
with the strategic objective of supporting businesses
through this form of financing. Total equipment leasing
therefore posted a gain of +6.7% year-on-year.
Short-term business loans increased +3.0% year-onyear thanks to the increased use of overdrafts and
growth in the customer base.
Overall, the Loan to Deposit ratio (ratio of outstanding
loans to outstanding deposits) improved on the back of
steady inflows to on-balance sheet savings accounts
and a strict loan approval policy.
Medium & long-term loans
Commercial & cash loans
2012
Overdrafts & others
New equipment loans
New equipment leasing activity
(at December 31)
(at December 31)
(in EUR millions)
(in EUR millions)
-13.5%
+1.1%
237
590
680
687
2010
2011
2012
2,629
2,274
2011
2012
19
2
Management Report
Financial developments
The figures presented below are taken from the Group’s
fully consolidated financial statements.
for the effects of the application of IFRS on future
commitments related to home savings products and the
measurement of financial liabilities at fair value.
In order to provide an economic assessment of financial
performance, the following comments were restated
(in EUR millions)
(including change in the PEL/CEL provision)
31/12/2011
1,118.7
1,120.1
-0.1
798.3
816.0
-2.2
1,917.0
1,936.1
-1.0
Net interest and similar income
Net fee income
NBI
Crédit du Nord Group’s consolidated book NBI fell by
-1.0%. After restatement for the impact of PEL and CEL
provisions and for the fair value measurement of financial
liabilities, NBI increased by +0.4%.
This increase can be attributed to resilient sales margins
and fee income in a persistently challenging and highly
competitive environment.
The sales margin fell by -0.8%, or -EUR 7.5 million.
20
% change
2012/2011
31/12/2012
the margin on loans increased on the back of growth in
investment loans and short-term loans. On the Individual
customers market, the margin on revolving loans and
short-term loans declined, impacted by consumer lending
reforms.
Restated for the items presented in the introduction, net
interest and similar income rose by +2.4%.
The margin on deposits fell by -1.5%,
i.e. -EUR 9.2 million. The robust growth in volumes was
not enough to offset the negative impact of the significant
fall in short rates.
Consolidated net fee income fell by -2.2%. Consolidated
service fee income fell by -1.5%. Solid growth in new
customers and in product and service sales was offset
by the negative impact of reforms on electronic payment
interchange fees.
The margin on loans rose by +0.5%,
i.e. +EUR 1.7 million. On the Business customers market,
Consolidated financial fee income fell by -3.4%.
Management fees on mutual funds fell by a sharp
Management Report
-14.0%, as returns generated by money market SICAVs
were severely affected by lower short rates and the
contraction in volumes. Fees on life insurance products
were down -6.9%, with a drop in investment fees
(11.8%) due to lower inflows compared to 2011.
2
Net fee income
(at December 31)
Consolidated Group scope (in EUR millions)
762.9
740.9
-2.9%
816.0
+10.1%
798.3
-2.2%
+2.9%
-3.4%
280.3
305.6
-10.8%
272.5
457.3
+2.4%
468.4
2009
Service fee income
+14.4%
2010
535.7
2011
270.9
-1.5%
527.4
2012
Financial fee income
Operating expenses
(in EUR millions)
Personnel expenses
Taxes
Other operating expenses
Depreciation and amortisation
TOTAL OPERATING EXPENSES
Growth in consolidated operating expenses was limited
to +0.7%, while personnel expenses rose by +3.3% due
to an increase in the social security contribution and
the broadening of the wage tax base. Other operating
expenses fell by -3.9%.
Staff in activity – Group (pro rata)
31/12/2012
31/12/2011
% change
2012/2011
-752.1
-727.8
+3.3
-38.1
-35.4
+7.6
-365.4
-380.4
-3.9
-84.3
-88.0
-4.2
-1,239.9
-1,231.6
+0.7
Taxes rose by +7.6%. It should be noted that the Group
booked exceptional VAT relief in 2011.
At the end of December 2012, the Group had a total
active headcount of 8,515, down by -2.3% in relation to
December 2011.
31/12/2012
31/12/2011
% change
2012/2011
8,515
8,715
-2.3
21
2
Management Report
Operating expenses
Cost-to-income ratio
(at December 31)
(at December 31)
Group consolidated data (in EUR millions)
Group consolidated data (in %)
+0.7%
+12.9%
+4.3%
1,045.8
1,090.7
1,231.6
1,239.9
2009
2010
2011
2012
66.2
65.8
63.6
64.7
2009
2010
2011
2012
(in EUR millions)
31/12/2012
NBI
Operating expenses
GOI
Book GOI came out at EUR 677.1 million, down -3.9%
in relation to 2011. After restatement for PEL and CEL
provisions and for the fair value measurement of financial
liabilities, GOI was stable in relation to 2011.
31/12/2011
% change 2012/2011
1,917.0
1,936.1
-1.0
-1,239.9
-1,231.6
+0.7
677.1
704.5
-3.9
Gross operating income (GOI)
(at December 31)
-3.9%
The book cost-to-income ratio was 64.7%.
+24.2%
+6.2%
22
534.0
567.1
704.5
677.1
2009
2010
2011
2012
Management Report
2
Cost of risk
(in EUR millions)
Cost of risk
31/12/2012
31/12/2011
% change
2012/2011
-191.8
-198.0
-3.1
36,886.5
35,330.9
4.4
Cost of risk / outstanding loans
0.52%
0.56%
- 0.04 pt
Crédit du Nord Group’s consolidated cost of risk (1)
came out at EUR 191.8 million in 2012, compared with
EUR 198.0 million in 2011. In relation to the total loans
issued by the Group, this level (0.52%) was down by 4
basis points compared with 2011. Excluding provisions
not related to the lending activity(2), there was a slight
increase.
tended to accelerate towards the end of the year. While
this pressure has had a limited impact on the cost of
risk up to now, and while cost of risk linked to Individual
customers is still low, the outlook for 2013 is clearly
negative.
Gross outstanding loans
Crédit du Nord Group’s lending business essentially
targets French customers. The SME and VSE customer
base continued to be impacted by the crisis, although
a pick-up was noted in 2010 and 2011. Overall, 2012
came under considerable competitive pressure, which
(in EUR millions)
Doubtful and disputed loans (gross)
Against this backdrop, the ratio of outstanding doubtful
and disputed loans to total outstanding loans rose
slightly to 5.9%.
The Group maintained a cautious provisioning policy
concerning non-performing loans and continued its
collective provisioning on performing loan portfolios.
31/12/2012
31/12/2011
% change 2012/2011
2,190.7
2,038.7
+7.5
-1,162.6
-1,037.3
+12.1
Gross doubtful and disputed loans /gross outstanding loans
5.9%
5.8%
0.17pt
Net doubtful and disputed loans/net outstanding loans
2.9%
2.9%
-0.04pt
Rate of provisioning for doubtful and disputed loans net
of guarantees received on doubtful outstandings (3)
79.6%
74.7%
4.89pt
Write-downs for individually impaired loans
(1) Cost of risk represents the net provisioning charge on banking activities (allocations to provisions less write-backs), plus non-provisioned losses
on irrecoverable loans, less amounts recovered on amortised loans.
(2) Provisions of EUR 2.8 million in 2012 compared with EUR 30.1 million in 2011.
(3) The valuation of guarantees received on doubtful outstanding equipment leases was revised following a change in method in 2012.
Figures as at December 31, 2011 are pro forma and exclude SMC.
23
2
Management Report
Operating income
Taking cost of risk into account, Crédit du Nord Group
generated operating income of EUR 485.3 million in
2012, down -4.2% in relation to 2011. After restatement
for PEL and CEL provisions and for the fair value
measurement of financial liabilities, operating income
rose by +1.3%.
Operating income
(at December 31)
326.2
+32.8%
391.1
+29.5%
506.5
-4.2%
485.3
-207.8
-15.3%
-176.0
+12.5%
-198.0
-3.1%
-191.8
2009
2010
Cost of risks
2011
2012
Operating income
Net income
(in EUR millionæs)
OPERATING INCOME BEFORE CORPORATION TAX
Corporation tax
Non-controlling interests
CONSOLIDATED NET INCOME AFTER TAXES
In 2012, consolidated net income amounted to EUR
308.4 million, down -2.0% in relation to 2011. After
restatement for PEL and CEL provisions and for the fair
value measurement of financial liabilities, consolidated
net income grew by +3.8%.
24
31/12/2012
31/12/2011
% change 2012/2011
486.6
508.2
-4.3
-173.5
-185.8
-6.6
-4.7
-7.6
-38.2
308.4
314.8
-2.0
Management Report
2
Outlook
In a challenging environment, Crédit du Nord Group
continued to focus on expanding its business, achieving
growth in all of its customer bases.
With consolidated net income of EUR 308 million in
2012, representing almost no change versus 2011,
the Group demonstrated resilience and confirmed the
soundness of its business model.
Low interest rates and a fall in financial fee income
nevertheless wiped out growth in NBI, which showed
a slight drop of -1.0% in 2012. After restatement for
changes in provisions on PEL and CEL outstandings,
and for the fair value measurement of financial liabilities,
revenue nevertheless saw growth of +0.4%. The +0.7%
increase in operating expenses was mainly attributable
to the broadening of the wage tax base and an increase
in the social security contribution, while current operating
expenses were limited. Cost of risk declined by -3.1%.
Overall, consolidated operating income fell by -4.2%;
after restatement for changes in PEL and CEL provisions
and for the fair value measurement of financial liabilities,
it increased by +1.3%.
2013 promises to be a tough year: revenue growth
should be impacted by heavier taxes on households
and businesses, weak consumption and investment,
and the fact that interest rates are likely to remain low.
Against this backdrop, savings levels are likely to
continue growing and new lending activity is expected
to remain weak.
Crédit du Nord will continue to develop its growth
drivers, drawing on the new branches opened over
the last decade, which are instrumental to the Group’s
commercial and financial advancement. These branches
still hold tremendous potential for increasing the number
of banking products and services sold to customers.
The development of Société Marseillaise de Crédit is
part of this strategy. With strong regional roots and a
well-known brand, its acquisition has positioned the
Crédit du Nord Group as a key player with a large
market share in the south of France, a region that holds
great potential in terms of business and demographics.
Crédit du Nord will draw on this powerful brand to ramp
up its development in this region.
Finally, Crédit du Nord will continue to upgrade its
information system. In 2013, the “Convergence” project
launched in 2010 to create a joint information system
for Societe Generale Group’s retail banks, will see
further convergence of SEPA processing and payment
systems. The project is expected to further improve the
Group’s commercial efficiency and enhance the range
of products and services offered to customers. Over the
long term, this investment will bring greater operational
efficiency.
25
2
Chairman’s report on the preparation and organisation of the Board’s activities and on internal control and risk management
Chairman’s report on the preparation and organisation
of the Board’s activities and on internal control
and risk management
This report pertains to 2012 and has been prepared in accordance with Article L.225-37
of the French Commercial Code.
Preparation and organisation of the Board’s activities
The Board of Directors meets at least once per quarter.
A list of the directors is provided in the registration
document.
The Board of Directors comprises 13 members,
including four independent directors selected for their
expertise and commitment to the company.
Crédit du Nord will comply with the law of January 27,
2011 governing the principle of balanced representation
of women and men on the Board.
The agenda of all Board meetings is set by the Chairman
after consultation with the Chief Executive Officer.
In addition to the Directors, the following also participate
in Board meetings:
• the Chief Executive Officer and, depending on
the matters being discussed, the members of the
Executive Committee and other company managers;
• the Statutory Auditors;
For the purposes of setting the agenda, the following
are reviewed:
• the Secretary of the Board;
• items to be examined by the Board pursuant to the
law;
Board meetings last approximately three hours.
• business allowing the Board to ascertain that the
company is being efficiently run and that its strategic
choices are being implemented (sales strategy,
organisation, investments, etc.).
The directors are convened no less than 15 days before
the meeting. Their notification includes:
• the agenda of the meeting;
• the draft minutes of the preceding Board meeting;
• an information pack pertaining to the key items on
the agenda.
When the Board meets to approve the annual financial
statements, the following information must also be
provided:
• to each Director: a list of all other corporate offices
held by the Director, it being the responsibility of each
Director to verify and amend the list as necessary;
26
• for the Chairman and Statutory Auditors, by virtue of
current regulations: a list of all significant agreements
entered into between Crédit du Nord and its senior
managers and/or those companies with which Crédit
du Nord shares senior managers or shareholders.
• the Secretary of the Central Works’ Council.
The agenda items are presented by the Chairman, the
Chief Executive Officer or the person responsible for the
items in question (Chief Financial Officer, Head of Risk,
etc.). A deliberation process ensues during which views
and opinions are expressed. At the end of deliberations,
the Board is asked to vote, where necessary.
The draft minutes of the meeting are prepared by the
Secretary of the Board, who submits the same to the
Chairman, the Chief Executive Officer and all other
individuals having brought business before the Board.
The draft minutes are then submitted for the approval of
the Board at the start of the following meeting.
Crédit du Nord applies some of the recommendations
presented in the AFEP/MEDEF corporate governance
code, in particular those related to the remuneration
of corporate officers. The company also has a
Compensation Committee consisting of two directors.
The Chief Executive Officer’s remuneration is set
by the Board. This compensation is comprised of a
fixed component and a variable (performance-based)
component based on the criteria proposed by the
Compensation Committee. Detailed information is
provided in the chapter entitled “Information on the
Corporate Officers” of the annual report.
In 2011, the Board decided to create an Audit
Committee comprising three directors. This Committee
is responsible for examining matters related to risk,
compliance and internal control. It met for the first time
in May 2012 and again in October 2012. It reports to the
Board on its work twice a year.
A Board regulation specifies the conditions under which
directors can participate in meetings through video
conferencing or other telecommunication methods. This
regulation can be consulted on the bank’s website under
«Vie de l’Entreprise».
The activities of Crédit du Nord Group are subject to
a secure control framework, in that they must comply
with both banking regulations and the systems and
procedures of its shareholder (I).
As a network bank with strong regional roots and a
customer base essentially comprised of individuals and
SMEs/SMIs, Crédit du Nord and its subsidiaries are
exposed to risks, the most significant of which is
counterparty risk (II).
Due to its chosen business mix, Crédit du Nord Group
has limited exposure to risks related to international and
real estate activities.
Internal Control at Crédit du Nord Group is based on
a system that draws a distinction between Permanent
Control and Periodic Control (III).
General Meetings of Shareholders are convened in
accordance with all applicable laws and regulations. All
shareholders receive a meeting notice.
As regards accounting and financial management,
a common information system is shared by virtually
all Group companies and in particular the banking
subsidiaries. This system provides the means to enforce
Crédit du Nord’s rules and procedures while monitoring
the results and activities of Group companies in real time
(IV).
Limits to the powers of the Chief Executive
Officer
I. A secure framework
The duties of Chairman of the Board and Chief Executive
Officer were split on January 1, 2010.
1 - Regulatory reporting
Information on holding several corporate offices and
on the independence of directors is provided in the
registration document.
The term of office of the Chief Executive Officer is
determined by the Board of Directors.
The Chief Executive Officer is vested with extensive
powers to act under all circumstances on behalf of
the company. The Chief Executive Officer exercises his
powers within the limits set out in the corporate purpose
and subject to those powers expressly attributed by
law to the Shareholders’ Meetings and the Board of
Directors.
The Chief Executive Officer’s powers in the area of
credit risk are specified in the rules adopted at the
Shareholders’ Meeting of October 25, 2012.
Internal control and risk management
This report discusses the internal control procedures
that apply to all entities within the Crédit du Nord Group.
The various units involved in internal control played a role
in preparing the report.
2
The annual report on internal control and on risk
measurement and oversight, prepared in accordance
with Articles 42 and 43 of CRBF Regulation No. 97-02,
as amended, is transmitted to the decision-making body
and addressed to the Statutory Auditors and to Societe
Generale, shareholder.
The French Prudential Supervisory Authority receives
the individual annual reports from each Crédit du Nord
subsidiary and the consolidated annual report for Crédit
du Nord Group.
Each year, the Group’s RSCIs (Heads of Investment
Service Compliance) submit a general report
on compliance with investment service provider
requirements and a special report addressing any
specific topic that may be requested to the AMF (French
securities regulator).
These reports are also submitted to the decision-making
body of each entity.
27
2
2- Controls performed by the shareholder
As a member of Societe Generale Group since 1997,
Crédit du Nord benefits from the control system
established by its shareholder.
This system focuses primarily on risk exposure, the
accuracy of financial and management accounting data
and the quality of information systems.
Systematic controls are performed by the shareholder
as part of a programme of regular inspections of Group
entities aimed at ensuring that procedures are being
applied.
As the shareholder is itself a banking establishment,
continuous comparisons between the two networks
facilitate the control of risk.
II. Main banking risks
1- Counterparty risk
The credit policy of Crédit du Nord Group is based
on a set of rules and procedures governing lending,
the delegation of responsibilities, risk monitoring, the
rating of counterparties, the classification of risks, and
the identification of impaired risks.
Identifying counterparty risk impairment is the
responsibility of all individuals in charge of managing,
monitoring and controlling risks: i.e. the sales function,
risk monitoring function, risk management department
and periodic control department.
Risk management is organised on two levels:
• The Central Risk Division (DCR), which reports
directly to Crédit du Nord’s Chief Executive Officer
and reports functionally to Societe Generale’s Risk
Division, assists with the definition of lending policies,
oversees the implementation of these policies
and participates in the credit approval process.
Responsible for identifying and classifying risks,
DCR participates in the risk control process, the
determination of the appropriate level of provisioning
for non-performing loans and the collection of
doubtful loans.
28
• The Regional and Subsidiary Risk Departments,
which report directly to the Regional Manager or
the Subsidiary Chairman and functionally to Crédit
du Nord’s Central Risk Division, are responsible for
implementing the Group’s credit policy and managing
risks within their scope.
• Specifically, they play a role in the credit approval
process, the monitoring and classification of risks and
the collection of doubtful and disputed loans.
Specialised committees and systems
In order to monitor and manage risk, the following
have been instituted at the Group and the regional/
subsidiary level:
• a Risk Committee, chaired by the Chief Executive
Officer, which meets once a month. A member
of the shareholder’s Risk Division also sits on this
committee;
• a Regional Risk Strategy Committee that meets once
a year in each region and at each subsidiary. This
committee is chaired by the Chief Executive Officer
of Crédit du Nord;
• a review of impaired risks is conducted every six
months by the Central Risk Division’s Control and
Provisioning Committee.
In the Group’s main customer markets, risk monitoring
and control structures have been strengthened using
risk modelling systems developed to determine the
Basel II capital adequacy ratio.
These structures regularly contribute to the definition of
risk policy, the implementation of this policy, the review
of significant risks, the monitoring of impaired risks,
provisioning for risks and overall risk analysis.
Crédit du Nord also prepares a quarterly report on
major regulatory risks for its shareholder, which is then
consolidated and submitted to the French Prudential
Supervisory Authority. Every quarter, it reports the main
risk events to the Societe Generale Risk Division using a
pre-defined format.
2- Interest rate, exchange rate and liquidity
risk (excluding market activities)
This risk is managed in large part by the following two
indicators:
With regard to overall risk management, Crédit du Nord
Group separates between structural balance sheet risks
(Asset and Liability Management or ALM) and risks
related to trading activities.
• the daily shortterm interest rate position, which
is subject to limits;
2-1 Management of structural balance sheet
risks (ALM)
Reporting directly to the Finance Division of Crédit du
Nord (DGF), the ALM unit comes under the authority of
Crédit du Nord’s Chief Financial Officer.
The ALM unit is responsible for monitoring and analysing
Crédit du Nord Group’s exposure to mismatched interest
rate and liquidity positions.
An ALM Committee, chaired by the Chief Executive
Officer, meets once a month to make decisions on
managing mismatched interest rate and liquidity
positions arising out of the Group’s business activities.
A member of the shareholder’s Finance Division also sits
on this committee.
Liquidity risk
The ALM unit monitors the outstandings and regulatory
ratios of Crédit du Nord and its subsidiaries. Shortterm
liquidity management is delegated to each subsidiary
as part of its cash management activities and is subject
to certain limits requiring the subsidiary to remain
sufficiently liquid.
Changes in the structure of the balance sheet and
disposals are managed by the ALM unit and monitored
by the ALM Committee, which in turn determines the
refinancing requirements of the Group’s entities. A
quarterly report on liquidity risk is submitted to the
shareholder.
Since the end of 2011, Crédit du Nord Group has been
creating dedicated tools for establishing Basel III liquidity
ratios. Through this work, the Group is preparing for
future regulatory requirements.
Interest rate risk
All assets and liabilities of the Group banks, excluding
those related to trading activities, are subject to
an identical set of rules governing interest rate risk
management.
The ALM Committee delegates the management of shortterm interest rate risk to the Weekly Treasury Commitee.
2
• exposure to short rates incurred by all balance sheet
transactions, which is also subject to a limit.
The Weekly Treasury Commitee makes sure these limits
are observed.
The overall interest rate risk of Crédit du Nord Group
is subject to exposure limits in euros and foreign.
Observation of these limits is verified within the
framework of a report submitted to the shareholder.
Crédit du Nord Group operates a consistent hedging
policy against ALM risks and implements the appropriate
hedges to reduce the exposure of Group entities
to interest rate fluctuations.
The hedging activities of the ALM unit cover all Crédit
du Nord Group entities.
Each Group entity is monitored individually and hedged
on an ad hoc basis.
Note that the Group is equipped with the
ALM application, Almonde, which is used to produce
the Weekly Cash Flow Committee’s reports, the ALM
Committee indicators and the quarterly shareholders’
report. Hedge effectiveness assessments required
under IFRS are carried out using market valuations
calculated by Evolan (an application used by the Trading
Floor), which provides an accurate representation of all
positions, given that all asset-liability mismatches are
identified and calculated as a monthly average.
2-2 Trading activity
Barring exceptions, transactions involving derivatives
linked to customer transactions are hedged with Crédit
du Nord’s shareholder, given that Crédit du Nord
maintains only limited proprietary positions in such
products.
Controls of limits assigned to these trading activities
by the General Management are monitored by
the Treasury and Foreign Exchange Department
in accordance with the standards adopted by the
shareholder.
T h e re s u l t s o f t h e s e a c t i v i t i e s a re c h e c k e d
by the appropriate audit teams (see «Market risks»
below).
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2
3 - Market risks linked to customer-driven
transactions
Crédit du Nord consistently collateralises customer
orders, mainly through its shareholder, thus significantly
reducing its exposure to market risk.
A specialised unit from the Treasury and Foreign
Exchange Department monitors market and
counterparty risks.
These risks are calculated on a daily basis and compared
with the limits. Any breaches are examined by the heads
of the Treasury and Foreign Exchange Department.
A report on limit controls is submitted to the shareholder
once every two weeks. The Chief Financial Officer
receives a weekly status report on results and limits and
a monthly report on changes in limits from the Treasury
and Foreign Exchange Department. The Chief Executive
Officer also receives a quarterly report on changes
in limits from the Treasury and Foreign Exchange
Department.
In addition, a weekly counterparty limits breach report is
submitted to the Head of the Central Risk Division.
4 - Operational risks
The businesses of the various Group entities are
exposed to a series of risks (administrative, accounting,
legal, IT, etc.) known as under the heading “Operational
risks”.
Operational risks are classified in accordance with
the recommendations of the Basel Committee and in
consultation with the shareholder. Above a threshold of
EUR 10,000 set by Crédit du Nord Group, losses are
systematically logged.
The main projects are monitored at Steering Committee
meetings, and in the case of the most important
projects, the CEO participates in these meetings.
Within the Central Risk Division, the Operational Risk
Management Department steers and coordinates
the procedures rolled out group-wide pertaining
to Operational Risks, Business Continuity Plans,
Crisis Management and central management of IT
authorisations.
The division uses a network of officers working at the
Head Office as well as the various regional entities and
subsidiaries.
30
An Internal Control Coordination Committee (CCCI,
see section III below) oversees the management of
operational risk within Crédit du Nord Group. It reviews
operating losses, major deficiencies, operational
risk mapping, business continuity plans and crisis
management systems.
An Operational Risk Review Meeting, attended by
the Heads of Internal Control, the Head of Information
System Security and the Head of Operational Risks, is
held prior to the delivery of each new IT application or
new version of an existing application where significant
changes have been made in order to ascertain risk in
terms of availability, integrity, confidentiality, testability
and control.
With the transfer of the IT security function to a new
entity alongside Societe Generale’s Retail Banking
France activity, Crédit du Nord’s IT Security function is
now overseen by the head of this entity’s IT Security.
An IT Security Committee, chaired by the Head of
IT System Security (RSSI), deals with all aspects of IT
system security.
A Crisis Plan makes it possible to assemble a crisis unit
at any time at one or more designated locations. This
unit combines a core of essential functions, which are
automatically mobilised irrespective of the type of crisis,
under the supervision of a crisis manager who oversees
the crisis management and reports to the General
Management. This unit can request the presence of any
executives, managers and experts directly concerned by
the event.
The strategic Head Office entities, i.e. those entities for
which it is crucial to ensure operational continuity, have
prepared a Business Continuity Plan that supplements
the procedures designed to ensure uninterrupted
services across the network.
5 – Non-compliance risk
In accordance with the rules applicable to credit
institutions, special procedures were developed
to address non-compliance risk, defined by the
consequences (penalties, financial losses, reputational
damage) likely to result from failure to comply with
regulations governing banking and financial activities.
Crédit du Nord and each corporate entity of the Group
governed by banking and financial regulations have a
Head of Compliance, whose name is transmitted to the
French Prudential Supervisory Authority.
Crédit du Nord’s Head of Compliance reports to the
executive body and to the Audit Committee whenever
necessary, and serves as liaison to the Compliance
Committee of Societe Generale Group, on which he sits.
Crédit du Nord’s Head of Compliance is assigned the
following duties:
• ensuring the effectiveness and consistency of the
organisation and procedures relating to compliance;
• identifying new risks related to non-compliance and
ensuring that the necessary measures are taken to
control them;
• monitoring the deficiencies identified via the Group’s
incident reporting system and assessing the
effectiveness of corrective measures.
Crédit du Nord Group’s Management Committee, on
which the heads of the main subsidiaries sit, periodically
reviews progress on compliance issues.
Before being launched, all new products and key
product transformations are subject to an examination
by the Products Committee, in which the Head
of Compliance, the Head of Investment Services
Compliance and Ethics, the Head of Marketing, the
Corporate Secretary and the Central Risk Manager
participate. The purpose is to check that all risks are
correctly identified and addressed. The Committee’s
work gives rise to a written opinion provided by the Head
of Compliance, who also examines internal instructions
and commercial documents related to new products.
Management and the internal control teams are
responsible for controlling compliance.
Compliance Officers ensure that all employees receive
the necessary directives on complying with regulations.
They also see to it that appropriate compliance training
programmes are in place.
2
Finally, internal guidelines set forth the rules applicable to
outsourced banking and financial services.
III. Organisation of internal control
Reporting functionally to Societe Generale’s Periodic
Control Department (DCPE), Crédit du Nord’s Head of
Periodic Control reports directly to the Chief Executive
Officer, who guarantees the independence of this office.
As a member of the Executive Committee, the
Corporate Secretary supervises the Permanent Control,
Compliance, Investment Services Compliance (RCSI),
Ethics, Anti-Money Laundering, and Legal Affairs and
Disputes divisions.
An Internal Control Coordination Committee (CCCI) is
chaired by the Chief Executive Officer, and is comprised
of the members of the Executive Committee and
the heads of Periodic Control, Permanent Control,
Compliance, Operational Risks, Information System
Security, Ethics, Investment Services Compliance and
Anti-Money Laundering divisions. This committee met
four times in 2012.
Finally, the instructions stemming from incident alerts
comply with the regulation stating that the Board
of Directors and the French Prudential Supervisory
Authority must be informed of key incidents.
1 – Periodic Control System
Crédit du Nord Group’s Periodic Control system covers
all Crédit du Nord Group activities.
Periodic Control staff members are mainly recent
university graduates who are trained by senior inspectors
with experience in risk control, administration and
accounting, all of whom are supervised by a member of
the General Management. An audit leader specialising in
IT provides support where needed or conducts targeted
inspections of IT and payment systems. This unit has
been expanded to improve coverage of the auditable
scope and to factor in the consolidation of Société
Marseillaise de Crédit.
31
2
This unit is an integral part of the internal control
structure of the Group’s shareholder. The shareholder’s
audit teams regularly conduct periodic controls of Crédit
du Nord Group.
The Head of Periodic Control gives an account of his
activities to Crédit du Nord’s General Management,
mainly during meetings of the Periodic Control
Committee, the annual Audit Committee, at which
Societe Generale’s Group Head of Internal Audit
is present, and the Internal Control Coordination
Committees.
The various entities of the Operations network are
audited at least once every five years, depending on the
priorities established by the General Management and
any audits performed by the shareholder.
Periodic Control assignments are conducted on the
basis of a written methodology and a procedure
involving the pre-selection of cases to be audited on site.
They generally comprise a pre-audit phase, an on-site
audit phase and a reporting phase.
The Periodic Control Department analyses the
administrative and accounting operations of the audited
entities, as well as their exposure to different types of risk
(notably to counterparty risk). These audits take account
of Basel II regulations on counterparty and operational
risks. In addition, Periodic Control assesses the quality
of Level One and Level Two controls.
It also conducts audits of Head Office divisions or
investigates specific areas as determined by General
Management.
Audits of specialised entities often involve a preliminary
learning and familiarity phase, which may prompt
General Management to rely on the special audits
performed by the shareholder.
The reports prepared when the audits are completed are
directly submitted to the Chief Executive Officer by the
Head of Periodic Control.
Monitoring of the implementation of any
recommendations made in the reports is carried out
by the Head of Permanent Control, who reports to the
Head of Periodic Control.
32
2 – Permanent Control
The head of each entity must perform a Level One
control of transactions carried out within his scope.
Branch and Business Centre managers must adhere
to a predefined plan (detailing frequency and risks to
be controlled) and must record and report on certain
controls performed; specialised supervisory staff also
assist the branches with the day-to-day monitoring of
accounts.
A Level Two control is conducted by dedicated
personnel, who report directly to the local head of
control (Region, Subsidiary or Operating Division), who in
turn reports directly to the Regional or subsidiary director
and functionally to Crédit du Nord’s Head of Permanent
Control.
On an exceptional basis, the heads of control covering
investment services compliance (DAF, DTC, DPGA,
brokerage firm Gilbert Dupont) report hierarchically to
RCSI.
The scheduling and details of these controls are
determined for each of these entities.
The Head of Permanent Control reports on his activities
to the General Management of Crédit du Nord.
2-1 Regional and subsidiary Level One and Two
administrative and accounting controls
The Line Management Control Manual sets out both
the requirement for vigilance (day-to-day security:
reception, opening of mail, filing, etc.) and a limited
number of controls to be formally defined by the
Management (recognition of payment instruments at
branches, sensitive procedures such as anti-money
laundering, compliance with the MiFID directive, etc.).
These controls may be delegated, provided that each
delegation of power is subject to supervisory control.
Level Two controls are performed by dedicated
personnel using control forms prepared together with
the Head of Permanent Control and a predefined plan
which specifies the frequency of controls based on the
degree of risk that the process or transaction represents.
Whenever an on-site control of a procedure is
performed, the procedure is rated for its degree of
compliance with applicable rules using a software tool.
This allows the Head of Permanent Control to map
out procedural compliance at both the local and
national level.
For each assignment, the Periodic Control Department
writes up an assessment of the Permanent Control
conducted for each area being audited.
2-2 Level One and Two risk controls of the
regions and banking subsidiaries
Level One control at a regional and subsidiary level
is carried out by Sales Management and by the Risk
Department of the region or subsidiary.
The Line Management Control Manual assigns
responsibility to the Branch or Business Centre
Manager for ensuring that delegated tasks are carried
out and that the lending decisions taken by subordinate
staff (customer advisers, etc.) who report to them are
suitable; furthermore they are responsible for any credit
limit breaches by the entity they supervise. These
controls are performed monthly, are formally defined and
may not be delegated.
As a line manager, the Group Director receives a copy
of the on-site auditing reports on Level Two controls.
He assists the branches in preparing a response to
these reports and supervises the implementation of the
Controllers’ recommendations.
Regional or subsidiary Risk Divisions are responsible
for supervising limit breaches. They also supervise the
appropriate classification of risks. They may decide to
classify loans as “performing loans under watch” or to
downgrade them to “doubtful” when renewal of such
loans is sought or amendments requested, or when
monitoring breaches.
Level Two Risk Controls are performed by Regional
or Subsidiary Risk Controllers reporting to the regional
or subsidiary Head of Control.
Regional or Subsidiary Risk Controllers carry out
checks to ensure that “performing” loans merit this
2
status. They examine and monitor “performing loans
under watch” and “doubtful loans” for the purpose of
downgrading or reclassifying them if necessary. They
oversee the proper application of rules relating to ratings.
The majority of the Risk Controller’s work is carried
out with the help of computer tools and the monthly
delegated limit reports. These tasks can be performed
on-site or remotely.
During on-site controls, Risk Controllers are required to
use sampling techniques to assess the quality of risk
management by operational staff, with special attention
given to standing procedures and compliance with Level
One control obligations.
2-3 Special controls conducted at Head Office
level on network entities
2.3.1 Central Risk Division
The Control and Provisioning Division performs the
following risk control and monitoring duties:
• On-site audits to monitor the application of Crédit
du Nord Group’s procedures by the Regional and
Subsidiary Risk Divisions and their correct application
of the Group’s credit policy, which is defined in the
Credit Manual;
• Permanent and remote risk monitoring through
centralised control of the most significant breaches
at Group level and of shortfalls in SRD (deferred
settlement service);
• Quarterly analysis of downgraded loans, in particular
«performing loans under watch» and «doubtful»
loans and periodic analysis of the management of
«doubtful» loans by «special affairs».
2.3.2 Ethics and Investment Service Compliance
Division.
This division conducts annual on-site audits on the
application of discretionary portfolio management
standards and procedures by wealth management
centres and on private banking activities at the regional
entities and subsidiaries.
33
2
2.3.3 Property Loans Division
The Property Loans Division holds a management
meeting every quarter at each of the Group’s regional
property lending centres to review existing loans and
oversee compliance with the Group’s policies in this
area.
2.3.4 Legal Affairs and Disputes Division
The Legal Affairs and Disputes Division conducts an
on-site audit every two years of disputes at regional and
subsidiary level.
2-4 Level One and Two controls of functional
divisions and specialised subsidiaries
The heads of Level Two permanent control for the
Head Office divisions and some specialised subsidiaries
report directly either to the Head of Permanent Control
(Banking Operations Division, central control in charge
of other functional departments) or to the Investment
Services Compliance Officer (DPGA, DTC, DAF and
brokerage firm Gilbert Dupont).
Due to the smaller size of some specialised subsidiaries,
sometimes their senior director carries out these controls
(e.g. Norbail Immobilier and Norbail Sofergie).
In other cases, Internal Control is partly outsourced:
Starlease to Franfinance and Antarius to Aviva.
3 – Ethics and Investment Service Compliance
Under the authority of the Corporate Secretary, this
Division ensures that the rules of good conduct
governing relations between the Bank, its employees
and its customers are well defined, understood and
observed.
Banking and finance ethics guidelines, which all staff
must observe, are outlined in an appendix to the
company’s internal rules, which are distributed to all
staff. Added to these principles are a number of specific
measures relating to certain activities (e.g. discretionary
portfolio managers).
In addition to compliance with AMF regulations, and in
particular the principles of organisation and rules of good
conduct defined in the General Regulations of the AMF,
this entity is also in charge of anti-money laundering and
anti-terrorism financing efforts.
Anti-money laundering and anti-terrorism financing is
essentially based on knowledge of the Bank’s customers
(KYC), vigilance in the processing of transactions
(blacklists of countries and individuals), monitoring
of certain payment instruments (cheques, electronic
payments, international credit transfers), and the flagging
and analysis of customer transactions.
Internal directives have been tailored to meet the
requirements of the Third European Anti-Money
Laundering and Terrorism Financing Directive; all relevant
staff have been given training on this regulation, which
emphasises a risk-based approach (customers and/or
transactions).
Each of the Group’s legal entities has a TRACFIN officer
in charge of suspicious activity reporting within the entity,
and an Investment Services Compliance Officer, who
moreover usually tends to be the Permanent Control
Manager.
Since May 2012, a procedure has been in place
whereby before being submitted, these reports must
first be sent to the Crédit du Nord reporting officers for
their recommendations, with a view to harmonising the
Group’s reporting procedures.
IV. P r o d u c t i o n a n d c o n t r o l o f
financial and accounting data
The Chief Financial Officer, who reports to the Chief
Executive Officer, is responsible for the production and
control of financial and accounting data.
As such, he oversees the proper application of
applicable accounting rules and guidelines, and monitors
recommendations issued by the Statutory Auditors.
Applicable accounting standards are French standards
for the preparation of parent company financial
statements and the standards formulated by the Societe
Generale Group’s Finance Division for the preparation
of the consolidated financial statements, which are
based on IFRS accounting standards as adopted by the
European Union.
Pursuant to European Regulation No. 1606/2002 of July
19, 2002, Crédit du Nord Group is required to prepare
its consolidated financial statements in compliance with
IFRS.
Furthermore, Crédit du Nord Group is required to publish
its prudential capital report (mainly Basel II).
34
1- Production of accounting data
1-1 Role of the Accounting and Summary
Information Department (DCIS)
This department, under the authority of the CFO, carries
out two major tasks:
• organisation and accounting procedures:
definition of a set of accounting rules for the whole
of the Group that comply with current accounting
regulations (definition of accounting frameworks and
procedures, management of the internal chart of
accounts, definition of reporting requirements, etc.);
• production and analysis of accounting and
financial statements: preparation of the individual
and consolidated financial statements of Crédit du
Nord Group and of other statements required by the
regulatory authorities.
2
This unified information system is instrumental in ensuring
accounting consistency and regularity among the Group’s
banks, with DCIS overseeing the definition and validity of
accounting rules and procedures, as well as the flow of
accounting information from input to output:
• the accounting treatment of Group-wide transactions
is based on automated procedures. Regardless of
whether the accounting frameworks are defined at
the accounting user level (over two-thirds of book
entries) or defined automatically by operating system
software, all accounting procedures have been
defined, tested and approved by DCIS;
• manual entries, which are on the decline, are subject
to Group control procedures;
• accounting databases are interfaced to automatically
input data into the consolidation packages and
reports intended for the French Prudential Supervisory
Authority (ACP) and the Banque de France.
1-2 Accounting information system
Crédit du Nord boasts a multi-bank information system,
i.e. all Group banks are managed via the same platform.
As such, they share the same processing systems for
banking transactions and the same summary reporting
systems.
Société Marseillaise de Crédit (SMC) was added to the
accounting information system of the Crédit du Nord
Group’s banks in 2012.
For accounting purposes, the summary accounting
system comprises the reference summary database,
«Base de Synthèse de Référence» (BSR), into which the
accounting entries of the different operating systems
are entered on a daily basis. This database integrates
extra-accounting details to form the enriched reference
summary database, «Base de Synthèse de Référence
Enrichie» (BSRE).
At the hub of Crédit du Nord Group’s summary system,
the BSRE is notably used to:
• provide data for all accounting and tax-related
reports;
• prepare the different regulatory reports (SURFI,
Cofinrep, etc.);
• provide data for risk drivers in the Basel II ratio
determination process, thus ensuring «native»
accounting consistency.
1-3 Production of accounting data
Preparation of individual financial statements and
individual consolidation packages
The figures presented in regulatory reports and individual
consolidation packages are pre-estimated using
parameters managed centrally by DCIS.
Each entity, using the same accounting information system,
then records all non-automated items at the balance sheet
date (representing a very low volume of entries).
Finally, each entity controls, analyses and records, where
applicable, the adjustment accounting entries for all
financial reports.
Once approved, the entities transmit the regulatory
reports to the supervisory authorities and the individual
financial statements are published.
In addition, all other entities, having their own accounting
information systems, transmit, above and beyond
the regulatory reports forwarded to the supervisory
authorities, a separate consolidation package generated
by their internal accounting application, compliant with
Group regulations and procedures.
The consistent application of accounting principles
and methods is ensured via meetings organised by
DCIS with the accounting managers of the Group’s
companies.
35
2
Account consolidation process
This phase culminates with the production of the
consolidated financial statements used in managing
the Group, legal and regulatory publications as well as
reports to the shareholders.
2-3 Control of the preparation of individual and
consolidated financial statements
During this phase, individual consolidation packages
from Group companies are verified and approved, and
consolidation and intercompany entries are booked. The
consolidated financial statements are then analysed and
validated before being published internally and externally.
The majority of these operations are performed on a
monthly basis, which increases the reliability of the
process. Group tax consolidation and reporting are also
carried out during this phase.
The process of consolidating accounting data and
preparing consolidated financial statements is subject to
several types of controls:
2- Internal accounting control
Once received, the consolidated reporting packages
sent in by each consolidated company are analysed,
corrected as necessary, and approved, notably
via controls of consistency with previous monthly
consolidated reporting packages, available budgets and
unusual events for the month.
2-1 At the network branch level
Day-to-day monitoring of accounts is carried out within
the Finance function by accounting staff who report to
Crédit du Nord’s Regional Steering Divisions and to the
Accounting Division at the subsidiaries.
They use a day-to-day account monitoring application
developed and maintained by DCIS, which identifies
accounts requiring further examination (balance or
directional anomaly, failure to comply with regulatory
thresholds, manual entries).
The documented and reported Level One control to
ensure that this monitoring is properly performed is
carried out by the Line Manager of the staff in charge of
monitoring the accounts.
The Level Two control is conducted quarterly by the
regional and subsidiary Permanent Control departments.
2-2 At the Head Office division level
The monitoring of the accounts of the Functional
Divisions is centralised and performed daily by
specialised staff, who also use the day-to-day account
monitoring application. A documented Level One control
is also performed by line management.
36
Level Two controls are performed annually by the Head
Office Permanent Control departments.
Data controls
The software used to generate the consolidated reports
includes configurable data consistency tests.
As long as the reporting company has not satisfied
control requirements, it may not transmit accounting
information to DCIS.
Entries specific to consolidation are then recorded.
Finally, DCIS performs controls of consolidated data
output and analyses variations, particularly those relating
to changes in shareholders’ equity.
Controls of consolidation tools
A Group chart of accounts specific to consolidation
is managed by DCIS and aids in breaking down
information to improve analysis.
The configuration of the Group consolidation system
is monitored and the various automated consolidation
processes are verified and approved.
Lastly, the automation of the monthly consolidated
reporting process in itself helps to control changes in
data over time by detecting any problems as they arise.
All of these controls help guarantee the quality of
accounting documents.
Accounting controls
The tools used by Crédit du Nord Group include:
The purpose of accounting controls is to ensure the
quality of accounting document preparation through the
implementation of a certification process.
• a query tool ranging from Event Reports (CREs)
to accounting entries, with an audit trail at the
accounting user level;
In this regard, Societe Generale implemented an
accounting control process based on a SOX approach.
• accounting database query tools (accounting flows
and balances);
The aim of this approach is to provide Societe Generale
Group with a consolidated view of accounting controls
in order to:
• query tools that work within data output applications
(regulatory reporting software packages, consolidation
software packages, etc.).
• strengthen the accounting control system;
Furthermore, the accounting documents used to monitor
and control accounting operations are stored for the
lengths of time specified by laws and agreements.
• ensure the quality of the financial statement
preparation process and of the accounting and
financial information published (certification process);
• meet requests from the Group’s Audit Committee.
In 2012, Crédit du Nord Group (parent company and
banking subsidiaries) participated in the quarterly
certification of Societe Generale Group based on key
controls, indicators, real accounting control data and the
quality of the accounting control system implemented.
2-5 Isolation and monitoring of assets held
for third parties
As an investment service provider, Crédit du Nord is
required to:
• protect the rights of its customers to the financial
instruments belonging to them;
For 2013, Crédit du Nord Group is preparing to roll out a
similar certification mechanism to its specialised leasing
subsidiaries.
• prevent the use of said financial instruments for
proprietary purposes, except with the customer’s
consent.
2-4 Structure established to guarantee
the quality and reliability of the audit trail
Assets held for third parties are segregated from assets
held for proprietary activities and are managed by
separate departments and accounts.
Each Crédit du Nord Group bank has an end-to-end
audit trail of the information chain. Given the complexity
of the different banking systems and data production
channels, this trail is comprised of various tools
interconnected by references which are representative
of search keys.
It is defined by procedures established at each phase of
the data production process.
The audit trail is organised to be able to optimally
respond to different types of queries.
In fact, a different tool is used depending on whether
the user wishes to locate a specific event or to recreate
a regulatory filing comprised of a large number of
accounting entries and requiring the tracking of
reference tables.
2
IT authorisations for the applications used for both
activities are restricted and separate, thus facilitating
their separate management.
The Statutory Auditors issue an annual report on the
measures taken by the Group to ensure the protection
of customer assets.
3 - Preparation and control of financial and
management accounting data
3-1 Production of financial and management
accounting data
Crédit du Nord Group bases its financial management
on financial accounting data.
Analytical accounting data needed for the financial
management of Crédit du Nord Group are generated
by the accounting information system and operating
systems, which are able to break down data by item
37
2
and by entity. This information is stored in a unified
management database, which covers the scope of
Crédit du Nord and its banking subsidiaries. Société
Marseillaise de Crédit (SMC) was integrated into the
Group’s information system and benefits from the same
level of management reporting as the Group’s other
banking subsidiaries.
The Financial Management Division (DGF), under the
authority of the CFO, manages the allocation of general
accounting data to the various cost accounting line
items. On the basis of the rules defined by the Group
ALM unit regarding the match-funding of assets and
liabilities, the analytical accounting system allows users
to switch from an interest paid/received accounting view
to an analytical approach in terms of margins on notional
match-funding.
Information from the management database is available
from branch level up to Group level and is identical from
one level to the next. As a result, the data can be used
by all Crédit du Nord Group control teams: subsidiaries,
regional divisions, functional divisions and the Financial
Management Division, which use this information in
particular to prepare the half-yearly management report.
3-2 Verification of financial and management
information
This information is checked during the monthly data
entry process by verifying the cost accounting category
to which the collected data is assigned, the income
statement, the balance sheet and operating procedures,
and by systematic analysis of variations in totals and
significant changes. A monthly reconciliation is also
performed by comparing the financial accounting figures
with the management reporting figures for the main
intermediate balances.
Budgets are monitored twice a year in the presence of
the General Management: in the first half of the year at
the Regional and Subsidiary Meetings and in the second
half of the year at the annual budget meeting. During
these meetings, changes in NBI, operating expenses,
investments and key risk indicators are systematically
reviewed.
A Cost Control Committee, which includes the Chief
Executive Officer, meets four times a year. It reviews
changes in network operating expenses and in operating
expenses at all of the Head Office divisions.
Chairman of the Board of Directors
38
2
39
2
Statutory auditors’ report on the report prepared by the chairman of the board of directors of Crédit du Nord
Statutory auditors’ report on the report prepared
by the chairman of the board of directors of Crédit du Nord
Year ended December 31, 2012
Statutory auditors’ report, prepared in accordance with article L. 225-235 of the French
commercial code (Code de commerce), on the report prepared by the chairman of the board of
directors of Crédit du Nord
This is a free translation into English of a report issued in French and it is provided solely for the convenience of Englishspeaking users.This report should be read in conjunction with, and construed in accordance with, French law and
professional standards applicable in France.
To the Shareholders,
In our capacity as statutory auditors of Crédit du Nord and in accordance with article L. 225-235 of the French
commercial code (Code de commerce), we hereby report on the report prepared by the chairman of your company in
accordance with article L. 225-37 of the French commercial code (Code de commerce) for the year ended December
31, 2012.
It is the chairman’s responsibility to prepare and submit for the board of directors’ approval a report on the internal
control and risk management procedures implemented by the company and to provide the other information required
by article L. 225-37 of the French commercial code (Code de commerce) relating to matters such as corporate
governance.
Our role is to:
• report on any matters as to the information contained in the chairman’s report in respect of the internal control and
risk management procedures relating to the preparation and processing of the accounting and financial information,
and
• confirm that the report also includes the other information required by article L. 225-37 of the French commercial
code (Code de commerce). It should be noted that our role is not to verify the fairness of this other information.
We conducted our work in accordance with professional standards applicable in France.
Information on the internal control and risk management procedures relating to the preparation and
processing of accounting and financial information
The professional standards require that we perform the necessary procedures to assess the fairness of the information
provided in the chairman’s report in respect of the internal control and risk management procedures relating to the
preparation and processing of the accounting and financial information. These procedures consist mainly in:
• obtaining an understanding of the internal control and risk management procedures relating to the preparation and
processing of the accounting and financial information on which the information presented in the chairman’s report
is based and of the existing documentation;
• obtaining an understanding of the work involved in the preparation of this information and of the existing
documentation;
40
Statutory auditors’ report on the report prepared by the chairman of the board of directors of Crédit du Nord
2
• determining if any material weaknesses in the internal control procedures relating to the preparation and processing
of the accounting and financial information that we would have noted in the course of our work are properly
disclosed in the chairman’s report.
On the basis of our work, we have no matters to report on the information relating to the company’s internal control and
risk management procedures relating to the preparation and processing of the accounting and financial information
contained in the report prepared by the chairman of the board of directors in accordance with article L. 225-37 of the
French commercial code (Code de commerce).
Other information
We confirm that the report prepared by the chairman of the board of directors also contains the other information
required by article L. 225-37 of the French commercial code (Code de commerce).
Neuilly-sur-Seine and Paris-La Défense, April 26, 2013
The Statutory Auditors
French original signed by
DELOITTE & ASSOCIES
Jean-Marc MICKELER
ERNST & YOUNG et Autres
Bernard HELLER
41
2
Consolidated balance sheet
Assets
Notes
31/12/2012
31/12/2011
Cash, due from central banks
4
2,077.1
1,989.3
Financial assets at fair value through profit or loss
5
1,561.9
1,337.4
Hedging derivatives
6
1,234.2
780.0
Available-for-sale financial assets
7
8,128.2
6,668.3
Due from banks
8
5,946.7
8,098.5
9
32,968.2
31,768.3
10
2,174.4
2,123.5
(in EUR millions)
Customer loans
Lease financing and similar agreements
Revaluation differences on portfolios hedged against interest rate risk
499.8
335.8
Held-to-maturity financial assets
11
26.0
37.5
Tax assets
12
541.8
388.5
Other assets
13
481.9
505.0
9.1
8.7
Investments in subsidiaries and affiliates accounted
for by the equity method
Tangible and intangible fixed assets
14
603.3
608.9
Goodwill
15
508.0
508.0
56,760.6
55,157.7
TOTAL
42
2
Liabilities
(in EUR millions)
Notes
31/12/2012
0.4
-
5
1,393.5
1,378.3
Due to central banks
Financial liabilities at fair value through profit or loss
Hedging derivatives
31/12/2011
6
565.7
385.1
Due to banks
17
7,754.8
6,607.5
Customer deposits
18
28,617.0
27,716.7
Debt securities
19
6,717.6
8,749.0
937.7
524.3
Tax liabilities
12
898.2
720.4
Other liabilities
13
1,140.0
1,109.7
Underwriting reserves of insurance companies
23
5,188.4
4,482.6
Provisions
16
176.0
219.4
Subordinated debt
22
TOTAL DEBT
Common stock
Equity instruments and associated reserves
Retained earnings
Net income
Sub-total
Gains and losses booked directly to equity
Sub-total, equity, Group share
TOTAL SHAREHOLDERS’ EQUITY
TOTAL
24
672.4
670.3
54,061.7
52,563.3
890.3
890.3
158.3
147.2
1,243.9
1,157.5
308.4
314.8
2,600.9
2,509.8
70.2
19.1
2,671.1
2,528.9
27.8
65.5
2,698.9
2,594.4
56,760.6
55,157.7
43
2
Consolidated income statement
Notes
2012
2011
Interest and similar income
30
1,981.2
1,923.5
Interest and similar expenses
30
-881.5
-819.3
12.6
10.0
(in EUR millions)
Dividends on equity securities
Fee income
31
955.2
956.4
Fee expenses
31
-156.9
-140.4
0.4
-2.2
1.0
-1.6
Net income from financial transactions
o/w net gains and losses on financial instruments at fair value through profit or
loss
32
o/w net gains or losses on available-for-sale financial assets
33
-0.6
-0.6
Income from other activities
34
25.8
25.1
Expenses due to other activities
34
Net Banking Income
Personnel expenses
35
Taxes
Other expenses
Amortisation and depreciation expense on intangible and tangible fixed assets
Total operating expenses
Gross Operating Income
Cost of risk
37
Operating income
-17.0
1,936.1
-752.1
-727.8
-38.1
-35.4
-365.4
-380.4
-84.3
-88.0
-1,239.9
-1,231.6
677.1
704.5
-191.8
-198.0
485.3
506.5
Share of net income of companies accounted for by the equity method
0.6
0.8
Net gains or losses on other assets
0.7
0.9
-
-
Goodwill impairment
Earnings before tax
Income tax
Consolidated net income
CONSOLIDATED NET INCOME AFTER TAXES
Earnings per ordinary share (in euros)
Number of shares comprising the share capital
44
-19.8
1,917.0
38
486.6
508.2
-173.5
-185.8
313.1
322.4
4.7
7.6
308.4
314.8
2.77
2.83
111,282,906
111,282,906
2
Statement of net income and gains and losses booked directly to equity*
(in EUR millions)
Net income
Translation gain (loss)
Revaluation of available-for-sale financial assets
Revaluation of derivatives qualified as cash flow hedges
Share of gains or losses booked directly to equity
from companies accounted for by the equity method
Taxes
Total gains and losses booked directly to equity
2011
322.4
-
-
74.6
-78.4
-
-
-
-
-23.4
20.7
51.2
-57.7
364.3
264.7
o/w Group share
359.5
257.5
o/w share attributable to non-controlling interests
4.8
7.2
NET INCOME AND GAINS AND LOSSES BOOKED DIRECTLY TO EQUITY*
*
2012
313.1
See note 24.
45
2
Change in shareholders’ equity
Retained
earnings
Capital and associated reserves
(in EUR millions)
SHAREHOLDERS’ EQUITY
AT DECEMBER 31, 2010
Common
stock
Equity instruments and
associated
reserves
Elimination
of treasury
stock
890.3
127.0
-
Gains and losses booked directly
to equity
Change in
Deferred
fair value of Change in
taxes
available- fair value
on
Retained
for-sale of hedging change in
earnings
assets derivatives fair value
-
1.3
2,326.2
Capital increase
-
-
-
Elimination of treasury
stock
-
-
-
Issuance of equity
instruments
-
-
-
7.4
-
7.4
2011 dividends paid
-
-3.8
-3.8
Impact of acquisitions
and disposals of noncontrolling interests
-
-
-
7.4
-3.8
3.6
-78.0
-0.4
-78.4
-
-
-
20.7
-
20.7
7.4
-
7.4
-
-
Change in value of
financial instruments
having an impact on
shareholders’ equity
-
-
-
-78.0
Change in value of
financial instruments, as
a percentage of income
Tax impact of change in
value of financial
instruments having an
impact on shareholders’
equity or as a percentage
of income
20.7
Translation differences
and other changes
12.8
2011 net income
Sub-total
-12.8
-
-
-
314.8
314.8
7.5
322.3
264.6
-
12.8
-
302.0
-78.0
-
20.7
257.5
7.1
-
-
-
-
-
-
-
-
-
-
-
-
-
890.3
147.2
-
1,472.3
-2.9
-
22.0
2,528.9
65.5
2,594.4
Changes in value of
having an impact on
Sub-total
46
Total
62.2
Sub-total of changes
linked to relations with
shareholders
75.1
NonGroup controlling
share interests
2,264.0
Equity component of
share-based payment
plans
1,170.3
Consolidated shareholders’ equity
Retained
earnings
Capital and associated reserves
(in EUR millions)
Common
stock
Equity instruments and
associated
reserves
Elimination
of treasury
stock
890.3
147.2
-
Gains and losses booked directly
to equity
Change in
Deferred
fair value of Change in
taxes
available- fair value
on
Retained
for-sale of hedging change in
earnings
assets derivatives fair value
-
22.0
NonGroup controlling
share interests
Total
65.5
2,594.4
Capital increase
-
-
-
Elimination of treasury
stock
-
-
-
Issuance of equity
instruments
-
-
-
8.8
-
8.8
-222.6
-222.6
-3.8
-226.4
-3.5
-3.5
-38.7
-42.2
-217.3
-42.5
-259.8
74.5
0.1
74.6
-
-
-
-23.4
-
-23.4
8.8
2012 dividends paid
Impact of acquisitions
and disposals of noncontrolling interests
Sub-total of changes
linked to relations
with shareholders
-2.9
Consolidated shareholders’ equity
2,528.9
Equity component of
share-based payment
plans
1,472.3
-
8.8
-
-226.1
Change in value of
having an impact on
-
-
-
74.5
Change in value of
financial instruments, as
a percentage of income
Tax impact of change in
value of financial
instruments having an
impact on shareholders’
equity or as a percentage
of income
-23.4
and other changes
2.3
2012 net income
Sub-total
-2.3
-
-
-
308.4
308.4
4.7
313.1
4.8
364.3
-
2.3
-
306.1
74.5
-
-23.4
359.5
-
-
-
-
-
-
-
-
-
-
-
-
-
890.3
158.3
-
1,552.3
71.6
-
-1.4
2,671.1
27.8
2,698.9
Changes in value of
having an impact on
Sub-total
2
At December 31, 2012, Crédit du Nord SA’s fully paid-up share capital amounted to EUR 890,263,248
and consisted of 111,282,906 shares each with a par value of EUR 8.
47
2
Statement of cash flows
Statement of cash flows
(in EUR millions)
31/12/2012
31/12/2011
313.1
322.4
CASH FLOWS FROM OPERATING ACTIVITIES
Net income after tax (I)
Amortisation and depreciation expense on tangible and intangible fixed assets
85.6
89.3
455.8
402.4
Net income/loss from companies accounted for by the equity method
-0.6
-0.8
Deferred taxes
-2.0
8.0
Net income from the sale of long-term available-for-sale assets and consolidated subsidiaries
-1.0
-0.5
Change in deferred income
0.7
15.9
Change in prepaid expenses
1.7
5.6
Net allocation to provisions and write-downs (including underwriting reserves of insurance companies)
Change in accrued income
21.8
-46.6
Change in accrued expenses
25.9
152.0
Other changes
217.3
260.7
Non-monetary items included in net income and other adjustments (not including
income on financial instruments measured at fair value through profit or loss) (II)
805.2
886.0
-1.0
1.6
3,625.2
-239.9
-505.5
100.1
Net income on financial instruments measured at fair value through profit or loss(1) (III)
Interbank transactions
Transactions with customers
Transactions related to other financial assets and liabilities
Transactions related to other non financial assets and liabilities
Net increase/decrease in cash related to operating assets and liabilities (IV)
NET CASH FLOW FROM OPERATING ACTIVITIES (A)=(I)+(II)+(III)+(IV)
-3,345.0
347.3
-80.3
-217.8
-305.6
-10.3
811.7
1,199.7
NET CASH FLOW FROM INVESTING ACTIVITIES
Cash flows from the acquisition and disposal of financial assets and long-term investments
-2.5
8.3
-79.1
-68.1
NET CASH FLOW FROM INVESTING ACTIVITIES (B)
-81.6
-59.8
-268.6
-3.8
NET CASH FLOW FROM FINANCING ACTIVITIES
Cash flow to/from shareholders
Other net cash flows from financing activities
-1.0
190.0
-269.6
186.2
460.5
1,326.1
Net balance of cash accounts and accounts with central banks (excluding related receivables)
1,988.0
930.7
Net balance of accounts, demand deposits and loans with banks
1,434.7
1,165.9
Net balance of cash accounts and accounts with central banks (excluding related receivables)
2,075.6
1,988.0
Net balance of accounts, demand deposits and loans with banks
1,807.6
1,434.7
460.5
1,326.1
NET CASH FLOW FROM FINANCING ACTIVITIES (C)
NET FLOW OF CASH AND CASH EQUIVALENTS (A) + (B) + (C)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the start of the year
Cash and cash equivalents at the close of the year
NET FLOWS OF CASH AND CASH EQUIVALENTS
(1) Net income on financial instruments measured at fair value through profit or loss includes realised and unrealised income.
48
Notes to the consolidated financial statements
2
Notes to the consolidated financial statements
These consolidated financial statements were approved by the Board of Directors on February 15, 2013.
Note 1
Main valuation and presentation rules
for the consolidated financial statements
50
Note 22
Subordinated debt
110
Note 2
Scope of consolidation
73
Note 23
Insurance activities
110
Note 3
Risk management
75
Note 24
Gains and losses booked directly to equity
113
Note 4
Cash, due from central banks
86
Note 25
Assets pledged and received as collateral
114
Note 5
Financial assets and liabilities
at fair value through profit or loss
Note 26
Transferred financial assets
115
87
Note 27
Assets and liabilities by period
remaining to expiration
Note 6
Hedging derivatives
90
116
Note 7
Available-for-sale financial assets
91
Note 28
Commitments
117
Note 8
Due from banks
93
Note 29
Foreign exchange transactions
119
Note 9
Customer loans
94
Note 30
Interest income and expense
119
Note 10
Lease financing and similar agreements
95
Note 31
Fee income and expense
120
Note 11
Held-to-maturity financial assets
96
Note 32
Net gains/losses on financial
instruments at fair value through profit
or loss
Note 12
Tax assets and liabilities
96
121
Note 13
Other assets and liabilities
97
Net gains/losses on available-for-sale
financial assets
121
Note 14
Fixed assets
98
Note 34
Income and expenses from other activities
122
Note 15
Goodwill
100
Note 35
Personnel expenses
123
Note 16
Impairments and provisions
101
Note 36
Share-based payment plans
123
Note 17
Due to banks
102
Note 37
Cost of risk
127
Note 18
Customer deposits
103
Note 38
Income tax
128
Note 19
Debt securities
103
Note 39
Transactions with related parties
129
Note 20
PEL/CEL home savings accounts
104
Note 40
Statutory Auditors’ fees
131
Note 21
Employee benefits
105
Note 33
49
2
NOTE 1 Main valuation and presentation rules for the consolidated financial
statements
Introduction
Pursuant to European Regulation No. 1606/2002 of July
19, 2002 on the application of international accounting
standards, Crédit du Nord Group (the “Group”) has
published its consolidated financial statements for the
period ended December 31, 2012 in compliance with
IFRS (International Financial Reporting Standards) as
adopted by the European Union and applicable at said
date. These standards are available on the European
Commission website at the following address:
The IFRS framework includes IFRS (International
Financial Reporting Standards) 1 to 8 and IAS
(International Accounting Standards) 1 to 41, as well as
the interpretations of these standards as adopted by the
European Union at December 31, 2012.
The Group also continued to apply the provisions of IAS
39, as adopted by the European Union, on macro fair
value hedge accounting (IAS 39: “carve out”).
The consolidated financial statements are presented
in euros.
http:// ec.europa.eu/internal_market/accounting/ias/
index_fr.htm).
The main valuation and presentation rules applied during
the preparation of the consolidated financial statements
are laid out below.
The Group is fully subject to these standards as it
regularly issues redeemable subordinated notes which
are admitted to trading on the primary market.
These accounting principles and methods were applied
consistently in financial years 2011 and 2012.
IFRS and IFRIC interpretations applied by the Group from January 1, 2012
Standard or Interpretation
Amendment to IFRS 7 «Disclosures - transfers of financial assets»
The application of these new provisions had
no significant impact on the Group’s income or
shareholders’ equity.
Amendment to IFRS 7 “Disclosures transfers of financial assets”
According to this amendment, new information on risk
exposure must be disclosed when a financial asset is
transferred and the transferring party retains exposure to
this asset. CDN Group conducted no such transactions.
Use of estimates
In drawing up the consolidated financial statements,
the application of the accounting principles and
methods described below led Management to develop
assumptions and make estimates which may have
an impact on the amounts recognised in the income
statement, on the valuation of balance sheet assets and
50
Date of publication by IASB
Date of adoption by European Union
October 7, 2010
November 22, 2011
liabilities, and on the disclosures presented in the notes
to the consolidated financial statements.
In order to make these estimates and formulate these
assumptions, Management uses data available at the
date on which the consolidated accounts are prepared
and may be called upon to use its own judgement. By
nature, the valuations based on these estimates contain
risks and uncertainties as to whether they will materialise
in the future. Consequently, the final future results of the
transactions in question may differ from these estimates
and therefore have a significant impact on the financial
statements.
The use of estimates primarily concerns the following
valuations:
• the fair value as reported in the balance sheet of
financial instruments that are not listed on an active
market is recognised under the headings “Financial
assets or liabilities at fair value through profit or loss”,
“Hedging instruments” or “Available-for-sale financial
assets” (see paragraph 2 and Notes 5 to 7), as
well as the fair value of instruments for which such
information must be presented in the notes;
• amounts recognised as impairments of financial
assets (Loans and receivables, Available-for-sale
financial assets, and Held-to-maturity financial
assets), finance lease transactions and related
transactions, tangible and intangible assets, and
goodwill (see paragraph 2 and Note 16);
• provisions recognised on the liabilities side of the
balance sheet, including provisions for employee
benefits, underwriting reserves of insurance
companies and the share of unrealised gains and
losses recorded in the balance sheet (see paragraph
2 and Notes 16, 20, 21 and 23);
• the amount of deferred tax assets recognised in the
balance sheet (see paragraph 2 and Note 12);
• the initial value of goodwill recognised for business
combinations (see paragraph 1 and Note 15);
• the fair value used to revalue the equity interest
retained by the Group in an entity when it gives
up control of a consolidated subsidiary (see
paragraph 1).
1. Principles of consolidation
The consolidated financial statements include the
financial statements of Crédit du Nord and of the main
companies comprising Crédit du Nord Group.
Methods of consolidation
2
• net income of less than EUR 1 million;
• no equity interest in a consolidated company.
Where applicable, the financial statements of
consolidated companies are restated according to
Group accounting principles. All significant balances,
profit and transactions between Group companies are
eliminated.
The voting rights taken into consideration in order
to determine the Group’s degree of control over an
entity and the corresponding consolidation method
include potential voting rights where these can be freely
exercised or converted at the time the assessment is
made. Potential voting rights are instruments such as
call options on ordinary shares outstanding in the market
or rights to convert bonds into new ordinary shares.
The following consolidation methods are used:
Full consolidation
This method applies to wholly-owned companies.
Exclusive control of a subsidiary is understood as the
power to govern the company’s financial and operating
policies so as to obtain benefits from its activities.
Control is presumed to exist when there is:
• direct or indirect ownership of the majority of the
voting rights in the subsidiary;
• power to appoint or remove the majority of the
members of the subsidiary’s administrative,
management or supervisory bodies, or to command
the majority of the voting rights at meetings of these
bodies;
• power to exercise significant influence over a
subsidiary by virtue of a contractual arrangement or
under a clause in the company’s by-laws.
The consolidated financial statements are established
using the individual financial statements of all significant
subsidiaries controlled by the Group.
Proportionate consolidation
Companies that do not qualify as significant under the
Group’s accounting standards have been excluded
from the consolidation scope. In order to qualify as
not significant, Group companies must meet the three
following conditions for two consecutive fiscal years:
Joint control is the sharing of control over a subsidiary
that is jointly operated by a limited number of partners or
shareholders, such that financial and operating decisions
require the consent of the parties sharing control.
Companies that are jointly owned and controlled by
Crédit du Nord Group are consolidated proportionately.
• total assets of less than EUR 10 million;
51
2
A contractual arrangement must specify that the
unanimous consent of all partners or shareholders is
required for exercising control over the economic activity
of the subsidiary and for all strategic decisions.
Equity method
Companies in which the Group holds a significant
influence are consolidated using the equity method.
Significant influence is defined as the power to participate
in the financial and operating policy decisions of a
subsidiary without exercising control over those policies.
This can result from representation on governing or
supervisory bodies, participation in strategic decisions,
the existence of major inter-company transactions,
interchange of managerial personnel, or the provision of
essential technical information. The Group is presumed
to exercise significant influence if it directly or indirectly
holds at least 20% of the voting rights.
Accounting treatment of special purpose
entities
Separate legal structures created specifically to manage
a transaction or set of similar transactions (special
purpose entities or SPEs) are consolidated if they are
substantially controlled by the Group, even in the
absence of capital ties.
The following criteria are used on a non-cumulative basis
to assess whether a special purpose entity is controlled
by another entity:
• the SPE’s activities are being conducted solely on
behalf of the Group so that the Group obtains benefits
from the SPE’s operation;
• the Group holds decision-making and management
powers over the entity’s ordinary operations or over
the assets comprising the entity; such powers may
have been delegated through the implementation of
an autopilot mechanism;
• the Group is entitled to receive the majority of the
benefits of the SPE;
• the Group retains the majority of the risks related to
the SPE.
When consolidating SPEs controlled in substance by the
Group, the portion of the SPEs that is not held by the
52
Group is recognised as a debt instrument in the balance
sheet.
Accounting treatment of acquisitions
and goodwill
Crédit du Nord Group uses the acquisition method
to account for its business combinations. Acquisition
cost is measured based on the total of the acquisitiondate fair value of the identifiable assets acquired, the
liabilities assumed and the equity instruments issued
in the exchange for the acquired entity. Costs directly
associated with business combinations are recognised
in profit or loss for the period.
Earn-out is subsumed into the acquisition cost at fair
value at the acquisition date even where said earn-out
is of a contingent nature. This item is accounted for as
an asset or a liability based on the manner in which
such earn-out is settled. If earn-out is qualified as a debt
instrument, subsequent adjustments to such earn-out
are recognised in profit or loss for financial liabilities
covered by IAS 39 and, for liabilities not addressed by
IAS 39, in accordance with the standards that apply;
if earn-out is qualified as an equity instrument, these
adjustments are not recognised.
In line with IFRS 3, «Business Combinations», identifiable
assets, liabilities, off-balance sheet items and contingent
liabilities of the acquired entity are measured individually
at their acquisition-date fair value, regardless of their
purpose. The analyses and appraisals necessary for the
initial measurement of such items, and any corrections
to the value based on new information, must be carried
out within 12 months of the acquisition date.
Any positive difference between the acquisition cost
of the acquired entity and the acquired portion of
remeasured net assets is recognised on the asset side of
the balance sheet as «Goodwill»; any negative difference
is directly recognised in profit or loss. Non-controlling
interests are then measured at their proportion of the
fair value of identifiable assets and liabilities in the
acquired entity. However, the Group may also elect, for
each business combination, to measure non-controlling
interests at fair value, with a fraction of such goodwill
then being allocated.
Goodwill is carried in the balance sheet at historical cost.
At the date control of the acquired entity is obtained, the
Group remeasures its pre-combination equity interest in
the acquired entity at its acquisition-date fair value and
recognises the resulting gain or loss, if any, in profit or
loss. For business combinations achieved in stages,
goodwill is determined by reference to fair value at the
date control of the acquire entity is obtained.
If the Group increases its equity interest in an entity
that was exclusively controlled before the combination,
the difference between the acquisition cost of the
additional equity interest and the acquired portion of
the acquired entity’s net assets at that date is recorded
under «Consolidated reserves, Group share». Likewise,
if the Group reduces its equity interest in an acquired
entity that remains exclusively controlled, the difference
between the selling price and the carrying value of the
equity interest sold is recognised under «Consolidated
reserves, Group share». The costs related to these
transactions are booked directly to shareholders’ equity.
When the control of a consolidated subsidiary is lost,
any equity interest retained by the Group is remeasured
at fair value simultaneously with the recognition of the
gain or loss on disposal under «Net gains/losses on
other assets» in the consolidated income statement.
Goodwill is regularly reviewed by the Group and tested
for impairment annually and whenever there is an
indication of impairment. At the acquisition date, each
item of goodwill is allocated to one or more CashGenerating Units (CGUs) expected to benefit from the
synergies of combination. Impairment of goodwill is
calculated by comparing the carrying amount of the unit
with the recoverable amount of the unit to which the
goodwill was allocated. At present, the Group has only
defined one CGU: retail banking.
When the recoverable amount of the CGU is less than
its carrying amount, an irreversible impairment loss is
recognised in the consolidated income statement for the
period under «Impairment of goodwill».
Goodwill on companies accounted for by the equity
method is recognised under «Investments in subsidiaries
and affiliates accounted for by the equity method» in the
consolidated balance sheet and impairments of these
2
investments are recorded under «Net income from
companies accounted for by the equity method « in the
consolidated income statement. Capital gains or losses
generated on the sale of companies accounted for by
the equity method are recognised under «Net gains/
losses on other assets».
Segment reporting
Given that insurance and intermediation activities are
non-material in relation to banking activities, Crédit du
Nord Group only reports on one business segment.
Similarly, as Crédit du Nord Group is a national banking
group, it only reports on one geographic segment.
Non-current assets held for sale
and discontinued operations
A non-current asset (or disposal group) is classified as
held for sale if its carrying amount will be recovered
principally through the selling of the asset rather than
through its continuing use. For this to be the case, the
asset (or disposal group) must be available for immediate
sale and its sale within 12 months must be highly
probable. The Group must have undertaken a plan to
dispose of the asset or group of assets and liabilities and
must be actively seeking a buyer; furthermore, the asset
or disposal group must be sold at a reasonable price in
relation to its present fair value.
Assets and liabilities falling under this category are
reclassified as «Non-current assets held for sale» and
«Liabilities directly associated with non-current assets
classified as held for sale», with no netting.
Any negative differences between the fair value, less
selling costs of non-current assets and groups of assets
held for sale and their net carrying value, are recognised
as an impairment loss in profit or loss. Further, noncurrent assets held for sale are no longer amortised as
from their reclassification.
An operation is classified as discontinued when
the criteria for classification as held for sale have
been satisfied or when the Group has disposed of it.
Discontinued operations are disclosed on a single line
item of the income statement for the period, including
net earnings after tax from the discontinued operations
53
2
until the disposal date and the gain or loss after taxes
recognised on the disposal or on the measurement at
fair value, less selling costs, of the assets and liabilities
comprising the discontinued operations. Similarly, cash
flows attributable to discontinued operations are booked
as a separate item in the cash flow statement for the
period.
Fiscal year-end
The consolidated financial statements were prepared
on the basis of the separate financial statements for the
period ended December 31, 2012 for all consolidated
companies.
2. Accounting principles and valuation
methods
At fiscal year-end, monetary assets and liabilities
denominated in foreign currencies are translated into
euros (Crédit du Nord Group’s operating currency) at
the prevailing spot rate. Realised or unrealised foreign
exchange losses or gains are recognised in profit or loss.
Forward foreign exchange transactions are measured
at fair value using the forward exchange rate of the
currency in question for the remaining maturity. Spot
positions are measured at the official spot rates
prevailing at fiscal year-end. The resulting revaluation
differences are recorded in the income statement.
Measuring the fair value of financial
instruments
Fair value is the amount for which an asset can be
exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction.
The fair value used to measure a financial instrument is,
firstly, the quoted price where the financial instrument
is listed on an active market. Otherwise, fair value is
determined using valuation techniques.
54
A financial instrument is regarded as listed on an active
market if quoted prices are readily and regularly available
from an exchange, dealer, broker, pricing service or
regulatory agency, and those prices represent real actual
and regularly occurring transactions on an arm’s length
basis.
A market is considered to be inactive on the basis
of indicators such as a significant decline in trading
volumes and the level of activity on the market, high
disparity between prices available over time and
between the different market operators mentioned
above, or how much time has elapsed since the most
recent transactions took place on the market on an
arm’s length basis.
Where the financial instrument is traded on different
markets and the Group has immediate access to
these markets, the financial instrument’s fair value is
represented by the most beneficial market price. If an
active market does not exist for a financial instrument
in its entirety, but active markets exist for its component
parts, fair value is the sum of the quoted market prices
for the component parts, taking into consideration the
bid price and asking price of the net position depending
on whether it is a long or short position.
If the market for a financial instrument is not active or is
no longer thought to be active, fair value is established
by using valuation techniques (internal pricing models).
Depending on the financial instrument, these include the
use of data derived from recent transactions, fair values
of substantially similar instruments, discounted cash flow
models, option pricing models and pricing parameter
models.
Where broadly used valuation techniques exist on the
market for these instruments, and where it has been
demonstrated that these techniques produce reliable
estimates of prices obtained in transactions on the
real market, the Group may use these techniques. The
use of internal assumptions concerning future cash
flows and discount rates correctly adjusted for risks
that any market participant would take into account is
authorised. These adjustments are applied reasonably
and appropriately after examination of the available
information. Internal assumptions notably take into
account counterparty risk, risk of non-performance,
liquidity risk and model risk, where appropriate.
Transactions resulting from forced sales are not
generally taken into account when assessing market
price. Where observable market data are used as the
basis for measurement, fair value is deemed to be the
market price, and the difference between the transaction
price and the value arrived at using the in-house pricing
model, representative of sales margin, is directly
recognised in profit or loss. However, where the valuation
criteria are not observable or the pricing models are not
recognised by the market, the financial instrument’s fair
value at the time of the transaction is deemed to be
the transaction price and the sales margin is generally
recognised in the income statement over the expected
life of the instrument, except where held to maturity or
where sold prior to maturity for some instruments owing
to their complexity. For issued instruments subject to a
high number of redemptions on a secondary market and
instruments for which there are quoted market prices,
the sales margin is recognised in the income statement
in accordance with the method used to determine the
price of the instrument. Where an instrument’s valuation
criteria become observable, the part of the sales margin
not yet booked is recognised in the income statement.
Acquisitions and disposals of non-derivative financial
assets measured at fair value through profit or loss,
held-to-maturity financial assets and available-forsale financial assets (see below) are recorded at their
settlement-delivery date, while financial derivatives
are recorded at their trade date. Changes in fair value
between the trade date and the settlement-delivery date
are recorded under profit or loss or under shareholders’
equity depending on their accounting category. Loans
and receivables are recorded in the balance sheet at
the date of disbursement or the due date for invoiced
services.
On initial recognition, financial assets and liabilities are
measured at fair value including acquisition costs (with
the exception of financial instruments recognised at fair
value through profit or loss) and are classified in one of
the following financial categories.
2
Loans and receivables
Loans and receivables include non-derivative fixed- or
determinable-income financial assets which are not
listed on an active market and which are not held for
trading purposes or held for sale from the time of their
acquisition or issuance. Loans and receivables are
presented in the balance sheet under the line item “Due
from banks” or “Customer loans”, depending on the
counterparty. They are valued after their initial recognition
at their amortised cost, based on the effective interest
rate, and may be subject to impairment if appropriate.
Financial assets and liabilities at fair value
through profit or loss
This category covers financial assets and liabilities held
for trading purposes. They are measured at fair value at
the balance sheet date and recorded in the balance sheet
under “Financial assets and liabilities at fair value through
profit or loss”. Changes in fair value are recognised in
the income statement for the period under “Net gains or
losses on financial instruments at fair value through profit
or loss”.
In addition to financial assets and liabilities held for
trading, this category includes non-derivative financial
assets and liabilities that the Group has designated at
fair value through profit or loss, in accordance with the
option provided by IAS 39. The Group uses this option
in the following cases:
• on the one hand to eliminate or significantly reduce
discrepancies in the accounting treatment of certain
financial assets and liabilities.
The Group thus recognises at fair value through
profit or loss certain structured bonds issued by
the Corporate and Investment Banking division.
These bonds are exclusively for commercial purposes,
the risks of which are covered by market reversals
using financial instruments in transaction portfolios.
The fair value option guarantees consistency between
the accounting treatment of these issues and that
of the derivative financial instruments used to hedge the
market risks caused by the latter and which must be
valued at fair value.
55
2
The Group also recognises at fair value through profit
or loss the financial assets held to guarantee unit-linked
policies of its life insurance subsidiaries to ensure their
financial treatment matches that of the corresponding
insurance liabilities. Under IFRS 4, insurance liabilities
have to be recognised according to local accounting
principles. Revaluations of underwriting reserves on unitlinked policies, which are directly linked to revaluations
of the financial assets underlying their policies, are
accordingly recognised in profit or loss. The fair value
option thus allows the Group to record changes in the
fair value of the financial assets through profit or loss so
that they match fluctuations in the value of the insurance
liabilities associated with these unit linked policies.
• on the other hand to measure certain compound
instruments at fair value and thereby avoid the need
to separate out embedded derivatives that would
otherwise have to be booked separately. These
notably concern Group-owned bonds convertible
into shares.
This category includes non-derivative fixed- or
determinable-income assets with a fixed maturity, which
are listed on an active market and which the Group has
the intention and ability to hold to maturity. They are
valued after their acquisition at their amortised cost and
may be subject to impairment if appropriate. Amortised
cost includes account premiums, discounts and
transaction costs. These financial assets are recorded
in the balance sheet under “Held-to-maturity financial
assets”.
This category covers non-derivative financial assets held
for an indefinite period and which the Group may sell at
any time. By default, these are financial assets which
are not classified in one of the three above categories.
They are booked in the balance sheet under “Availablefor-sale financial assets” and are measured at fair value
at the balance sheet date. Accrued or earned income
on fixed-income securities is recorded in profit or loss
under “Interest and similar income - Trading in financial
instruments” based on the effective interest rate, while
changes in fair value excluding income are recorded
56
on a separate line under shareholders’ equity entitled
“Gains and losses booked directly to equity”. Changes
in fair value are only recognised in profit and loss, under
“Net gains or losses on available-for-sale financial
assets”, when the asset is sold or sustainably impaired.
Impairments of equity securities classified as availablefor-sale assets may not be reversed. Income from these
securities is booked to profit or loss under “Dividend
income”.
Securities lending and borrowing
Securities loaned or sold under repurchase agreements
are maintained under their original heading on the assets
side of the Group’s balance sheet. For securities sold
under repurchase agreements, the obligation to return
the deposited amounts is recorded under the obligation
to recover disbursed amounts is recorded under “Debts”
on the liabilities side of the balance sheet, with the
exception of transactions conducted as part of trading
activities which are recorded under “Financial liabilities at
fair value through profit or loss”.
Securities borrowed or purchased under resale
agreements are not recorded in the Group’s balance
sheet. However, in the event that borrowed securities
are subsequently sold, an obligation to return these
securities to their lender is recorded under «Financial
liabilities at fair value through profit or loss» in the
Group’s balance sheet. For securities purchased under
resale agreements, the amount paid by the Group
is recorded under «Loans and receivables» on the
assets side of the balance sheet, with the exception
of transactions conducted as part of trading activities
which are recorded under «Financial assets at fair value
through profit or loss».
Cash-backed securities lending and borrowing
transactions are accounted for the same way as
repurchase/resale agreements and are recognised and
reported as such in the balance sheet.
Reclassification of financial assets
After initial recognition on the Group’s balance sheet,
financial assets may not be reclassified as “Financial
assets at fair value through profit or loss”.
A non-derivative financial asset initially reported in the
balance sheet under «Financial assets at fair value
through profit or loss» may be reclassified to a different
category under the following circumstances:
• if a fixed- or determinable-income financial asset held
for trading purposes can no longer be traded on an
active market following its acquisition, and the Group
has the intention and the ability to hold the asset for
the foreseeable future or to maturity, then this financial
asset may be reclassified in “Loans and receivables”,
subject to meeting the applicable eligibility criteria;
• if rare circumstances lead to a change in holding
strategy for non-derivative financial assets or equity
investments initially held for trading, these assets may
be reclassified either as «Available-for-sale financial
assets» or as «Held-to-maturity financial assets»,
subject to meeting the applicable eligibility criteria.
Under no circumstances may derivative financial
instruments or financial assets using the fair value option
be reclassified in a category other than “Financial assets
and liabilities at fair value through profit or loss”.
Financial assets initially recorded as «Available-forsale financial assets» may be transferred to «Heldto-maturity financial assets», subject to meeting the
appropriate eligibility criteria. Furthermore, if a fixed- or
determinable-income financial asset initially recorded
under «Available-for-sale financial assets» is no longer
available for sale following its acquisition, and the Group
has the intention and the ability to hold the asset for the
foreseeable future or to maturity, then this financial asset
may be reclassified in «Loans and receivables», subject
to meeting the applicable eligibility criteria.
Reclassified financial assets are transferred to their new
category at their fair value at the date of reclassification,
after which they are valued in accordance with the
provisions applicable to the new category. The amortised
cost of financial assets reclassified from «Financial assets
2
at fair value through profit or loss» or «Available-for-sale
financial assets» to «Loans and receivables», as well as
the amortised cost of financial assets reclassified from
«Financial assets at fair value through profit or loss» to
«Available-for-sale financial assets», are determined on
the basis of estimated future cash flows calculated on
the date of reclassification. The estimate of expected
future cash flows must be revised at each balance sheet
date; in the event of an increase in estimated future
inflows following a rise in their recoverability, the effective
interest rate is adjusted on a forward-looking basis;
however, where there is objective evidence of impairment
resulting from an event which took place after the
reclassification of the financial assets in question, and
this event has a negative impact on initially expected
future cash flows, an impairment loss on the asset in
question is booked to «Cost of risk» on the income
statement.
Liabilities
Debt issued by the Group which is not classified as
“Financial liabilities measured at fair value through profit
or loss” is initially booked at cost, i.e. at the fair value of
the sums borrowed net of transaction costs. This debt
is valued at amortised cost at the balance sheet date
using the effective interest method and is recorded in
the balance sheet under “Due to banks”, “Customer
deposits” or “Debt securities”.
Amounts due to banks, Customer deposits
Amounts due to banks and customer deposits are
classified according to their initial duration and type into:
demand (deposits, current accounts) and term accounts
in the case of banks; and special savings accounts and
other deposits in the case of customers. This debt
includes repurchase agreements, secured by notes and
securities, carried out with these economic operators.
57
2
Accrued interest on this debt, which is calculated at the
effective interest rate, is recorded under related payables
in the income statement.
Debt securities
Debt securities are classified by type of security:
short-term notes, money market and negotiable debt
securities, fixed-income and similar securities, excluding
subordinated securities classified under “Subordinated
debt”.
Interest accrued on these securities, calculated at the
effective interest rate, is booked as related payables
through profit or loss. Bond issue and redemption
premiums are amortised using the effective interest rate
method over the duration of the bonds in question. The
resulting charge is recorded as interest expenses in
profit or loss.
Subordinated debt
This item includes all dated or undated subordinated
borrowings, which, in the event of the liquidation of the
borrower, may only be redeemed after all other creditors
have been paid. Interest accrued and payable in respect
of subordinated debt, if any, is booked as related
payables and as an expense in the income statement.
Derecognition of financial assets and
liabilities
The Group derecognises all or part of a financial asset
(or group of similar assets) when the contractual rights
to the cash flows on the asset expire or when the Group
has transferred the contractual rights to receive the cash
flows and substantially all of the risks and rewards of
ownership of the asset.
Where the Group has transferred the cash flows of a
financial asset but has neither transferred nor retained
substantially all the risks and rewards of its ownership
and has not retained control of the financial asset, the
Group derecognises it and recognises separately an
asset or liability representing any rights and obligations
created or retained as a result of the asset’s transfer. If
the Group has retained control of the asset, it continues
58
to recognise it in the balance sheet to the extent of its
continuing involvement in that asset.
When a financial asset is derecognised in its entirety,
a gain or loss on disposal is recorded in the income
statement for the difference between the carrying value
of the asset and the payment received for it, adjusted
where necessary for any unrealised profit or loss
previously recognised directly in equity.
The Group only derecognises all or part of a financial
liability when it is extinguished, i.e. when the obligation
specified in the contract is discharged, cancelled or
expires.
Derivatives and hedging
All derivative financial instruments are recognised at
their fair value under financial assets or liabilities in the
balance sheet. With the exception of financial derivatives
classified as cash flow hedges for accounting purposes
(see below), changes in the fair value of derivative
financial instruments are recorded in the income
statement for the period.
Derivative instruments are divided into two categories:
Derivative financial instruments held for
trading
Derivative financial instruments are considered to be
trading financial derivatives by default, unless they are
designated as hedging instruments for accounting
purposes. They are booked in the balance sheet under
“Financial assets or liabilities at fair value through profit
or loss”. Changes in fair value are booked in the income
statement under the heading “Net gains or losses on
financial instruments at fair value through profit or loss.”
Changes in fair value of derivative contracts entered into
with counterparties which end up defaulting are booked
under «Net gains or losses on financial instruments at fair
value through profit or loss» until the date the instruments
are cancelled and recognised in the balance sheet, for
the fair value at this same date of the receivable or debt
vis-à-vis the counterparties in question. Any subsequent
impairments on these receivables are recorded under
“Cost of risk” in the income statement.
Derivative hedging instruments
Macro hedging at fair value
As soon as a hedge is established, Crédit du Nord
Group produces documentation indicating: the asset,
liability or future transaction hedged, the risk to be
hedged, the type of financial derivative used and the
evaluation method applied to measure the effectiveness
of the hedge. The hedge must be highly effective,
such that changes in the fair value or cash flows are
offset. This effectiveness is measured when the hedge
is first set up and throughout its life. Derivative hedging
instruments are recognised in the balance sheet under
“Hedging derivatives”.
In this type of hedge, interest rate derivatives are used
to hedge the Group’s overall structural interest rate risk.
Crédit du Nord Group has elected to use the carve-out
provisions of IAS 39 as adopted by the European Union,
which facilitates:
Depending on the type of risk hedged, the Group defines
the derivative financial instrument as a fair value hedge,
a macro fair value hedge, a cash flow hedge or a net
investment hedge.
Fair value hedges
In fair value hedges, the carrying amount of the hedged
item is adjusted for the gains or losses generated on the
hedged risk and are recognised in profit or loss under
“Net gains or losses on financial instruments at fair value
through profit or loss” in the income statement. Insofar
as the hedging relationship is highly effective, changes
in the fair value of the hedged item are symmetrical
to changes in the fair value of the derivative hedging
instrument. For interest rate derivatives, accrued interest
income or expenses on the hedging derivative are
booked to profit or loss under the same line item, at the
same time as the interest income or expense related to
the hedged item.
The Group discontinues the hedge, on a forwardlooking basis, if the effectiveness criteria for the hedging
instrument are no longer met, or the financial derivative
is sold or terminated. As a result, the balance sheet
value of the hedged item is no longer adjusted to take
into account changes in value, and cumulative gains
or losses on the previously hedged item are amortised
over the remaining life of the item. Hedging is also
discontinued if the hedged item is sold before maturity
or terminated early.
2
• the use of fair value hedge accounting for macro
hedges used in Asset & Liability Management,
including customer demand deposits in the fixed-rate
positions being hedged;
• the application of the effectiveness test required by
IAS 39, adopted in the European Union.
The accounting treatment of financial derivatives used for
macro fair value hedges is similar to that of derivatives
used in fair value hedges. Changes in the fair value of the
macro-hedged portfolio are booked in the balance sheet
under “Revaluation differences on portfolios hedged
against interest rate risk” through profit or loss.
Cash flow and net investment hedges
Crédit du Nord Group has no financial instruments in its
balance sheet classified as cash flow hedges or hedges
of a net investment.
Embedded derivatives
An embedded derivative is a component of a hybrid
instrument. While hybrid instruments are not measured
at fair value through profit or loss, the Group does
separate embedded derivatives from their host
instrument where, on initiation of the transaction, the
economic characteristics and risks associated with
the embedded derivatives are not closely linked to the
characteristics and risks of the host instrument and
where they meet the definition of a derivative financial
instrument. Once separated, the derivative financial
instrument is booked at fair value in the balance sheet
under “Financial assets and liabilities at fair value through
profit or loss” under the terms described above.
59
2
Impairment of financial assets
Financial assets carried at amortised cost
The criteria for determining whether the credit risk on
an individual loan is identified are similar to those used
under French regulations to determine whether a loan is
doubtful.
At each balance-sheet date, the Group determines
whether there is objective evidence that any asset or
group of individually assessed financial assets has been
impaired as a result of one or more events occurring
since they initial recognition (“a loss generating event”)
that has (have) an impact on the estimated future cash
flows of the asset or group of financial assets which can
be reliably estimated.
The Group first determines if there is objective evidence
of impairment in any individually significant financial
assets, and similarly, whether individually or collectively,
in financial assets which are not individually significant.
Notwithstanding the existence of a guarantee, the criteria
used to determine probable credit risk on individual
outstanding loans include the occurrence of one or more
payments at least over 90 days due (six months for real
estate and property loans and nine months for municipal
loans), or, even in the absence of missed payments, the
existence of probable credit risk or legal disputes.
In the event there is no objective evidence of impairment
for a financial asset, whether considered individually
significant or not, the Group includes this financial asset
in a group of financial assets presenting similar credit
risk and collectively subjects them to an impairment test.
If a loan is deemed to incur a probable credit risk which
makes it likely that the Group will be unable to recover all
or part of the amount owed by the counterparty under
the initial terms and conditions of the loan agreement,
notwithstanding any loan guarantees, an impairment
loss is booked for the loan in question, and deducted
directly from the value of the asset.
The amount of the impairment loss is equal to the
difference between the carrying value of the asset and
the present value, discounted at the original effective
interest rate, of the total estimated recoverable sum,
taking into account the value of any guarantees. The
impaired receivable subsequently generates interest
60
income, calculated by applying the effective interest rate
to the net carrying value of the receivable. Impairment
allowances and reversals, losses on non-recoverable
loans and amounts recovered on impaired loans are
booked under “Cost of risk”.
An impairment loss against loans and advances
calculated on a portfolio basis is also recognised
in the balance sheet to cover credit risk that has not
yet been individually identified. In portfolios of similar
assets, as soon as a credit risk is incurred on a group
of receivables, collective impairment loss is recognised
without waiting for the risk to individually affect one or
more receivables. The collective impairment losses
cover, on the one hand, the credit risk incurred on a
portfolio of counterparties which are sensitive or on the
watch-list, and, on the other hand, sector risk exposure.
Performing loans under watch
Within the “Performing loan” risk category, the Group
has created a subcategory called “Performing loans
under watch” to cover loans/receivables requiring closer
supervision. This category includes loans/receivables
where certain evidence of deterioration has appeared
since they were granted.
The Group conducts historical analyses to determine
the rate of classification of these loans/receivables as
doubtful and the impairment ratio, and updates these
analyses on a regular basis. It then applies these figures
to similar groups of receivables in order to determine the
amount of impairment.
Impairment due to sector credit risk
The Group’s Central Risk Division regularly identifies
the business sectors that it believes represent a high
probability of default in the short term due to recent
events that may have caused lasting damage to the
sector. A rate of classification as doubtful loans is
then applied to the total outstanding in these sectors
in order to determine the volume of doubtful loans. An
impairment is then booked for the overall amount of
these outstanding loans, using impairment ratios which
are determined according to the historical average
impairment rates of doubtful customers, adjusted to
take into account an analysis of each sector by an
independent expert on the basis of the economic climate
in the sector.
Where there is evidence of lasting impairment to an
available-for-sale financial asset, an impairment loss
is booked to profit or loss. Where a non-permanent
unrealised capital loss has been directly booked to
shareholders’ equity and subsequently objective
evidence of lasting impairment emerges, the Group
recognises the total accumulated unrealised loss,
previously booked to shareholders’ equity, in profit or
loss:
• under “Cost of risk” for debt instruments (fixedincome securities);
• under «Net gains or losses on available-for-sale
financial assets» for equity instruments (equity
securities).
The amount of the cumulative impairment loss is
calculated as the difference between the acquisition cost
of the security (net of any repayments of principal and
amortisation) and its current fair value, less, if necessary,
any loss of value on the security previously booked
through profit or loss.
For listed equity instruments, a significant or prolonged
decline in share price to a value below the acquisition
cost constitutes objective evidence of impairment. The
Group believes this is particularly the case for listed
equities which present, at the balance sheet date,
unrealised losses exceeding 50% of their acquisition
cost, as well as for listed equities posting unrealised
losses for a continuous period of 24 months or more
prior to the balance sheet date. Other factors, such as
the issuer’s financial position or development prospects,
may lead the Group to conclude that it may not recover
its investment even if the above-mentioned criteria were
not met. In such cases, an impairment loss is recognised
in the income statement for the difference between the
share’s listed price at the balance sheet date and its
acquisition cost.
2
For unlisted equity instruments, the impairment criteria
used are the same as those described above.
Impairment losses recognised through profit or loss on
equity instruments considered as available-for-sale are
not reversed until the financial instrument is sold. Once
an equity instrument has been impaired, any further
loss of value is booked as an additional impairment
loss. However, losses of value on debt instruments
are reversed through profit or loss if the instruments
subsequently appreciate in value.
The impairment criteria for debt instruments are similar
to those applied for the impairment of financial assets
measured at amortised cost.
Leases are qualified as finance leases when they transfer
substantially all the risks and rewards incidental to
ownership of an asset to the lessee. Leases other than
finance leases are referred to as operating leases.
Finance lease receivables are recognised in the balance
sheet under «Lease financing and similar agreements»
and represent the Group’s net investment in the lease,
calculated as the present value of the minimum lease
payments to be received from the lessee, plus any
unguaranteed residual value, discounted at the interest
rate implicit in the lease.
Interest included in the lease payments is booked under
«Interest and similar income» in the income statement
such that the lease generates a constant periodic rate
of return on the lessor’s net investment. In the event
of a decline in the unguaranteed residual value, used
in calculating the lessor’s gross investment in the lease
financing contract, the discounted value of this decline
is recorded under «Expenses from other activities» in the
income statement to offset the reduction in the finance
lease receivable on the assets side of the balance sheet.
Fixed assets arising from operating lease activities
are presented in the balance sheet under «Tangible
and intangible fixed assets» and are treated
accordingly. Buildings are booked under «Investment
61
2
property». Income from rent is recognised in the
income statement on a straight-line basis over the
life of the lease under «Income from other activities».
The accounting treatment of income which is invoiced
for maintenance services related to operating leases
must show a constant margin between this income and
the expenses incurred over the term of the lease.
Infrastructures
Major structures
50 yrs
Doors and windows, roofing
20 yrs
Façades
30 yrs
Elevators
Operating and investment fixed assets are booked in the
balance sheet at cost. Borrowing expenses incurred to
fund a lengthy construction period for fixed assets are
included in the acquisition cost, along with other directly
attributable expenses. Investment subsidies received are
deducted from the cost of the relevant assets.
Electrical installations
Software developed in-house is capitalised at the direct
development cost, which includes external hardware
and service costs and personnel expenses directly
attributable to the production of the software and its
preparation for use.
As soon as they are fit for use, fixed assets are
depreciated over their useful life. Any residual value of
the asset is deducted from its depreciable amount. In the
event of a subsequent reduction or increase in the initially
recorded residual value, adjustments are made to the
depreciable amount with a view to making prospective
changes to the asset’s depreciation schedule.
Where one or more components of a fixed asset are
used for different purposes or to generate economic
benefits over a different time period from the asset
considered as a whole, these components are
depreciated over their own useful life. Allowances for
depreciation are booked in the income statement under
«Provisions, impairment and depreciation of tangible and
intangible assets».
62
The Group has applied this approach to its operating
and investment property, breaking down its assets into at
least the following components, with their corresponding
depreciation periods:
Electricity generators
Technical
installations
Air conditioning, smoke
extraction
Technical cables
10-30 yrs
Security and surveillance
installations
Plumbing
Fire safety equipment
Fixtures & fittings
Finishings, dry wall,
surroundings
10 yrs
Depreciation periods for other categories of fixed assets
depend on their useful life, usually estimated in the
following ranges:
Safety and advertising equipment
5 yrs
Transport
4 yrs
Furniture
10 yrs
IT and office equipment
3-5 yrs
Software, developed or
acquired
3-5 yrs
Franchises, patents and licenses
5-20 yrs
Fixed assets are subject to impairment tests whenever
there is an indication that their value may have
diminished. Evidence of a loss in value is assessed at
each balance sheet date. Impairment tests are carried
out on assets grouped by cash-generating units. Where
a loss is established, an impairment loss is booked to
the income statement under «Provisions, impairment
and depreciation of tangible and intangible assets»,
which may be reversed if there is an improvement in
the conditions that initially led to its recognition. The
impairment loss reduces the depreciable amount of
the asset and thus also affects its future depreciation
schedule.
Capital gains and losses on the sale of operating fixed
assets are recorded under «Net gains or losses on
other assets», while income on investment property is
classified as net banking income and booked under
«Income from other activities».
Provisions
Provisions, excluding those related to employee benefits
and credit risks, represent liabilities, the timing or amount
of which cannot be precisely determined. Provisions
are booked where the Group has a commitment to a
third party which makes it probable or certain that it will
never incur an outflow of resources to this third party
without expecting to receive at least an equivalent value
in exchange from said third party.
The estimated amount of the expected outflow is then
discounted to present value to determine the size of
the provision, where this discounting has a significant
impact. Allocations to and reversals of provisions
are booked through profit or loss under the items
corresponding to the future expense.
At Crédit du Nord Group, these provisions are made
up of provisions for disputes and provisions for general
risks.
Commitments under home savings accounts
Home savings accounts and plans are savings schemes
for individual customers (in accordance with Law
No. 65-554 of July 10, 1965), which combine an initial
deposit phase in the form of an interest-earning savings
account with a lending phase where the deposits are
used to provide property loans. The latter phase is
subject to the previous existence of the savings phase
and is therefore inseparable from it. The deposits
collected and loans granted are booked at amortised
cost.
These instruments generate two types of commitments
for the Group: the obligation to subsequently lend to the
customer at an interest rate established upon the signing
of the agreement, and the obligation to pay interest on
the customer’s savings in the future at an interest rate
set upon the signing of the agreement, for an indefinite
period.
Commitments with future adverse effects for the Group
are subject to provisions booked as balance-sheet
liabilities, any changes in which are recorded on the
interest margin line under “Net Banking Income”. These
2
provisions relate exclusively to commitments under
home savings accounts and schemes existing at the
date of the provision’s calculation.
Provisions are calculated for each generation of home
savings schemes, on the one hand, with no netting
between the different generations of schemes, and
for all home savings accounts taken together, which
constitutes a single all-encompassing generation, on
the other hand.
During the savings phase, provisions are calculated
according to the difference between average expected
outstanding savings and minimum expected outstanding
savings, both of which are determined statistically based
on historic observations of actual customer behaviour.
During the lending phase, provisions are calculated
according to loans already issued but not yet due at the
balance sheet date, as well as future loans considered
as statistically probable on the basis of customer savings
deposits in the balance sheet at the date of calculation
and on historic observations of actual customer
behaviour.
A provision is booked if the discounted value of expected
future earnings for a given generation of home savings
products is negative. These results are measured on the
basis of interest rates available to individual customers
for equivalent savings and loan instruments, with similar
estimated life and date of inception.
Loan commitments
Financing commitments which are not considered
financial derivative instruments are initially booked at
their fair value. If necessary, provisions are recognised
for these commitments in accordance with the
generally accepted accounting principles applicable to
“Provisions”.
Financial guarantees given
The Group initially recognises financial guarantees given
as non-derivative financial instruments at their fair value
in the balance sheet; the guarantees are subsequently
measured at the higher of the best estimate of the
obligation and the amount initially recognised less, where
appropriate, amortisation of the guarantee commission.
Where there is objective evidence of impairment,
financial guarantees given are provisioned as balance
sheet liabilities.
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2
Distinction between debt and equity
Net fee income
The financial instruments issued by the Group are fully
or partially qualified as debt or equity instruments based
on whether or not the issuer has an obligation to deliver
cash to securities holders.
Crédit du Nord Group books its fee income and
expenses in the income statement according to the type
of transaction for which the fees are charged.
“Non-controlling interests” are equity interests in fully
consolidated subsidiaries that are not owned, either
directly or indirectly, by the Group. They include equity
instruments issued by these subsidiaries but not owned
by the Group.
Fees for ongoing services, such as fees on payment
instruments, custody fees on deposited securities, or
online subscriptions, are spread out over the duration
of the service.
Fees for one-off services, such as fund transfer fees, fees
on contributions received, arbitrage fees and penalties
for payment incidents are fully booked to income when
the service is provided under «Fee income - Services
and other items».
Interest income and expenses
Interest income and expenses are booked to the
income statement for all financial instruments valued at
amortised cost using the effective interest rate method.
The effective interest rate is taken to be the rate that
discounts the future cash inflows and outflows over
the expected life of the instrument to the book value
of the financial asset or liability. The rate is calculated
using the estimated cash flows based on the contractual
provisions of the financial instrument without taking
account of possible future loan losses. The calculation
includes commission paid or received between the
parties where these can be assimilated to interest,
transaction costs and all types of premiums and
discounts.
When a financial asset or a group of similar financial
assets has been impaired following a loss of value,
subsequent interest income is booked through profit or
loss under «Interest and similar income» using the same
interest rate that was used to discount the future cash
flows when measuring the loss of value. Provisions that
are booked as balance sheet liabilities, except for those
related to employee benefits, generate interest expenses
for accounting purposes. This expense is calculated
using the same interest rate used to discount to present
value the expected outflow of resources that gave rise
to the provision.
64
Personnel expenses
“Personnel expenses” include all employee-related
expenses, notably profit-sharing and bonus incentive
amounts booked for the period, charges related to the
Group’s various pension plans and charges related
to the Group’s application of IFRS 2 “Share-based
payments”.
Employee benefits
Group companies can pay their employees:
• post-employment benefits, such as pension plans
and severance pay;
• long-term benefits, such as deferred variable
remuneration, long-service awards or flexible working
provisions;
• employment termination benefits.
Post-employment benefits
Pension plans can be defined contribution or defined
benefit plans.
Defined contribution plans limit the Group’s liability to the
contributions paid into the plan, but do not commit the
Group to a specific level of future benefits. Contributions
paid are booked as an expense for the year in question.
Defined benefit plans commit the Group, on a formal or
implied basis, to pay a certain amount or level of future
benefits and the Group therefore bears the medium-and
long-term risk.
Where these plans are financed using external funds
meeting the definition of plan assets, the fair value
of these funds is deducted from the amount of the
provision recorded to cover the related commitments.
Said plans cover several types of benefits, notably any
residual complementary benefits afforded by specialist
pension funds.
Differences arising from changes in the calculation
method (early retirement, discount rate, etc.) or between
actuarial assumptions and actual figures (return on
hedging assets, etc.) constitute actuarial differences
(gains or losses). These are amortised in the income
statement over the anticipated residual average working
life of the employees participating in the plan in question,
where they exceed the higher of the following two values
(corridor method):
As of January 1, 1994, pursuant to an agreement signed
by all French banks on September 13, 1993, the banking
institutions of the Group, excluding Crédit du Nord, are
no longer affiliated with specialist pension funds and are
henceforth affiliated with the ARRCO AGIRC funds of
the general system. This agreement gave rise to residual
commitments with respect to current retirees and active
employees (for periods of employment within the Group
prior to December 31, 1993).
For Crédit du Nord, following the Branche agreement of
February 25, 2005, which provided for the amendment
of the provisions relating to complementary benefits, and
in light of the negative balance of its pension fund, an
internal agreement was signed in 2006 setting forth the
following provisions:
• for beneficiaries of complementary benefits still
employed with Crédit du Nord, the value of the
complementary benefits was transferred to a
supplementary savings plan outsourced to an insurer;
• retirees and beneficiaries of a survivor’s pension
were given a choice of opting for a single lump-sum
payment of their complementary benefits.
Any residual complementary benefits are therefore linked
to retirees and beneficiaries of a survivor’s pension who
did not opt for a single lump-sum payment of their
complementary benefits, on the one hand, and to
beneficiaries no longer employed with Crédit du Nord,
on the other hand.
A provision is recorded on the liabilities side of the
balance sheet under «Provisions» to cover all of the
above pension commitments. It is valued on a regular
basis by independent actuaries using the projected
credit unit method. This valuation method takes account
of assumptions on demographics, early retirement,
wage increases, discount rates and inflation.
2
• 10% of the discounted value of the defined benefit
commitment;
• 10% of the fair value of the plan assets at the end of
the previous period.
Where a new plan (or amendment) is implemented,
the service cost is spread out over the residual vesting
period.
The annual charge booked under «Personnel expenses»
for defined benefit plans includes:
• additional entitlements vested by each employee
(current service cost);
• the interest cost corresponding to the increase in the
present value of a defined benefit obligation;
• the expected return on plan assets (gross yield);
• the amortisation of actuarial gains and losses and
past service cost;
• the effect of settlement or curtailment of plans.
Long-term benefits
Long-term benefits are employee benefits which do
not entirely fall due within the twelve months after the
end of the period in which the employees provided the
related services. The valuation method is identical to that
used for post-employment benefits, based on actuarial
gains or losses and past service cost, which are booked
immediately to the income statement.
65
2
Share-based payments
As the Group does not issue listed shares, its employees
are entitled to the equity instruments of the shareholder.
Share-based payments involve the systematic entry of
a personnel expense under «Employee compensation»,
as described below.
Employee shareholder structure
Under the employee shareholder scheme, all the Group’s
current and former staff are entitled to participate in the
parent company’s annual capital increase reserved for
employees.
New shares are offered at a discount in exchange for a
five-year lock-up period. The related benefit is recorded
as an expense for the period under «Personnel expenses
– Employee profit sharing and incentives». The benefit
is measured as the difference between the fair value of
the vested shares and the acquisition price paid by the
employee, multiplied by the actual number of shares
subscribed. The fair value of the vested securities
is calculated by taking into account the cost of the
associated legal obligatory lock-up period, estimated
using interest rates available to beneficiaries to estimate
the free transferability of the shares.
Other share-based payments
Societe Generale Group may offer certain
employees of Crédit du Nord Group the option of
purchasing or subscribing for Societe Generale shares
or free shares.
The options are measured at their fair value at the date
on which the employee is notified of the award, without
waiting for the conditions that trigger the award to be
met, or for the beneficiaries to exercise their options.
If the Group has adequate statistics on the behaviour
of option beneficiaries, Group stock option plans are
valued using the binomial model, failing which the BlackScholes or Monte-Carlo model is used. This valuation is
conducted by an independent actuary.
For share-based payments unwound through equity
instruments (free shares and options to purchase or
subscribe to Societe Generale shares), the fair value of
these instruments, as calculated at the notification date,
66
is expensed over the vesting period against «Equity
instruments and associated reserves» in shareholders’
equity. At each balance sheet date, the number of
instruments is revised to take account of performance
and presence conditions, and to adjust the overall cost
of the original plan; the cost from the beginning of the
plan, recorded under «Employee compensation», is
adjusted accordingly.
Cost of risk
The figure shown under “Cost of Risk” includes net
reversals of impairment losses and provisions for
credit risk, losses on non-recoverable loans, amounts
recovered on impaired loans, and allowances and
reversals for other risks.
Income taxes
Income tax expense includes:
• current income tax for the financial year including
dividend tax credits and tax credits used for tax
settlement purposes. Tax credits are recorded under
the same line item as the income to which they are
related;
• deferred tax.
Current income tax
In France, standard corporate income tax is 33.33%. In
addition, there is a social security contribution of 3.3%
(after a deduction of EUR 0.76 million), which came into
force in 2000, and an increase of 5% as from 2011 for
companies that generate revenue of more than EUR 250
million.
Since January 1, 2007, long-term capital gains on
equity investments have been taxed at 15% for shares
in companies whose main activity is real estate and have
been tax-exempt for other equity investments (subject to
a share for fees and expenses of 12% of gross capital
gains in the event of a long-term capital gain). In addition,
under the regime of parent companies and subsidiaries,
dividends received from companies in which the equity
investment is at least 5% are tax-exempt (with the
exception of a share for fees and expenses equivalent to
5% of the dividends paid).
Tax credit arising in respect of income from receivables
and security portfolios, where they are used for the
settlement of corporate tax due for the fiscal year, are
booked under the same line item as the related income.
The corresponding income tax expense is recognised
under «Income Tax» in the income statement.
Since January 1, 2010, Crédit du Nord has been
included in Societe Generale’s tax consolidation scope.
A tax consolidation sub-group was set up between
Crédit du Nord and some of the subsidiaries in which
it holds a direct or indirect ownership interest of at least
95%. The convention adopted is that of neutrality.
Deferred taxes
Insurance activity
Deferred taxes are recognised whenever there is a
temporary difference between the carrying amount
of assets and liabilities in the balance sheet and their
respective tax base, where said differences will have an
impact on future tax payments.
Deferred taxes are calculated based on a tax rate which
has been approved or almost approved and should be
in effect at the time when the temporary difference will
reverse. These deferred taxes are adjusted in the event
of a change in the tax rate. No discount is applied to
their calculation. Deferred tax assets may result from
temporary deductible differences or tax loss carryforwards. Deferred tax assets are only recognised if it is
likely that the tax entity in question has the prospect of
recovering them over a given time period, particularly by
deducting these differences and tax loss carry-forwards
from future profits.
Tax loss carry-forwards are subject to an annual review,
taking into account the tax scheme applicable to each
relevant entity and a realistic projection of their taxable
income based on their business development outlook:
deferred tax assets which had previously not been
recognised are then recognised in the balance sheet
if it becomes probable that the entity’s future taxable
profit makes recovery of said assets possible; however,
the carrying amount of deferred tax assets already
appearing in the balance sheet is reduced where there
is a risk of partial or total non-recovery.
Current and deferred tax is recognised as income or
an expense and included in consolidated profit or loss
for the period under «Income Tax», with the exception
of deferred tax related to gains or losses recognised
directly in equity, which is reported as «Unrealised or
deferred gains and losses» for which the expense or
income is recorded to the same line item in equity.
2
General framework
Antarius, a mixed (life and non-life) insurance company,
is the only consolidated insurance company, and is
jointly held with Aviva.
Capitalisation reserve
The capitalisation reserve of insurance companies
consists of capital gains generated on the sale of
obligations and is designed to offset subsequent capital
losses. The capitalisation reserve is split between
technical reserves and shareholders’ equity according
to forecasts of future capital losses and therefore of
the use of reserves. As the recognition of part of the
capitalisation reserve under shareholders’ equity
generates a temporary taxable difference, Credit du Nord
Group records a deferred tax liability in its consolidated
financial statements.
The financial assets and liabilities of the Group’s
companies are booked and valued using the methods
described above for the valuation of financial
instruments.
Underwriting reserves of insurance
companies
Underwriting reserves are insurance company
commitments to insured parties and policy beneficiaries.
Under IFRS 4, Insurance Contracts, underwriting
reserves for life and non-life insurance policies are still
measured using the same methods as those required by
local regulations. Embedded derivatives which are not
valued with reserves are booked separately.
67
2
Under the «shadow accounting» principles defined in
IFRS 4, an allocation to a provision for deferred profit
sharing is booked in respect of insurance policies that
have a discretionary participation feature. This provision
is calculated to reflect the potential entitlement of
policyholders to unrealised capital gains on financial
instruments measured at fair value or their potential
liability for unrealised losses.
• the market on which they are traded requires net
settlement;
IFRS 4 also requires that a liability adequacy test be
carried out to assess whether underwriting reserves are
sufficient.
• they have the same characteristics (firstly, offsetting
call options against call options and, secondly,
offsetting put options against put options);
• they are traded using the same strategy;
• they are traded on the same organised market;
• the settlement of options by physical delivery of the
underlying assets is not possible on these organised
markets;
• they have the same underlying asset, currency and
maturity date.
3. Presentation of the financial
statements
The Group also recognises the net amount of reverse
repurchase or repurchase agreements meeting the
following criteria:
Use of the banking statement format
recommended by the French National
Accounting Standards Board
• they are entered into with the same legal entity;
In the absence of any model required by IFRS, the
format used for the financial reports complies with the
format for banking statements recommended by the
French National Accounting Standards Board (Conseil
National de la Comptabilité) in Recommendation No.
2009-R-04 of July 2, 2009.
Rule on offsetting financial assets and
liabilities
A financial asset and a financial liability are offset and
a net total is presented in the balance sheet when the
Group has a legally enforceable right to offset recognised
amounts and intends either to settle on a net basis, or
to realise the asset and settle the liability simultaneously.
In this regard, on its balance sheet, the Group recognises
the net amount of the fair value of index options traded
on an organised market, having as their underlying
instrument shares in a given legal entity meeting the
following criteria:
68
• they have identical firm maturity dates at origination;
• they are covered under a master agreement that
provides for a standing and enforceable right to settle
amounts due on the same day;
• they are unwound through settlement/delivery
systems that guarantee delivery of the securities
against receipt of the associated cash amounts.
Cash and cash equivalents
For the purpose of preparing the cash flow statement,
cash and cash equivalents include cash accounts,
demand deposits and demand loans and borrowings
from central banks and credit institutions.
Earnings per share
Earnings per share are calculated by dividing net
earnings attributable to ordinary equity holders by
the weighted average number of ordinary shares
outstanding during the period.
2
4. Account standards and interpretations that the Group will apply in the future
The IASB has published standards and interpretations
that were not all adopted by the European Union
as at December 31, 2012. These standards and
interpretations shall only be mandatory as of July
1, 2012 at the earliest, or upon their adoption by the
European Union. Consequently, they were not applied
by the Group at December 31, 2012.
Accounting standards, amendments and interpretations adopted by the European Union
Standards or Interpretation
Amendments to IAS 1 «Presentation of other comprehensive income»
Amendments to IAS 19 «Employee benefits»
Date adopted
by the European Union
Application dates: fiscal years
beginning from
June 5, 2012
July 1, 2012
June 5, 2012
January 1, 2013
IFRS 13 «Fair value measurement»
December 11, 2012
January 1, 2013
IFRIC 20 «Stripping costs in the production phase of a surface mine»
December 11, 2012
January 1, 2013
Amendments to IAS 12 «Deferred tax: recovery of underlying assets»
December 11, 2012
January 1, 2013
Amendments to IFRS 7 «Disclosures - Offsetting financial assets
and financial liabilities»
December 13, 2012
January 1, 2013
Amendments to IAS 32 «Presentation - Offsetting financial assets
and financial liabilities»
December 13, 2012
January 1, 2013
IFRS 10 «Consolidated financial statements»
December 11, 2012
January 1, 2014
IFRS 11 «Joint arrangements»
December 11, 2012
January 1, 2014
IFRS 12 «Disclosure of interests in other entities»
December 11, 2012
January 1, 2014
Amendments to IAS 27 «Separate financial statements»
December 11, 2012
January 1, 2014
Amendments to IAS 28 «Investments in associates
and joint ventures»
December 11, 2012
January 1, 2014
Amendments to IAS 1 «Presentation of other
comprehensive income»
These amendments will modify certain provisions related
to the presentation of gains and losses booked directly
to equity, of which the various components and related
tax effects will be grouped to assess which items can be
recycled or not to income.
Amendments to IAS 19 “Employee benefits”
The main consequences of the amendments to IAS 19
“Employee benefits” will be the compulsory recording
under gains and losses booked directly to equity of
actuarial gains or losses on post-employment defined
benefit plans and, in the event there is a change in the
plan, the immediate recognition of past service costs
in the income statement, whether the rights have been
vested or not at December 31, 2012, the pre-tax amount
of these unrecognised items was -EUR 41.1 million, as
mentioned in Note 21.
IFRS 13 “Fair value measurement”
IFRS 13 defines fair value as the price that would be
received for the sale of an asset or which would be
paid for the transfer of a liability in a regular arm’s length
transaction between participants at the valuation date.
IFRS 13 does not alter the scope of fair value, but
specifies the methods to be used to calculate the fair
value of financial and non-financial assets and liabilities
when required or permitted by another IFRS standard.
The anticipated consequences of this standard relate
69
2
primarily to the accounting recognition of credit risk
in the valuation of derivative financial liabilities. The
changes in valuation methods, which will notably
include the details mentioned in this standard, may
prompt the Group to adjust the methods it uses to
assess counterparty risk when measuring the fair value
of derivative financial assets. IFRS 13 also requires
the disclosure of additional information in the notes to
the financial statements. As the application of IFRS 13
from January 1, 2013 is prospective, the impact of this
new standard on the Group’s consolidated financial
statements will be recorded in the results for the first
quarter of 2013. The impact of this standard is in the
process of being assessed.
IFRIC 20 “Stripping costs in the production
phase of a surface mine”
This interpretation defines the accounting treatment to
be used for stripping costs in the production phase of
a surface mine. As the Group is not concerned by the
transactions covered by this interpretation, it will not
have any impact on its income or shareholders’ equity.
Amendment to IAS 12 “Deferred tax: recovery
of underlying assets”
The calculation of deferred tax depends on how
the entity wishes to recover the asset, i.e. by using it
or by selling it. The amendment assumes that the
asset is recovered through a sale, unless the entity
has a clear intention of realising it in another manner.
This assumption only concerns tangible fixed assets
and intangible assets that have been measured or
remeasured at fair value.
Amendments to IFRS 7 “Disclosures Offsetting financial assets and financial
liabilities”
This amendment requires the disclosure of information
on offsetting rights and the corresponding agreements
on financial instruments. The new information is
required for all financial instruments which are offset in
the balance sheet, in accordance with IAS 32 (gross
amounts of financial assets and liabilities offset, amounts
offset and net amounts presented in the balance sheet),
offset and net amounts related to the offset financial
assets and liabilities to be presented in the balance
sheet). Additional information must also be provided
70
on financial instruments that are the subject of a global
binding offsetting agreement or similar agreement, even
if they are not offset in the balance sheet in accordance
with IAS 32.
Amendments to IAS 32 “Presentation Offsetting financial assets and liabilities”
This amendment clarifies the rules for offsetting financial
assets and liabilities: offsetting is compulsory only if
the relevant entity has an unconditional and legally
enforceable right in any circumstances to offset the
recorded amounts and if it intends either to settle the
asset and liability on a net basis or to realise the asset
and liability on a net basis, or to realise the asset and
settle the liability simultaneously. An analysis of the
potential impact of these amendments on the Group’s
consolidated financial statements is underway.
IFRS 10 “Consolidated financial statements”
This new standard redefines the notion of control, and
places greater emphasis on managements’ use of
judgement. The new definition takes the following into
account: the power exercised over the entity, exposure
or rights to the entity’s variable returns, and the capacity
to use one’s power to influence the entity’s returns. An
analysis of the potential impact of this new standard
on the Group’s consolidated financial statements is in
progress.
IFRS 11 “Joint arrangements”
This standard makes a distinction between two types
of joint arrangements (joint operation or joint venture)
depending on the partners’ rights and obligations,
and removes the option to apply the proportionate
consolidation method. Joint ventures must now be
consolidated using the equity method.
IFRS 12 “Disclosure of interests in other
entities”
This standard defines all the information that must be
presented in the notes on all subsidiaries, partnerships,
associates and structured entities (whether consolidated
or not). The Group will consequently provide additional
information in the notes to the consolidated financial
statements in respect of fiscal years beginning on or
after January 1, 2014.
Amendments to IAS 27 “Separate financial
statements”
Amendments to IAS 28 “Investments in
associates and joint ventures”
The amendments specify the methods to be used to
recognise equity interests in the individual financial
statements.
IAS 28 has been amended to take account of the
changes introduced by the publication of IFRS 10 and
IFRS 11 regarding investments in associates and joint
ventures.
2
Accounting standards, amendments and interpretations not yet adopted by the European Union
at December 31, 2012
Standard or Interpretation
IFRS 9 «Financial instruments - Phase 1: classification and
measurement»
Annual improvements (2009-2011) to IFRS - May 2012
Amendments to IFRS 10, IFRS 11, IFRS 12 regarding transitional
provisions
Investment entities (amendments to IFRS 10, IFRS 12 and IAS 27)
IFRS 9 «Financial instruments - Phase 1:
classification and measurement»
This standard, which represents the first phase in the
overhaul of IAS 39, defines new rules for classifying and
measuring financial assets and liabilities. The impairment
methodology for financial assets as well as hedges, will
be addressed in future phases to complete IFRS 9.
Financial assets will be classified in three categories
(amortised cost, fair value through profit or loss, and fair
value through other comprehensive income) depending
on the details of their contractual flows and the way
the entity manages its financial instruments (business
model).
Debt instruments (loans, receivables or debt securities)
shall be recorded at their amortised cost, provided they
are held for the purpose of receiving contractual cash
flows and they have standard characteristics (cash flows
must be solely payments of principal and interest on the
principal outstanding). All other debt instruments are
measured at fair value through profit or loss.
Equity instruments shall be recognised at fair value
through profit or loss unless there is an irrevocable
Date published by IASB
Application dates: fiscal years
beginning from
November 12, 2009
October 28, 2010
and December 16, 2011
January 1, 2015
May 17, 2012
January 1, 2013
June 28, 2012
January 1, 2013
October 31, 2012
January 1, 2014
option to measure them at fair value through other
comprehensive income (only if these instruments are not
held for trading and classified as such under financial
assets measured at fair value through profit or loss)
without subsequent recycling to profit or loss.
Embedded derivatives shall no longer be booked
separately from the financial host instruments, where
they are financial assets, such that the entire hybrid
instrument must be measured at fair value through profit
or loss.
The rules for classifying and measuring financial liabilities
addressed by IAS 39 are retained without modification in
IFRS 9, with the exception of financial assets which the
entity has elected to measure at fair value through profit
or loss (fair value option) for which revaluation differences
associated with changes in the entity’s own credit risk
will be recognised as gains and losses taken directly to
equity without subsequent recycling to profit or loss.
The provisions of IAS 39 regarding derecognition of
financial assets and liabilities are retained without
modification in IFRS 9.
71
2
These IFRS 9 provisions are the subject of proposed
amendments covered in an IASB exposure draft
published on November 28, 2012 entitled «Classification
and measurement: limited amendments to IFRS 9». The
final provisions of IFRS 9 «Financial instruments – Phase
1: classification and measurement» may differ from those
presented above.
Investment entities (amendments to IFRS 10,
IFRS 12 and IAS 27)
Annual improvements (2009-2011) to IFRS May 2012
These amendments exempt investment entities from
having to consolidate the entities they control; instead,
they are accounted for at fair value through profit or loss.
As part of the annual process of improving International
Financial Reporting Standards, the IASB published six
minor amendments to existing standards.
They also clarify the information to be disclosed by
investment companies in the notes to the financial
statements.
Amendments to the transitional provisions
of IFRS 10, IFRS 11 and IFRS 12
These amendments limit the restated comparative data
to the comparative period immediately preceding the
72
application of IFRS 10, 11 and 12, and eliminate the
need to publish restated comparative information for
non-consolidated structured entities in the first year of
application of IFRS 12.
2
NOTE 2 Scope of consolidation
31/12/2012
Consolidation
method
Crédit du Nord
28, place Rihour
59800 Lille
Full
Banque Rhône-Alpes
20-22, boulevard Edouard Rey
38000 Grenoble
Ownership
interest
31/12/2011
Controlling
interest
Consolidation
method
Consolidating company
Full
Ownership
interest
Controlling
interest
Consolidating company
Full
99.99
99.99
Full
99.99
99.99
Full
97.57
97.57
Full
80.00
80.00
Banque Courtois
33, rue de Rémusat
31000 Toulouse
Full
100.00
100.00
Full
100.00
100.00
Banque Kolb
1-3, place du Général-de-Gaulle
88500 Mirecourt
Full
99.87
99.87
Full
99.87
99.87
Banque Laydernier
10, avenue du Rhône
74000 Annecy
Full
100.00
100.00
Full
100.00
100.00
Banque Nuger
5, place Michel-de-L’Hospital
63000 Clermont-Ferrand
Full
64.70
64.70
Full
64.70
64.70
Société Marseillaise de Crédit
75, rue Paradis
13006 Marseille
Full
100.00
100.00
Full
100.00
100.00
Norbail Immobilier
50, rue d’Anjou
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Star Lease
59, boulevard Haussmann
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
ETOILE ID
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Société de Bourse Gilbert Dupont
50, rue d’Anjou
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Norimmo
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Etoile Gestion Holding
75008 Paris
Full
98.99
100.00
Full
97.73
100.00
Banque Tarneaud
2-6, rue Turgot
87000 Limoges
(1)
(1) Crédit du Nord launched a simplified public offer on Tarneaud shares at a price of EUR 140, from November 30 to December 20, 2012.
At December 31, 2012, Crédit du Nord owned 97.57% (versus 80.00% at December 31, 2011) of the shares in Tarneaud.
The squeeze-out that took place in January 2013 brought Crédit du Nord’s ownership interest in this company to 100%.
73
2
31/12/2012
31/12/2011
Consolidation method
Ownership
interest
Controlling
interest
Consolidation method
Ownership
interest
Controlling
interest
Anna Purna
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Nice Broc
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Nice Carros
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Kolb Investissement
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Nord Assurances Courtage
28, place Rihour
59800 Lille
Full
100.00
100.00
Full
100.00
100.00
Norbail Sofergie
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Sfag
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Partira
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Crédinord Cidize
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
entity sold on June 30, 2012
Full
100.00
100.00
SC Fort De Noyelles
75008 Paris
Banque Pouyanne
12, place d’armes
64300 Orthez
Equity
35.00
35.00
Equity
35.00
35.00
Proportionate
50.00
50.00
Proportionate
50.00
50.00
Full
100.00
100.00
Full
100.00
100.00
Fct BS CDN PPI
17, cours Valmy
92972 Paris La Défense
Full
100.00
100.00
-
-
-
Fct BS CDN ENT (4)
17, cours Valmy
Full
100.00
100.00
-
-
-
(2)
Antarius
75008 Paris
Fct Blue Star Guaranteed Home
Loans 3)
17, cours Valmy
(4)
(2) including sub-consolidated insurance mutual funds.
(3) FCT Blue Star Guaranteed Home Loans was consolidated by Crédit du Nord Group in December 2011.
(4) FCT BS CDN PPI and FCT BS CDN ENT were consolidated by Crédit du Nord Group in January 2012.
The following companies, in which the Group holds
ownership interests ranging from 40% to 100%, were
not included in the consolidation scope: Starvingt,
Starvingt trois, Starvingt six, Starvingt huit, Amerasia
74
3, Amerasia 4, Snc Obbola, Snc Wav II, Immovalor
service, Scem Expansion, Snc Hedin, Snc Legazpi, Snc
Nordenskiöld and Snc Verthema.
2
NOTE 3 Risk management
This note describes the main risks incurred in the
Group’s banking activities, i.e.:
• It defines or validates methods and procedures for
analysing, approving and monitoring risk.
• credit risk: the risk of losses stemming from the
inability of a counterparty to meet its financial
commitments;
• It contributes to the independent assessment of
credit risk during the loan approval process by giving
an opinion on the transactions put forward by the
sales function.
• structural risk: the risk of loss or residual impairment
of balance sheet items arising from changes in
interest rates or exchange rates;
• liquidity risk: the risk that the Group may not be able
to meet its financial commitments when they mature;
• market risk: the risk of loss resulting from changes
in market rates and prices, in correlations between
these market rates and prices, and in their volatility.
Credit risk
The provision of loans makes a significant contribution
to Crédit du Nord Group’s development and results.
However, it also exposes the Group to credit and
counterparty risk, i.e. the risk of partial or complete
default on the part of the borrower.
For this reason, all lending activities are monitored
and controlled by a dedicated organisational
structure, the Risk Division, which is independent
from the sales function and coordinated by the
Central Risk Division (DCR). Lending activities are
subject to a body of rules and procedures governing
the granting of loans, approval of loans, monitoring of
risks, rating and classification of risks, identification of
downgrade risk and loan impairment.
Organisation
The Central Risk Division, which reports directly to the
Chief Executive Officer of Crédit du Nord, contributes
to the development and profitability of the Group by
ensuring that the risk management framework in place
is both sound and effective.
To this end, it ensures that a consistent approach to risk
assessment and monitoring is applied at the Group level.
• It takes part in controlling and provisioning risks, and
in the collection of non-disputed, non-performing
loans.
• It identifies all Group risks.
• It monitors the consistency and adequacy of the risk
management information system.
The Central Risk Division reports on its activities and
general changes in the Group’s risk exposure to the
General Management at the Monthly Risk Committee
meeting. This committee takes decisions on the main
strategic issues: risk-taking policies, measurement
methods, analyses of portfolios and cost of risk,
detection of credit concentrations, etc.
Each region of Crédit du Nord parent company and
each Crédit du Nord banking subsidiary has a Risk
Department that reports to the Regional Manager or
Subsidiary Chairman and is responsible for implementing
the Group’s credit policy and managing risk exposure
for the region or subsidiary in question. The Risk
Departments report functionally to the Central Risk
Division.
Procedures and methods
Loan approval
The Group enforces a strict procedure for the provision
of loans to counterparties:
• a preliminary examination is conducted of all loan
applications to ensure complete information has
been obtained before any risk is incurred;
• support for the decision-making process is provided
via the establishment of counterparty and loan
ratings, as well as approval scores based on these
ratings for small, straightforward loans;
• It helps define the Group’s credit policy and oversees
its implementation.
75
2
• analysis and decision-making within the sales
units and risk units at the most appropriate level of
authority in respect of the risk involved;
• decisions to grant loans must be formally set out in a
dated and signed written or electronic document that
specifies the limits of the commitment and the period
of validity of the approval;
• the concept of the Group is incorporated in
risk assessment and an internal lead manager
is designated for each Group identified, who is
responsible for presenting a consolidated credit
application.
The lending procedure also complies with a number of
the core principles of the Group’s credit policy which are
designed to limit counterparty risk:
• loans are mainly provided for the financing of
operations and clients in mainland France. However,
loans may be provided to certain neighbouring
countries or OECD member countries, under specific
conditions;
• division and distribution of risk;
• counter-guarantees must be sought from specialised
companies such as CREDIT LOGEMENT for
residential property loans and OSEO for loans to
professionals and businesses;
• wherever possible, loans provided to finance a
business’s operating cycle should be secured with
customer receivables;
• investments in equipment and property by
professional and business customers should
preferably be funded through lease finance
agreements;
• guarantees and collateral are systematically sought.
The Finance unit within the Risk Division of the Treasury
and Foreign Exchange Department is responsible for
counterparty risk linked to market transactions.
Counterparty limits for market transactions are attributed
as follows:
• where the counterparty is a customer, the manager
in charge of the account requests limits from the
Regional and Subsidiary Risk Divisions. These limits
allocated for the products are then input to the
monitoring systems;
76
• where the counterparty is a bank or
f i n a n c i a l i n s t i t u t i o n , t h e Tr e a s u r y a n d
Foreign Exchange Department works with the
Accounting Flows and Exter nal Operations
Department to open an application for each
counterparty, recording the details of credit line
applications, by product and duration. The application
is then submitted to the relevant Risk Division teams
at Societe Generale. The allocated limits are input to
the daily monitoring and reporting systems.
• for the sovereign loan book, an application is
prepared by the Treasury and Foreign Exchange
Department and is submitted to the relevant Risk
Division teams at Societe Generale for approval and
validation. The limits attributed for the products are
transmitted and are subject to a monitoring report
submitted to Societe Generale’s Risk Division.
Internal risk measurement systems
For several years, the Group has used internal
quantitative models for measuring credit risk as a tool in
the loan approval process. These models have gradually
been expanded to include the main customer markets in
which the Group operates.
Beginning in 2005, these internal rating models (some of
which were based on Societe Generale Group models)
were amended to take account of new regulatory
requirements. There are three pillars to the Group’s
internal rating system for the business customer market:
• internal rating models drawing on:
– the counterparty rating (debtor’s probability of
default at one year);
– the loan rating (loss given default);
• a body of procedures which covers banking principles
and the rules for using the models (scope, frequency
of rating revision, approval procedure, etc.);
• the human appraisal of those involved in the ratings
process who apply the models in compliance with
the relevant banking principles and whose expertise
is invaluable in drawing up the final ratings.
The Rating Systems Governance unit, created in
2007, oversees the adequacy of ratings models and
their rules of use, and monitors compliance with rating
procedures.
Across all of its operating markets, the Group has
gradually adapted its credit risk management, control
and supervision policy and now includes ratings in its
day-to-day operations.
Provisions for impairment
Risk management and control
A counterparty is deemed to be in default where any of
the following takes place:
All employees of the sales and risk functions are
responsible for risk management within the Group.
It is incumbent upon all employees to observe
the limits and terms of loan decisions, show
vigilance and respond quickly in detecting the
deterioration of a counterparty’s financial situation, and
take the necessary measures to reduce the risk incurred
by the Bank. Loan decisions are addressed in a monthly
report.
The purpose of risk control is to continuously verify the
quality of counterparty risks to which Crédit du Nord
Group is exposed through its lending operations, and
to ensure that its commitments are classified in the
appropriate risk categories. This is an integral part of
the processes defined by the Group’s three-level control
system (supervisory, permanent and periodic controls).
The Central Risk Division and the Corporate Secretariat
have developed risk analysis tools with a view to
optimising risk controls: these tools are updated on a
regular basis, notably to adjust to regulatory changes.
Management of non-disputed non-performing loans
is usually assigned to dedicated teams (out-of-court
collection of individual customer loans, special affairs,
etc.). Where doubtful (non-performing) loans become
2
disputed, however, they are handed over to teams
specialising in the collection of disputed loans.
• significant deterioration in the counterparty’s financial
situation creates a strong probability that it will not
be able to meet all of its commitments and thus
represents a risk of loss for the bank;
• one or more instalments have gone unpaid for at least
90 days and/or a collections procedure has been
initiated (180 days for housing loans);
• a proceeding such as bankruptcy, compulsory
liquidation or legal protection is in progress.
Once reclassified, doubtful loans are usually reviewed
to determine the possibilities of recovering the Bank’s
funds. This analysis takes into account the financial
position of the counterparty, its economic prospects
and the guarantees called up or which may be called up.
The collection flows thus determined are discounted to
calculate the appropriate level of provisioning.
These provisions are subject to a quarterly review by the
Central Risk Division to assess their appropriateness.
Crédit du Nord Group also books collective impairment
losses for identified credit risks on similar groups of
loans in its portfolio, without waiting for the impairment
to individually affect identified counterparties.
77
2
Exposure to credit risk
The chart below shows the exposure to credit risk of the Group’s financial assets before the impact of unrecognised
netting agreements and collateral (in particular cash, financial and non-financial assets received as guarantees and
guarantees from legal entities).
31/12/2012
(in EUR millions)
Assets at fair value through profit or loss (excluding equity securities)
Hedging derivatives
170.8
126.1
1,234.2
780.0
Available-for-sale financial assets (excluding equity securities)
7,644.2
6,160.2
Due from banks
5,946.7
8,098.5
Customer loans
32,968.2
31,768.3
499.8
335.8
2,174.4
2,123.5
26.0
37.5
50,664.3
49,429.9
Financing commitments given
3,547.4
4,153.8
Guarantee commitments given
17,604.6
11,905.0
-51.4
-71.0
Exposure of balance sheet commitments, net of impairment
Provisions for off-balance sheet commitments
Exposure of off-balance sheet commitments, net of impairment
TOTAL
Additional analysis of the loan book (IFRS 7)
This analysis covers concentration risk as well as unpaid
or impaired loans.
Disclosures relating to risk concentration
Crédit du Nord Group’s core business is Retail Banking
in France, which naturally ensures diversification of
risks. Concentration risks are monitored with respect to
counterparties and economic sectors.
• Counterparty concentration risk is reviewed in the
loan approval phase, during which the Group’s
commitments are systematically summarised: it is
also subject to a special half-yearly review (along with
sector concentration risk). At September 30, 2012,
commitments linked to the top 10 counterparties
accounted for 11.6% of outstandings for Crédit du
78
31/12/2011
21,100.6
15,987.8
71,764.9
65,417.7
Nord Group’s business and professional customers
(excluding lease finance and disputed loans). Of these
counterparties, the top three were major construction
companies with commitments primarily in the form
of guarantees on very diversified markets (with low
historical risk levels).
• Sector concentration risk is reviewed on a halfyearly basis (at March 31 and September 30). At
September 30, 2012, two sectors accounted for
over 10% of outstandings for the Group’s business
and professional customers: construction, with a
relatively favourable positioning in terms of type of
risk (see above). The second sector was wholesale
trade (10.1%), comprised of highly differentiated
outstandings.
2
Breakdown of loan outstandings
Gross outstandings
31/12/2012 31/12/2011 34,541.5
33,151.5
93.7%
93.8%
Unpaid but not impaired
154.3
140.7
As a % of total gross outstandings
0.4%
0.4%
2,190.7
2,038.7
5.9%
5.8%
36,886.5
35,330.9
(in EUR millions)
Performing loans, neither unpaid nor impaired
Impaired
TOTAL GROSS OUTSTANDINGS
Given the deterioration in the general economic environment over the year, the relative weight of impaired outstandings
increased slightly in 2012. At December 31, 2012, impaired outstandings accounted for 5.9% of total outstanding
loans, compared with 5.8% at the end of 2011.
Non-impaired outstandings with past due amounts
0-29 days
30-59 days
60-89 days
90-179 days
180 days - 1
year
> 1 year
TOTAL
Businesses and other non-retail
customer loans
10.3
2.4
0.6
0.3
1.2
0.1
14.9
Very small company & property
company loans
21.1
8.7
1.2
1.0
-
-
32.0
Mortgage lending
53.3
17.8
5.7
3.4
0.5
-
80.7
Other individual consumer loans
20.0
5.6
0.9
0.1
0.1
-
26.7
104.7
34.5
8.4
4.8
1.8
0.1
154.3
(in EUR millions)
TOTAL
The amounts presented in the table above refer to the
total amounts of loans (remaining principal, interest and
unpaid portions) with past due amounts. These loans
primarily relate to delinquencies of less than 90 days.
restructured (in terms of principal and/or interest
rates and/or maturities) due to the probability that the
counterparty will be unable to meet its commitments in
the absence of such a restructuring.
When payments are more than 90 days overdue (180
days for property loans), the loans are reclassified as
«doubtful loans». A small number of customers may, on
an exceptional basis, be kept in the performing loans
category where they agree to rectify their payment
status.
This does not include commercial renegotiations freely
entered into by the Bank in order to maintain the quality
of its relations with a customer.
Non-impaired outstandings with past due amounts
stood at EUR 154.3 million at the end of 2012, up
10% compared to 2011 (concentrated in the second
half). This deterioration primarily concerns loans to very
small companies and mortgage loans. The total amount
nevertheless remained low (0.4% of outstanding loans).
Impaired loans reclassified as performing
loans after renegotiation
“Renegotiated” loans cover all customer groups.
Renegotiated loans are loans that have been
These loans are identified from automated data
extractions. They correspond to loans restructured
between October 1, 2011 and December 31, 2012,
when they were in default, and for which their postrestructuring status qualified them for reclassification as
performing loans during the period.
On these bases, the amount of loans restructured since
October 1, 2011 was insignificant (EUR 4.1 million) at
the end of 2012. The majority of the loans restructured
over the period were still identified as being in default at
December 31, 2012. Crédit du Nord Group’s banking
practices require renegotiated loans to be maintained
in the «impaired loans» category as long as the bank
79
2
remains uncertain of the customers’ ability to meet their
future commitments (definition of default under Basel II).
Guarantees on impaired loans or loans with
missed payments
Since 2008, Crédit du Nord’s risk management systems
have drawn data from an IT application used to manage
guarantees received by the Bank. At the end of 2012,
data for Société Marseillaise de Crédit was incorporate
following its migration to the Group’s information
systems.
The following method was used to calculate the rate of
loans covered by guarantees: the amount of guarantees
was capped at the amount of the loan guaranteed, on
a loan by loan basis. As a result, certain guarantees
were not included, such as guarantees on loans already
backed by an intrinsic guarantee (e.g. those linked to the
mobilisation of customer receivables).
• Individual customers (natural persons and related
property investment companies): housing loans
(secured by mortgage or against a home loan
guarantee) were considered as fully secured; for other
medium and long-term loans to property investment
partnerships, guarantees were noted at their carrying
amount in the database. By default, all other loans
were considered to be unsecured.
• Other customers: short-term loans were considered
as unsecured, with the exception of receivablebacked loans, which were considered as fully
secured.
Mortgages and finance lease outstandings were
deemed to be fully secured; in 2012, equipment lease
outstandings were considered as unsecured.
For medium-term loans, guarantees were maintained at
their recorded value in the database.
Some guarantees were not counted because their real
value, should the guarantees be called up, is difficult to
estimate (particularly for pledges of unlisted securities,
personal sureties, etc.).
Guarantees on impaired outstandings at December 31, 2012
(in EUR millions)
Undisputed non-performing
loans
Coverage rate Disputed loans
Coverage rate
Businesses and other non-retail customer loans
268.5
30.1%
458.4
16.5%
Very small company & property company loans
231.0
52.0%
506.9
22.5%
Mortgage lending
213.1
100.0%
126.8
100.0%
TOTAL
Given the changes in scope and method in 2012
(equipment leases considered as unsecured), it is not
possible to compare the 2011 and 2012 coverage
rates. The rate was lower for disputed loans (guaranteed
117.5
-
212.6
-
830.1
49.9%
1,304.7
24.3%
outstandings often repaid more quickly once they
are transferred to Collections). The provisioning rate
(70%) covered the bulk of the portion not covered by
guarantees.
Guarantees on non-impaired outstandings at December 31, 2012
(in EUR millions)
Businesses and other non-retail customer loans
Coverage rate
15.0
31.8%
Very small company & property company loans
32.0
73.3%
Mortgage lending
81.3
100.0%
TOTAL
For business customers, the Risk Function validates
procedures governing the periodic revaluation of
guarantees, which is notably performed during
80
Overdue amounts on loans
26.0
-
154.3
71.0%
annual loan reviews and systematically when a loan is
reclassified as doubtful.
Structural interest rate and exchange
rate risks
With regard to the Group’s structural risk management,
Crédit du Nord Group distinguishes between the
management of structural balance sheet risks (Asset and
Liability Management or ALM) and the management of
risks related to trading activities.
At Crédit du Nord, the ALM division, which reports
directly to the Finance Division and comes under the
authority of the Financial Management Division, is
responsible for monitoring and analysing global, interest
rate, liquidity and maturity mismatch risk.
• Structural interest rate and exchange rate risks are
incurred in client-driven and proprietary activities
(transactions involving shareholders’ equity and
investments):
All decisions concerning the management of any interest
rate and/or liquidity mismatch positions generated by
the Group’s client-driven activities are made by the ALM
Committee, which meets on a monthly basis under the
chairmanship of the Chief Executive Officer. A member
of the shareholder’s Finance Division also sits on this
committee.
– wherever possible, client-driven transactions
are hedged against interest rate and exchange
rate risks. This is done through macro hedging
(blanket hedging of portfolios of similar sales
transactions) or through micro-hedging (individual
hedging of each sales transaction);
It should be noted that the ALM Committee delegates
the management of short-term interest rate risk to
the Treasury and Foreign Exchange Department. This
department is responsible for approving hedging
transactions with an initial maturity of less than one year,
needed to limit short-term interest rate exposure.
– interest rate risks on proprietary trading must
also be hedged as far as possible. There is no
exchange rate risk on these transactions at Crédit
du Nord.
The Weekly Cash Flow Committee monitors this
exposure by examining the following indicators each
week:
The general aim is to reduce positions exposed to
interest rate and exchange rate risk as much as possible
by regularly implementing appropriate hedges.
Consequently, structural interest rate and exchange rate
risks are only incurred on residual positions.
• Management of interest rate and exchange rate
risks associated with market activities is addressed
in the section entitled “Market risks linked to trading
activities”.
Organisation of the management of structural
interest rate and exchange rate risks
The principles and standards for managing these risks
are defined and overseen by the shareholder. However,
each entity is primarily responsible for managing these
risks.
Crédit du Nord Group therefore develops its own
models, measures its risks and sets up hedges
on an ad hoc basis, within the framework defined
by these risk management standards.
The shareholder’s ALM Department carries out a Level
Two control on the risk management performed by the
entities.
2
• the short-term fixed interest rate position. In absolute
value terms, this position must remain under EUR
1,500 million;
• exposure to short rates incurred by all transactions,
which is limited to EUR 3 million.
Structural interest rate risk
Structural interest rate risk arises from residual positions
(surplus or deficit) in fixed-rate positions with future
maturities. All assets and liabilities of Group banks,
excluding those related to trading activities, are subject
to an identical set of rules governing interest rate risk
management.
The Group’s principal aim is to reduce each entity’s
exposure to interest rate risk as much as possible, once
the mismatch policy has been defined.
Consequently, Crédit du Nord Group follows a policy of
systematically hedging against structural interest rate risk
and, where applicable, implements the hedges needed
to reduce the exposure of Group entities to interest rate
fluctuations.
To this end, the overall interest rate risk of Crédit du
Nord Group is subject to exposure limits set by the
shareholder’s Finance Committee. Sensitivity is defined
as the variation in the net present value of future
81
2
(maturities of up to 20 years) residual fixed-rate positions
(surplus or deficits on assets and liabilities) for a 1%
parallel shift in the yield curve. Observation of these
limits is verified within the framework of a regular report
submitted to the shareholder. Crédit du Nord Group’s
overall limit is EUR 63.3 million (representing around
3.3% of prudential capital).
Structural exchange rate risks
Measurement and monitoring of structural
interest rate risks
In order to cover its balance sheet against exposure
to certain market risks, Crédit du Nord Group used
hedges designated as fair value hedges for accounting
purposes.
In order to quantify its exposure to structural interest
rate risks, the Group analyses all fixed-rate assets and
liabilities with future maturities to identify gaps. These
positions come from operations remunerated or charged
at fixed rates and from their maturities.
A s s e t s a n d l i a b i l i t i e s a re g e n e r a l l y a n a l y s e d
independently without any a priori matching. Maturities
on outstandings are determined on the basis of the
contractual terms governing transactions or based
on adopted conventions. These conventions are the
result of models of customer behaviour patterns based
on historical observations (special savings accounts,
prepayment rates, etc.) as well as conventional
assumptions relating to certain aggregates (principally
shareholders’ equity and demand deposits).
Stress tests consisting of an immediate parallel shift of
+1% and -1% in the yield curve are also carried out.
The analysis of structural interest rate risks at Crédit du
Nord revealed that:
• All on- and off-balance sheet transactions are matchfunded according to their specific characteristics
(maturity, interest rate, explicit or implicit options). A
model developed by the ALM unit (“notional balance
sheet” model) is used to monitor interest rate risk
management indicators, in particular a fixed-rate limit,
as well as the risks associated with options appearing
in the balance sheets of Group entities;
• options risk is also subject to regular monitoring and
the implementation of appropriate hedges (purchases
of caps or swaps);
• demand deposits and regulated savings products
are subject to specific modelling to lock in mediumand long-term yields. The conservative nature of the
models has enabled the Group’s banks to maintain
their interest margin.
82
The overall foreign exchange position is kept within
conservative limits and remains small relative to the
bank’s net shareholders’ equity.
Hedging of interest rate and exchange rate
risks
It also manages the exposure of its fixed-rate financial
assets and liabilities (mainly loans/borrowings, security
issues and fixed-rate securities) to risks of fluctuations in
long-term interest rates, by setting up hedges qualified
as fair value hedges for accounting purposes, principally
using interest rate swaps and caps.
In order for these transactions to qualify as hedges,
the Group documents the hedging relationship in
detail from inception, specifying the risk hedged, the
risk management strategy and the way in which the
effectiveness of the relationship will be documented.
The purpose is to avoid the reclassification of hedging
derivative portfolios in the accounts to cover the bank
against unfavourable variations in the fair value of an item
which, as long as the hedging relationship is efficient,
has no impact on profit or loss, but could affect it if the
item were eliminated from the balance sheet.
Tests are regularly carried out to ascertain the hedging
relationship and measure its effectiveness. These tests
are both forward-looking and retrospective.
The future effectiveness of the hedge is calculated using
a sensitivity analysis that integrates probable scenarios
for changes in market parameters.
Retrospective effectiveness is assessed by comparing
the variations in fair value of the hedging instrument with
the variations in fair value of the hedged item. The hedge
is deemed effective if changes in the fair value of the
hedged item are almost fully offset by the changes in fair
value of the hedging instrument, i.e. the ratio between
the two changes is in the 80%-125% range (sliding
quarter-on-quarter changes).
Effectiveness is measured prospectively each quarter
(expected effectiveness over future periods) and
retrospectively (actual effectiveness).
Liquidity risk
Organisation of liquidity risk management
The guidelines and standards for the management of
liquidity risk are defined by the shareholder. As Crédit
du Nord is nevertheless responsible for managing its
liquidity and complying with regulatory restrictions, it
develops its own models, measures its liquidity positions
and finances its activities or reinvests surplus cash in
accordance with the standards defined at the Group
level.
Measurement and monitoring of liquidity risk
Crédit du Nord acts as the central refinancing unit of
the Group’s banks and financial subsidiaries. The
monitoring of outstandings by subsidiary and regulatory
ratios is carried out by the ALM unit. Short-term liquidity
management is delegated to each subsidiary as part of
its cash management activities and is subject to certain
limits.
Until May 31, 2010, Crédit du Nord applied CRBF
Regulation 88-01 as the basis for monitoring liquidity.
Since the June 30, 2010 mid-year balance sheet date,
Crédit du Nord has opted for the standard liquidity risk
management method defined in CB Instruction 2009-05.
Crédit du Nord’s short-term liquidity ratio was 152% on
average for 2012, a ratio higher than that required.
Since 2011, Crédit du Nord has participated in its
shareholder›s liquidity programme, the aim of which is
to produce specific indicators, notably LCR (short-term
ratio < 1 month) and NSFR (medium/long-term ratio).
Mismatch risk
Changes in the structure of the balance sheet are
monitored and managed by the ALM unit in order to
determine and adjust the refinancing requirements of the
Group’s various entities.
2
Measurement of the Group’s long-term financing
requirements is based on budget estimates and
results of past transactions, making it possible to plan
appropriate financing solutions.
Crédit du Nord Group has had no trouble securing its
financing, mainly thanks to its substantial, diversified
deposits, which account for a large portion of its short-,
medium- and long-term resources.
A special quarterly report on maturity mismatch risk is
submitted to the shareholder.
Market risk
All capital market activities carried out by Crédit du Nord
Group are client-driven. In terms of both products and
regions, Crédit du Nord Group only conducts proprietary
transactions in business segments where it has
significant customer interests. The primary purpose of
its activities in this area is to maintain a regular presence
on the financial markets in order to be able to offer its
clients competitive prices.
As part of this fundamental strategy:
• Crédit du Nord holds very few positions on derivatives
markets and regularly matches customer orders
through its shareholder, thereby significantly reducing
its exposure to market and counterparty risks;
• with regard to other instruments, the trading limits
imposed on the cash position in terms of geographic
regions, authorised volumes and the duration of
open positions are determined jointly with the Bank’s
shareholder and are kept at low levels with respect to
Crédit du Nord’s capital.
Although primary responsibility for risk management
naturally rests with the Front Office managers,
responsibility for supervision lies with a special unit
which is part of the Treasury and Foreign Exchange
Department. Specifically, this unit carries out the
following functions:
• permanent monitoring of positions and results, in
collaboration with the Front Office;
• verification of the market criteria used to calculate
risks and results;
83
2
• daily calculation of market risk, using a formal and
secure procedure;
• daily limit monitoring for each activity.
Methods used to measure market risks
Market risk is assessed using three main indicators,
which are used to define exposure limits:
• the 99% Value at Risk (VaR) method, in accordance
with the regulatory internal model, a composite
indicator for day-to-day monitoring of market risks
incurred by the bank, in particular in its trading
activities;
• stress-test measurements, based on the 10-year
shock-type indicator, are established by Societe
Generale and transmitted to Crédit du Nord so
that it can incorporate them into its limit monitoring
methods;
• complementary limits (sensitivity, nominal, holding
periods, etc.), which ensure consistency between
the total risk limits and the operational limits
used by the Front Office. These limits also enable
risks only partially detected by VaR or stresstest measurements to be controlled (as is the case
for options).
Value at Risk (VaR) method
This method was introduced at the end of 1996. It is
constantly being improved with the addition of new
risk factors and the extension of the scope covered.
New risk parameters and changes in the scope of the
portfolios are incorporated by Societe Generale into the
TRAAB application, and Crédit du Nord then receives
the new, updated versions. Societe Generale then uses
files sent back by Crédit du Nord in TRAAB format to
calculate the VaR.
The method used is the «historical simulation» method.
It is based on the following principles:
• the creation of a database containing historical
information on the main risk factors that are
representative of Societe Generale Group’s positions
84
(interest rates, share prices, exchange rates,
commodity prices, volatility, credit spreads, etc.). VaR
is therefore calculated using a database of several
thousand risk factors;
• the definition of 260 scenarios, corresponding to
one-day variations in these market parameters over
a sliding one-year period;
• the application of these 260 scenarios to the daily
market parameters;
• the revaluation of daily positions, on the basis of
these 260 adjusted daily market conditions, and on
the basis of a revaluation taking into account the nonlinearity of positions.
The 99% Value at Risk is the largest loss that would
be incurred after eliminating the top 1% of the most
unfavourable occurrences: over one year, or 260
scenarios, it corresponds to the average of the second
and third largest losses observed.
Since June 30, 1998, Crédit du Nord has used an
application developed by Societe Generale known as
TRAAB (gross annual actuarial rate of return), used by
the Treasury and Foreign Exchange Department, which
incorporates the data required to calculate risk profiles
on a daily basis. This information is also used by Societe
Generale for its own consolidated risk monitoring.
The model is based on a historical data series of daily
changes in interest rate or exchange rate instruments,
which are applied to daily positions in order to measure
risk with a 99% confidence interval and sensitivity to 10
basis points.
The chart below shows the change in the Group’s 99%
Value at Risk (VaR) over the course of 2012; the values
indicated present the following characteristics:
• change in the portfolio over a 1-day holding period;
• a confidence interval of 99%;
• historical data considered for the last 260 business
days.
2
Trading Value-at-Risk: breakdown by risk factor
1 Day - 99% / FY 2012
(in EUR thousands)
Forex
Treasury currency
Securities and off-balance
sheet interest rate
Netting effect
Overall
02/01/2012
-315
-80
-248
282
-361
Minimum
-374
-180
-562
NS(1)
-555
Maximum
-24
-16
-139
NS(1)
-227
-157
-46
-305
169
-339
-32
-17
-416
51
Average
31/12/2012
LIMITS
-1,000
-414
-1,000
(1) Immaterial netting effect: potential min/max losses do not occur simultaneously.
A confidence interval of 99% means that over a one day
period there is a 99% probability that a potential loss will
not exceed the defined value.
the more or less high degree of offsetting between the
different type of risks (interest rate, treasury exchange
rate, securities and offbalance sheet rates) among one
another.
Netting is defined as the difference between the total
VaR and the sum of VaR per risk factor. Its level reflects
Value at Risk (1 day - 99%)
(in EUR thousands)
-600
-500
-400
-300
-200
02/01/2012
02/03/2012
02/05/2012
02/07/2012
02/09/2012
02/11/2012
85
2
Limits of the VaR calculation
The VaR assessment is based on a conventional model
and assumptions. The main methodological limitations
are as follows:
• the use of “1-day” shocks assumes that all positions
can be unwound or hedged within one day, which is
not the case for some products and in some crisis
situations;
• the use of the 99% confidence interval does not take
into account any losses arising beyond this interval;
VaR is therefore an indicator of losses under normal
market conditions and does not take into account
exceptionally large fluctuations;
• VaR is calculated using closing prices, so intra-day
fluctuations are not taken into account;
• there are a number of approximations in the VaR
calculation. For example, benchmark indices are
used instead of certain risk factors and, in the case of
some activities, not all of the relevant risk factors are
taken into account, which may be due to difficulties
in obtaining daily data, and options held in the trading
portfolio are not taken into account.
Crédit du Nord controls the limitations of the VaR model
by:
• systematically assessing the appropriateness of the
model by back-testing to verify that the number of
days for which the negative result exceeds the VaR
complies with the 99% confidence interval;
• supplementing the VaR system with stress test
measurements. Note that, given today’s dislocated
markets, the historical 99% 1-day VaR is less
appropriate than other risk indicators, such as stress
tests.
Allocation of market risk limits and
organisation of limit monitoring
Capital market exposure limits are allocated annually as
follows: a proposal is drawn up internally and presented
to the Executive Committee. If approved, it is transmitted
to the Risk Control Division of Societe Generale (the
market risk monitoring team) for its opinion.
Once a final opinion has been received, the limits are
sent by Societe Generale to the Chairman’s Office
and are then compiled and integrated into the daily
monitoring and reporting system. The last notification
occurred in June 2012.
A monitoring report is submitted daily to Societe
Generale, in which any breaches are reported.
The Finance Department is notified each week by the
Treasury and Foreign Exchange Department via a results
and limits monitoring report, and monthly via a report
covering changes in risks and results. The CEO and
CFO also receive a quarterly report on changes in risk
from the Treasury and Foreign Exchange Department.
NOTE 4 Cash, due from central banks
(in EUR millions)
Cash
Due from central banks
Related receivables
TOTAL
86
31/12/2012
31/12/2011
174.6
174.2
1,901.4
1,813.7
1.1
1.4
2,077.1
1,989.3
2
NOTE 5 Financial assets and liabilities at fair value through profit or loss
31/12/2012
(in EUR millions)
ASSETS
Trading portfolio
Bonds and other debt securities
Shares and other equity securities
Other financial assets
SUB-TOTAL ASSETS HELD FOR
TRADING
FINANCIAL ASSETS MEASURED
UNDER THE FAIR VALUE OPTION
RECOGNISED IN PROFIT OR
LOSS
Shares and other equity securities (1)
Other financial assets
SUB-TOTAL FINANCIAL ASSETS
MEASURED UNDER THE FAIR
VALUE OPTION RECOGNISED IN
PROFIT OR LOSS
SUB-TOTAL SEPARATE ASSETS
RELATING TO EMPLOYEE
BENEFITS
Valuation
Valuation
determined
determined
using
using prices
observable
quoted data other than
on active quoted market
markets (L1)
prices (L2)
31/12/2011
Valuation
determined
mainly
using nonobservable
market data
(L3)
Valuation
Valuation
determined
determined
using
using prices
observable
quoted data other than
on active quoted market
Total markets (L1)
prices (L2)
Valuation
determined
mainly
using nonobservable
market data
(L3)
Total
2.2
-
-
2.2
5.9
-
-
5.9
17.8
-
-
17.8
15.5
-
-
15.5
-
-
-
-
-
-
-
-
20.0
-
-
20.0
21.4
-
-
21.4
60.8
105.8
2.0
168.6
-
120.2
-
120.2
0.1
1,236.6
- 1,236.7
0.1
1,007.7
-
-
-
-
-
60.9
1,342.4
2.0 1,405.3
0.1
1,127.9
-
-
-
97.7
-
- 1,007.8
-
-
- 1,128.0
-
-
-
-
TRADING DERIVATIVES
Interest rate instruments
-
97.7
-
97.7
-
97.7
-
Firm transactions
-
85.4
-
85.4
-
86.9
-
86.9
Swaps
-
85.4
-
85.4
-
86.9
-
86.9
FRAs
-
-
-
-
-
-
-
-
Options
-
12.3
-
12.3
-
10.8
-
10.8
Options on organised markets
-
-
-
-
-
-
-
-
OTC options
-
-
-
-
-
-
-
-
Caps, floors, collars
-
12.3
-
12.3
-
10.8
-
10.8
Foreign exchange instruments
-
38.9
-
38.9
-
90.3
-
90.3
Firm transactions
-
31.2
-
31.2
-
79.8
-
79.8
Options
-
7.7
-
7.7
-
10.5
-
10.5
Equity and index instruments
-
-
-
-
-
-
-
-
Other forward financial instruments
-
-
-
-
-
-
-
-
Instruments on organised markets
-
-
-
-
-
-
-
-
OTC instruments
SUB-TOTAL TRADING
DERIVATIVES
-
-
-
-
-
-
-
-
-
136.6
-
136.6
-
188.0
-
188.0
80.9
1,479.0
2.0 1,561.9
21.5
1,315.9
TOTAL FINANCIAL ASSETS AT FAIR
VALUE THROUGH PROFIT
OR LOSS (1)
- 1,337.4
(1) Including UCITS
87
2
31/12/2012
Valuation
determined
using prices
quoted
on active
markets (L1)
(in EUR millions)
LIABILITIES
TRADING PORTFOLIO
Debt securities
Amounts payable on borrowed
securities
sold short
sold short
Other financial liabilities
SUB-TOTAL TRADING
PORTFOLIO
TRADING DERIVATIVES
Valuation
determined
using
observable
data other than
quoted market
prices (L2)
31/12/2011
Valuation
determined
mainly
using nonobservable
market data
(L3)
Valuation
determined
using prices
quoted
on active
Total markets (L1)
Valuation
determined
using
observable
data other than
quoted market
prices (L2)
Valuation
determined
mainly
using nonobservable
market data
(L3)
Total
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.2
-
-
0.2
0.1
-
-
0.1
-
-
-
-
-
-
-
-
0.2
0.1
-
-
0.1
0.2
-
-
-
98.3
-
98.3
-
113.0
-
113.0
Firm transactions
-
94.2
-
94.2
-
108.1
-
108.1
Swaps
-
94.2
-
94.2
-
108.1
-
108.1
FRAs
-
-
-
-
-
-
-
-
Options
-
4.1
-
4.1
-
4.9
-
4.9
Options on organised markets
-
-
-
-
-
-
-
-
OTC options
-
-
-
-
-
-
-
-
-
4.1
-
4.1
-
4.9
-
4.9
-
38.4
-
38.4
-
91.9
-
91.9
Firm transactions
-
29.7
-
29.7
-
81.2
-
81.2
Options
-
8.7
-
8.7
-
10.7
-
10.7
Equity and index instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
OTC instruments
SUB-TOTAL TRADING
DERIVATIVES
SUB-TOTAL FINANCIAL
LIABILITIES MEASURED UNDER
THE FAIR VALUE OPTION
RECOGNISED IN PROFIT
OR LOSS
-
-
-
-
-
-
-
-
-
136.7
-
136.7
-
204.9
-
204.9
-
1,256.6
- 1,256.6
-
1,173.3
- 1,173.3
0.2
1,393.3
- 1,393.5
0.1
1,378.2
- 1,378.3
TOTAL FINANCIAL LIABILITIES
AT FAIR VALUE THROUGH PROFIT
OR LOSS
31/12/2012
(in EUR millions)
TOTAL FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT
OR LOSS (2)
Amount repayable
Fair value
at maturity
1,256.6
31/12/2011
Difference between
fair value and amount
repayable at maturity
1,270.0
-13.4
Amount repayable
Fair value
at maturity
1,173.3
1,199.5
Difference between
fair value and amount
repayable at maturity
-26.2
(2) The change in fair value attributable to own credit risk generated an expense of -EUR 12.4 million at December 31, 2012. Revaluation differences linked to the Group’s issuer credit
risk are measured using models incorporating the Group’s most recent actual refinancing terms and conditions on the markets and the residual maturity of the relevant liabilities.
88
2
Changes in financial assets at fair value through profit or loss determined using non-observable
parameters (Level 3)
Financial assets measured at fair value
option through profit or loss
Trading portfolio
(in EUR millions)
Bonds and Shares and
Other Bonds and Shares and
other debt other equity financial other debt other equity
securities securities
assets securities
securities
Balance at January 1, 2012
Trading financial derivatives
Other Interest
Foreign Equity and
financial rate deri- exchange index deriassets vatives derivatives
vatives
Other Total finanforward cial assets
Credit financial at fair value
Commodity derivainstruthrough
derivatives
tives
ments profit or loss
-
-
-
-
-
-
-
-
-
-
-
-
Acquisitions
Disposals/
redemptions
2.0
2.0
-
Transfer to Level 2
-
Transfer to Level 1
Transfer from
Level 2
Transfer from
Level 1
Gains and losses
for the period
Foreign exchange
differences
Changes in scope
and other changes
-
-
-
-
-
-
-
-
-
2.0
-
-
-
-
-
-
-
-
2.0
BALANCE AT
DECEMBER 31, 2012
89
2
NOTE 6 Hedging derivatives
31/12/2012
(in EUR millions)
Fair value hedge
(1)
31/12/2011
Assets
Liabilities
Assets
Liabilities
1,234.2
565.7
780.0
385.1
1,233.1
565.7
770.5
385.1
1,233.1
565.7
770.5
385.1
1.1
-
9.5
-
1.1
-
9.5
-
-
-
-
-
1,234.2
565.7
780.0
385.1
Firm transactions
Swaps
Options
Cash flow hedge
TOTAL
(1) Including Macro Fair Value Hedge derivatives
90
2
NOTE 7 Available-for-sale financial assets
31/12/2012
(in EUR millions)
31/12/2011
Valuation
determined
using prices
quoted
on active
markets
(L1)
Valuation
determined
using
observable
data other than
quoted market
prices
(L2)
Valuation
determined
mainly
using nonobservable
market data
(L3)
689.3
-
-
Total
Valuation
determined
using prices
quoted
on active
markets
(L1)
Valuation
determined
using
observable
data other than
quoted market
prices
(L2)
689.3
1,484.7
-
Valuation
determined
mainly
using nonobservable
market data
(L3)
Total
CURRENT ASSETS
Treasury notes and similar
securities
o/w related receivables
o/w impairments
4,320.6
-
o/w impairments
0.9
8.1
5.2
o/w impairments
SUB-TOTAL
Long-term investment securities
o/w loaned securities
1,950.6
2,724.9
- 4,675.5
63.4
59.5
-14.3
-14.3
14.2
0.9
49.9
4.7
55.5
-
-
-3.4
-3.5
4,328.7
5.2
7,658.4
3,436.2
2,774.8
-
-
469.8
469.8
-
-
4.7 6,215.7
452.6
0.1
o/w impairments
TOTAL AVAILABLE-FOR-SALE
FINANCIAL ASSETS
6,954.9
3,324.5
Sub-total
11.3
2,634.3
Shares and other equity securities (1)
- 1,484.7
5.6
452.6
0.1
-3.8
-4.6
-
-
469.8
469.8
-
-
3,324.5
4,328.7
475.0
8,128.2
3,436.2
2,774.8
-
-
-
-
-
-
452.6
452.6
457.3 6,668.3
-
-
(1) Including UCITS.
91
2
Activity in available-for-sale financial assets
2012
2011
6,668.3
6,346.8
(in EUR millions)
Acquisitions
3,480.3
Disposals/redemptions/mergers
-2,313.2
Reclassifications and changes in scope
Gains and losses on changes in fair value booked to equity
Change in impairment of fixed-income securities booked to profit or loss
-2,628.3
-41.0
(2)
0.2
334.9
(3)
-102.1
-
Change in impairment of equity instruments booked to profit or loss
Change in related receivables
Foreign exchange differences
BALANCE AT DECEMBER 31, 2012
6.1
0.9
-0.2
-1.9
19.6
-0.1
-0.8
8,128.2
6,668.3
(2) The amount reported as «reclassifications and changes in scope» can be attributed to the conversion of Antarius shares into available-for-sale securities and the conversion of
convertible bonds into shares, previously measured at fair value through profit or loss.
(3) The difference compared to «Revaluation of available-for-sale assets» under shareholders’ equity relates mainly to EUR 263.5 million for «insurance - net allowances for deferred
profit sharing».
Change in inventory of available-for-sale assets whose valuation is not based on market parameters
Treasury notes
and similar
securities
Long-term
investment securities
Total
452.6
457.3
Acquisitions
12.8
12.8
Disposals/redemptions
-6.7
-6.7
(in EUR millions)
Bonds and other debt Shares and other
securities equity securities
-
-
Transfer to Level 2
-
Transfer to Level 1
-
Transfer from Level 2
-
Gains and losses for the period booked
to equity
0.5
10.3
10.8
Change in impairments of fixed-income
securities booked to profit or loss
-
o/w:
increase
-
write-back
-
Impairment of equity instruments booked through profit or loss
-
Change in related receivables
-
Foreign exchange differences
0.6
0.6
Change in scope and other changes
0.2
0.2
469.8
475.0
BALANCE AT DECEMBER 31, 2012
92
4.7
-
-
5.2
2
NOTE 8 Due from banks
(in EUR millions)
Current accounts
Overnight deposits and loans and others
Loans secured by overnight notes
Related receivables
31/12/2012
31/12/2011
2,180.5
1,881.3
7.0
699.6
-
-
0.2
3.4
Total - demand and overnights
2,187.7
2,584.3
Term deposits and loans
3,658.2
5,416.6
Loans secured by notes and securities
-
-
Securities received under term repurchase agreements
-
-
95.5
88.2
5.8
9.9
Subordinated loans and participating securities
Related receivables
Total - term receivables
TOTAL GROSS
Provisions for impairment
TOTAL NET
Fair value of amounts due from banks
3,759.5
5,514.7
5,947.2
8,099.0
-0.5
-0.5
5,946.7
8,098.5
5,946.7
8,098.5
It should also be noted that, of the total amount due from banks at December 31, 2012, EUR 3,766.8 million
represented transactions with Societe Generale Group (EUR 6,056.2 million at December 31, 2011).
93
2
NOTE 9 Customer loans
(in EUR millions)
Trade notes
Related receivables
Total - trade notes
31/12/2012
31/12/2011
620.8
873.9
0.6
0.9
621.4
874.8
2,148.2
2,178.4
Other customer loans
Short-term loans
Export loans
Equipment loans
Housing loans
Other loans
Related receivables
Total - other customer loans
Overdrafts
Related receivables
Total - overdrafts
TOTAL GROSS
Impairments of individually impaired loans
Impairments of groups of homogeneous assets
67.1
65.9
6,552.1
6,592.6
18,150.1
17,123.3
4,324.0
3,952.8
56.2
61.2
31,297.7
29,974.2
2,197.3
1,965.2
23.8
25.5
2,221.1
1,990.7
34,140.2
32,839.7
-1,094.0
-1,005.5
-78.0
-65.9
IMPAIRMENTS
-1,172.0
-1,071.4
NET AMOUNT
32,968.2
31,768.3
Securities received under resale agreements (including related receivables)
-
-
TOTAL - CUSTOMER LOANS
32,968.2
31,768.3
Fair value of customer loans
33,403.2
31,715.6
The provisioning rate for doubtful and disputed loans, net of guarantees received on doubtful outstandings, was
79.6%. The guarantees taken into account do not include guarantees on disputed loans or guarantees on finance
lease outstandings.
Breakdown of other customer loans
(in EUR millions)
31/12/2011
31,239.8
29,910.5
Business customers
13,231.5
12,896.2
16,656.5
15,792.9
Local authorities
Professional customers
Governments and central administrations
Others
Financial customers
TOTAL - BREAKDOWN OF OTHER CUSTOMER LOANS
Related receivables
TOTAL - OTHER CUSTOMER LOANS
94
31/12/2012
Non-financial customers
19.4
17.3
1,131.6
1,010.5
52.8
53.2
148.0
140.4
1.7
2.5
31,241.5
29,913.0
56.2
61.2
31,297.7
29,974.2
2
NOTE 10 Lease financing and similar agreements
(in EUR millions)
31/12/2012
31/12/2011
1,665.3
1,590.0
581.7
565.1
0.2
0.5
2,247.2
2,155.6
-68.7
-31.8
-0.6
-0.3
Non-real estate lease financing agreements
Real estate lease financing agreements
Related receivables
SUB-TOTAL
Impairments of individually impaired loans
Impairments of lease financing assets
Impairments of groups of homogeneous assets
SUB-TOTAL
NET AMOUNT
Fair value of receivables on lease financing and similar assets
-3.5
-
-72.8
-32.1
2,174.4
2,123.5
2,175.5
2,124.0
The activities of Star Lease, the equipment leasing subsidiary, can be broken down as follows: 56% industrial
equipment, 38% transport equipment, 4% IT hardware and 2% office equipment.
Breakdown of lease financing outstandings (excluding doubtful outstandings)
(in EUR millions)
Gross investment
Less than one year
1-5 years
More than five years
Present value of minimum payments receivable
Less than one year
31/12/2012
31/12/2011
2,363.6
2,274.0
718.9
694.6
1,277.2
1,289.6
367.5
289.8
2,176.7
2,075.2
694.3
671.3
1,138.9
1,147.5
More than five years
343.5
256.4
Unearned financial income
117.0
118.7
69.8
80.1
1-5 years
Non-guaranteed residual values receivable by the lessor
95
2
NOTE 11 Held-to-maturity financial assets
31/12/2012
31/12/2011
-
-
Listed
-
-
Unlisted
-
-
Related receivables
-
-
(in EUR millions)
Treasury notes and similar securities
Listed
Unlisted
Related receivables
Impairments
TOTAL HELD-TO-MATURITY FINANCIAL ASSETS
Fair value of held-to-maturity financial assets
26.0
37.5
24.5
33.4
4.6
6.0
-
0.1
-3.1
-2.0
26.0
37.5
26.1
37.6
NOTE 12 Tax assets and liabilities
31/12/2012
31/12/2011
Current tax assets
221.0
152.8
Deferred tax assets
320.8
235.7
- on balance sheet items
320.8
233.9
(in EUR millions)
- on items credited or charged to shareholders’ equity for unrealised gains
and losses
-
1.8
TOTAL TAX ASSETS
541.8
388.5
Current tax liabilities
280.8
209.4
Deferred tax liabilities
617.4
511.0
- on balance sheet items
616.0
531.1
1.4
-20.1
898.2
720.4
- on items credited or charged to shareholders’ equity for unrealised gains
and losses
TOTAL TAX LIABILITIES
Deferred taxes on shareholders’ equity relate to unrealised gains/losses on available-for-sale securities and on deferred
profit-sharing for the insurance business
96
2
NOTE 13 Other assets and liabilities
(in EUR millions)
31/12/2012
31/12/2011
OTHER ASSETS
Securities transactions
Guarantee deposits paid (1)
Other sundry receivables
Prepaid expenses and deferred income
Impairments
1.2
1.1
33.3
30.0
69.3
95.7
108.7
115.2
-0.6
-0.6
Other insurance assets
270.0
263.6
TOTAL OTHER ASSETS
481.9
505.0
168.3
178.0
OTHER LIABILITIES
Accounts payable after collection
66.5
88.7
Guarantee deposits received (2)
52.3
49.3
Expenses payable on employee benefits
148.8
157.5
Other sundry payables
378.3
297.7
Accrued expenses and deferred income
315.5
332.4
Other insurance liabilities
TOTAL OTHER LIABILITIES
10.3
6.1
1,140.0
1,109.7
(1) Primarily security deposits paid on financial instruments.
2)
Primarily security deposits received on financial instruments.
97
2
NOTE 14 Fixed assets
(in EUR millions)
Gross value at
31/12/2011
Inflows
Outflows
Change in scope and
reclassifications
252.3
29.0
-17.6
-
88.8
0.5
-0.1
-0.3
120.5
2.2
-
-0.2
461.6
31.7
-17.7
-0.5
Intangible assets
Software created
Software purchased
Other intangible assets
SUB-TOTAL INTANGIBLE ASSETS
Operating tangible assets
Land and buildings
301.4
8.1
-0.1
15.1
IT hardware
140.9
1.9
-0.7
-4.4
Other tangible assets
487.0
45.6
-4.6
-41.8
Real estate leasing
1.7
-
-
-
Equipment leasing
-
-
-
-
931.0
55.6
-5.4
-31.1
20.5
0.1
-0.6
1.1
-
-
-
-
20.5
0.1
-0.6
1.1
1,413.1
87.4
-23.7
-30.5
SUB-TOTAL OPERATING TANGIBLE ASSETS
Investment property
Land and buildings
Fixed-assets in progress
SUB-TOTAL INVESTMENT PROPERTY
TOTAL - TANGIBLE AND INTANGIBLE ASSETS
98
2
Amortisation and depreciation for the year
Gross value at Accumulated amortisation and
31/12/2012
depreciation at 31/12/2011
Allocations
Reversals
Change in scope and
reclassifications
Net value at
31/12/2012
Net value at
31/12/2011
87.6
263.7
-164.7
-25.5
14.4
-
87.9
88.9
-82.8
-3.8
0.1
0.4
2.8
6.0
122.5
-6.6
-5.0
-
-
110.9
113.9
475.1
-254.1
-34.3
14.5
0.4
201.6
207.5
324.5
-75.3
-11.0
0.4
1.0
239.6
226.1
137.7
-123.8
-7.5
0.7
5.3
12.4
17.1
486.2
-339.9
-32.0
2.0
22.7
139.0
147.1
1.7
-1.6
-
-
-
0.1
0.1
-
-
-
-
-
-
-
950.1
-540.6
-50.5
3.1
29.0
391.1
390.4
21.1
-9.5
-0.8
0.4
-0.6
10.6
11.0
-
-
-
-
-
-
-
21.1
-9.5
-0.8
0.4
-0.6
10.6
11.0
1,446.3
-804.2
-85.6
18.0
28.8
603.3
608.9
99
2
NOTE 15 Goodwill
(in EUR millions)
Gross value at 31/12/2011
508.0
Acquisitions and other increases
-
Disposals and other decreases
-
GROSS VALUE AT 31/12/2012
508.0
Impairment of goodwill at 31/12/2011
-
Impairment losses
-
IMPAIRMENT OF GOODWILL AT 31/12/2012
Net value at 31/12/2011
NET VALUE AT 31/12/2012
508.0
508.0
Main sources of net goodwill at December 31, 2012
(in EUR millions)
Banque Courtois
10.2
Banque Laydernier
12.8
Banque Kolb
22.3
Banque Tarneaud
Fortis branches
NET VALUE AT 31/12/2012
3.3
454.2
5.2
508.0
Crédit du Nord Group has one cash generating unit: retail banking.
At December 31, 2012, an annual impairment test was conducted on the cash generating unit. No impairment losses
were recorded.
100
2
NOTE 16 Impairments and provisions
Impairments
Asset
impairments
at 31/12/2011
Note
(in EUR millions)
Write-backs Write-backs
Allocations
available
used
Asset
impairments
at 31/12/2012
Other
Banks
8
0.5
-
-
-
-
0.5
Loans to customers
9
1,005.5
294.9
-147.0
-59.1
-0.3
1,094.0
10
31.8
33.8
-24.1
-4.5
31.7 (1)
9 and 10
65.9
17.9
-2.3
-
Provisions for homogeneous assets
68.7
-
81.5
(2)
21.5
Available-for-sale assets
7
22.4
-
-
-
-0.9
Held-to-maturity assets
11
2.0
1.0
-
-
-
3.0
Fixed assets
14
1.8
-
-0.3
-
-0.7
0.8
Others
TOTAL IMPAIRMENTS
0.6
0.1
-0.1
-
-
0.6
1,130.5
347.7
-173.8
-63.6
29.8
1,270.6
(1) Corresponds to the reclassification of provisions for finance lease guarantee commitments which were previously recognised under liabilities.
(2) Of which EUR 0.8 million in provision write-backs on securities sold and EUR 0.1 million related to the reclassification of Antarius shares to available-for-sale securities.
Provisions
Provisions at
31/12/2011 Allocations
(in EUR millions)
Write-backs Write-backs
available
used
Effect
of discounting
Other
Provisions at
31/12/2012
Provisions for post-employment benefits
53.3
8.7
-0.9
-23.4
-
-
37.7
Provisions for long-term benefits
37.6
12.2
-0.1
-6.2
-
-
43.5
8.1
1.6
-0.8
-1.8
-
-
7.1
-
-
-
-
-
-
-
0.3
-
-
-
-
-
0.3
17.1
3.1
-2.2
-3.2
-
-0.1
14.7
-
-
-
-
-
-
-
71.0
27.9
-15.8
-
-
7.2
-
-0.1
-4.0
-
Provisions for severance pay
Provisions for other employee benefits
Provisions for property risks
(3)
Provisions for disputes
Provisions for off-balance sheet
commitments with credit institutions
commitments with customers
Tax provisions
Autres provisions
(5)
TOTAL PROVISIONS
-31.7 (4)
-
24.8
0.6
-0.1
-4.9
-
-2.2
219.4
54.1
-20.0
-43.5
-
-34.0
51.4
3.1
(6)
18.2 (7)
176.0
(3) Provisions for property risks cover termination losses relative to investments in property programmes.
(4) Corresponds to the reclassification of provisions for finance lease guarantee commitments which are now recognised under assets.
(5) Other provisions have no impact on cost of risk.
(6) Of which net write-back of the home savings provision: EUR 0.5 million;
(7) Home savings provisions totalled EUR 15.3 million at December 31, 2012 (see Note 20).
101
2
NOTE 17 Due to banks
31/12/2012
31/12/2011
Current accounts
250.9
282.4
Overnight deposits and borrowings
163.8
216.3
-
-
(in EUR millions)
Borrowings secured by overnight notes
Securities loaned under overnight repurchase agreements
Related payables
TOTAL DEMAND DEPOSITS
Term deposits and borrowings
Borrowings secured by notes and securities
Securities sold under term repurchase agreements
Related payables
TOTAL TERM DEPOSITS
Revaluation of hedged items
TOTAL
Fair value of amounts due to banks
-
-
0.1
0.1
414.8
498.8
7,215.9
6,021.5
-
-
-
-
32.4
9.6
7,248.3
6,031.1
91.7
77.6
7,754.8
6,607.5
7,754.8
6,599.8
It should also be noted that, at December 31, 2012, EUR 3,701.5 million of the total amount due to banks represented transactions
with Societe Generale Group (EUR 4,541.7 million at December 31, 2011).
102
2
NOTE 18 Customer deposits
31/12/2012
31/12/2011
Demand regulated savings accounts
8,904.0
7,681.3
Term regulated savings accounts
1,952.3
1,938.7
Demand and overnight accounts
(in EUR millions)
14,792.9
14,570.6
Companies and individual entrepreneurs
8,834.2
8,625.9
5,189.9
5,212.3
Financial customers
Others
Term accounts
5.2
16.7
763.6 (1)
715.7
2,720.4
2,550.0
2,346.1
2,309.8
194.4
144.0
Financial customers
-
Others
179.9
Borrowings secured by notes and securities
6.0
(2)
-
Securities sold under overnight repurchase agreements
Securities sold under term repurchase agreements
Related payables
Guarantee deposits
TOTAL
Fair value of customer deposits
90.2
-
-
190.9
73.9
657.4
172.1
124.3
1.4
3.5
28,617.0
27,716.7
28,616.9
27,716.6
(1) Of which EUR 231.0 million associated with governments and central administrations.
(2) Of which EUR 12.2 million associated with governments and central administrations.
NOTE 19 Debt securities
(in EUR millions)
Savings certificates
Money market and negotiable debt securities
Bonds
Related payables
SUB-TOTAL
TOTAL
Fair value of debt securities
31/12/2012
31/12/2011
9.3
12.5
5,982.8
7,189.6
699.6
1,504.9
25.9
42.0
6,717.6
8,749.0
-
-
6,717.6
8,749.0
6,784.7
8,811.7
103
2
NOTE 20 PEL/CEL home savings accounts
A. Outstanding deposits in PEL/CEL accounts
31/12/2012
31/12/2011
Less than 4 years old
601.3
628.3
Between 4 and 10 years old
375.0
575.8
(in EUR millions)
PEL accounts
More than 10 years old
SUB-TOTAL
CEL accounts
TOTAL
679.8
428.3
1,656.1
1,632.4
305.2
302.4
1,961.3
1,934.8
B. Outstanding housing loans granted in respect of PEL/CEL accounts
31/12/2012
31/12/2011
23.1
31.0
13.3
9.2
2.0
3.0
38.4
43.2
31/12/2012
31/12/2011
(in EUR millions)
TOTAL
C. Provisions for commitments linked to PEL/CEL accounts (1)
(in EUR millions)
PEL accounts
5.9
-
0.8
4.0
3.3
10.6
10.0
14.6
4.3
-
Sub-total
CEL accounts
Drawn-down loans
TOTAL
1.0
1.2
15.3
15.8
(1) These provisions are booked as «Provisions for general risk and commitments» (see Note 16).
D. Methods used to establish the parameters for valuing provisions
The parameters used to estimate future customer
behaviour are derived from historical observations of
customer behaviour patterns over long periods (more
than ten years). The value of these parameters can
be adjusted if any changes are subsequently made to
regulations with the potential to undermine the reliability
of past data as an indicator of future customer behaviour.
The values of the different market parameters used,
notably interest rates and margins, are calculated on
104
the basis of observable data and constitute a best
estimate, at the date of valuation, of the future value
of these factors for the period concerned, in line with
the retail banking division’s policy of interest rate risk
management.
The discount rates used are derived from zero coupon
swaps versus the Euribor yield curve at the date of
valuation, averaged over a 12-month period
2
NOTE 21 Employee benefits
A. Post-employment defined contribution plans
Defined contribution plans limit the Group’s liability to the
contributions paid to the plan but do not commit the
Group to a specific level of future benefits.
plans such as ARRCO and AGIRC, pension schemes
for which the only commitment is to pay annual
contributions (PERCO) and multi-employer plans.
The main defined contribution plans provided to
employees of the Group are based in France. They
include State pension plans and national retirement
Expenses relating to these plans totalled
EUR 67.2 million at December 31, 2012 vs.
EUR 63.3 million at December 31, 2011.
105
2
B. Post-employment defined benefit plans and other long-term benefits
B1. Reconciliation of assets and liabilities recorded in the balance sheet
31/12/2012
31/12/2011
Post employment benefits
(in EUR millions)
Breakdown of provisions recorded
in the balance sheet
Pension
plans
20.5
Other longOther term benefits
17.2
43.5
Total plans
Pension
plans
81.2
30.9
Other longOther term benefits
22.5
37.6
Total plans
91.0
Breakdown of assets recorded in
the balance sheet
-0.7
-
-
-0.7
-
-
-
-
Net provision
19.8
17.2
43.5
80.5
30.9
22.5
37.6
91.0
Present value of defined benefit
obligations
134.0
-
-
134.0
106.2
-
-
106.2
Fair value of plan assets
BREAKDOWN OF PLAN DEFICIT
-93.4
-
-
-93.4
-77.2
-
-
-77.2
Actuarial deficit (A)
40.6
-
-
40.6
29.0
-
-
29.0
Present value of unfunded
obligations (B)
17.8
19.9
43.5
81.2
33.2
20.3
37.6
91.1
8.2
-
-
8.2
9.0
-
-
9.0
30.4
2.7
-
33.1
22.3
-2.2
-
20.1
-
-
-
-
-
-
-
-
Unrecognised items
Unrecognised past service cost
Unrecognised net actuarial gain/loss
Separate assets
Plan assets impacted by change in
asset ceiling
-
-
-
-
-
-
-
-
Total unrecognised items (C)
38.6
2.7
-
41.3
31.3
-2.2
-
29.1
NET PROVISION (A + B - C)
19.8
17.2
43.5
80.5
30.9
22.5
37.6
91.0
Notes:
1- For defined-service pension schemes, in accordance with IAS 19, Crédit du Nord Group uses the projected credit unit method
to calculate employee benefits, and amortises actuarial gains and losses which exceed 10% of the greater between the defined
benefit obligations or funding assets on the estimated average remaining working life of the employees participating in the plan
(corridor method). The Group uses the straight-line method over the residual working lives of employee beneficiaries to recognise
past service cost resulting from an amendment of the plan.
2- Post-employment pension plans include plans offering pre - and post- retirement benefits in the form of annuities and termination
benefits. Pension benefit annuities are paid additionally to State pension plans.
Other post-employment benefit plans are insurance schemes covering accidental death at three institutions located in France.
Other long-term employee benefits include deferred bonuses, which include flexible working provisions (compte épargne temps)
and long-service awards.
3- The value of the defined benefit obligations has been determined by independent qualified actuaries.
4- Information regarding plan assets:
- only end-of-career payments, additional complementary pension plans and complementary banking plans are partially covered
by assets managed by an external company.
- the fair value of plan assets is comprised of 22.3% bonds, 54.3% equities and 23.4% other assets.
5- In general, the expected rates of return on plan assets are based on a weighted average of expected returns on each category
of assets at fair value.
6- Benefits payable under post-employment plans in 2013 are estimated at EUR 19.1 million.
7- The impact on the Group’s shareholders’ equity from the application of the revised IAS19 on January 1, 2013
will be -EUR 41.1 million.
106
2
The actual rate of return on benefit plan and separate assets was:
(as a % or the item measured)
Plan assets
Separate assets
(in EUR millions)
Plan assets
Separate assets
31/12/2012
31/12/2011
13.4
-6.1
-
-
31/12/2012
31/12/2011
11.3
-5.2
-
-
B2. Plan actuarial costs
31/12/2012
31/12/2011
(in EUR millions)
Current service cost for the
year, including social security
contributions
Employee contributions
Interest cost
Expected return on plan assets
Expected return on separate assets
Pension
plans
5.1
Other
plans
0.3
Other longterm benefits
Total
plans
Pension
plans
Other
plans
Other longterm benefits
Total
plans
3.2
8.6
5.7
0.4
4.2
10.3
-
-
-
-
-
-
-
-
5.7
0.7
1.1
7.5
5.1
0.9
1.3
7.3
-4.9
-
-
-4.9
-5.2
-
-
-5.2
-
-
-
-
-
-
-
-
Amortisation of past service cost
0.8
-
-
0.8
0.8
-
1.2
2.0
Amortisation of gains/losses
0.7
-0.1
4.1
4.7
1.8
-
0.1
1.9
Changes in consolidation scope and
other adjustments for the period
-
-0.5
-
-0.5
-
-
-
-
Plan settlement
-
-5.0(1)
-
-5.0
-
-
-
-
8.4
11.2
8.2
1.3
6.8
16.3
TOTAL NET EXPENSES
RECOGNISED IN THE INCOME
STATEMENT
7.4
-4.6
(1) Settlement of the SMC health plan.
107
2
B3. Changes in net liabilities of post-employment plans recognised in the balance sheet
B3a. Changes in the present value of defined benefit obligations
2012
(in EUR millions)
VALUE AT JANUARY 1
Pension
plans
139.4
2011
Other Total postplans employment
20.3
159.7
Pension
plans
143.8
17.2
161.0
Service cost for the year, including social security contributions
5.1
0.3
5.4
5.7
0.4
6.1
Interest cost
5.7
0.7
6.4
5.1
0.9
6.0
-
-
-
-
-
-
15.2
4.8
20.0
-10.5
-2.3
-12.8
-
-
-
-
-
-
-13.6
-0.7
-14.3
-13.1
-1.2
-14.3
-
-
-
8.4
-
8.4
Actuarial gains and losses generated over the period
Foreign currency exchange adjustment
Benefit payments
Cost of past services generated during the period
Acquisition of subsidiaries
-
-
-
-
-
-
Transfers and other
-
-5.5
-5.5
-
5.3
5.3
151.8
19.9
171.7
139.4
20.3
159.7
Pension
plans
VALUE AT DECEMBER 31
B3b. Changes in fair value of plan assets and separate assets
2012
(in EUR millions)
VALUE AT JANUARY 1
Actuarial gains and losses generated over the period
Pension
plans
2011
77.2
-
77.2
84.3
-
84.3
4.9
-
4.9
5.2
-
5.2
-
-
-
-
-
-
6.4
-
6.4
-10.4
-
-10.4
Foreign currency exchange adjustment
-
-
-
-
-
-
-
-
-
-
-
-
16.2
-
16.2
0.3
-
0.3
-11.3
-
-11.3
-2.2
-
-2.2
Employer contributions
Benefit payments
Acquisition of subsidiaries
-
-
-
-
-
-
Transfers and other
-
-
-
-
-
-
93.4
-
93.4
77.2
-
77.2
Any employer contributions paid for 2013 in respect of post-employment defined benefit plans will be determined after
the year-end evaluations.
108
2
B4. Main assumptions for post-employment plans
2012
2011
Expected return on assets (separate and plan assets)
2.5%
6.6%
Future salary increase (including inflation)
3.5%
3.5%
Notes:
1- The expected rate of return on assets (separate and plan assets) has been 6.6% since 2005. The range of expected rates of
return on assets is due to the composition of the assets. In accordance with the revision to IAS 19, applicable as of January 1,
2013, the expected rate of return shall henceforth be equal to the year-end discount rate.
2- The discount rate used depends on the term of each plan (1.1% for 3 years / 1.5% for 5 years / 2.6% for 10 years / 3.2% for 15
years and 3.3% for 20 years).
3- Average working life established individually by benefit for each Group entity and is calculated taking into account turnover
assumptions.
4- The inflation assumption is 1.9% for all plans.
B5. Sensitivity analysis of post-employment defined benefit obligations compared to main
assumption ranges
2012
(as a % of item measured)
2011
Pension plans
Other plans
Pension plans
Other plans
-8.2%
-15.2%
-6.9%
-13.0%
-12.9%
-27.7%
-10.6%
-24.1%
1.0%
-
1.0%
-
-11.7%
-
-21.4%
-
Variation of +1% in discount rate
Impact on present value of defined benefit obligations at December 31
Impact on total expenses
Variation of +1% in expected return on assets
(plan assets and separate assets)
Impact on plan assets at December 31
Variation of +1% in future salary increases, net of inflation
9.6%
20.2%
7.9%
17.1%
17.2%
41.9%
14.2%
35.4%
B6. Experience adjustments on post-employment defined benefit obligations
(in EUR millions)
Present value of defined benefit obligations
31/12/2012
31/12/2011
31/12/2010
31/12/2009
31/12/2008
151.8
139.4
143.8
124.6
134.0
93.4
77.2
84.3
68.2
59.0
Deficit / (negative: surplus)
58.4
62.2
59.5
56.4
75.0
Experience adjustments on plan liabilities
-5.5
-0.4
-1.3
-4.0
-5.6
6.4
-10.4
5.8
3.9
-27.1
Experience adjustments on plan assets
109
2
NOTE 22 Subordinated debt
(in EUR millions)
31/12/2012
31/12/2011
-
-
631.0
631.0
-
-
Equity investments
Redeemable subordinated notes
Undated subordinated notes
Related payables
TOTAL
Fair value of subordinated debt
5.0
6.4
36.4
32.9
672.4
670.3
636.0
625.8
Schedule of redeemable subordinated notes
2013
2014
2015
2016
2017
Others
Outstanding
at 31/12/2012
Outstanding
at 31/12/2011
-
-
100.0
115.0
-
416.0
631.0
631.0
Subordinated debt
NOTE 23 Insurance activities
Underwriting reserves of insurance companies
(in EUR millions)
Underwriting reserves for unit-linked life insurance policies
Life insurance underwriting reserves
Non-life insurance underwriting reserves
Deferred profit sharing - liabilities
TOTAL
Deferred profit sharing - assets
Underwriters’ share
Underwriting reserves (including deferred profit sharing), net of underwriters’ share
(1) Amounts reclassified with respect to the data published on December 31, 2011.
110
31/12/2012
31/12/2011
962.0
914.9
3,898.5
3,515.8
3.6
3.1
324.3
5,188.4
-
48.8 (1)
4,482.6
-0.1 (1)
-245.6
-244.9
4,942.8
4,237.6
2
Statement of changes in underwriting reserves of insurance companies
Underwriting reserves
for unit-linked policies
Life insurance
underwriting reserves
Non-life insurance
underwriting reserves
Reserves at January 1, 2012
914.9
3,515.8
3.1
Allocation to insurance reserves
-51.5
390.5
0.5
81.8
-
-
(in EUR millions)
Revaluation of unit-linked life policies
Charges deducted from unit-linked policies
9.1
-
-
Transfers and arbitrage
7.7
-7.2
-
New customers
-
-
-
Profit-sharing
-
-0.6
-
Others
-
-
-
962.0
3,898.5
3.6
RESERVES AT DECEMBER 31, 2012
(EXCLUDING DEFERRED PROFIT-SHARING)
In line with IFRS and Group principles, the Liability
Adequacy Test (LAT) was carried out at December 31,
2012. The purpose of this test is to determine whether
recognised insurance liabilities are adequate, using
current estimates of future cash flows generated by
insurance policies.
It is carried out based on stochastic models
consistent with a Market Consistent
Embedded Value approach.
Net investments by insurance companies (2)
(in EUR millions)
Debt instruments
Shares and other equity instruments
Due from banks
Debt instruments
Shares and other equity instruments
31/12/2012
31/12/2011
1,402.8
1,127.0
166.1
119.2
1,236.7
1,007.8
-
-
3,967.8
3,459.5
3,967.3
3,417.5
0.5
42.0
-
-
Investment property
-
-
5,370.6
4,586.5
TOTAL
(2) This table shows net insurance company investments before elimination of intra-group transactions.
111
2
Underwriting income from insurance companies
(in EUR millions)
Earned premiums
Cost of benefits (including changes in reserves)
2012
2011
746.5
705.8
-799.3
-588.6
Net income from investments
119.0
-54.9
Other net underwriting income/expense
-34.0
-31.8
32.2
30.5
-1.5
-1.5
30.7
29.0
2012
2011
Acquisition fees
13.9
14.3
Management fees
42.6
40.4
0.1
-
Acquisition fees
-13.0
-12.9
Management fees
-13.4
-12.9
-2.3
-2.2
27.9
26.7
CONTRIBUTION TO OPERATING INCOME BEFORE ELIMINATION
OF INTRA-GROUP TRANSACTIONS
Elimination of intra-group transactions
CONTRIBUTION TO OPERATING INCOME AFTER ELIMINATION
OF INTRA-GROUP TRANSACTIONS
Net fee income (3)
(in EUR millions)
Fees received
Others
Fees paid
Others
TOTAL FEES
(3) This table shows income from fees before the elimination of intra-group transactions.
112
2
NOTE 24 Gains and losses booked directly to equity
(in EUR millions)
31/12/2012
Period
31/12/2011
-
-
-
72.7
74.6
-1.9
Change in gains and losses booked directly to equity
Revaluation difference for the period
Recycled to the income statement
Revaluation of available-for-sale assets (1)
63.1
11.5
Revaluation of hedging derivatives
-
-
-
on companies accounted for by the equity method
Taxes
TOTAL
GROUP SHARE
-
-
-
-1.4
-23.4
22.0
71.3
51.2
20.1
1.1
0.1
1.0
70.2
51.1
19.1
31/12/2012
(in EUR millions)
Revaluation of available-for-sale assets
Revaluation of hedging derivatives
on companies accounted for by the equity method
Total gains and losses booked directly to equity
GROUP SHARE
31/12/2011
Gross
Tax
Net of tax
Gross
Tax
Net of tax
-
-
-
-
-
-
72.7
-1.4
71.3
-1.9
22.0
20.1
-
-
-
-
-
-
-
-
-
-
-
-
72.7
-1.4
71.3
-1.9
22.0
20.1
1.1
-
1.1
1.0
-
1.0
71.6
-1.4
70.2
-2.9
22.0
19.1
113
2
(1) Breakdown of revaluation differences on available-for-sale assets:
Unrealised capital gains Unrealised capital losses
(in EUR millions)
Unrealised gains and losses on available-for-sale financial assets
Unrealised gains and losses on available-for-sale debt instruments
Unrealised gains and losses on assets reclassified as Loans and
Receivables
Unrealised insurance company gains and losses
o/w on available-for-sale financial assets
o/w on available-for-sale debt instruments and assets
reclassified as Loans and Receivables
o/w deferred profit sharing
TOTAL
Net revaluation
84.3
-1.2
83.1
1.5
-30.2
-28.7
-
-
-
339.0
-320.7
18.3
0.1
-
0.1
338.9
-8.4
330.5
-
-312.3
-312.3
424.8
-352.1
72.7
NOTE 25 Assets pledged and received as collateral
1. Assets pledged as collateral
(in EUR millions)
Carrying amount of assets pledged as collateral
(1)
Carrying amount of assets pledged as collateral on financial instruments (2)
Carrying amount of assets pledged as collateral for off-balance sheet commitments
TOTAL
31/12/2012
31/12/2011
10,474.1
7,992.4
33.3
30.0
-
-
10,507.4
8,022.4
31/12/2012
31/12/2011
-
-
(1) Assets pledged as collateral for liabilities mainly comprise receivables pledged as collateral for liabilities (notably with central banks).
(2) Assets pledged as collateral on financial instruments mainly comprise security deposits.
2. Assets received as collateral and available to the entity
(in EUR millions)
FAIR VALUE OF SECURITIES PURCHASED UNDER RESALE AGREEMENTS
114
2
NOTE 26 Transferred financial assets
1. Financial assets transferred but not derecognised
Financial assets which have been transferred but remain
fully recognised in the balance sheet include temporary
sales of securities (securities lending and repurchase
agreements) and certain sales of loans to consolidated
securitisation vehicles.
The accounting treatment of temporary sales of
securities is set out in Note 1 «Main valuation and
presentation rules for the consolidated financial
statements».
For temporary sales of securities, the Group is exposed
to the risk of default by the issuer of the security (credit
risk) and to increases or decreases in the value of the
securities (market risk). Securities loaned or sold under
repurchase agreements cannot simultaneously be used
as collateral for another transaction.
Temporary sales of securities (securities lending and
repurchase agreements) shown in the tables below
relate only to securities recognised under assets in the
balance sheet in the categories mentioned.
Securities sold under repurchase agreements
(in EUR millions)
Carrying amount of
assets
Carrying amount
of related debts
74.0
73.9
74.0
73.9
Book value of the assets
Book value
of related debts
-
-
Available-for-sale securities
TOTAL
Securities lending
(in EUR millions)
TOTAL
Securitisation assets for which the related debtholders’ recourse is limited solely to the
transferred assets
(in EUR millions)
TOTAL
Carrying amount
of assets
Carrying amount
of related debts
Fair value
of transferred assets
Fair value
of related debt
Net position
-
-
-
-
-
2. Financial assets that have been partially transferred or fully derecognised
The Group has no significant amount of transferred financial assets that are partly or fully derecognised.
115
2
NOTE 27 Assets and liabilities by period remaining to expiration
Contractual maturities of financial liabilities (1)
At December 31, 2012
(in EUR millions)
Due to central banks
Less than
3 months
3 months
- 1 year
1-5 years
More than
5 years
Undated
Total
0.1
-
0.1
0.2
-
0.4
Financial liabilities measured at fair
value through profit or loss excluding
derivatives
241.1
61.8
939.9
150.7
-
1,393.5
Due to banks
629.0
1,030.2
5,864.7
230.9
-
7,754.8
Customer deposits
3,992.9
2,680.3
9,461.3
12,479.4
3.1
28,617.0
Debt securities
1,248.8
3,690.9
1,582.9
195.0
-
6,717.6
Subordinated debt
TOTAL LIABILITIES
Loan commitments given
41.4
-
215.0
416.0
-
672.4
6,153.3
7,463.2
18,063.9
13,472.2
3.1
45,155.7
255.5
789.9
1,451.0
693.6
357.4
3,547.4
14,389.1
365.7
462.7
1,392.0
995.1
17,604.6
TOTAL COMMITMENTS GIVEN
14,644.6
1,155.6
1,913.7
2,085.6
1,352.5
21,152.0
(1) The amounts indicated are the contractual amounts excluding estimated interest
Underwriting reserves of insurance companies (2)
(in EUR millions)
Underwriting reserves of insurance
companies
Less than
3 months
3 months
- 1 year
1-5 years
More than
5 years
Undated
Total
324.4
-
-
4,864.0
-
5,188.4
(2) Maturities of book amounts
Notional maturities of commitments in financial derivatives (3)
0-1 year
1-5 years
More than 5 years
Total
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
8,370.4
8,370.4
11,545.3
11,545.3
14,339.0
14,339.0
34,254.7
34,254.7
-
-
-
-
-
-
-
-
929.6
252.4
2,157.7
648.5
58.0
55.5
3,145.3
956.4
566.7
648.6
289.9
331.7
-
-
856.6
980.3
-
-
-
-
-
-
-
-
(in EUR millions)
Firm transactions
Swaps
FRAs
Options
Foreign exchange
instruments
Foreign exchange options
Other forward instruments
(3) These items are presented based on the maturities of the financial instruments.
116
2
NOTE 28 Commitments
A. Financing commitments given and received
(in EUR millions)
31/12/2012
31/12/2011
201.2
115.0
3,346.2
4,038.8
247.9
208.2
3,116.0
3,109.2
213.2
202.1
14,027.5
8,385.5
3,316.7
796.0
16,191.0
15,959.1
241.3
239.8
44.6
53.1
Commitments given
Loan commitments
To banks
To customers
Guarantee commitments
On behalf of banks
On behalf of customers
On behalf of insurance activities
Others
Commitments received
Loan commitments
From banks
From banks
From insurance activities
Others
(1)
(1) O/w EUR 44.6 million in guarantee commitments received from government administrations and local authorities at December 31, 2012 (vs. EUR 53.1 million at December 31, 2011).
Financing commitments and guarantees given to Societe Generale Group amounted to EUR 4,132.0 million
at December 31, 2012 versus EUR 4,835.4 million at December 31, 2011.
Financing commitments and guarantees received from Societe Generale Group amounted to EUR 3,893.2 million
at December 31, 2012 versus EUR 4,100.8 million at December 31, 2011.
B. Securities transactions and foreign exchange transactions
31/12/2012
31/12/2011
Securities to be received
2.7
4.3
Securities to be delivered
15.3
16.9
Currency to be received
3,657.7
5,288.5
Currency to be delivered
3,655.7
5,290.1
(in EUR millions)
At December 31, 2012, securities and foreign currency
to be received from Societe Generale Group stood
at EUR 357.7 million while securities and foreign
currency to be delivered to Societe Generale Group
amounted to EUR 370.9 million.
At December 31, 2011, securities and foreign currency
to be received from Societe Generale Group stood at
EUR 885.2 million while securities and foreign currency
to be delivered to Societe Generale Group amounted to
EUR 897.9 million.
117
2
C. Financial derivatives
31/12/2012
31/12/2011
Assets
Liabilities
Assets
Liabilities
12,818.4
12,818.4
14,586.1
14,585.9
-
-
-
-
-
-
-
-
1,260.3
956.4
1,374.8
954.2
856.6
980.3
253.6
253.6
-
-
-
-
14,935.3
14,755.1
16,214.5
15,793.7
21,436.3
21,436.3
21,002.0
21,002.0
1,885.0
-
2,021.0
-
23,321.3
21,436.3
23,023.0
21,002.0
38,256.6
36,191.4
39,237.5
36,795.7
(in EUR millions)
TRADING INSTRUMENTS
Firm transactions
Swaps
FRAs
Options
OTC options
SUB-TOTAL TRADING INSTRUMENTS
FAIR VALUE HEDGING INSTRUMENTS (2)
Firm transactions
Swaps
Options
SUB-TOTAL HEDING INSTRUMENTS
TOTAL
(2) Including macrohedging derivatives at fair value through profit or loss.
At December 31, 2012, commitments of this nature
with the Societe Generale Group stood at EUR
33,861.6 million compared with EUR 34,439.6 million
at December 31, 2011.
118
Under current regulations, transactions processed on
behalf of and on the order of customers are classified
in the Trading category, while any hedging of these
transactions is classified in «Fair value hedging through
profit or loss».
2
NOTE 29 Foreign exchange transactions
31/12/2012
31/12/2011
Currencies to Currencies to be
be received
delivered
Assets
Liabilities
EUR
56,070.6
56,002.6
42.0
CHF
344.4
196.7
GBP
21.9
33.2
USD
245.1
JPY
5.0
Liabilities
17.0
54,274.1
54,262.7
2,116.6
2,134.5
167.9
1.9
354.4
167.8
375.9
561.6
1.7
1.6
55.7
22.1
504.1
530.1
476.0
100.9
241.3
426.3
680.2
1,854.4
1,662.0
2.4
0.7
0.1
7.2
2.2
22.7
20.0
73.6
49.7
72.8
123.9
40.0
22.7
414.8
381.9
56,760.6
56,760.6
386.0
385.8
55,157.7
55,157.7
5,288.5
5,290.1
Other currencies
TOTAL
Currencies to be Currencies to
received be delivered
Assets
(in EUR millions)
NOTE 30 Interest income and expense
(in EUR millions)
2012
2011
Interest and similar income from
Transactions with banks
Transactions in financial instruments
110.6
79.8
1,308.5
1,285.6
406.6
402.9
188.6
185.5
0.5
0.9
-
-
217.5
216.5
155.5
155.2
80.0
80.6
75.5
74.6
-
-
1,981.2
1,923.5
Securities lending
Hedging derivatives
Finance leases
Other interest and similar income
SUB-TOTAL
INTEREST AND SIMILAR EXPENSES FROM
-134.2
-66.5
-378.0
-337.3
Debt securities
Subordinated and convertible debt
Securities borrowing
Hedging derivatives
Finance leases
Other interest and similar expenses
SUB-TOTAL
TOTAL INTEREST AND SIMILAR INCOME
-307.2
-352.2
-126.0
-152.8
-21.1
-26.1
-
-
-160.1
-173.3
-62.1
-63.2
-57.3
-58.5
-4.8
-4.7
-
-0.1
-881.5
-819.3
1,099.7
1,104.2
119
2
2012
2011
-23.6
13.3
930.5
948.3
128.1
134.9
(in EUR millions)
NET INCOME (EXPENSE) FROM
Short-term loans
Export loans
Equipment loans
Housing loans
1.5
1.8
187.1
197.1
736.5
686.7
-122.7
-72.2
99.4
50.7
Finance leases
93.4
92.0
-
-0.1
1,099.7
1,104.2
2012
2011
-
-
282.6
285.5
6.8
5.9
Others
Others
TOTAL INTEREST AND SIMILAR INCOME
NOTE 31 Fee income and expense
(in EUR millions)
FEE INCOME
Foreign exchange and financial derivatives transactions
Loan and guarantee commitments
Services
Others
2.2
2.4
32.5
29.2
631.1
633.4
-
-
955.2
956.4
-0.4
-0.9
-5.4
-5.7
Foreign exchange and financial derivatives transactions
-0.1
-0.1
SUB-TOTAL
FEE EXPENSE
Loan and guarantee commitments
-1.9
-1.4
Others
-149.1
-132.3
SUB-TOTAL
-156.9
-140.4
798.3
816.0
- Fee income, excluding EIR* linked to financial instruments not measured
at fair value through profit or loss
315.1
314.8
- Fee income relating to trusts or similar activities
128.3
140.3
TOTAL NET FEES AND COMMISSIONS
This fee income and expense includes:
- Fee expenses, excluding EIR* linked to financial instruments not measured
at fair value through profit or loss
- Fee expenses relating to trusts or similar activities
*
120
Effective Interest Rate
-1.9
-1.4
-18.1
-19.3
2
NOTE 32 Net gains/losses on financial instruments at fair value through profit
or loss
2012
2011
Net gain/loss on non-derivative financial assets held for trading
4.7
3.6
Net gain/loss on financial assets measured using fair value option
1.3
3.2
Net gain/loss on non-derivative financial liabilities held for trading
-
-
-34.5
-25.0
15.6
5.1
(in EUR millions)
Net gain/loss on financial liabilities measured using fair value option
(1)
Gain/loss on derivative financial instruments held for trading
Net gain/loss on fair value hedging instruments
Revaluation of hedged items attributable to hedged risks
Ineffective portion of cash flow hedges
Net gain/loss on foreign exchange transactions
TOTAL
264.3
370.7
-267.3
-371.5
-
-
16.9
12.3
1.0
-1.6
(1) Including an expense of EUR -12.4 million related to the Group’s credit spread on the revaluation of the Group’s financial liabilities at December 31, 2012 (versus income of EUR
12.1 million at December 31, 2011).
Net income from financial assets and liabilities at fair
value through profit or loss is measured using valuation
techniques based on observable parameters.
This income is therefore not impacted by the change
in the fair value of instruments initially measured using
valuation parameters not based on market data.
NOTE 33 Net gains/losses on available-for-sale financial assets
2012
(in EUR millions)
2011
CURRENT ACTIVITIES
Gains on sale (1)
10.6
6.4
Losses on sale (2)
-8.0
-3.8
Impairment of equity instruments
-
-
Profit sharing, deferred or otherwise, on available-for-sale assets of insurance
subsidiaries
-6.0
-3.1
SUB-TOTAL
-3.4
-0.5
2.8
0.6
-
-0.1
LONG-TERM EQUITY INVESTMENTS
Gains on sale
Losses on sale
Impairment of equity instruments
Sub-total
TOTAL
-
-0.6
2.8
-0.1
-0.6
-0.6
(1) Of which EUR 9.7 million due to insurance activities at December 31, 2012 versus EUR 4.8 million at December 31, 2011.
(2) Of which EUR -3.7 million due to insurance activities at December 31, 2012 versus EUR -1.7 million at December 31, 2011.
121
2
NOTE 34 Income and expenses from other activities
(in EUR millions)
2012
2011
INCOME FROM OTHER ACTIVITIES
Real estate development
Real estate leasing (1)
Equipment leasing
-
-
4.4
5.6
1.2
1.2
Other activities
20.2 (2)
18.3 (3)
SUB-TOTAL
25.8
25.1
Real estate development
-0.1
-0.2
Real estate leasing
-3.3
-2.2
Equipment leasing
-0.1
-0.1
Other activities
-16.3
-14.5
SUB-TOTAL
-19.8
-17.0
6.0
8.1
EXPENSES DUE TO OTHER ACTIVITIES
NET AMOUNT
(1) O/w rent on investment property: EUR 2.8 million at December 31, 2012 and December 31, 2011.
(2) O/w net income on insurance business: EUR 6.5 million at December 31, 2012, which breaks down into income of EUR 871.7 million and expenses of EUR 865.2 million.
(3) O/w net income on insurance business: EUR 4.2 million at December 31, 2011, which breaks down into income of EUR 916.5 million and expenses of EUR 912.3 million.
122
2
NOTE 35 Personnel expenses
A. Personnel expenses
2012
2011
Employee compensation
-446.5
-442.6
Social security charges and payroll taxes
-113.4
-115.1
-67.3
-63.3
-1.3
-2.7
(in EUR millions)
Net retirement expenses - defined contribution plans
Net retirement expenses - defined benefit plans
Other social security charges and taxes
-62.6
-51.2
Employee profit-sharing and incentives
-61.9
-57.1
0.9
4.2
-752.1
-727.8
Transfer of charges
TOTAL
Performance-based compensation paid in 2012 in respect of 2011 totalled EUR 26.8 million.
B. Headcount (1)
2012
2011
Registered workforce (2)
9,689
9,850
Average staff count in activity
9,377
9,566
8,733
8,951
644
615
2012
2011
-
-
-8.8
-7.4
-8.8
-7.4
Average staff count in activity directly compensated by Crédit du Nord Group
Maternity leave, qualification/apprenticeship contracts
(1) Excluding staff at Banque Pouyanne.
(2) Excluding staff posted to Societe Generale Group.
NOTE 36 Share-based payment plans
Expenses recorded in the income statement
(in EUR millions)
Net expenses from stock option purchase plans (1)
Net expenses from stock option and free share allocation plans
TOTAL
(1) See paragraph on the allocation of SG shares with a discount.
The expense indicated above relates to equity-settled stock-option plans and to cash-settled plans.
123
2
Main characteristics of stock option and free share allocation plans
Equity-settled stock option plans for Crédit du Nord Group employees for the year ended December 31, 2012 are
briefly described below.
Stock options
There is less information for the 2005 to 2007 plans due to their current situation.
Issuer: Societe Generale
2010
2009
2008
Subscription
options
Subscription
options
Subscription
options
Shareholders’ agreement
27/05/2008
27/05/2008
30/05/2006
Board of Directors’ decision
09/03/2010
09/03/2009
21/03/2008
44,422
58,068
63,535
Type of plan
Number of stock-options granted (1)
Term of validity of options
Settlement
Vesting period
7 yrs
7 yrs
7 yrs
SG shares
SG shares
SG shares
09/03/2010 31/03/2014
09/03/2009 31/03/2012
21/03/2008 31/03/2011
Performance-based (2)
yes
yes
yes
Conditions linked to departure from Group
lost
lost
lost
Conditions linked to dismissal
lost
lost
lost
maintained
maintained
maintained
maintained
6 months
maintained
6 months
maintained
6 months
43.64
23.18
63.60
Conditions linked to retirement
In the event of death
Share price at grant date (in euros) (1) (3)
Discount
Exercise price (in euros) (1)
Options authorised but not awarded
Options exercised at December 31, 2012
Options lost at December 31, 2012
Options outstanding at December 31, 2012
Not applicable
0%
0%
41.20
23.18
63.60
-
-
-
-
-
-
790
32,284
34,755
43,632
25,784
28,780
Number of shares reserved at December 31, 2012
-
-
-
Share price of shares reserved (in euros)
-
-
-
Total value of shares reserved (in EUR millions)
-
-
-
31/03/2014
31/03/2013
21/03/2012
-
1 year
1 year
First authorised date for selling the shares
Lock-in period
Fair value (% of share price at grant date)
Valuation method used
26%
Monte-Carlo
(4)
27%
24%
Monte-Carlo
Monte-Carlo
2007
2006
2005
19/01/2007
18/01/2006
13/01/2005
7 yrs
7 yrs
7 yrs
115.60
93.03
64.63
44,583
73,178
-
(1) In accordance with IAS 33, as a result of the detachment of Societe Generale share preferential subscription rights, the historical share data have been adjusted for the
coefficient given by Euronext, which reflects the portion attributable to the share after detachment following the capital increase which took place in the fourth quarter of 2009.
(2) The performance-based conditions are described in the section on Corporate Governance in Societe Generale Group’s registration document. The 2010 EPS performance
conditions on which the 2008 stock option awards were based were not met.
(3) Average of the 20 last market quotations for the 2008 and 2009 plans and the closing price for the award under the 2010 plan.
(4) If the ROE condition is not met, fair value takes account of the TSR condition, i.e. 7%.
124
2
Free shares
Issuer: Societe Generale
2012
2011
2010
2009
Type of plan
Free shares
Free shares
Free shares
Free shares
Shareholders’ agreement
25/05/2010
25/05/2010
27/05/2008
27/05/2008
Board of Directors’ decision
02/03/2012
07/03/2011
09/03/2010
20/01/2009
184,788
89,011
87,709
123,732
SG shares
SG shares
SG shares
SG shares
07/03/2011 31/03/2013
Sub-plan No. 1
09/03/2010 31/03/2013
20/01/2009 31/03/2012
yes
lost
Number of shares awarded (5)
Settlement
Vesting period
02/03/2012 31/03/2014
Performance-based (6)
yes
yes
Performance
conditions for a
list of awardees
Conditions linked to departure from Group
lost
lost
lost
Conditions linked to dismissal
lost
lost
lost
lost
Conditions linked to retirement
maintained
maintained
maintained
maintained
In event of death
maintained
6 months
maintained
6 months
maintained
6 months
maintained
6 months
25.39
46.55
43.64
23.36
Share price at grant date (in euros) (5)
Shares delivered at December 31, 2012
Shares lost at December 31, 2012
-
-
267
117,740
126
1,220
2,737
5,282
Shares outstanding at December 31, 2012
184,662
87,791
84,705
710
Number of shares reserved at December 31, 2012
184,662
87,791
84,705
710
29.75
45.67
47.71
59.70
5.5
4.0
4.0
-
01/04/2016
31/03/2015
31/03/2015
31/03/2014
2 yrs
2 yrs
2 yrs
2 yrs
86%
86% (7)
Share price of shares reserved (in euros)
Total value of shares reserved (in EUR millions)
First authorised date for selling the shares
Lock-in period
Fair value (% of the share price at grant date)
2-year vesting period
82% (8)
3-year vesting period
Valuation method used
Arbitrage
Arbitrage
Arbitrage
78%
Arbitrage
(5) In accordance with IAS 33, as a result of the detachment of Societe Generale share preferential subscription rights, the historical share data have been adjusted for the
coefficient given by Euronext, which reflects the portion attributable to the share after detachment following the capital increase which took place in the fourth quarter of 2009.
(6) The performance conditions are described in the section on Corporate Governance in Societe Generale Group’s registration document.
(7) If the ROE or EPS condition is not met, fair value takes account of the TSR condition, i.e. 31% and 68%, respectively.
(8) If the ROE condition is not met, fair value takes account of the TSR condition, i.e. 16%.
Furthermore, Banque Tarneau allocated 12,000 shares for all of its employees in 2009. These shares were valued at
EUR 59.89 and had a vesting period of three years.
At December 31, 2012, a total of 1,160 shares had been lost and 10,840 delivered.
125
2
Statistics concerning stock-option plans
The stock option plans offered to Crédit du Nord Group employees for the year ended December 31, 2012 are
described below:
Weighted average
remaining
contractual life
Weighted average
fair value at grant
date (in euros)
Weighted average
share price at exercise date (in euros)
Exercise
price range
(in euros)
Number of options
2010 plan
2009 plan
2008 plan
29,863
ry
Options outstanding at Janua
1, 2012
-
-
-
-
43,632
58,068
Options granted during the period
-
-
-
-
-
-
-
Options lost during the period
-
-
-
-
-
32,284
1,083
Options exercised during the
period
-
-
-
-
-
-
-
Options expired during the period
-
-
-
-
-
-
-
Options outstanding at December
31, 2012
21 months
14.29
-
-
43,632
25,784
28,780
-
-
-
-
-
25,784
28,780
Exercisable options at December
31, 2012
Main assumptions used to value Societe Generale stock-option plans
2010
2009
2008
Risk-free interest rate
2.9%
3.0%
4.2%
Future share volatility
29.0%
55.0%
38.0%
0%
0%
0%
Expected dividend (yield)
1.3%
3.5%
5.0%
Expected life
5 yrs
5 yrs
5 yrs
Forfeited rights rate
Future volatility was estimated using the implied volatility of the Group, which, over 5-year share options traded OTC
(TOTEM database), was around 29% in 2010. This implied volatility more accurately reflects future volatility.
Overview of the free share allocation programme benefiting all Societe Generale Group
employees
In order to give all Societe Generale Group employees
a stake in the success of the Ambition SG2015
programme, its Board of Directors allocated 40 free
shares to each staff member at its meeting of November
2, 2010. These shares are wholly contingent on
presence and performance conditions. The vesting
period extends from November 2, 2010 to March 29,
2013 for the first tranche, i.e. 16 shares, and from
November 2, 2010 to March 31, 2014 for the second
tranche, i.e. 24 shares. The shares will then be subject
to a two-year lock-in period.
126
The performance conditions are described in
Section 6 «Human Resources» of the Registration
Document filed by Societe Generale Group.
Because it is a bonus issue, there were no reserved
shares at December 31, 2012.
The issue price, in euros, is EUR 42.10. The method
used to determine fair value is the bid-ask spread
approach. Fair value (as a % of the equity instrument
granted) is set at 85% for the first tranche, and 82% for
the second tranche.
An annual staff turnover assumption was made to
determine the cost of the plan; it stands at an average
of 3.5% per year for the employees eligible for the plan.
Allocation of SG shares with a discount
Under the Group’s employee shareholding policy,
on April 2, 2012, Societe Generale offered its
employees the opportunity to subscribe for a reserved
capital increase at a share price of EUR 19.19,
with a discount of 20% to the average price of the
Societe Generale share for the 20 last quoted market
prices prior to the offering date.
2
The valuation model used, which complies with
the recommendations of the French National
Accounting Board on the accounting treatment of
company savings plans, compares the gain that
employees would have obtained if they had been
able to sell the shares immediately with the notional
cost that the 5-year holding period represents to the
employee. As the average closing price of Societe
Generale shares observed over the subscription period
(from April 23 to May 7) was less than the per-employee
acquisition cost of the instrument, this model resulted in
a unit value of zero.
The number of shares subscribed for was 123,391.
There is no expense to the Group for this plan.
NOTE 37 Cost of risk
(in EUR millions)
2012
2011
-186.5
-185.6
-10.1
-16.9
COUNTERPARTY RISK
Net allocation for impairment
Losses not covered by provisions
Amounts recovered on amortised receivables
7.0
8.6
-189.6
-193.9
Net allowance for other provisions for contingent liability items
-0.9
-3.2
-1.3
-0.9
SUB-TOTAL
OTHER RISKS
SUB-TOTAL
TOTAL
-2.2
-4.1
-191.8
-198.0
127
2
NOTE 38 Income tax
(in EUR millions)
2012
2011
Current taxes
-175.5
-177.8
2.0
-8.0
-173.5
-185.8
Deferred taxes
TOTAL
Reconciliation of the difference between the Group’s normative tax rate and its effective tax rate is presented below:
(in EUR millions)
Earnings before tax and net income from companies accounted
for by the equity method
Normal tax rate applicable to French companies (including the 3.3% contribution)
Permanent differences
2011
485.9
507.4
34.43%
34.43%
1.12%
1.49%
Differential on items taxed at reduced rate
-0.07%
-
Tax differential on profits taxed outside France
-0.82%
-0.75%
Gain due to tax consolidation
-0.33%
0.52%
Adjustments and dividend tax credits
-0.20%
-0.16%
Change in tax rate
1.29%
0.93%
Other items
0.29%
0.16%
35.71%
36.62%
Group effective tax rate
In France, the standard corporate income tax rate is
33.33%. In addition, companies pay a Social Security
Contribution of 3.3% (after a deduction from taxable
income of EUR 0.76 million), introduced in 2000, in
addition to an Exceptional Contribution of 5% instituted
for fiscal years 2011 and 2012 and renewed for 2013
and 2014, on all profitable companies generating
revenue of more than EUR 250 million.
Long-term capital gains on equity investments are
tax-exempt, subject to taxation of a share for fees and
expenses. As from December 31, 2012, in accordance
with the 2013 Finance Act, this share of fees and
expenses stands at 12% of the gross capital gain in the
128
2012
event of a net overall capital gain, versus 10% of the net
capital gain previously.
In addition, under the regime of parent companies
and subsidiaries, dividends received from companies
in which the equity investment is at least 5% are taxexempt, subject to taxation at the standard rate of 5%
for a share of fees and expenses.
The standard tax rate applicable to French companies to
determine their deferred tax is 34.43% and the reduced
rate is 4.13% depending on the type of transactions
involved.
2
NOTE 39 Transactions with related parties
In accordance with IAS 24, Crédit du Nord’s related parties include members of the Board of Directors, corporate
officers (the Chief Executive Officer) and their respective spouses and any children residing in their family home, on the
one hand, and affiliated companies, on the other.
1. Senior Managers
A.1. Remuneration of the Group’s senior managers (1)
This includes amounts effectively paid by the Crédit du Nord Group to its directors and corporate officers as
remuneration (including employer charges), and other benefits under IAS 24, paragraph 16, as indicated below.
(in EUR millions)
Short-term benefits
2012
2011
0.8
1.4
-
-
Long-term benefits
-
-
Termination benefits
-
0.9
Share-based payments
-
0.1
0.8
2.4
TOTAL
(1) In 2011 there were two corporate officers: the Chief Executive Officer and the Deputy Chief Executive Officer. In 2012, one corporate officer (the Chief Executive Officer)
was taken into account with a balance payment made to the previous Chief Executive Officer.
A description of the remuneration and benefits of Crédit du Nord’s corporate officers is included in the information on
corporate officers.
129
2
A.2. Related party transactions (physical persons)
Transactions with members of the Board of Directors, corporate officers and members of their families discussed in
this note consist solely of loans and guarantees outstanding at December 31, 2012 and securities transactions. These
transactions are insignificant.
B. Principal subsidiaries and affiliates
Crédit du Nord Group has reported the following companies as affiliated entities: Antarius, consolidated using the
proportionate method, and Societe Generale Group entities with which it carries out transactions.
(in EUR millions)
31/12/2012
31/12/2011
42.5
71.0
OUTSTANDING ASSETS WITH RELATED PARTIES
Other assets
TOTAL OUTSTANDING ASSETS
(in EUR millions)
6,744.2
7,791.4
6,786.7
7,862.4
31/12/2012
31/12/2011
72.8
95.1
0.7
1,029.5
OUTSTANDING LIABILITIES WITH RELATED PARTIES
Customer deposits
Other liabilities
4,727.3
5,592.1
4,800.8
6,716.7
31/12/2012
31/12/2011
35.9
-0.8
Fee income
34.4
56.5
255.6
343.0
1.7
-
327.6
398.7
31/12/2012
31/12/2011
TOTAL OUTSTANDING LIABILITIES
(in EUR millions)
NET BANKING INCOME FROM RELATED PARTIES
Net income from financial transactions
Net income from other activities
NBI
(in EUR millions)
COMMITMENTS TO RELATED PARTIES
Foreign exchange transactions and securities to be received
357.7
885.2
Foreign exchange transactions and securities to be delivered
370.9
897.9
3,893.2
4,100.8
-
-
Guarantee commitments received
Forward financial instrument commitments
130
4,132.0
4,835.4
33,861.6
34,439.6
2
NOTE 40 Statutory Auditors’ fees
DELOITTE
ERNST & YOUNG
OTHER AUDITORS
2012
2011
2012
2011
2012
2011
Statutory Auditors, certification and examination
of individual and consolidated financial statements
581.0
554.0
358.0
415.0
181.0
224.0
Fees relating to other due diligence procedures and
services directly linked to the statutory auditor’s duties
104.0 (1)
-
8.0
-
415.0
189.0
224.0
(in EUR thousands)
TOTAL
685.0
-
554.0
56.0 (1)
414.0
131
2
Statutory auditors’ report on the consolidated financial statements
Statutory auditors’ report on the consolidated financial
statements
This is a free translation into English of the statutory auditors’ report on the consolidated financial statements issued in
French and it is provided solely for the convenience of English-speaking users.
The statutory auditors’ report includes information specifically required by French law in such reports, whether modified
or not. This information is presented below the opinion on the consolidated financial statements and includes an
explanatory paragraph discussing the auditors’ assessments of certain significant accounting and auditing matters.
These assessments were considered for the purpose of issuing an audit opinion on the consolidated financial statements
taken as a whole and not to provide separate assurance on individual account balances, transactions or disclosures.
This report also includes information relating to the specific verification of information given in the group’s management
report.
This report should be read in conjunction with and construed in accordance with French law and professional auditing
standards applicable in France.
In compliance with the assignment entrusted to us by your
annual general meeting, we hereby report to you, for the
year ended December 31, 2012, on:
• the audit of the accompanying consolidated financial
statements of Crédit du Nord;
• the justification of our assessments;
• the specific verification required by law.
These consolidated financial statements have been
approved by the board of directors. Our role is to express
an opinion on these consolidated financial statements
based on our audit.
I. Opinion on the consolidated financial
statements
We conducted our audit in accordance with professional
standards applicable in France; those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated financial
statements are free of material misstatement. An
audit involves performing procedures, using sampling
techniques or other methods of selection, to obtain
132
audit evidence about the amounts and disclosures in the
consolidated financial statements. An audit also includes
evaluating the appropriateness of accounting policies used
and the reasonableness of accounting estimates made,
as well as the overall presentation of the consolidated
financial statements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide
a basis for our audit opinion.
In our opinion, the consolidated financial statements give
a true and fair view of the assets and liabilities and of the
financial position of the group as at 31 December 2012
and of the results of its operations for the year then ended
in accordance with International Financial Reporting
Standards as adopted by the European Union.
II. Justification of your assessments
In accordance with the requirements of article L. 823-9
of the French commercial code (Code de commerce)
relating to the justification of our assessments, we bring
to your attention the following matters:
• For the purpose of preparing the consolidated financial
statements, your company records depreciation
Statutory auditors’ report on the consolidated financial statements
to cover the credit risks inherent to its activities and
performs significant accounting estimates, as described
in note 1 to the consolidated financial statements, related
in particular to the valuation of goodwill, as well as of
pension plans and other post-employment benefits. We
have reviewed and tested the processes implemented
by management, the underlying assumptions and the
valuation parameters, and we have assessed whether
these accounting estimates are based on documented
procedures consistent with the accounting policies
disclosed in note 1 to the consolidated financial
statements.
• As detailed in note 1 to the consolidated financial
statements, your company uses internal models to
measure financial instruments that are not listed on
active markets. Our procedures consisted in reviewing
the control procedures for the models used, assessing
the underlying data and assumptions as well as their
observability, and verifying that the risks generally
expected from the markets were taken into accounts
in the valuations.
2
• As stated in note 5 to the consolidated financial
statements, your company assessed the impact of
changes in its own credit risk with respect to the valuation
of certain financial liabilities measured at fair value through
profit and loss. We have verified the appropriateness of
the data used for this purpose.
These assessments were made as part of our audit
of the consolidated financial statements taken
as a whole, and therefore contributed to the opinion
we formed which is expressed in the first part
of this report.
III. Specific verification
As required by law we have also verified, in accordance
with professional standards applicable in France the
information presented in the group’s management report.
We have no matters to report as to its fair presentation
and its consistency with the consolidated financial
statements.
The statutory auditors
DELOITTE & ASSOCIES
Jean-Marc MICKELER
Bernard HELLER
133
2
Basel II Capital Adequacy Ratio Information under Pillar 3
Ratio Information under Pillar 3
The Basel Accord of June 2004 established the rules
for calculating minimum capital requirements, while
extending the scope of risks (with the introduction of
a capital charge for operational risk) for the purpose
of gaining a better understanding of the risks to
which banks are exposed. This mechanism (known
as Basel II) was transposed into European law via
the Capital Requirements Directive (CRD I) and
subsequently into French law in 2006.It came into force
on January 1, 2008.
The capital adequacy ratio is determined on a
consolidated «prudential» basis and eliminates the
contribution of insurance companies (Antarius).
The calculation of credit risk-weighted assets
was fine-tuned to better take account of the risk to
which banking operations are exposed. Under Basel
II standards, there are two possible approaches
for determining risk-weighted assets: the standard
method (based on fixed weightings) and the internal
ratings-based method (IRB). IRB relies on internal
counterparty risk rating models (IRB foundation
approach), or on internal counterparty and operational
risk rating models (Advanced IRB approach).
In January 2008, the French Banking Commission
authorised Crédit du Nord Group to use advanced
methods on credit risk (IRBA) and operational risk
(AMA). In compliance with current laws, these models
are subject to regular monitoring and back-testing.
The scope of application of the advanced methods
will continue to be extended at the Crédit du Nord
Group level, and in particular with Societe Marseillaise
de Crédit, which currently uses the standard method.
134
In respect of the Basel II capital adequacy ratio,
minimum capital requirements are set at 8% of total
credit risk weighted assets plus the capital requirement
multiplied by 12.5 for market risks (interest rate risk,
foreign exchange risk, equity risk and commodities risk)
and operational risks.
In respect of prudential capital, Basel II introduced
new deductions, half of which are applicable to Tier 1
capital and half to Tier 2 capital (shareholdings in
companies engaged in financial operations, inadequacy
of provisions).
The Basel II capital adequacy ratio was 11.1%
at June 30, 2012 (with a Basel II Tier 1 ratio of 9.0%).
Prudential capital, comprised of T ier 1capital
and Tier 2 capital, is determined in accordance with
CRBF Regulation No. 90 02, currently in effect. Tier 2
capital is taken into account only within the limit of 100%
of Tier 1 capital.
Furthermore, Tier 2 capital can only be recognised
within the limit of 50% of Tier 1 capital. Regulation
No. 95-02 on prudential market risk management
permits recognition of Tier 3 capital and, accordingly,
issuance of subordinated instruments having an initial
maturity two years or more. Crédit du Nord Group does
not use this option.
As a result, equity, Group share, stood at EUR 2,671.1
million at December 31, 2012 (compared to EUR
2,528.9 million at December 31, 2011). After taking
account of non-controlling interests and prudential
deductions, prudential Basel II Tier 1 capital came out
at EUR 1,572.9 million and Basel II risk-weighted assets
at EUR 17 471.6 million.
Basel II Capital Adequacy Ratio Information under Pillar 3
Risk-weighted assets can be broken down as follows
by type of risk:
• market risk exposure of EUR 2.1 million was
insignificant at December 31, 2012;
• credit risk exposure of EUR 16,537.4 million,
accounting for 94.7% of risk-weighted assets at
December 31, 2012;
• operational risk exposure of EUR 932.1 million,
accounting for 5.3% of risk-weighted assets at
December 31, 2012.
2
Basel II capital adequacy ratio
31/12/2012
31/12/2011
2,671.1
2,528.9
23.6
62.1
Intangible assets
-144.4
-150.0
Goodwill
-508.0
-508.0
Dividends proposed at the Shareholders' Meeting
-222.6
-222.6
(in EUR millions)
Consolidated equity, Group share (IFRS)
Non-controlling interests, after estimated dividend payout
Other regulatory adjustments
-144.4
-91.7
SUB-TOTAL TIER 1 CAPITAL
1,675.3
1,618.7
Basel II deductions (1)
TOTAL TIER 1 CAPITAL
Tier 2 capital
-102.4
-115.0
1,572.9
1,503.7
616.7
662.2
Basel II deductions (1)
-102.4
-115.0
Equity interests in insurance companies
-157.4
-142.4
356.9
404.8
1,929.8
1,908.5
16,537.4
16,758.5
2.1
6.6
TOTAL TIER 2 CAPITAL
TOTAL REGULATORY CAPITAL (TIER 1 + TIER 2)
Credit risk-weighted assets
Market risk-weighted assets
Operational risk-weighted assets
TOTAL RISK-WEIGHTED ASSETS
932.1
863.1
17,471.6
17,628.2
9.0%
8.5%
11.1%
10.8%
CAPITAL ADEQUACY RATIOS
Tier 1 ratio
Total capital ratio
(1) 50% of Basel 2 deductions are applied to Tier 1 capital and 50% to Tier 2 capital.
135
Individual
financial
statements
3
2012 Management Report _____________________________________________________ 137
Five-year financial summary ____________________________________________________ 139
Individual balance sheet at December 31 ________________________________________ 140
Income statement ___________________________________________________________ 142
Notes to the individual financial statements _______________________________________ 143
Information on the Corporate Officers ___________________________________________ 177
Statutory Auditors’ Report on the Annual Financial Statements ______________________ 188
Statutory Auditors’ Report on Related Party Agreements and Commitments __________ 190
Draft Resolutions: Ordinary General Shareholders’ Meeting of May 16, 2013 __________ 193
136
Individual financial statements
2012 Management Report
3
The situation in the euro zone may have quieted
in 2012, but the economic climate in France nevertheless
remained heavily impacted by the crisis, with virtually
nil GDP growth, stagnating household consumption
and a substantial downturn in the job market.
In such a challenging environment, affecting the business
customers and wealth management markets alike,
Crédit du Nord continued to develop its customer bases
and benefited from the commercial investments launched
in recent years.
Fiscal year activity
Crédit du Nord’s balance sheet totalled EUR 38,515.1 million
in 2012, representing a decline on 2011. This drop can be
attributed to the transfer, at January 1, 2012, of the PACA
region branches to Société Marseillaise de Crédit (the
transfer of PACA region branches at December 31, 2011
amounted to EUR 2,251.9 million).
Outstanding loans improved (+5.9% excluding the PACA
transfer) despite the decrease in new loans both to
individuals and businesses, caused by weaker demand
linked to the sluggish economic climate.
Special savings accounts and sight deposits (+11.0%
excluding the PACA transfer) were boosted by outflows
from money market mutual funds, still unattractive given
the particularly low level of interest rates, and by the
tendency of the crisis to drive economic operators to
keep their cash in sight accounts and shortterm savings
accounts.
The change in the securities portfolio reflects the initiatives
undertaken to monetise certain receivables in order to
make them eligible for ECB financing operations.
transfer (net banking income for the PACA region was
EUR 121.6 million in 2011) was offset by the increase
in income generated on equity securities (dividends paid
by its subsidiaries: EUR 187.4 million in 2012 versus
EUR 139.6 million in 2011) and by impairment reversals
(recorded under “Net gains on short-term investment
portfolio transactions”), recognised predominantly on
short-term investment securities purchased in 2008
from the Etoile Gestion (+EUR 39.6 million in 2012
versus -EUR 56.2 million in 2011). This change in NBI
drew on the resilience of sales margins and fee income,
despite persistently difficult market conditions and
heavy competitive constraints. Net fee income totalled
EUR 382.0 million, buoyed by continuous efforts to
increase the number of banking and insurance products
and services sold to customers.
In June 2011, Crédit du Nord implemented a new system
for rebilling operating expenses to its banking subsidiaries.
This rebilling system, which covered the entire 2012 fiscal
year (EUR 77.6 million in 2012 versus EUR 22.6 million in
2011), combined with the impact of the PACA transfer
(operating expenses for the PACA region came to
EUR 76.0 million in 2011), was the reason for the sharp
drop in operating expenses compared to 2011.
In light of all these factors, gross operating income
amounted to EUR 520.6 million.
Although the outlook in terms of cost of risk is unfavourable
for the coming year, economic tensions had only a limited
impact in 2012. Once corrected for provisions booked
on indirect risks linked to Greek debt (EUR 26.6 million
in 2011 versus EUR 2.8 million in 2012), cost of risk
increased slightly by +2.3%.
Pre-tax profit came out at EUR 436.3 million. After income
tax, net income for the period stood at EUR 344.9 million.
2012 net income
Crédit du Nord’s net banking income amounted to
EUR 1,083.5 million in 2012, up +0.4% on 2011. The
decrease in net banking income subsequent to the PACA
137
3
Outlook
Even in the worsening conditions prevalent in 2012,
Crédit du Nord posted resilient earnings and confirmed
the solidity of its business model.
weak and cost of risk to climb further. However, Crédit
du Nord expects to continue taking advantage of the
growth drivers built by investments in the opening of new
branches and implementation of software development
and organisational projects over the last few years.
2013 is shaping up to be a tough year: savings are
expected to continue growing, loan origination to remain
Schedule of trade payables
Payables not yet due
1-30 days
31-60 days
> 60 days
Payables due
Other scheduled
payments
Total
Amount at 31/12/2012
1.0
-
-
-
0.2
1.2
Amount at 31/12/2011
1.1
-
-
-
0.3
1.4
(in EUR millions)
The maturity dates correspond to the payment dates
listed on the invoices or to supplier terms and conditions,
independent of their date of receipt.
The Purchasing Department records the invoices and
carries out the payments requested by all of the functional
departments. The network branches have special teams
to process and pay their own invoices.
In accordance with Crédit du Nord’s internal control
procedures, invoices are only paid after they are
138
approved by the departments which ordered the services.
Once approval is obtained, they are entered into a joint
application, with payments made according to the terms
set by the suppliers.
The “Other scheduled payments” column refers to retention
payments for work which will be paid approximately 6
months after the work is received.
Five-year financial summary
3
Five-year financial summary
2012
2011
2010
2009
2008
Capital stock (in EUR)
890,263,248
890,263,248
890,263,248
740,263,248
740,263,248
Shares outstanding
111,282,906
111,282,906
111,282,906
92,532,906
92,532,906
Revenue without tax (1)
1,677,752
1,843,867
1,579,145
1,698,558
2,126,540
Net Banking Income
1,083,516
1,079,181
1,070,379
1,054,647
931,564
542,248
530,465
463,278
520,679
404,049
FINANCIAL POSITION AT YEAR-END
RESULTS OF OPERATIONS FOR THE YEAR
(IN EUR THOUSANDS)
Income before tax, depreciation, provisions
and profit-sharing
Income tax
-91,369
-58,458
-46,124
-37,134
-14,635
Income after tax, depreciation and provisions
344,903
226,891
256,758
331,356
168,230
Total dividends (2)
222,566
222,566
-
323,865
129,546
Earnings after tax, but before depreciation
and provisions (3)
3.97
4.02
3.50
4.98
4.05
Income after tax, depreciation and provisions
3.10
2.04
2.31
3.58
1.82
2.00
2.00
-
3.50
1.40
4,616
5,197
5,300
5,415
5,415
250,814
269,314
265,934
263,915
260,091
111,911
114,816
118,476
113,801
113,314
EARNINGS PER SHARE (in euros)
Dividend per share
(2)
EMPLOYEE DATA
Number of employees (4)
Total payroll (in EUR thousands)
Total benefits (Social Security, corporate
benefits, etc.)
(in EUR thousands)
(1) Defined as the sum of bank operating income and other income deducted for interest paid on financial instruments.
(2) In respect of the fiscal year.
(3) Based on the number of outstanding shares at year-end.
(4) Average staff count in activity (amounts for previous years have been corrected with respect to published financial statements).
139
3
Individual balance sheet at December 31
Assets
Notes
(in EUR millions)
Cash, due from central banks and postal accounts
31/12/2012
31/12/2011
1,883.4
1,740.4
Treasury notes and similar securities
4
334.5
1,016.7
Due from banks
2
6,843.7
10,103.0
3
16,663.1
17,947.2
Bonds and other fixed-income securities
4
9,927.0
6,095.2
4
0.5
0.6
Equity investments and other long-term investment securities
5
92.3
93.8
Investments in subsidiaries and affiliates
5
1,836.1
1,675.5
1.7
3.6
109.8
113.1
Lease financing and similar transactions
Intangible assets
6
Tangible assets
6
192.4
197.6
Other assets
7
317.9
277.7
Accruals
7
312.7
483.9
38,515.1
39,748.3
TOTAL
Off-balance sheet items
Notes
31/12/2012
31/12/2011
16
2,791.6
3,874.9
16
3,062.4
3,073.2
1.9
4.1
(in EUR millions)
Security commitments given
Forward financial instrument commitments
140
17
3,373.5
4,838.3
42,519.4
44,440.5
3
Liabilities
(in EUR millions)
Notes
Due to central banks, postal accounts
31/12/2012
31/12/2011
0.4
-
Due to banks
8
8,620.7
7,977.0
9
16,578.3
16,416.8
Debt securities
10
9,104.8
11,150.9
Other liabilities
11
384.4
392.1
Accruals
11
839.2
941.0
Provisions
12
171.8
175.9
Subordinated debt
14
671.3
672.7
Shareholders’ equity
15
2,144.2
2,021.9
890.3
890.3
Subscribed capital
Additional paid-in capital
10.4
10.4
897.4
893.2
Regulated provisions
0.8
0.8
Retained earnings
0.4
0.3
Reserves
Net income
TOTAL
344.9
226.9
38,515.1
39,748.3
Off-balance sheet items
Notes
31/12/2012
31/12/2011
Loan commitments received from banks
16
3,316.7
796.0
Guarantee commitments received from banks
16
7,373.7
8,122.7
1.8
4.0
3,374.7
4,836.0
(in EUR millions)
Security commitments received
141
3
Income statement
Income statement
(in EUR millions)
Notes
Interest and similar expenses
2011
941.5
-517.4
-378.9
Net interest and similar income (expenses)
18
481.1
562.6
Income from equity securities
19
187.4
139.6
442.0
494.2
Fee income
Fee expenses
-60.0
-56.2
Net fee income (expenses)
20
382.0
438.0
Net gains on trading portfolio transactions
21
-7.7
-4.1
Net gains on investment portfolio and similar transactions
21
39.6
-56.2
9.1
12.2
-8.0
-12.9
Other banking income
Other banking expenses
Net other banking income (expenses)
NET BANKING INCOME
1.1
-0.7
1,083.5
1,079.2
Personnel expenses
22
-386.8
-413.2
Other operating expenses
24
-121.9
-215.3
-54.2
-57.9
-562.9
-686.4
Depreciation and amortisation expense
Operating expenses, depreciation and amortisation expense
GROSS OPERATING INCOME
Cost of risk
25
OPERATING INCOME
Gains or losses on fixed assets
26
PRE-TAX PROFIT
Exceptional income
Income tax
Net allocation to regulated provisions
NET INCOME
142
2012
998.5
27
520.6
392.8
-86.0
-107.9
434.6
284.9
1.7
0.5
436.3
285.4
-
-
-91.4
-58.5
-
-
344.9
226.9
Notes to the individual financial statements
3
Notes to the individual financial statements
NOTE 1
ACCOUNTING PRINCIPLES AND VALUATION METHODS
Main valuation and presentation rules
for the individual financial statements
Crédit du Nord’s individual financial statements were drawn
up in accordance with the provisions of CRB (Banking
Regulation Committee) Regulation No. 91-01 applicable to
credit institutions, and the generally accepted accounting
principles used in the French banking profession. The
presentation of the financial statements complies with the
provisions of CRC (Accounting Regulation Committee)
Regulation No. 200003 relating to the individual financial
statements of companies under the authority of the CRBF
(French Banking and Financial Regulation Committee),
amended by CRC Regulation No. 2005-04 of November
3, 2005.
Comparability of financial statements
No change in accounting method was observed in 2012.
Partial asset transfer
The partial asset transfer described below was carried out
with a retroactive effective date at 1/1/2012:
• on October 21, 2012, the Crédit du Nord branches in the
PACA region, with book net assets of EUR 103.3 million,
were transferred to Société Marseillaise de Crédit. In
exchange for this transfer, Société Marseillaise de
Crédit issued 438,115 new shares each with a value
of EUR 16, in favour of Crédit du Nord, with additionalpaid in capital amounting to EUR 96.3 million.
Accounting principles and valuation methods
In accordance with the accounting principles applicable
to French credit institutions, for most transactions the
valuation methods take into account the original intention
of said transactions.
Transactions carried out for banking intermediation
purposes are maintained at their historic cost and
impaired in the event of counterparty risk. The results
of such transactions are recorded on a pro rata basis,
in accordance with the principle of separate accounting
years. This category includes transactions in forward
financial instruments aimed at hedging and managing
the overall interest rate risk of banking intermediation
activities.
Trading transactions are usually marked to market, with the
exception of loans, borrowings and short-term investment
securities, which are recorded at nominal value. When
instruments are traded on illiquid markets, the market
value used is reduced for reasons of prudence. Moreover,
a reserve is booked to cover valuations established on
the basis of in-house models (Reserve Policy), which is
determined according to the complexity of the model
used and the life of the financial instrument.
Due from banks and customers – endorsements
Amounts due from banks and customers are classified
according to their initial duration or type into: demand
accounts (current accounts and overnight transactions)
and term accounts in the case of banks; customer
receivables, current accounts and other loans in
the case of customers. Amounts due from banks
and customers include outstanding loans and repurchase
agreements, secured by notes and securities, entered into
with these counterparties.
Accrued interest on these amounts is recorded as related
receivables through profit or loss.
Fees received and incremental transaction costs related
to the granting of a loan are comparable to interest and
spread over the effective life of the loan.
Off-balance sheet guarantees and endorsements
correspond to irrevocable cash loan commitments and
guarantee commitments which did not give rise to any
fund flows.
143
3
Impairment of individual outstanding loans
due to probable credit risk
In accordance with CRC Regulation No. 2002-03, if a loan
is considered to bear a probable risk that all or part of the
sums owed by the counterparty under the initial terms and
conditions of the loan agreement will not be recovered,
and notwithstanding the existence of loan guarantees,
the loan in question is classified as doubtful. In any event,
outstanding loans are reclassified as doubtful where one
or more payments is at least three months overdue (six
months for real estate and property loans, nine months
for municipal loans), or where, any missed payments
notwithstanding, there is a probable risk of loss or where
a loan is disputed.
Unauthorised overdrafts are classified as doubtful loans
after a period of no more than three uninterrupted months
during which the account limits are exceeded (limits of
which individual customers are notified; limits resulting
from legal or de facto agreements with other categories
of customers).
Where a given borrower’s loan is classified as a “doubtful
loan”, any other loans and commitments of the same
borrower are also automatically classed as doubtful,
regardless of any guarantees.
Doubtful loans and non-performing loans give rise to
impairment for the probable portion of doubtful and
non-performing loans that will not be recovered, and
are recorded as an asset write-down. The amount of
the impairment loss for doubtful and non-performing
loans is equal to the difference between the gross book
value of the asset and the present value discounted for
estimated recoverable future cash flows, taking into
account the value of any guarantees, discounted at the
original effective interest rate of the loans. Furthermore,
this impairment may not be less than the full amount of
the accrued interest on the doubtful loan. Impairment
allocations and reversals, losses on irrecoverable loans
and amounts recovered on impaired loans are booked
under “Cost of risk”.
Doubtful loans can be reclassified as performing loans
once there is no longer any probable credit risk and once
payments have resumed on a regular basis according
144
to the initial contractual schedule. Moreover, doubtful
loans which have been restructured may be reclassified
as performing.
In the event the creditworthiness of the borrower is such
that after a reasonable period of classification in doubtful
loans, a reclassification to performing loan status is no
longer plausible, the loan is specifically classified as a nonperforming loan. This status is conferred at close-out or
upon cancellation of the loan agreement and, in any event,
one year following classification in doubtful loans, with
the exception of doubtful loans for which the contractual
clauses are respected and/or doubtful loans with valid
enforceable guarantees. Restructured loans for which the
borrower has not respected payment schedules are also
classified as non-performing loans.
Performing loans under watch
Within the “Performing loan” risk category, Crédit du
Nord has created a subcategory called “Performing loans
under watch”, to cover loans/receivables requiring closer
supervision. This category includes loans/receivables
where certain evidence of deterioration has appeared
since they were granted.
The Group conducts historical analyses to determine
the rate of classification of these loans/receivables as
doubtful and the impairment ratio, and updates these
analyses on a regular basis. It then applies these figures to
homogeneous groups of receivables in order to determine
the amount of impairment.
Impairment due to sector credit risk
This type of impairment is not made on an individual loan
basis, but covers several classes of risk, including regional
sector risk (global risk in sectors of the regional economy
impaired by specific unfavourable business conditions).
Crédit du Nord’s Central Risk Division regularly lists the
business sectors that it considers to represent a high
probability of default in the short term due to recent events
that may have caused lasting damage to the sector.
A rate of classification as doubtful loans is then applied to
the total outstanding in these sectors in order to determine
the volume of doubtful loans. Impairments are then
booked for the overall amount of these outstanding loans,
using impairment ratios which are determined according
to the historical average rates of doubtful customers,
adjusted to take into account an analysis of each sector
by an independent expert on the basis of the economic
environment.
Securities portfolio
Securities are classified according to
• their type: public notes (Treasury notes and similar
securities), bonds and other fixed-income securities
(negotiable debt instruments, interbank securities),
shares and other equity securities;
• and the purpose for which they were required:
trading, short-term and long-term investment,
portfolio activities, equity investments, investments in
subsidiaries and affiliates, and other long-term equity
investments.
Sales and purchases of securities are recognised in the
balance sheet at the date of settlement-delivery.
In accordance with the provisions of amended CRB
Regulation No. 90-01 relating to the accounting treatment
of securities transactions, as amended by CRC Regulation
No. 2008-17, the rules for classifying and evaluating each
portfolio category are as follows:
Trading securities
Trading securities are securities initially bought or sold
principally for the purpose of reselling or repurchasing
them in the near-term, or held for the purpose of marketmaking activities. These securities are traded in active
markets, and the available market price reflects frequent
buying and selling under normal conditions of competition.
Trading securities also include securities linked to a sale
commitment in the context of an arbitrage operation done
on an organised or assimilated market and securities
purchased or sold in the specialised management of a
trading portfolio containing forward financial instruments,
securities or other financial instruments that are managed
together and for which there is evidence of a recent pattern
of short-term profit-taking.
Trading securities are recorded on the balance sheet at
cost, net of expenses.
3
They are marked to market at the end of the financial
period.
Net unrealised gains or losses, together with net gains
or losses on disposals, are recognised in the income
statement under “Net income from financial transactions”.
Coupon payments received on fixed-income securities in
the trading portfolio are recorded in the income statement
under “Net interest income from bonds and other fixedincome securities”.
Trading securities no longer held for sale in the short
term, no longer held for market-making purposes, or for
which the specialised portfolio management strategy for
which they are held no longer offers a recent profit-taking
profile in the short term, may be transferred to the “Shortterm Investment Securities” or “Investment Securities”
category if:
• an exceptional market situation requires a change in
holding strategy;
• or if the fixed-income securities can no longer be traded
on an active market following their acquisition, and if
Crédit du Nord intends and is able to hold them for the
foreseeable future or until their maturity.
Transferred securities are recorded in their new category
at their market value at the date of transfer.
Short-term investment securities
Short-term investment securities are all those that are
not classified as trading securities, long-term investment
securities, or investments in consolidated subsidiaries
and affiliates.
Equity securities are carried on the balance sheet at
cost excluding acquisition expenses, or at contribution
value. At year-end, cost is compared to realisable value.
For listed securities, realisable value is defined as the
most recent market price. Unrealised capital gains are
not recognised in the accounts but an impairment of
portfolio securities is booked to cover unrealised capital
losses, without said impairment being offset against any
unrealised capital gains. Income from these securities is
recorded in “Income from equity securities”.
145
3
These securities are carried at cost excluding acquisition
expenses and, in the case of bonds, excluding interest
accrued and not yet due at the date of purchase. The
positive or negative difference between cost and
redemption value is amortised to income over the life of
the relevant securities and using the actuarial method.
Accrued interest on bonds and other short-term
investment securities is recorded as Related receivables
and under “Net interest income from bonds and other
fixed-income securities” in the income statement.
At year-end, cost is compared to realisable value or, in the
case of listed securities, to their most recent market price.
Unrealised capital gains are not recognised in the accounts
but an impairment of portfolio securities is booked to cover
unrealised capital losses, after consideration of any gains
made on any related hedging transactions.
Allocations to and reversals of impairments for losses on
short-term investment securities together with gains and
losses on sales of these securities are recorded under
“Net income from financial transactions” in the income
statement.
Short-term investment securities can be reclassified as
“Investment Securities” if:
• an exceptional market situation requires a change in
holding strategy;
• or if the fixed-income securities can no longer be traded
on an active market following their acquisition, and if
Crédit du Nord intends and is able to hold them for the
foreseeable future or until their maturity.
Long-term investment securities
Long-term investment securities are acquired debt
securities or reclassified short-term investment securities
which Crédit du Nord intends to hold until maturity, where
it has the financial capacity to do so and is not subject to
any legal or other form of constraint that might undermine
its ability to do so.
Accounting recognition of investment securities is
identical to that of short-term investment securities. Longterm investments are booked according to the same
146
principles as short-term investment securities, except that
no impairment is recorded for unrealised losses, unless
there is a strong probability that the securities will be sold
in the short term, or unless there is a risk that the issuer
will be unable to redeem them.
Allocations to and reversals of impairments for losses
on long-term investment securities, together with gains
and losses on sales of these securities, are recorded in
the income statement under “Net income from long-term
investments”.
Equity investments, investments in
subsidiaries and affiliates, and other longterm investments
This category of securities covers “Equity investments
and investments in subsidiaries and affiliates”, when it
is deemed useful to Crédit du Nord’s business to hold
the said shares in the long term. This notably covers
investments that meet the following criteria:
• shares in companies that share directors or senior
managers with Crédit du Nord and where influence
can be exercised over the company in which the shares
are held;
• shares in companies that belong to the same group
controlled by individuals or legal entities, where the said
persons or entities exercise control over the group and
ensure that decisions are taken in unison;
• shares representing more than 10% of the voting rights
in the capital issued by a bank or a company whose
business is directly linked to that of Crédit du Nord.
This category also includes “Other long-term investment
securities”. These are equity investments made by Crédit
du Nord with the aim of developing special professional
relations with a company over the long term but without
exercising any influence on its management due to the
low proportion of attached voting rights.
Investments in consolidated subsidiaries and affiliates,
and other long-term equity investments are recorded at
their purchase price net of acquisition costs. Dividend
income earned on these securities is booked in the
income statement under “Income from equity securities”.
At year-end, investments in consolidated subsidiaries
and affiliates are valued at their value in use, namely the
price the company would accept to pay to obtain the said
securities if it had to acquire them in view of its investment
objective. This value is estimated on the basis of various
criteria, such as shareholders’ equity, profitability, and the
average share price over the last three months. Unrealised
capital gains are not recognised in the accounts but an
impairment on portfolio securities is booked to cover
unrealised capital losses. Allocations to and reversals of
impairments as well as any capital gains or losses realised
on the disposal of these securities, including any profit or
loss generated when tendering these securities to public
share exchange offers, are booked under “Net income
from long-term investments”.
Fixed assets
Operating and investment fixed assets are booked on the
balance sheet at cost. Borrowing expenses incurred to
fund a lengthy construction period for fixed assets are
included in the acquisition cost, along with other directly
attributable expenses. Investment grants received are
subtracted from the cost of the relevant assets.
Software developed internally is recorded on the asset
side of the balance sheet in the amount of the direct cost
of development, which includes external expenditure on
hardware and services and personnel expenses which
can be attributed directly to its production and preparation
for use.
As soon as they are fit for use, fixed assets are depreciated
over their useful life. Any residual value of the asset is
deducted from its depreciable amount.
Where one or more components of a fixed asset are used
for different purposes or to generate economic benefits
3
over a different time period from the asset considered as a
whole, these components are depreciated over their own
useful life. Allocations to depreciation and amortisation are
recorded on the income statement under “Amortisation
expense”.
Crédit du Nord has applied this approach. Depreciation
periods for other categories of fixed assets depend on
their useful life, usually estimated in the following ranges:
Major structures
Infrastructures
50 years
Doors and Windows, roofing
20 years
Façades
30 years
Elevators
Electrical installations
Electricity generators
Technical
installations
Air conditioning, smoke
extraction
Heating
10 to 30
years
Security and surveillance
installations
Plumbing, piping
Fire safety equipment
Fixtures & fittings
Finishings, dry wall, edging
10 years
Depreciation periods for other categories of fixed assets
depend on their useful life, usually estimated in the
following ranges:
Plant and equipment
Transport equipment
Furniture
5 years
4 years
10 years
IT and office equipment
3 to 5 years
Software, developed or acquired
3 to 5 years
Franchises, patents, licences, etc.
5 to 20 years
147
3
Amounts due to banks and customer deposits
Amounts due to banks and customer deposits are
classified according to their initial duration and type into:
demand (deposits, current accounts) and term accounts
in the case of banks; and special savings accounts
and other deposits in the case of customers. This debt
includes pension transactions, in the form of securitised
debt payables, carried out with these economic operators.
Accrued interest on these amounts is recorded as related
payables through profit or loss.
Debt securities
These liabilities are broken down into medium-term notes,
interbank securities and negotiable debt instruments,
bonds and other fixed-income securities (with the
exception of subordinated notes, which are classified
under subordinated debt).
Interest accrued and payable in respect of these securities
is booked as related payables through profit or loss. Bond
issuance and redemption premiums are amortised using
the straight-line or actuarial method over the life of the
related borrowings. The resulting expense is recorded in
the income statement under “Net income from bonds and
other fixed-income securities”.
Bond issuance costs accrued over the period are booked
as expenses for the period, under “Net income from
bonds and other fixed-income securities” in the income
statement.
Subordinated debt
This item includes all dated or undated borrowings,
whether or not in the form of securitised debt, which in
the case of liquidation of the borrowing company may
only be redeemed after all other creditors have been paid.
Interest accrued and payable in respect of subordinated
debt, if any, is booked as related payables and as an
expense on the income statement.
Provisions
Provisions include:
• provisions for commitments;
• provisions for contingencies and disputes.
148
Provisions for contingencies are defined as liabilities with
no precisely defined amount or due date. They are only
booked if the company has an obligation to a third party
that will probably or necessarily lead to a transfer of funds
to the third party, without compensation for at least an
equivalent amount being expected from this third party.
Provisions are presented in Note 12. Information
pertaining to the category and amount of risks involved
is not provided if Crédit du Nord is of the opinion that it
could result in major losses in a legal dispute against third
parties concerning the object of the provision.
Equalisation provisions are classified by type in the
relevant income statement.
Commitments in respect of home savings
accounts
Home savings accounts and plans are savings schemes
for individual customers (in accordance with Law No.
65-554 of July 10, 1965), which combine an initial deposit
phase in the form of an interest-earning savings account
with a lending phase where the deposits are used to
provide property loans. By regulation, this latter phase is
subject to the previous existence of the savings phase and
is therefore inseparable from it. The deposits collected
and loans granted are booked at amortised cost.
These instruments generate two types of commitments for
Crédit du Nord: the obligation to subsequently lend to the
customer at an interest rate established upon the signing
of the agreement, and the obligation to pay interest on
the customer’s savings in the future at an interest rate set
upon the signing of the agreement, for an indefinite period.
Commitments with future adverse effects for Crédit du
Nord are subject to provisions booked as balance-sheet
liabilities, any changes in which are recorded on the
interest margin line under “Net Banking Income”. These
provisions relate exclusively to commitments under home
savings accounts and schemes existing at the date of the
provision’s calculation.
Provisions are calculated for each generation of home
savings schemes, on the one hand, with no netting
between the different generations of schemes, and for all
home savings accounts taken together, which constitutes
a single all-encompassing generation, on the other hand.
During the savings phase, provisions are calculated
according to the difference between average expected
outstanding savings and minimum expected outstanding
savings, both of which are determined statistically based
on historic observations of actual customer behaviour.
During the lending phase, provisions are calculated
according to loans already issued but not yet due at the
balance sheet date, as well as future loans considered as
statistically probable on the basis of customer savings
deposits on the balance sheet at the date of calculation
and on historic observations of actual customer behaviour.
A provision is booked if the discounted value of expected
future earnings for a given generation of home savings
products is negative. These results are measured on the
basis of interest rates available to individual customers
for equivalent savings and loan instruments, with similar
estimated life and date of inception.
Gains and losses arising from ordinary activities in foreign
currencies are booked to the income statement.
In accordance with CRB regulation 89-01, forward foreign
exchange transactions are valued on the basis of the
forward foreign exchange rate of the relevant currency
for the remaining maturity. Spot and other forward foreign
exchange positions are revalued on a monthly basis using
official month-end spot rates. Unrealised gains and losses
are recognised in the income statement.
Forward financial instrument transactions
Transactions in forward interest rate, foreign exchange
or equity instruments are accounted for in accordance
with amended CRB Regulations 88-02 and 90-15 and
Directive 94-04 of the French Banking Commission.
Nominal commitments on forward financial instruments
are recorded as a separate off-balance sheet item.
This amount represents the volume of outstanding
transactions and does not represent the potential gain or
3
loss associated with the market or counterparty risk on
these transactions.
The accounting treatment of income or expenses on these
forward financial instruments depends on the purpose for
which the transaction was concluded, as follows:
Hedging transactions
Income and expenses on forward financial instruments
used as a hedge and assigned from the beginning to an
identifiable item or group of similar items, are recognised
in the income statement in the same manner as revenues
and expenses on the hedged item. Income and expenses
on interest rate instruments are booked as net interest
income in the same interest income or expense account
as the items hedged. Income and expenses on other
instruments are booked as “Net income from financial
transactions”, under “Income from forward financial
instruments”.
Income and expenses on forward financial instruments
used for hedging and management of overall interest rate
risk are recorded in the income statement on a pro rata
basis. They are recognised as “Net income from financial
transactions” under “Income from forward financial
instruments”.
Transactions in open positions
All relative income and expenses are booked to the income
statement on a pro rata basis. They are recognised as
“Net income from financial transactions” under “Income
from forward financial instruments”. Unrealised losses,
determined by a book-to-market value comparison, are
provisioned. Unrealised gains are not recorded.
Guarantees given and received
Guarantees given at the request of customers or banks are
recorded as off-balance sheet items in the amount of the
commitment. For guarantees received, only those from
lending institutions, States, government administrations
and local authorities are recorded.
149
3
Off-balance sheet guarantees and endorsements
correspond to irrevocable cash loan commitments and
guarantee commitments which did not give rise to any
fund movements.
Where necessary, these financing guarantees and
commitments are subject to provisions.
Net income from service fees
Crédit du Nord recognises service fee income and
expenses in different ways depending on the type of
service.
Fees for continuous services, such as certain fees on
payment instruments, custody fees or web-service
subscriptions are booked as income over the life of the
service provided.
Fees for one-off services, such fund activity fees, finder’s
fees received, penalties following payment incidents are
booked to income when the service is provided under
“Fee income – Services and others”.
Personnel expenses
The “Personnel expenses” account includes all expenses
related to personnel, notably the cost of the legal employee
profit-sharing and incentive plans for the year.
Staff benefits
Crédit du Nord grants the following benefits to its
employees:
• post-employment benefits, such as pension plans or
retirement bonuses;
• long-term benefits such as deferred variable
remuneration, long service awards or the Compte
Epargne Temps (CET) flexible working provisions;
• termination benefits.
Pension plans may be defined contribution or defined
benefit.
Defined contribution plans limit Crédit du Nord’s liability
to the contributions paid to the plan but do not commit
150
Crédit du Nord to a specific level of future benefits.
Contributions paid are booked as an expense for the year
in question.
Defined benefit plans commit Crédit du Nord, either
formally or implicitly, to pay a certain amount or level of
future benefits and therefore bear the associated medium
or long-term risk.
A provision is recorded on the liability side of the balance
sheet under “Provisions” to cover all of the above retirement
commitments. This is assessed regularly by independent
actuaries using the projected unit credit method. This
valuation technique incorporates assumptions about
demographics, early retirement, salary rises and discount
and inflation rates.
When these plans are financed from external funds
classed as plan assets, the fair value of these funds is
subtracted from the provision to cover the obligations.
Differences arising from changes in calculation
assumptions (early retirements, discount rates, etc.)
or differences between actuarial assumptions and
real performance (return on plan assets) are booked
as actuarial gains or losses. They are amortised in the
income statement according to the corridor method: i.e.
over the expected average remaining working lives of
the employees participating in the plan, as soon as they
exceed the greater of:
• 10% of the present value of the defined benefit
obligation;
• 10% of the fair value of the assets at the end of the
previous financial year.
Where a new or amended plan comes into force the cost
of past services is spread over the remaining period until
vesting.
The annual expense recognised as “Personnel expenses”
for defined benefit plans includes:
• additional entitlements vested by each employee
(current service cost);
• the interest cost corresponding to the increase in the
present value of a defined benefit obligation;
• the expected return on any plan assets (gross yield);
• the amortisation of actuarial gains and losses and past
service cost;
• the effect of any plan curtailments or settlements.
Long-term benefits
These are benefits paid to employees more than 12
months after the end of the period in which they provided
the related services. Long-term benefits are measured
in the same way as post-employment benefits, except
for the treatment of actuarial gains and losses and past
service costs which are booked immediately to the income
statement.
Cost of risk
The figure shown under “Cost of Risk” includes net
reversals of impairment losses and provisions for credit
risk, losses on non-recoverable loans and amounts
recovered on impaired loans, and allowances and
reversals for other risks.
Gains or losses on fixed assets
This item covers capital gains or losses realised on
disposals, as well as the net allocation to impairments
for investments in consolidated subsidiaries and affiliates,
long-term investment securities and offices and other
premises. Income from real-estate holdings excluding
offices is booked under “Net Banking Income”.
Income tax
All taxes (excluding income tax) whose assessment refers
to items for the fiscal year in question are recognised as
expenses for said year, whether or not the tax was actually
paid during the course of the fiscal year.
Current income tax
Since January 1, 2010, Crédit du Nord has been included
in Societe Generale’s tax consolidation scope. Therefore,
a tax consolidation sub-group has been set up between
3
Crédit du Nord and some of subsidiaries in which it holds
a direct or indirect ownership interest of at least 95%. The
convention adopted is that of neutrality.
In France, standard corporate income tax is 33.33%.
In addition, a social security contribution of 3.3% (after
deduction from taxable income of EUR 0.76 million) was
introduced in 2000 and, as from 2011, an additional 5%
tax for companies generating revenue in excess of EUR
250 million.
Since January 1, 2007, long-term capital gains on
equity investments in predominantly real estate-oriented
companies have been taxed at 15%, while capital gains
on other equity investments are tax-exempt, subject to
a share for fees and expenses of 12% on the amount
of gross capital gains in the event a net capital gain is
generated over the long term. In addition, under the
regime of parent companies and subsidiaries, dividends
received from companies in which the equity investment is
at least 5% are tax-exempt (with the exception of a share
for fees and expenses equivalent to 5% of the dividends
paid).
Tax credits arising in respect of interest from loans and
income from securities are recorded in the relevant interest
account as they are applied in settlement of income taxes
for the year. The corresponding income tax expense is
kept in the income statement under “Income Tax”.
Deferred tax
Crédit du Nord records deferred taxes in its parent
company financial statements.
Deferred taxes are recognised in the event a temporary
difference is detected between the restated book values
and the tax values of balance sheet items. Deferred taxes
are calculated using the liability method. Accordingly, they
are adjusted whenever there is a change in the tax rate.
The corresponding impact is added to/subtracted from
the deferred tax expense. Net deferred tax assets are
recognised where there is a possibility of recovering over
a given time period.
151
3
For 2012 and subsequent fiscal years, the normal tax rate
used to determine deferred tax is 34.43% for earnings
taxed at the normal rate, and the reduced rate is 4.13%
taking into account the nature of the taxed transactions.
Deferred taxes are determined separately for each
taxable entity and are not discounted to present value
when the corresponding effect is not significant or when
a precise timetable has not been drawn up.
Exceptional income
This heading includes income earned and expenses
incurred by Crédit du Nord that are considered to be
exceptional in view of either the amount or the manner in
which they were generated. In most cases, said income
or expenses are the result of events that fall outside the
scope of Crédit du Nord’s activity.
NOTE 2 Due from banks
(in EUR millions)
31/12/2012
31/12/2011
1,388.3
1,152.8
362.0
1,084.6
4,983.8
7,762.3
94.5
86.2
0.2
-
15.4
17.6
6,844.2
10,103.5
-0.5
-0.5
6,843.7
10,103.0
Demand deposits and loans
Current accounts
Overnight deposits and loans
Subordinated and participating loans
Securities received under repurchase agreements
Related receivables
TOTAL GROSS
(1) (2) (3) (4)
Impairments
TOTAL NET
(1) o/w non-performing loans
(2) o/w irrecoverable non-performing loans
(3) o/w transactions with Crédit du Nord Group
(4) o/w transactions with Societe Generale Group
152
-
-
0.5
0.5
5,104.9
5,984.0
539.4
2,854.7
3
NOTE 3 Transactions with customers
31/12/2012
31/12/2011
242.0
360.3
15,773.6
16,857.7
Short-term loans
1,081.2
1,226.7
37.9
41.4
(in EUR millions)
Commercial loans
Export loans
Capital expenditure loans
3,267.5
3,540.6
Housing loans
9,383.8
10,002.8
Other loans
2,003.2
2,046.2
1,064.4
1,175.5
Overdrafts
Related receivables
TOTAL GROSS (1) (2) (3) (4)
Impairments
TOTAL NET
34.7
47.0
17,114.7
18,440.5
-451.6
-493.3
16,663.1
17,947.2
(1) o/w non-performing loans
331.8
355.9
(2) o/w irrecoverable non-performing loans
531.4
579.8
(3) o/w receivables pledged as security
8,109.6
5,986.0
(4) o/w receivables eligible as collateral for Banque de France financing
1,394.5
1,561.7
205.2
215.4
NOTE 4 Treasury notes, bonds and other fixed-income securities, shares
and other equity securities
31/12/2012
31/12/2011
Treasury
notes and
similar
securities
Shares and
other equity
securities
Bonds and
other fixedincome
securities
-
-
-
332.8
3.6
-
-3.0
332.8
0.5
Gross amount
-
-
42.3
42.3
Impairments
-
-
-3.0
-3.0
(in EUR millions)
Trading portfolio
Total
Treasury
notes and
similar
securities
Shares and
other equity
securities
Bonds and
other fixedincome
securities
Total
-
-
-
4.0
4.0
9,916.5 10,252.9
1,011.2
3.6
6,105.6
7,120.4
-47.1
-
-3.0
-87.3
-90.3
9,872.4 10,205.7
1,011.2
0.6
6,018.3
7,030.1
-
-
59.6
59.6
-
-
-2.0
-2.0
Short-term investment
portfolio (*)
Gross book value
Impairments
Net amount
-44.1
Investment portfolio
Net amount
Related receivables
TOTAL
-
-
39.3
39.3
-
-
57.6
57.6
1.7
-
15.3
17.0
5.5
-
15.3
20.8
334.5
0.5
9,927.0
10,262.0
1,016.7
0.6
6,095.2
7,112.5
(*) o/w securities eligible as collateral for Banque de France financing
6,525.0
4,011.2
153
3
Additional information on securities
Short-term investment portfolio
31/12/2012
31/12/2011
Estimated value of short-term investment securities
Unrealised capital gains
6.1
8.2
Unrealised capital gains on shares and other equity securities
4.6
4.1
Unrealised capital gains on bonds and other fixed-income securities
1.5
4.1
-5.3
-6.8
-
-
695.2
1,040.1
9.3
23.3
Premiums and discounts related to short-term investment securities (excluding doubtful
securities)
Shares of UCITS held
Listed securities (net of provisions and excluding related receivables)
Subordinated securities (net of provisions and excluding related receivables)
Investment portfolio
The investment portfolio is wholly comprised of OBSAARs (bonds with redeemable and/or acquisition warrants): two
partial redemptions were recorded in 2012 for EUR 6.4 million (excluding related receivables) and two OBSAARs were
exited from the portfolio for EUR 10.2 million.
NOTE 5 Equity investments, other long-term investment securities
and investments in subsidiaries and affiliates
Equity investments and other long-term investment securities
31/12/2012
31/12/2011
Banks
73.0
73.4
Others
19.4
21.1
TOTAL GROSS
92.4
94.5
Impairments
-0.1
-0.7
TOTAL NET
92.3
93.8
(in EUR millions)
154
3
(in EUR millions)
Banks
31/12/2012
31/12/2011
1,415.1
1,269.5
-
74.9
1,415.1
1,194.6
421.1
406.1
Listed (1)
Unlisted
(2)
Others
Listed
Unlisted (3)
TOTAL GROSS
-
-
421.1
406.1
1,836.2
1,675.6
-0.1
-0.1
1,836.1
1,675.5
Impairments
TOTAL NET
The main changes for 2012 concern:
(1) The withdrawal of Tarneaud shares from trading following the takeover bid filed by Crédit du Nord on November 13, 2012: -EUR 74.9 million.
(2) The acquisition of Tarneaud shares following the takeover bid filed by Crédit du Nord on November 13, 2012: +EUR 42.3 million (and the transfer of
previously listed shares: +EUR 74.9 million).
(2) The capital increase carried out by Société Marseillaise de Crédit: +EUR 103.3 million.
(3) The capital increase carried out by Antarius: +EUR 15.0 million.
NOTE 6
Fixed assets
(in EUR millions)
Gross book
value at
31/12/2011 Acquisitions
Disposals
Gross book
Other
value at
changes 31/12/2012
Accumulated
depreciation and
Net book
amortisation at
value at
31/12/2012 31/12/2012
Operating fixed assets
Intangible assets
Start-up costs
Software created
-
-
-
-
-
-
-
252.4
29.0
-17.6
-
263.8
-175.9
87.9
Software purchased
82.3
0.3
-
-0.4
82.2
-79.9
2.3
Others
20.2
1.1
-
-1.6
19.7
-0.1
19.6
354.9
30.4
-17.6
-2.0
365.7
-255.9
109.8
SUB-TOTAL
Tangible assets
Land and buildings
159.3
3.2
-0.1
10.2
172.6
-50.9
121.7
Others
406.8
25.8
-0.4
-74.4
357.8
-290.4
67.4
SUB-TOTAL
566.1
29.0
-0.5
-64.2
530.4
-341.3
189.1
Fixed assets (excluding operating
fixed assets)
Tangible assets
Land and buildings
2.7
-
-
4.3
7.0
-4.2
2.8
Others
4.1
-
-
-
4.1
-3.6
0.5
SUB-TOTAL
6.8
-
-
4.3
11.1
-7.8
3.3
927.8
59.4
-18.1
-61.9
907.2
-605.0
302.2
TOTAL
155
3
NOTE 7 Accruals and other accounts receivable
(in EUR millions)
31/12/2012
31/12/2011
273.3
223.5
44.4
53.5
-
0.5
Other assets
Sundry debtors
Premiums on options purchased
Settlement accounts on securities transactions
Others
SUB-TOTAL
0.2
0.2
317.9
277.7
7.8
15.1
Accruals and other accounts receivable
Prepaid expenses
Deferred taxes
Accrued income
Others
SUB-TOTAL
TOTAL
56.7
58.0
176.2
275.1
72.0
135.7
312.7
483.9
630.6
761.6
31/12/2012
31/12/2011
588.2
524.1
NOTE 8 Due to banks
(in EUR millions)
Demand accounts
Demand deposits and current accounts
Related payables
SUB-TOTAL
0.1
0.1
588.3
524.2
7,999.2
7,441.9
Term accounts
Term deposits and borrowings
Related payables
156
33.2
10.9
SUB-TOTAL
8,032.4
7,452.8
TOTAL (1) (2)
8,620.7
7,977.0
1,009.9
1,507.9
3,683.6
4,528.0
3
NOTE 9 Transactions with customers
31/12/2012
31/12/2011
Demand
4,643.7
4,327.9
Term
1,000.5
1,129.1
SUB-TOTAL
5,644.2
5,457.0
(in EUR millions)
Special savings accounts
Other demand deposits
4,697.8
4,842.9
2,666.5
3,020.5
Financial customers
Others
SUB-TOTAL
4.3
12.8
492.0
494.7
7,860.6
8,370.9
1,026.1
1,569.0
75.2
58.9
1,712.6
-
Other term deposits
(1)
Financial customers (2)
Others
SUB-TOTAL
Related payables
98.1
41.0
2,912.0
1,668.9
87.6
71.7
16,504.4
15,568.5
73.9
848.3
16,578.3
16,416.8
0.5
0.5
1,756.8
33.5
31/12/2012
31/12/2011
6.8
7.5
1,151.2
1,956.0
3.3
6.7
SUB-TOTAL
1,161.3
1,970.2
Money market and negotiable debt securities
7,919.2
9,140.1
TOTAL
Securities sold to customers under repurchase agreements
TOTAL
(3)
(1) o/w guarantee deposits
(2) Transactions with the Blue Star Crédit du Nord Entreprises and FCT Blue Star Crédit du Nord Prêts Personnels funds
NOTE 10 Debt securities
(in EUR millions)
Short-term notes
Bonds
Related payables
Related payables
SUB-TOTAL
TOTAL
24.3
40.6
7,943.5
9,180.7
9,104.8
11,150.9
157
3
NOTE 11 Accruals and other accounts payable
(in EUR millions)
31/12/2012
31/12/2011
306.1
284.8
27.1
34.4
Other liabilities
Sundry creditors
Premiums on derivatives sold
Settlement accounts on securities transactions
2.4
2.5
48.8
70.4
384.4
392.1
Expenses payable
371.3
409.1
Deferred taxes
207.4
197.0
54.2
59.5
Others
206.3
275.4
SUB-TOTAL
839.2
941.0
1,223.6
1,333.1
Other securities transactions (1)
SUB-TOTAL
Accruals
Deferred income
TOTAL
(1) Main capital increases not fully paid up as of December 31, 2012: Hedin (EUR 7.8 million) - Verthema (EUR 10.5 million) - Nordenskiöld (EUR 25.0 million) - Legazpi (EUR 5.2 million).
NOTE 12 Provisions and impairments
(in EUR millions)
31/12/2012
31/12/2011
Asset impairments
Banks
0.5
0.5
Loans to customers
451.6
493.3
SUB-TOTAL (1)
452.1
493.8
Provisions
Provisions for off-balance sheet commitments
51.7
52.3
Sector-based provisions
40.2
37.2
Provisions for general risks and commitments
79.9
86.4
171.8
175.9
623.9
669.7
SUB-TOTAL
(3)
TOTAL PROVISIONS AND IMPAIRMENTS (EXCLUDING SECURITIES) (2)
Impairment of securities
TOTAL
(1) o/w impairment of irrecoverable non-performing loans
158
50.3
93.1
674.2
762.8
384.5
424.8
3
(2) The change in provisions and impairments breaks down as follows:
Allocations
Reversals/Uses
Provisions and
impairments at
31/12/2011
by cost
of risk
by other
income
statement
balances
Impairments
493.8
131.8
-
-85.6
-
-87.9
452.1
(3)
175.9
20.3
12.7
-11.2
-13.9
-12.0
171.8
669.7
152.1
12.7
-96.8
-13.9
-99.9
623.9
(in EUR millions)
Provisions
TOTAL
by cost
of risk
by other
income
statement
balances
Other
changes (*)
Provisions and
impairments at
31/12/2012
(*) «Other changes» related to the partial transfer of PACA region assets to Société Marseillaise de Crédit.
(3) Analysis of provisions:
Allocations
Reversals/Uses
Provisions at
31/12/2011
by cost
of risk
by other
income
statement
balances
commitments
52.3
13.1
-
-6.9
-
-6.8
51.7
Sector-based provisions
37.2
4.7
-
-
-
-1.7
40.2
Provisions for employee benefits
57.6
-
11.5
-
-12.8
-2.3
54.0
Provisions for disputes with customers
11.6
2.5
0.4
-3.9
-
-0.4
10.2
(in EUR millions)
Provisions for forward financial instruments
Other provisions
TOTAL
by cost
of risk
by other
income
statement
balances
Other
changes (*)
Provisions at
31/12/2012
4.4
-
0.8
-
-
-
5.2
12.8
-
-
-0.4
-1.1
-0.8
10.5
175.9
20.3
12.7
-11.2
-13.9
-12.0
171.8
(*) «Other changes» related to the partial transfer of PACA region assets to Société Marseillaise de Crédit.
NOTE 13 Home savings accounts and plans
A. Outstanding deposits in PEL/CEL accounts
31/12/2012
31/12/2011
299.0
385.4
194.6
333.1
367.4
231.1
SUB-TOTAL
861.0
949.6
(in EUR millions)
PEL accounts
CEL accounts
TOTAL
153.3
160.5
1,014.3
1,110.1
159
3
B. Outstanding housing loans granted with respect to PEL/CEL accounts
(in EUR millions)
31/12/2012
31/12/2011
10.7
16.8
7.0
4.3
1.1
1.5
18.8
22.6
31/12/2012
31/12/2011
3.1
-
0.4
2.3
2.0
7.0
SUB-TOTAL
5.5
9.3
CEL accounts
2.1
-
Drawn down loans
0.5
0.6
8.1
9.9
TOTAL
C. Provisions for commitments linked to PEL/CEL accounts (1)
(in EUR millions)
PEL accounts
TOTAL
(1) These provisions are booked as «Provisions for general risk and commitments» (see Note No. 12 under «Other provisions for general risk and commitments»).
D. Methods used to establish the parameters for valuing provisions
The parameters used for estimating the future behaviour
of customers are derived from historical observations of
customer behaviour patterns over long period (more than
10 years). The value of these parameters can be adjusted
if any changes are subsequently made to regulations
with the potential to undermine the reliability of past data
as an indicator of future customer behaviour.
The values of the different market parameters used,
notably interest rates and margins, are calculated
on the basis of observable data and constitute a best
estimate, at the date of valuation, of the future value of
these elements for the period concerned, in line with
the retail banking division’s policy of interest rate risk
management.
The discount rates used are derived from the zero coupon
swaps vs. Euribor yield curve at the date of valuation,
averaged over a 12-month period.
NOTE 14 Subordinated debt
31/12/2012
31/12/2011
Redeemable subordinated notes
316.0
316.0
Subordinated borrowings
350.0
350.0
5.3
6.7
671.3
672.7
(in EUR millions)
Interest payable
TOTAL
160
3
Details of redeemable subordinated notes
June 2004 issue of a total of EUR 50 million
with the following characteristics:
Issuance in October 2006 of a total EUR 100 million
Size:
Principal:
Number of notes:
Issue price:
Maturity:
Interest:
Redeemable at par on:
Size:
Principal:
Number of notes:
Issue price:
Maturity:
Interest:
EUR 50 million
EUR 300
166,667
99.87% of principal
12 years
4.70% of principal
June 14, 2016
EUR 100 million
EUR 10,000
10,000
100% of principal
10 years
4.38% of principal
October 18, 2016
July 2005 issue of a total of EUR 100 million
November 2006 issue of a total of EUR 66 million
Size:
Principal:
Number of notes:
Issue price:
Maturity:
Interest:
Size:
Principal:
Number of notes:
Issue price:
Maturity:
Interest:
EUR 100 million
EUR 10,000
10,000
100% of principal
10 years and 25 days
Principal x ((1+CNO-TEC
10 - 0.48% )^1/4 - 1)
July 25, 2015
EUR 66 million
EUR 300
220,000
100.01% of principal
12 years
4.15% of principal
November 6, 2018
For all redeemable subordinated notes, Crédit du Nord has placed a self-imposed ban on the early amortisation of
subordinated notes via redemption, but reserves the right to carry out early amortisation via stock market purchases
and the public offer of exchange or purchase of redeemable subordinated notes.
At December 31, 2012, the unamortised debit balance of the issue premiums of these borrowings stood at EUR 15,300.
Details of subordinated borrowings
Subordinated loan totalling EUR 350 million, taken
out on March 22, 2011, with the following characteristics:
Loan amount:
Maturity:
Interest:
Due date:
EUR 350 million
10 years
6M Euribor + 2%
March 22, 2021
This loan can only be prepaid at the borrower’s initiative with the prior approval of the Secretary General of the ACP.
Interest paid on these subordinated debts amounted to EUR 22.6 million at December 31, 2012 versus EUR 27.7 million
at December 31, 2011.
161
3
NOTE 15 Change in shareholders’ equity
(in EUR millions)
Common
stock (1)
Additional
paid-in-capital
Reserves
Retained
earnings
Net
Regulated
provisions
Shareholders’
equity
890.3
10.4
636.4
0.4
256.8
0.8
1,795.1
Capital increase
-
-
-
-
-
-
-
Third resolution of the General
Shareholders’ Meeting of
May 6, 2011
-
-
256.9
-0.1
-256.8
-
-
2011 net income
-
-
-
-
226.9
-
226.9
Other changes
-
-
-0.1
-
-
-
-0.1
890.3
10.4
893.2
0.3
226.9
0.8
2,021.9
Capital increase
-
-
-
-
-
-
-
Third resolution of the Combined
General Shareholders’ Meeting
of May 11, 2012 (2)
-
-
4.2
0.1
-226.9
-
-222.6
2012 net income
-
-
-
-
344.9
-
344.9
Other changes
-
-
-
-
-
-
-
890.3
10.4
897.4
0.4
344.9
0.8
2,144.2
(1) At December 31, 2012, Crédit du Nord SA’s fully paid-up share capital amounted to EUR 890,263,248 and consisted of 111,282,906 shares each with a par value of EUR 8.
(2) Distribution of a dividend of EUR 222.6 million to shareholders
Societe Generale owned 100% of Crédit du Nord’s
capital at December 31, 2012. As a result, Crédit du
Nord’s accounts are fully consolidated in Crédit du Nord’s
consolidated financial statements.
Profits plus earnings carried forward from the previous
period, i.e. EUR 447,029.16, resulted in total income
available for distribution of EUR 345,349,905.84 which
the Shareholders’ Meeting resolves to allocate as follows:
Proposed distribution of earnings
• allocation of a dividend of EUR 222,565,812.00 to
shareholders; a dividend per share of EUR 2.00;
Acting in accordance with the quorum and majority
requirements established for Ordinary General
Shareholders’ Meetings, the Shareholders’ Meeting
resolved to allocate net income for the period amounting
to EUR 344,902,876.68.
162
• allocation of EUR 122,000,000.00 to the ordinary
reserve;
• allocation of EUR 784,093.84 to retained earnings.
The ordinary reserve is therefore increased from EUR
808,000,000.00 to EUR 930,000,000.00.
3
NOTE 16 Commitments
31/12/2012
31/12/2011
599.8
1,037.9
• To customers
2,191.8
2,837.0
SUB-TOTAL
2,791.6
3,874.9
(in EUR millions)
Commitments given
Loan commitments
• To banks
• To banks
273.6
226.7
• To customers
2,788.8
2,846.5
SUB-TOTAL
3,062.4
3,073.2
TOTAL (1) (2)
5,854.0
6,948.1
Commitments received
Loan commitments from banks
3,316.7
796.0
Guarantee commitments from banks
7,373.7
8,122.7
10,690.4
8,918.7
TOTAL (3) (4)
1,021.0
1,490.3
8.1
7.0
0.1
0.1
314.9
355.9
NOTE 17 Forward financial instruments commitments
Position management
transactions
Hedging
transactions
Total
31/12/2012
Total
31/12/2011
Interest rate futures
-
-
-
-
Foreign exchange futures
-
-
-
-
-
-
-
-
2,927.1
33,123.2
36,050.3
38,734.4
-
-
-
-
-
-
-
-
(in EUR millions)
Firm transactions
Transactions on organised markets
OTC agreements
Interest rate swaps
Others
Options
Interest rate options
Other options
TOTAL
-
1,630.4
1,630.4
507.1
1,707.5
3,131.2
4,838.7
5,199.0
4,634.6
37,884.8
42,519.4
44,440.5
163
3
Fair-value of the transactions qualified as hedging
(in EUR millions)
31/12/2012
Firm transactions
Transactions on organised markets
Interest rate futures
-
Foreign exchange futures
-
-
OTC agreements
Interest rate swaps
Others
317.5
-
Options
Interest rate options
Other options
TOTAL
164
-
-0.7
7.0
323.8
3
NOTE 18 Interest income and expense
(in EUR millions)
2012
2011
167.9
145.1
INTEREST AND SIMILAR INCOME
Transactions with central banks, post office accounts and banks
Securities due under repurchase agreements
SUB-TOTAL
1.9
1.9
169.8
147.0
6.0
9.5
67.0
80.2
0.6
1.1
Interest income from transactions with customers
Commercial loans
Short-term loans
Export loans
Capital expenditure loans
Housing loans
Other loans
Overdrafts
85.7
98.4
383.9
402.4
55.8
61.9
36.7
48.6
0.1
0.1
SUB-TOTAL
635.8
702.2
186.9
81.5
Other interest and similar income
6.0
10.8
998.5
941.5
-191.3
-74.2
-
-0.2
-191.3
-74.4
Special savings accounts
-96.4
-94.6
Other amounts due to customers
-75.2
-17.1
-0.8
-4.0
SUB-TOTAL
-172.4
-115.7
-153.6
-188.6
SUB-TOTAL
INTEREST AND SIMILAR EXPENSES
Transactions with central banks, post office accounts and banks
SUB-TOTAL
Other interest and similar expenses
-0.1
-0.2
SUB-TOTAL
-517.4
-378.9
TOTAL NET
481.1
562.6
165
3
NOTE 19 Income from equity securities
(in EUR millions)
Dividends from shares and other equity securities
Dividends from equity investments and other long-term investment securities
TOTAL
2012
2011
0.1
0.1
187.3
139.5
187.4
139.6
2012
2011
NOTE 20 Net fee income
(in EUR millions)
Fee income from
-
-
133.1
150.4
3.0
2.7
1.1
1.4
22.8
21.8
Services and other
282.0
317.9
SUB-TOTAL
442.0
494.2
-0.4
-0.9
-
-
-
-
-0.1
-0.1
Financing and guarantee commitments
-1.8
-1.3
-57.7
-53.9
Financing and guarantee commitments
Fee expense from
Services and other
SUB-TOTAL
-60.0
-56.2
TOTAL NET
382.0
438.0
2012
2011
NOTE 21 Net income from financial transactions
(in EUR millions)
Net income from the trading portfolio
Net income from transactions in trading securities
-0.4
0.2
Net income from forward financial instruments
-20.0
-12.6
Net income from foreign exchange transactions
12.7
8.3
SUB-TOTAL
-7.7
-4.1
Net income from short-term investment securities
166
Gains on sale
0.8
1.2
Losses on sale
-4.3
-2.2
Impairments
-0.1
-58.1
Reversals
43.2
2.9
SUB-TOTAL
39.6
-56.2
TOTAL NET
31.9
-60.3
3
NOTE 22 Personnel expenses
2012
(in EUR millions)
2011
-223.0
-247.9 (*)
Social security charges and payroll taxes
-55.8
-59.9 (*)
Retirement expenses - defined contribution plans
-36.4
-39.6 (*)
-4.2
-6.4 (*)
Employee compensation
Retirement expenses - defined benefit plans
Other social security charges and taxes
-34.0
Employee profit-sharing and incentives
o/w incentives
o/w profit-sharing
Transfer of charges
TOTAL
-31.5
-34.3
-30.5
-19.3
-21.6
-9.1
-2.7
0.9
2.6
-386.8
-413.2
(*) Amount adjusted in regard to financial statements published on December 31, 2011.
Compensation of the administrative and decision-making bodies totalled EUR 1.4 million in 2011.
2012
2011
Average staff count in activity
4,616
5,197
Staff count recorded at December 31
5,153
5,734
NOTE 23 Employee benefits
A. Post-employment defined contribution plans
Defined contribution plans limit Crédit du Nord’s liability to
the contributions paid to the plan but do not commit the
Group to a specific level of future benefits.
The main defined contribution plans provided to Crédit du
Nord employees notably include State pension plans and
national retirement plans such as ARRCO and AGIRC,
pension schemes for which the only commitment is to pay
annual contributions (PERCO) and multi-employer plans.
Expenses relating to these plans totalled EUR 36.4 million
at December 31, 2012 vs. EUR 39.6 million at December
31, 2011.
167
3
B. Post-employment benefit plans (defined benefit plans) and other long-term benefits
B1. Reconciliation of assets and liabilities recognised in the balance sheet
31/12/2012
31/12/2011
(in EUR millions)
Pension
plans
Other Other longplans term benefits
Total
plans
Pension
plans
Total
plans
Breakdown of provisions recorded
in the balance sheet
14.4
15.2
23.0
52.6
17.7
15.4
22.5
55.6
Breakdown of assets recorded in
the balance sheet
-0.7
-
-
-0.7
-
-
-
-
Net provisions
13.7
15.2
23.0
51.9
17.7
15.4
22.5
55.6
BREAKDOWN OF SURPLUS/DEFICIT
Present value of defined benefit
obligations
79.7
-
-
79.7
76.2
-
-
76.2
-56.1
-
-
-56.1
-53.4
-
-
-53.4
Actuarial deficit (A)
23.6
-
-
23.6
22.8
-
-
22.8
Present value of unfunded
obligations (B)
16.2
17.3
23.0
56.5
17.2
13.5
22.5
53.2
Unrecognised items
Unrecognised past service cost
Unrecognised net actuarial gain/loss
Separate assets
Plan assets impacted by the change
in asset ceiling
Total unrecognised items (C)
BALANCE (A+B-C)
0.7
-
-
0.7
0.9
-
-
0.9
25.4
2.1
-
27.5
21.4
-1.9
-
19.5
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
26.1
2.1
-
28.2
22.3
-1.9
-
20.4
13.7
15.2
23.0
51.9
17.7
15.4
22.5
55.6
Notes:
1- For defined-service pension schemes, in accordance with IAS 19, Crédit du Nord Group uses the projected credit unit method
to calculate employee benefits, and amortises actuarial gains and losses which exceed 10% of the greater between the defined
benefit obligations or funding assets on the estimated average remaining working life of the employees participating in the plan
(corridor method). Crédit du Nord uses the straight-line method over the residual working lives of employee beneficiaries
to recognise past service cost resulting from an amendment of the plan.
2- Post-employment retirement plans include plans offering pre- and post-retirement benefits in the form of annuities
and termination benefits. Pension benefit annuities are paid additionally to State pension plans.
Other post-employment benefit plans are insurance schemes covering accidental death.
Other long-term employee benefits include deferred bonuses, including long-service benefits and flexible working provisions.
3- The present value of defined benefit obligations has been determined by qualified independent actuaries.
4- Information regarding plan assets:
- only end-of-career benefits and additional complementary retirement plans are partially covered by assets managed
by a company outside Crédit du Nord Group;
- the fair value of plan assets is comprised of 22.3% bonds, 54.3% equities and 23.4% money market funds.
5- In general, the expected rates of return on scheme assets are based on a weighted average of expected returns
on each category of assets at fair value.
6- Benefits payable under post-employment plans in 2013 are estimated at EUR 14.0 million.
168
3
The actual rate of return on benefit plan and separate assets was:
(as a% of the item measured)
31/12/2012
31/12/2011
16.4
-6.6
-
-
31/12/2012
31/12/2011
8.3
-3.8
-
-
Plan assets
Separate assets
(in EUR millions)
Plan assets
Separate assets
B2. Actuarial costs of plans
31/12/2012
31/12/2011
(in EUR millions)
Current service cost for the
year, including social security
contributions
Pension
plans
3.0
Employees contributions
0.2
3.3
Total
plans
Pension
plans
6.5
4.0
0.3
2.4
Total
plans
6.7
-
-
-
-
-
-
-
-
3.5
0.6
0.6
4.7
3.7
0.6
0.8
5.1
-3.2
-
-
-3.2
-3.8
-
-
-3.8
Amortisation of past service cost
0.1
-
-
0.1
0.1
-
-
0.1
Amortisation of gains/losses
0.7
-
2.2
2.9
1.8
-
0.3
2.1
Changes in scope and other
adjustments for the period
-0.1
-0.4
-2.0
-2.5
-
-
-
-
-
-
-
-
-
-
-
-
4.0
0.4
4.1
8.5
5.8
0.9
3.5
10.2
Interest cost
Plan settlement
TOTAL NET CHARGES RECOGNISED
IN THE INCOME STATEMENT
B3. Changes in net liabilities of post-employment plans booked to the balance sheet
B3a. Changes in the present value of defined benefits obligations
2012
(in EUR millions)
Pension plans
VALUE AT JANUARY 1
Pension
plans
2011
Pension
plans
93.4
13.5
106.9
102.1
15.2
117.3
Service cost (including social security contributions)
3.0
0.2
3.2
4.0
0.3
4.3
Interest cost
3.5
0.6
4.1
3.7
0.6
4.3
-
-
-
-
-
-
Actuarial gains and losses generated over the fiscal year
11.2
4.0
15.2
-6.8
-2.0
-8.8
Benefit payments
-9.6
-0.6
-10.2
-9.6
-0.6
-10.2
Past service cost generated over the fiscal year
Transfers and other adjustments
-
-
-
-
-
-
-5.6
-0.4
-6.0
-
-
-
95.9
17.3
113.2
93.4
13.5
106.9
169
3
B3b. Changes in fair value of plan assets and separate assets
2012
(in EUR millions)
Pension
plans
VALUE AT JANUARY 1
2011
Pension
plans
53.4
-
53.4
57.5
-
57.5
3.3
-
3.3
3.8
-
3.8
-
-
-
-
-
-
5.0
-
5.0
-7.6
-
-7.6
Actuarial gains and losses generated over the fiscal year
-
-
-
-
-
-
5.8
-
5.8
-
-
-
Benefit payments
-7.5
-
-7.5
-0.3
-
-0.3
Transfers and other adjustments
-3.9
-
-3.9
-
-
-
56.1
-
56.1
53.4
-
53.4
Employer contributions
B4. Main assumptions for post-employment plans
2012
2011
Expected return on assets (separate and plan assets)
6.6%
6.6%
Rate of payroll growth (including inflation)
3.5%
3.5%
Notes:
1- The expected rate of return on assets (separate and plan assets) has been 6.6% since 2005. The range in the expected rate of
return on assets is due to the composition of the assets.
2- The discount rate used depends on the term of each plan (1.1% for up to 3 years / 1.5% for up to 5 years / 2.6% for up to 10
years / 3.2% for up to 15 years and 3.3% for up to 20 years).
3- The average remaining lifetime is established individually by benefit and is calculated taking into account turnover assumptions.
4- The inflation assumption is 1.9% for all plans.
B5. Sensitivities analysis of post-employment defined benefit obligations compared
to main assumption ranges
2012
(as a% of the item measured)
2011
Pension
plans
Other
plans
Pension
plans
Other
plans
-8.3%
-14.7%
-6.9%
-12.7%
-13.5%
-27.8%
-10.7%
-24.2%
Variation of +1% in discount rate
Variation of +1% in expected return on assets (plan assets and separate assets)
Impact on plan assets at December 31
1.0%
-
1.0%
-
-14.4%
-
-25.4%
-
Variation of +1% in future salary increases, net of inflation
170
9.6%
19.5%
7.9%
16.6%
18.1%
42.1%
14.5%
35.6%
3
B6. Experience adjustments on post-employment defined benefit obligations
31/12/2012
31/12/2011
31/12/2010
31/12/2009
31/12/2008
95.9
93.4
102.1
99.9
107.2
56.1
53.4
57.5
50.0
43.6
Deficit / (negative: surplus)
39.8
40.0
44.6
49.9
63.6
Experience adjustments on plan liabilities
-3.0
-0.7
-0.8
-3.4
-4.1
5.0
-7.6
4.5
2.9
-22.0
(in EUR millions)
Defined benefit obligations
Experience adjustments on plan assets
NOTE 24 Other operating expenses
(in EUR millions)
Taxes
2012
2011
-20.2
-19.7
Other expenses
Rent and rental charges
Sub-contracting expenses
Charges reinvoiced to third parties
Transfer of charges
SUB-TOTAL
TOTAL
-24.2
-33.6
-258.3
-260.7
152.7
73.3
28.1
25.4
-101.7
-195.6
-121.9
-215.3
Statutory Auditors’ fees
DELOITTE
(in EUR thousands)
Statutory Auditors, certification, Audit of the individual
and consolidated financial statements
Additional assignments
ERNST & YOUNG
OTHER FIRMS (1)
2012
2011
2012
2011
2012
2011
-191.0
-187.5
-191.0
-187.5
-5.2
-5.0
-71.1
-74.0
-41.1
-30.0
-84.0
-
(1) Statutory Auditors for the Monaco branch and asset transfer auditors.
NOTE 25 Cost of risk
(in EUR millions)
2012
2011
-82.4
-97.8
-5.6
-10.2
4.0
4.3
-84.0
-103.7
-1.6
-3.6
Counterparty risk
Net allocation for impairment
Amounts recovered on amortised receivables
SUB-TOTAL
Other risks
Net allocation to provisions for disputes
Losses not covered by provisions for disputes
-0.4
-0.6
SUB-TOTAL
-2.0
-4.2
-86.0
-107.9
TOTAL
171
3
NOTE 26 Gains or losses on fixed assets
(in EUR millions)
Investment securities
2012
2011
-
-
Gains on sale
0.9
-
Losses on sale
-0.5
-
Impairments
-
-
Reversals
0.6
-
SUB-TOTAL
1.0
-
Operating fixed assets
Gains on sale
1.6
0.6
Losses on sale
-0.9
-0.1
0.7
0.5
1.7
0.5
2012
2011
-79.6
-64.0
-11.8
5.5
-91.4
-58.5
2012
2011
436.3
285.3
SUB-TOTAL
TOTAL
NOTE 27 Income tax
(in EUR millions)
Current taxes
(1)
Deferred taxes
TOTAL
(1) 2012 income tax includes a tax loss of EUR 3.4 million versus a loss of EUR 23.7 million in respect of fiscal year 2011.
Reconciliation of the normative tax rate and the effective tax rate:
Net income before tax (in EUR millions)
Normal tax rate applicable to French companies (including the social security
contribution of 3% and exceptional contribution of 5%)
Permanent differences
Differential on items taxed at reduced rate
36.10%
-14.79%
-0.23%
-0.26%
Tax differential on profits taxed outside France
-0.68%
-1.13%
Gain due to tax consolidation
-0.36%
-0.32%
Miscellaneous
Effective tax rate
172
36.10%
-14.24%
0.35%
0.89%
20.94%
20.49%
3
NOTE 28 Assets and liabilities - Breakdown by residual maturity
Residual maturity at December 31, 2012
(in EUR millions)
< 3 months
3 months to 1 year
1 to 5 years
> 5 years
Total
ASSETS (USES OF FUNDS)
Due from banks
1,570.8
511.7
2,373.0
2,388.2
6,843.7
2,115.9
1,540.4
5,949.8
7,057.0
16,663.1
-
-
-
-
-
879.4
2,446.2
3,730.6
2,831.5
9,887.7
1.5
30.9
6.9
-
39.3
4,567.6
4,529.2
12,060.3
12,276.7
33,433.8
1,413.4
1,027.4
5,850.6
329.3
8,620.7
Trading securities
Short-term investment securities
Investment securities
TOTAL
LIABILITIES (RESOURCES)
Due to banks
Debt securities
TOTAL
13,605.9
322.0
929.6
1,720.8
16,578.3
1,387.0
2,745.5
3,611.5
1,360.8
9,104.8
16,406.3
4,094.9
10,391.7
3,410.9
34,303.8
173
3
NOTE 29 Information concerning subsidiaries and equity investments
(in EUR thousands)
Capital
Reserves
and
retained
earnings
Share of
capital
owned
(as%)
Net asset
value
Guarantees
of shares Unpaid loans and endorseowned and advances ments given
Net
Banking
Income
2012
net
Income
Dividends
received
in 2012
Observations
A. Information on subsidiaries and equity investments owned by Crédit du Nord, whose net asset value
exceeds 1% of the bank’s capital
Subsidiaries (at least 50% of capital owned)
Banque Courtois
33, rue Rémusat
31000 Toulouse
18,400 145,574
94.48
54,056
627,658
26,354
157,497
24,427
42,373
Banque Tarneaud
2-6, rue Turgot
87000 Limoges
26,703 185,243
97.57
117,148
416,771
7,824
130,225
22,300
8,489
Banque Rhône-Alpes
20-22, boulevard Edouard Rey
38000 Grenoble
12,563 124,118
93.29
93,886
589,329
3,804
148,263
24,902
36,990
Banque Nuger
5, place Michel-de-l’Hospital
63000 Clermont-Ferrand
11,445
45,021
63.19
13,921
10,097
1,816
37,877
2,813
3,010
Banque Laydernier
10, avenue du Rhône
74000 Annecy
24,789
41,850
96.82
44,435
331,735
37,397
69,528
11,355
11,250
Etoile ID
75008 Paris
15,400
7,418
100.00
22,977
-
-
1,642
1,526
1,749
Banque Kolb
1-3, place
du Général-de-Gaulle
88500 Mirecourt
14,099
53,951
78.44
46,606
395,282
5,177
67,604
8,482
8,132
Kolb Investissement
75008 Paris
77
15,161
100.00
38,964
-
-
2,361
2,265
-
Star Lease
75008 Paris
55,000
30,641
100.00
55,000
1,568,271
546,865
11,169
-3,188
-
Société Marseillaise
de Crédit
75, rue Paradis
13006 Marseille
24,472 393,385
94.03
975,387
310,213
183,939
344,483
54,741
45,500
8,367
69.88
108,309
-
-
7,101
4,674
-
Etoile Gestion Holding
75008 Paris
155,000
174
Hedin
75008 Paris
32,147
-69,796
94.99
30,540
-
-
-4,929
-10,544
-
(3)
Nordenskiöld
75008 Paris
32,656
-18,223
94.99
31,023
-
-
-3,414
-13,261
-
(3)
Verthema
75008 Paris
24,451
-38,896
94.99
23,229
-
-
-4,642
-14,475
-
(3)
Legazpi
17, cours Valmy
92800 Puteaux
23,888
-38,865
50.00
11,944
-
-
-8,683
-14,203
-
(3)
3
Capital
(in EUR thousands)
Reserves
and
retained
earnings
Share of
capital
owned
(as%)
Net asset
value
Guarantees
of shares Unpaid loans and endorseowned and advances ments given
Net
Banking
Income
2012
net
Income
Dividends
received
in 2012
Observations
Equity investments (less than 50% of capital owned)
Crédit Logement
50, boulevard Sébastopol
75003 Paris
1,253,975
Sicovam Holding
18, rue La Fayette
75009 Paris
72,414
0.66
38,852
90,532
175,050
206,656
88,515
2,517
(1)
10,265 520,919
6.10
14,889
-
-
8,786
8,574
588
(2) (3)
50.00
157,407
-
- 1,492,941
41,666
18,641
(3)
Antarius
75008 Paris
314,060
7,437
B. General information concerning other subsidiaries and equity investments
Subsidiaries not covered in section A
a) French subsidiaries
(combined)
-
-
-
23,265
658,171
207,838
-
-
2,150
b) Foreign subsidiaries
(combined)
-
-
-
-
-
-
-
-
-
Equity investments (4) not covered in section A
a) French equity
investments (combined,
including property
development
companies)
-
-
-
26,553
1,797,697
2,682,375
-
-
391
b) Foreign equity
investments (combined)
-
-
-
128
-
-
-
-
-
(1) Data in italics pertain to December 31, 2011 (2012 data unavailable).
(2) Data in italics taken at July 31, 2012.
(3) For non-banking companies, revenue is indicated rather than «Net Banking Income».
(4) Including equity investments of less than 10% recorded in equity investment accounts, in accordance with the provisions of the internal charts of accounts.
Note: Net income and Net Banking Income for 2012 are indicated for some companies, subject to the approval of the financial statements by the Ordinary General Shareholders’ Meeting
scheduled to meet in 2013.
175
3
NOTE 30 Main changes in the securities portfolio in 2012
Crédit du Nord carried out the following transactions in its
securities portfolio during fiscal year 2012:
None.
In accordance with the provisions of Article L.233.6 of the
French Commercial Code, the table below summarises
the significant changes in Crédit du Nord’s securities
portfolio recorded in 2012 (note that legal thresholds exist
at 5%, 10%, 20%, 33% and 50%).
Acquisition:
Upward threshold breaches:
Creation:
FCT Blue Star Crédit du Nord Entreprises - FCT Blue Star
Crédit du Nord Prêts Personnels Immobiliers - Replic
Nord-Pas-de-Calais
Increased equity investment:
Percent of capital
Threshold Company
previous
8.14%
0.00%
FCT Blue Star Crédit du Nord
Entreprises
50.00%
0.00%
FCT Blue Star Crédit du Nord
Prêts Personnels Immobiliers
50.00%
0.00%
Replic Nord-Pas-de-Calais
50%
Tarneaud - Swift
Participation in capital increases:
Société Marseillaise de Crédit - Antarius - Croissance
Nord-Pas-de-Calais - Oseo SA - Acces Valeur Pierre
31/12/2012
5%
Downward threshold breaches:
Percent of capital
Liquidation - complete disposal:
Valeur Pierre Alliance - Valeur Pierre Union - SBEPEC Gayant Expo - FCPR PME France Investissement II Starquatorze - COFIPRO - SCI Fort de Noyelles
Reduced equity investment:
FCPI Gen I - Valeur Pierre Patrimoine - FCPR PME France
investissement A - Caisse de Refinancement de l’Habitat
176
Threshold Company
31/12/2012
previous
20%
COFIPRO
0.00%
33.21%
50%
SCI Fort de Noyelles
0.00%
99.90%
Starquatorze
0.00% 100.00%
Information on the Corporate Officers
3
Information on the Corporate Officers
In 2012, the composition of the Board of Directors evolved due to the resignation, on January 11, of Chief Executive
officer Vincent TAUPIN, and the appointment of Philippe AYMERICH, who succeeded Mr. TAUPIN as Director and Chief
Executive Officer of Crédit du Nord.
Furthermore, the directorships of Didier ALIX and Séverin CABANNES, which had reached expiry, were renewed for a
term of four years.
Thierry LUCAS, one of the three members of the Executive Committee appointed in 2011 as “Deputy Chief Executive”
for the purpose of assisting the Chief Executive Officer, resigned from office in September.
Philippe AMESTOY and Jean-Louis KLEIN, respectively Head of Marketing and Head of Business Customers, remained
Deputy Chief Executive Officers.
Positions held and duties performed over the last five years
Philippe AYMERICH
• Deputy Chief Executive Officer of Societe Generale
(since 01/2010);
• Chief Executive Officer: Crédit du Nord (since 01/2012);
• Chairman of the Board of Directors: Crédit du Nord
(since 01/2010); CGA (from 01/2005 to 10/2011);
• Director: Crédit du Nord (since 11/2009); SOGECAP*;
SOGEPROM (since 02/2009); Boursorama (since
05/2009); Amundi Group (since 12/2009); Sopra
Geneval (since 04/2010); CGA (from 01/2005 to
10/2011); SOGESSUR (until 06/2011); SG Equipement
Finances (until 04/2010); Banque Tarneaud (from
04/2010 to 05/2011);
• Member of the Supervisory Board: SG Marocaine
de Banque (since 12/2007); public limited company
“Fonds de garantie des dépôts” (since 06/2009);
Banque Tarneaud (since 05/2011); SKB Banka (until
05/2009);
• Permanent Representative of SG FSH on the Board of
Directors of Franfinance (until 04/2011);
• Permanent Representative of Crédit du Nord on the
Boards of Directors of Banque Rhône-Alpes (from
03/2010 to 05/2010) and Société Marseillaise de
Crédit (from 09/2010 to 12/2010);
• Permanent Representative of Crédit du Nord on the
Supervisory Boards of Directors of Banque RhôneAlpes (since 05/2010) and Société Marseillaise de
Crédit (since 12/2010);
• Non-Voting Director of Ortec Expansion (since
04/2009).
• Chairman of the Supervisory Board: Société Marseillaise
de Crédit (since 02/2012); Banque Courtois (since
02/2012);
• Vice-Chairman of the Supervisory Board: Banque Kolb
(since 03/2012); Banque Rhône Alpes (since 04/2012);
• Director: Crédit du Nord (since 01/2012); Sogecap
(since 03/2012); Amundi Group (since 02/2012);
Généras SGBT (from 06/2010 to 06/2012); Societe
Generale Ré SA SGBT (from 08/2010 to 06/2012);
• Member of the Supervisory Board: Banque Courtois
(since 02/2012); Société Marseillaise de Crédit (since
02/2012); Banque Kolb (since 03/2012); Banque
Tarneaud (since 03/2012); Banque Rhône Alpes (since
04/2012).
Vincent TAUPIN
• Chief Executive Officer: Crédit du Nord (from 01/2010
to 01/2012);
• Chairman of the Board of Directors: Antarius (from
01/2010 to 10/2011);
• Chairman of the Supervisory Board: Société Marseillaise
de Crédit (from 12/2010 to 01/2012); Banque Courtois
(from 10/2011 to 02/2012);
• Director: Crédit du Nord (from 11/2009 to 01/2012);
Antarius (from 12/2009 to 01/2012); Amundi Group
(from 12/2009 to 01/2012); Sogessur (from 06/2010
to 01/2012); Banque Tarneaud (from 02/2010 to
05/2011); Euromirabelle (until 06/2009); Talos Securities
Limited (until 12/2009); Talos Holdings Limited (until
* Positions held for at least the past five years.
177
3
12/2009); Veritas (from 04/2005 to 07/2008); ESGL
(from 08/2005 to 03/2008); Banque Rhône Alpes (from
03/2010 to 05/2010); Société Marseillaise de Crédit
(from 09/2010 to 12/2010); Banque Laydernier (from
03/2010 to 11/2010); Boursorama (from 05/1999 to
02/2010);
• Member of the Supervisory Board: Banque Rhône
Alpes (since 05/2010); Banque Courtois (from
03/2010 to 02/2012); Banque Nuger (from 03/2010 to
09/2011); Société Marseillaise de Crédit (from 12/2010
to 01/2012); Banque Kolb (from 03/2010 to 01/2012);
Banque Tarneaud (from 05/2011 to 01/2012);
• Permanent Representative of Crédit du Nord on
the Board of Banque Laydernier (from 11/2010 to
09/2011).
Didier ALIX
• Chairman and Chief Executive Officer: Sogébail*;
Société de Gestion St Jean de Passy*;
• Chairman of the Supervisory Board: Komercni Banka*;
• Deputy Chief Executive Officer: Societe Generale (from
09/2006 to 12/2009);
Christophe BONDUELLE
• Chairman and Chief Executive Officer: Bonduelle SA*;
• Chief Executive Officer: Bonduelle Limited*; Bonduelle
Netherland BV (SRL)*;
• Chairman of the Supervisory Board: Bonduelle Polska*;
• Director: Crédit du Nord (since 05/2011); Bonduelle
Nordic*; Bonduelle Portugal*; LESAFFRE et Cie*;
«Bonduelle Northern Europe» a public limited company
under Belgian law (since 2009).
Séverin CABANNES
• Deputy Chief Executive Officer: Societe Generale
SGPM (since 05/2008);
• Director: Crédit du Nord (since 02/2007); Amundi Group
(since 31/12/2009); TCW Group (since 08/2009);
Fiditalia (from 01/2007 to 04/2008); Genefimmo Cafi
1 (from 04/2007 to 04/2009); Rosbank BHFM (from
05/2008 to 06/2009);
• Member of the Supervisory Board: Groupe Steria SCA
(since 02/2007); Komercni Banka (from 10/2001 to
09/2010).
• Director: Crédit du Nord (from 07/2007 to 11/2009 then
since 01/2010); Yves Rocher*; Banque Roumaine de
Développement*; CIPM International (since 06/2012);
Societe Generale de Banques au Cameroun*; Societe
Generale de Banques au Sénégal*; Societe Generale
de Banques en Côte d’Ivoire*; Société de Gestion St
Jean de Passy*; Rémy COINTREAU (since 07/2010);
FAYAT SAS (since 02/2011); SG Private Banking Suisse
SA SGBT (since 12/2009); Societe Generale au Liban
(until 06/2007); SGBT Luxembourg (from 12/2009 to
05/2012); Franfinance (from 01/1991 to 04/2010);
National Societe Generale Bank SAE (NSGB) (from
02/2001 to 04/2010);
Patrick DAHER
• Member of the Supervisory Board: Societe Generale
Marocaine de Banques*; Société FAIVELY Transport
(since 09/2010).
Bruno FLICHY
•
Chairman and Chief Executive Officer:
Compagnie DAHER*;
• Chairman of the Supervisory Board: Grand Port
Maritime de Marseille (since 01/2009);
• Director and Chief Executive Officer: Sogemarco DAHER*;
• Director: Crédit du Nord*; DAHER International
Développement* (company operating under
Luxembourg law); LISI (since 04/2008); DAHER
Aérospace Ltd (2007); DAHER Inc. (2007).
• Director: Crédit du Nord*; Eiffage*; Aviva Participations*;
Aviva France (since 11/2008); Dexia Banque Belgique
(from 02/2004 to 05/2010);
• Member of the Supervisory Board: Aviva France (from
2004 to 11/2008).
178
Philippe HEIM
Pascal COULON
• Director: Crédit du Nord (since 05/2010); Groupama
Banque (from 10/2009 to 11/2012); Newedge Group
(from 05/2011 to 05/2012).
• Employee Director: Crédit du Nord (since 07/2009).
3
Marie- Chantal JACQUOT
Thierry MULLIEZ
• Chairman: HTM (since 10/2008);
Annie PRIGENT
• Director: Crédit du Nord (since 05/2011); HTM (since
10/2008); Boulanger*; SECOM (since 04/2008);
Crématorium de France (since 06/2010); DECATHLON
(since 12/2009 representing SAS Holympiades).
Patrick SUET
• Chairman of the Board of Directors: SGBT Luxembourg
(since 06/2009); Sofrantem (since 10/2011); Societe
Generale Ré SA SGBT (from 09/2010 to 06/2012);
Généras SA (until 06/2012);
• Director: Crédit du Nord*; Généras SA*; SGBT
Luxembourg (since 11/2006); Sofrantem (since
10/2011); Societe Generale Ré SA SGBT (from
08/2010 to 06/2012); Clickoptions (from 10/2000
to 08/2010); Sogé Participations (from 04/2001 to
05/2008);
Angelina HOLVOET
• Employee Director: Crédit du Nord (from 12/2009 to
01/2012).
Jean-Pierre DHERMANT
12/2012).
Alain JAFFRAIN
12/2012).
• Member of the Supervisory Board: Lyxor Asset
Management Mark*; Lyxor International Asset
Management Mark*.
To the best of Crédit du Nord’s knowledge, there are no conflicts of interest between Crédit du Nord and the members
of the Board of Directors, with respect to either their personal or professional interests.
Other disclosures
Shares held by directors
Ethics
• In accordance with Article 11 of the by-laws, the
Directors hold at least 10 shares.
• All Directors refrain from carrying out transactions in the
shares of the companies on which (and to the extent
that) they hold, by virtue of their offices, information
which has not yet been made public.
179
3
Senior management remuneration policy
The remuneration of senior corporate officers is
determined based on the guidelines recommended
by the Remuneration Committee and approved by the
bank’s Board of Directors. Remuneration is in line with
the recommendations of the AFEP-MEDEF Corporate
Governance Code (Paragraph 20, “Remuneration of
senior corporate officers”) and hence complies with its
guidelines (completeness, fairness, consistency, easily
understandable rules, etc.).
Remuneration of senior corporate directors includes:
• fixed annual compensation;
• performance-based compensation in the form of
a bonus paid at the end of each fiscal year after the
financial statements are approved. Since January 1,
2010, the amount of this bonus has been determined
via an assessment utilising multiple criteria, notably
including:
– maintaining and, as the case may be, raising customer
satisfaction,
– active participation in retail banking working groups
within Societe Generale Group,
– seeking a decline in the cost/income ratio by at least
1 point per year,
– looking for cost synergies and revenues with Societe
Generale Group, etc.
– rigorous management of credit and operational risks…
In accordance with European Directive CRD 3 of
November 24, 2010, one portion of the variable
compensation of corporate officers is paid in cash and
Societe Generale quasi-equity, and the remaining portion
is deferred over one to three years and is based on the
achievement of economic targets.
Philippe AYMERICH
Appointed Chief Executive Officer of Crédit du Nord on
January 11, 2012 following the resignation of Vincent
TAUPIN, Philippe AYMERICH holds an employment
contract with Societe Generale. He is posted to Crédit du
Nord for the term of his office as Chief Executive Officer.
The CEO’s fixed and performance-based compensation
are shown in the AFEP-MEDEF tables below.
180
Since this year, directors’ fees and other compensation
paid to Boards of Directors or Supervisory Committees
on which Mr. AYMERICH sits as a representative of Crédit
du Nord or as a representative of Societe Generale Group
remain with the company where the office is held.
Long-term profit-sharing
Each year, the Board of Directors can recommend to
Societe Generale that it grant Societe Generale shares
and/or Societe Generale options to Mr. AYMERICH in
accordance with the terms and conditions established
under the relevant plans, provided this is permitted by
national legislation and regulations in force.
The allocation between stock options and performance
shares will be determined on a case-by-case basis in
compliance with the rules governing Societe Generale
plans.
For the purposes of definitive allocation, stock options or
bonus shares will be subject to performance conditions
established by the rules of the relevant plans, subject to
national legislation and regulations in force.
Furthermore, as a salaried employee of Societe Generale,
Mr. AYMERICH is eligible for Societe Generale’s profitsharing and incentive programmes and is therefore
ineligible for programmes offered by Crédit du Nord.
Obligation to hold and to keep Societe
Generale shares
As a member of the Societe Generale Group Management
Committee, Mr. AYMERICH must hold 2,500 Societe
Generale share within 5 years of the date of his appointment
as Chief Executive Officer, i.e. January 11, 2012. The
shares may be held either directly or indirectly through
the company’s savings plan.
For as long as this minimum shareholding requirement is
not satisfied, Mr. AYMERICH is required keep any shares
resulting from the exercise of options acquired under
Societe Generale’s bonus share allocation programmes.
The shares may be held either directly or indirectly through
the company’s savings plan.
Provisions related to post-employment
benefits
• Termination benefit: Mr. AYMERICH will not receive a
termination benefit when his term of office expires.
• Pensions: Mr. AYMERICH is eligible for Societe
Generale’s supplementary pension allocation plan for
“Outside Classification” executive level employees.
This complementary scheme, set up in 1991, grants
beneficiaries, on the date of settlement of their Social
Security pension, a total pension equal to the product of
the following two terms:
– The average, over the last ten years of the beneficiary’s
career, of the proportion of basic salaries exceeding
“Tranche B” of the AGIRC pension increased by a
variable part limited to 5% of the basic fixed salary;
– The rate equal to the ratio between a number of
annuities corresponding to the years of professional
services within Societe Generale and 60.
AGIRC’s “Tranche C” pension vested in respect of his
professional services within Societe Generale is deducted
from this total pension. The complementary allocation to
be paid by Societe Generale is increased for beneficiaries
who have brought up at least three children, as well as for
those retiring after 60. It cannot be less than one-third of
the full-rate value of service of AGIRC “Tranche B” points
acquired by the beneficiary since his or her entry in Societe
Generale’s “Unclassified” category.
3
Compensation and annuities paid in consideration for
the period of employment with Societe Generale include
services rendered as a corporate officer at Crédit du Nord.
Eligibility for this plan is subject being in the employ of the
company at the time the entitlements are paid.
Mr. Vincent TAUPIN
Vincent TAUPIN was Chief Executive Officer of Crédit du
Nord from January 1, 2010 until January 11, 2012, i.e. the
date of his resignation as Chief Executive Officer of Crédit
du Nord. As Mr. TAUPIN held an employment contract
with Societe Generale, he was seconded to Crédit du
Nord for the term of his office as Chief Executive Officer.
Mr. TAUPIN’s fixed and variable compensation are shown
in the following AFEP-MEDEF tables for his term of office
with the Company.
For the term of his corporate mandate, Mr. TAUPIN
maintained all of the benefits acquired prior said term as
an employee of Societe Generale.
Termination benefit
Vincent TAUPIN received no severance pay when he
resigned from office on January 11, 2012.
Attendance fees paid to directors
The amount of directors’ fees was set at EUR 81,000 by
the General Shareholders’ Meeting of May 11, 2012.
The rules for distributing directors’ fees among Board
members resolved by the Board of Directors on
March 12, 1998, are as follows:
• the balance is divided up among directors in proportion
to the number of Board meetings attended by each
director during the fiscal year. The share belonging to
absentees is not redistributed to other directors but is
retained by Crédit du Nord.
• half of the attendance fees are distributed in equal
amounts among the directors;
181
3
AFEP/MEDEF and AMF recommendations
The Board of Directors of Crédit du Nord (CDN) examined and decided to apply the AFEP/MEDEF recommendations
on compensation of senior corporate officers.
The standardised presentation of their compensation, prepared in accordance with AFEP/MEDEF recommendations,
is presented below.
Standardised tables in compliance with AFEP-MEDEF and AMF recommendations
Table 1
SUMMARY OF REMUNERATION AND STOCK OPTIONS AND SHARES ALLOCATED TO EACH CHIEF EXECUTIVE OFFICER (1)
Fiscal Year 2011
Fiscal Year 2012
1,143,973
1,249,532
0
0
281,002 (2)
0
Jean-François SAMMARCELI, Chairman
Remuneration due for the fiscal year (detailed in Table 2)
Value of options awarded during the fiscal year (see Table 4)
Value of performance-based shares awarded during the fiscal year (see Table 6)
Valuation of share equivalents awarded under a long-term incentive programme
during the fiscal year (3)
TOTAL
0
571,876
1,424,975
1,821,408
624,685
73,781
0
0
Vincent TAUPIN, Chief Executive Officer (4)
37,573
0
662,258
73,781
-
706,205
-
0
-
0
TOTAL
-
706,205
TOTAL
Philippe AYMERICH, Chief Executive Officer (5)
(1) This represents the remuneration due in respect of mandates exercised during the fiscal year.
(2) The performance condition applicable to this award was not met, therefore the bonus share rights were entirely forfeited.
(3) This programme is detailed on page 120 of Societe Generale’s Registration Document.
(4) Until January 11, 2012.
(5) Since January 11, 2012.
182
3
Table 2
STATEMENT OF COMPENSATION PAID TO EACH SENIOR MANAGEMENT CORPORATE OFFICER (1)
Fiscal Year 2011
Amount paid
Fiscal Year 2012
Amount due
in respect of
the fiscal year
Amount paid
Amount due
in respect of
the fiscal year
Jean-François SAMMARCELLI, Chairman (this compensation is not billed to Crédit du Nord, with the exception
of directors’ fees paid in respect of the office held at CDN)
- fixed compensation
- non-deferred variable
- deferred variable
650,000
compensation (2)
650,000
650,000
650,000
326,471
0
0
117,499
0
487,937 (3)
119,994
469,997
11,449
0
58,615
6,000
compensation (2)
- directors’ fees
- benefits in
kind (4)
6,036
6,036
6,036
6,036
993,956
1,143,973
834,645
1,249,532
270,000
270,000
22,500
22,500
144,000
100,000
100,000
0
0
250,000
174,804
0
200,000 (6)
0
50,901 (7)
50,901 (7)
TOTAL
Vincent TAUPIN, Chief Executive Officer (until January 11, 2012)
- non-deferred variable
- deferred variable
compensation (2)
compensation (2)
- exceptional compensation
- directors’ fees
0
0
0
0
4,685
4,685
380
380
618,685
624,685
348,585
73,781
-
-
201,674 (5)
201,674 (5)
- non-deferred variable compensation (2)
-
-
0
260,000
- deferred variable compensation (2)
-
-
0
240,000
- benefits in kind (4)
TOTAL
Philippe AYMERICH, Chief Executive Officer (as from January 11, 2012)
- directors’ fees
-
-
0
0
- benefits in kind (4)
-
-
4,531 (5)
4,531 (5)
TOTAL
-
-
206,205
706,205
(1) Compensation figures are in euros, gross, before tax.
(2) The criteria used to determine these figures are detailed in the Chapter covering the remuneration of corporate officers.
(3) Variable compensation amounts due in respect of 2011, published in the 2012 Registration Document, correct and replace the amounts published in the 2011 Registration
Document, which were “revised” post-publication.
(4) Provision of a company car.
(5) Amounts are determined on a pro rata basis according to the individual’s time with the Company.
(6) This amount, paid in 2011, is deferred compensation in respect of Vincent TAUPIN’s previous offices.
(7) Payment of the flexible working provisions and the balance of annual leave.
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3
Table 3
STATEMENT OF DIRECTORS’ FEES
Members of the Board
Attendance fees paid in 2011
Attendance fees paid in 2012(1)
6,000
0*
Vincent TAUPIN (2)
6,000
1,000
Philippe AYMERICH (2)
-
5,000
Didier ALIX (3)
6,000
6,500
Christophe BONDUELLE (4)
3,000
4,000
Séverin CABANNES
4,500
5,500
Pascal COULON (5)
6,000
6,000
Patrick DAHER (3)
5,250
7,000
Jean-Pierre DHERMANT (5)
6,000
5,500
Bruno FLICHY
6,000
6,000
Philippe HEIM (2)
5,250
5,000
Angélina
HOLVOET (5) (6)
Alain JAFFRAIN (5)
Thierry MULLIEZ (4)
Patrick
SUET (2) (3)
TOTAL
*
5,250
500
-
4500
3,750
4,000
6,000
6,500
69,000
73,000
EUR 6,000 due in respect of 2012 but received by the interested party in 2013.
(1) Adjustment of the «attendance fees» budget following the vote of the General Shareholders’ Meeting of May 2011.
(2) Paid to Societe Generale
(3) Also a member of the Audit Committee (+EUR 1,000), which met for the first time in 2012
(4) Appointed at the General Shareholders’ Meeting of May 2011.
(5) Paid to the Crédit du Nord union (CFDT)
(6) After taking his retirement on January 31, 2012, replaced by Alain JAFFRAIN, his alternate.
The Board of Directors met 6 times in 2012, with the average meeting lasting 3 hours.
The attendance rate was once again high at over 80%, demonstrating their dedication to their role as directors.
Table 4
STOCK OPTIONS AWARDED DURING THE FISCAL YEAR
CORPORATE OFFICER BY THE ISSUER AND BY ANY COMPANY BELONGING TO THE GROUP
Name of senior corporate officer
Date of plan
Value of options based
Type of option on the method used for Number of options
(subscription the consolidated financial
awarded during
or purchase)
statements *
the fiscal year
No options awarded in 2012
Vincent TAUPIN
Philippe AYMERICH
Strike price Exercise period
* This value corresponds to the value of the options at the time they were awarded, in accordance with IFRS 2, after primarily taking into account a potential discount linked
to performance criteria and the probability of the individuals continued employ with the company at the end of the vesting period, but before the averaging effect under IFRS 2
of the expense over the vesting period.
184
3
Table 5
SOCIETE GENERALE STOCK OPTIONS
EXERCISED DURING THE FISCAL YEAR
Name of senior corporate officer
Date of plan
Number of options exercised during the fiscal
year
No options exercised in 2012
Vincent TAUPIN
Philippe AYMERICH
TOTAL
Strike price
0
Table 6
PERFORMANCE-BASED SOCIETE GENERALE SHARES AWARDED TO EACH CORPORATE OFFICER
Performance-based shares awarded
to each corporate officer by Societe
Generale during the fiscal year
Number of options
awarded during the
Date of plan
2012 fiscal year
Valuation
of shares
Acquisition date Date of availability
Vincent TAUPIN
Philippe AYMERICH
Performancebased
TOTAL
0
Table 7
PERFORMANCE SHARES (1) PERMANENTLY
VESTED DURING THE FISCAL YEAR BY EACH CORPORATE OFFICER
Date of plan
Number of shares permanently
vested during the fiscal year
20/01/2009
1,479 (2)
Vincent TAUPIN
Philippe AYMERICH
No shares permanently vested
20/01/2009
TOTAL
1,183 (2)
2,662
(1) Performance-based shares are free shares awarded to corporate officers, in accordance with Articles L.225-197-1 et seq. of the French Commercial Code, and which are
subject to additional requirements provided for by the AFEP/MEDEF recommendations of October 2008.
(2) The shares acquired in 2012 were allocated to beneficiaries in relation to their salaried employment before they became Chief Executive Officers.
185
3
Table 8
HISTORY OF SG STOCK OPTIONS AWARDED
DISCLOSURES OF SUBSCRIPTIONS OR PURCHASES (1)
Date of the Board of Directors’
meeting
09/03/10
09/03/09
21/03/08
18/09/07
19/01/07
25/04/06
18/01/06 13/01/05
1,000,000 1,344,552 (7)
2,328,128
135,729
1,418,916
154,613
1,738,543 4,656,319
shares (2)
Total number of
available
for subscription or purchase
o/w number of shares available
for subscription or purchase
by corporate officers
Corporate Officer 1:
Jean-François SAMMARCELLI(3)
Corporate Officer 2: Vincent
TAUPIN (4)
Corporate Officer 3:
Philippe AYMERICH (5)
0
28,456
26,830
0
16,747
0
18,074
0
28,134
0
0
0
0
0
0
0
0
0
14,215
11,382
10,434
0
0
0
Beginning of exercise period
09/03/14
31/03/12
21/03/11
18/09/10
19/01/10
25/04/09
18/01/09 13/01/08
Expiry date
08/03/17
08/03/16
20/03/15
17/09/14
18/01/14
24/04/13
17/01/13 12/01/12
41.20
23.18
63.60
104.17
115.60
107.82
93.03
64.63
0
2,290
0
0
0
0
2,174
53,340
906,705 1,295,940
31,408
318,224
39,728
104,321
1,100,692
114,885
Subscription or purchase price (6)
Terms of exercise (where the plan
includes more than one tranche)
Number of shares subscribed
for at 31/12/2012
Total number of cancelled
or expired options
23,646
Number of stock options remaining
at period end
976,354
435,557
1,032,188
181,594 4,602,979
1,554,561
0
(1) This table covers only those plans under which corporate officers were awarded stock options.
(2) Exercising an option entitles the holder to one Societe Generale share. This table reflects the adjustments made following capital increases. This line does not include options
exercised since the date of allocation.
(3) Appointed as a corporate officer on January 1, 2010.
(4) Corporate officer from January 1, 2010 to January 11, 2012.
(5) Appointed as a corporate officer on January 11, 2012.
(6) The subscription or purchase price is equal to the average of the 20 share prices prior to Board of Directors’ meeting.
(7) o/w 320,000 options initially awarded to the Societe Generale Group corporate officers who gave them up.
Table 9
STOCK OPTIONS AWARDED TO THE TOP TEN HIGHEST PAID EMPLOYEES NOT SERVING AS SENIOR CORPORATE
OFFICERS AND OPTIONS EXERCISED BY THESE EMPLOYEES *
Total number
of options awarded/share
subscriptions or purchases
Average weighted price
Options awarded during the fiscal year by the issuer to the top ten highest
paid employees of Crédit du Nord Group (the number indicated is the highest
number of options awarded) *
0
0.00
Options held by the issuer and exercised during the fiscal year by the top ten
highest paid employees of Crédit du Nord Group (the number indicated
is the highest number of options exercised)
0
0.00
* No stock option plan was established by Societe Generale during financial year 2012.
186
3
Table 10
SITUATION OF THE SENIOR CORPORATE OFFICERS
Dates of offices
Employment contract
with Crédit du Nord (1)
yes
no
Compensation or benefits
due as a result
Supplementary
of termination or
pension plan(2)
change of position
yes
no
yes
no
Compensation related
to a non-compete
clause
start
end
yes
no
Chairman
2010
2013
X
X (3)
X
X
Vincent TAUPIN
Chief Executive Officer
2010
2012
X
X (3)
X
X
Philippe AYMERICH
Chief Executive Officer
2012
2015
X
X (3)
X
X
(1) As regards the combination of a corporate mandate with an employment contract, the only positions addressed by the AFEP/MEDEF recommendations are Chairman
of the Board of Directors, the Chairman and Chief Executive Officer, and the Chief Executive Officer of companies with a Board of Directors.
(2) Detailed information on the supplementary pension plans is provided in the section entitled «Information on Corporate Officers».
(3) Paid to Societe Generale
187
3
Statutory Auditors’ Report on the Annual Financial Statements
This is a free translation into English of the statutory auditors’ report on the financial statements issued in French and it
is provided solely for the convenience of English-speaking users.
The statutory auditors’ report includes information specifically required by French law in such reports, whether modified
or not. This information is presented below the opinion on the financial statements and includes explanatory paragraphs
discussing the auditors’ assessments of certain significant accounting and auditing matters. These assessments were
considered for the purpose of issuing an audit opinion on the financial statements taken as a whole and not to provide
separate assurance on individual account balances, transactions or disclosures.
This report also includes information relating to the specific verification of information given in the management report
and in the documents addressed to the shareholders.
This report should be read in conjunction with and construed in accordance with French law and professional auditing
In compliance with the assignment entrusted to us by your
annual general meeting, we hereby report to you, for the
year ended December 31, 2012, on
• the audit of the accompanying financial statements of
Crédit du Nord;
• the justification of our assessments;
• the specific verifications and information required by
law
These financial statements have been approved by the
board of directors. Our role is to express an opinion on
these financial statements based on our audit.
I. Opinion on the financial statements
We conducted our audit in accordance with professional
standards applicable in France; those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements
are free of material misstatement. An audit involves
performing procedures, using sampling techniques or
other methods of selection, to obtain audit evidence
about the amounts and disclosures in the financial
statements. An audit also includes evaluating the
appropriateness of accounting policies used and the
188
reasonableness of accounting estimates made, as well
as the overall presentation of the financial statements.
We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our
audit opinion.
In our opinion, the financial statements give a true and
fair view of the assets and liabilities and of the financial
position of the Company as at 31 December 2012 and
of the results of its operations for the year then ended in
accordance with French accounting principles.
II. Justification of your assessments
In accordance with the requirements of article L. 823-9
of the French commercial code (Code de commerce)
relating to the justification of our assessments, we bring
to your attention the following matters:
• For the purpose of preparing the financial statements,
your company records depreciations and provisions
to cover the credit risks inherent to its activities and
performs significant accounting estimates, as described
in note 1 to the financial statements, related in particular
to the valuation of investments in subsidiaries and of
its securities portfolio, as well as the assessment of
pension plans and other post-employment benefits. We
have reviewed and tested, the processes implemented
by management, the underlying assumptions and the
valuation parameters, and we have assessed whether
these accounting estimates are based on documented
procedures consistent with the accounting policies
disclosed in note 1 to the financial statements.
• As detailed in note 1 to the financial statements, your
company uses internal models to measure financial
instruments that are not listed on active markets.
Our procedures consisted in reviewing the control
procedures for the models used, assessing the
underlying data and assumptions as well as their
observability, and verifying that the risks generally
expected from the markets were taken into accounts
in the valuations.
These assessments were made as part of our audit of
the financial statements taken as a whole, and therefore
contributed to the opinion we formed which is expressed
in the first part of this report.
III. Specific verifications and information
We have also performed, in accordance with professional
standards applicable in France, the specific verifications
required by French law.
We have no matters to report as to the fair presentation
and the consistency with the financial statements of the
3
information given in the management report of the board
of directors and in the documents addressed to the
shareholders with respect to the financial position and
the financial statements.
Concerning the information given in accordance with
the requirements of article L. 225-102-1 of the French
Commercial Code (Code de commerce) relating to
remunerations and benefits received by the directors and
any other commitments made in their favour, we have
verified its consistency with the financial statements, or
with the underlying information used to prepare these
financial statements and, where applicable, with the
information obtained by your Company from Companies
controlling your company or controlled by it.
Based on our procedures, we have the following comment
on the accuracy and fairness of this information: this
information does not include all the compensation and
benefits paid by the company controlling your company to
the executive officers concerned regarding the mandates,
duties or assignments other than those carried out within
or on behalf of the Crédit du Nord, and this information
includes the compensation and indemnities paid by your
Company to executive officers solely with respect to their
mandates carried out within Crédit du Nord.
In accordance with French law, we have verified that the
required information concerning the controlling interests
has been properly disclosed in the management report.
DELOITTE & ASSOCIES
Jean-Marc MICKELER
Bernard HELLER
189
3
Statutory Auditors’ Report on Related Party Agreements and Commitments
Statutory Auditors’ Report on Related Party Agreements
and Commitments
General Meeting of Shareholders to approve the financial statements for the year ended
December 31, 2012
This is a free translation into English of a report issued in French and it is provided solely for the convenience
of English-speaking users.
This report should be read in conjunction with, and construed in accordance with, French law and professional
In our capacity as statutory auditors of your company,
we hereby report on certain related party agreements
and commitments.
We are required to inform you, on the basis of the
information provided to us, of the terms and conditions
of those agreements and commitments indicated to
us, or that we may have identified in the performance
of our engagement. We are not required to comment
as to whether they are beneficial or appropriate or to
ascertain the existence of any such agreements and
commitments. It is your responsibility, in accordance
with article R. 225-31 of the French commercial code
(Code de Commerce), to evaluate the benefits resulting
from these agreements and commitments prior to their
approval.
In addition, we are required, where applicable, to inform
you in accordance with article R. 225-31 of the French
commercial code (Code de Commerce) concerning the
implementation, during the year, of the agreements and
commitments already approved by the General Meeting
of Shareholders.
We performed those procedures which we considered
necessary to comply with professional guidance issued
by the national auditing body (Compagnie Nationale
des Commissaires aux Comptes) relating to this type of
190
engagement. These procedures consisted in verifying
that the information provided to us is consistent with the
documentation from which it has been extracted.
Agreements and commitments submitted
for approval by the General Meeting of
Shareholders
We hereby inform you that we have not been advised
of any agreements or commitments authorized in
the course of the year to be submitted to the General
Meeting of Shareholders for approval in accordance with
article L. 225-38 of the French commercial code (Code
de Commerce).
Agreements and commitments already
approved by the General Meeting of
Shareholders
In accordance with article R. 225-30 of the French
commercial code (Code de Commerce), we have
been advised that the implementation of the following
agreements and commitments which were approved
by the General Meeting of Shareholders in prior years
continued during the year.
1. With Mr Vincent Taupin, Chief Executive
Officer until January 11, 2012
Nature and purpose
Supplementary pension plan for Mr Vincent Taupin.
Conditions
Mr Vincent Taupin benefited from the provisions of the
supplementary pension plan for senior managers of
Société Générale. As Mr Vincent Taupin left Société
Générale Group on January 11, 2012 for reasons
other than retirement, he lost his rights to this plan as
of that date.
2. With Société Générale, your shareholder
Nature and purpose
Pooling of IT infrastructures.
Conditions
In the interest of generating Group-wide synergies, a
subcontracting agreement with a Société Générale
department (GTS) was drawn up in the first half
of 2009 and implemented on August 1, 2009.
This subcontracting agreement pertained to the
deployment, production and maintenance of IT technical
infrastructure services, and the expenses incurred by
GTS have been invoiced to your company at actual cost
since 2009. Your board of directors of July 23, 2009
authorized the signing of the necessary agreements for
the implementation of this agreement.
A total of K€ 44,182 excluding tax was invoiced for
services rendered in 2012.
banks, the establishment of a common information
system is a major lever for operational efficiency, through
the synergies developed and the sharing of skills. The
group decided to build this information system with
assets from each of Société Générale group’s retail
banking networks in France and created a common
organization, the Information Systems, Organization
and Processes Division (SIOP), housed within Société
Générale group. SIOP aims at securing the operation
of the information system and optimizing the expected
synergies in order to decrease the portion of NBI
devoted to IT.
Your board of directors of May 6, 2011 authorized
the signature of the documents necessary for the
implementation of this project, namely:
• the contract (letter of intent and operating agreement)
that specifies the legal, administrative and financial
terms and conditions in which SIOP provides
services to its customers and the implementation
of the contract, its scope and its governance.
The letter of intent was followed by the signing of a
framework agreement and an application agreement
on March 9, 2012;
• the transfer agreement that specifies, as part of
the implementation of the aforesaid agreement, the
terms of transfer and assignment of rights, duties
and obligations of your company to SIOP, including
the disposal of certain assets (intangible assets,
in particular) at fair value. An agreement for the
transfer of intellectual property rights was signed on
November 10, 2011.
Creating a common information system for Société
Générale group’s retail banking France.
Based on the simulation carried out in June 2011 in
connection with the drafting of the transfer agreement,
and subject to the implementation of the Convergence
project deployment schedule, defined on the same date,
it is stated that:
Conditions
• the net book value of the assets to be sold is
K€ 33,767 as at December 31, 2011;
b) Nature and purpose
Under the Convergence program, and to meet the goal
of improving the service related to the IT needs of the
various businesses of Société Générale group’s retail
3
• sixteen lots were sold in 2012 for K€ 3,731.
These disposals resulted in a gain of K€ 519.
191
3
This approach takes into account the full cost of the
projects, less a discount for obsolescence, and a
discount related to IT asset adjustment costs.
An amount of K€ 63,583 excluding tax was invoiced
for the services provided in 2012 under the agreement
between SIOP and your company.
Société Générale paid your company a cash balance of
K€ 3,800 in 2012 in accordance with the clause capping
IT expenses and presented in article 14 of the financial
terms and conditions of the framework agreement.
DELOITTE & ASSOCIES
Jean-Marc MICKELER
192
Bernard HELLER
Draft Resolutions: Ordinary General Shareholders’ Meeting
3
of May 16, 2013
First resolution
Approval of the
consolidated financial
statements
«Acting in accordance with the quorum and majority requirements laid down for Ordinary
General Shareholders’ Meetings, and having read the Board of Directors’ Report and
the Statutory Auditors’ Report on the consolidated financial statements, the General
Shareholders’ Meeting hereby approves the transactions recorded therein, the balance
sheet closed at December 31, 2012 and the income statement for fiscal year 2012.
The General Shareholders’ Meeting approves the consolidated net income after
taxes of EUR 308,377,000.00”.
Second resolution
Approval of the
individual financial
statements and release
of the directors from
their duties
«Acting in accordance with the quorum and majority requirements laid down for Ordinary
General Shareholders’ Meetings, and having read the Board of Directors’ Report and the
Statutory Auditors’ Report on the individual financial statements, the General Shareholders’
Meeting hereby approves the transactions recorded therein, the balance sheet closed
at December 31, 2012 and the income statement for fiscal year 2012. The General
Shareholders’ Meeting approves the net income after taxes of EUR 344,902,876.68.
Accordingly, the General Shareholders’ Meeting fully and without reservation releases
the Directors from their mandates for said fiscal year”.
Third resolution
Distribution
of earnings
«Acting in accordance with the quorum and majority requirements established for
Ordinary General Shareholders’ Meetings, the General Shareholders’ Meeting hereby
resolves to allocate net income for the period amounting to EUR 344,902,876.68.
Earnings, plus earnings carried forward from the previous period, i.e. EUR 447,029.16,
results in total income available for distribution of EUR 345,349,905.84, which the
General Shareholders’ Meeting resolves to allocate as follows:
– a total dividend payment of EUR 222,565,812.00, giving a dividend per share
of EUR 2.00;
– allocation of EUR 122,000,000.00 to the ordinary reserve;
– allocation of EUR 784,093.84 to retained earnings.
The ordinary reserve is therefore increased from EUR 808,000,000.00 to
EUR 930,000,000.00.
For individuals residing in France, dividends are subject to income tax on a progressive
scale and to social security deductions.
At the time of their payment, they are subject to a compulsory deduction at the rate
of 21% calculated on the gross amount. This deduction is offset against the final
income tax payable for the year in which the dividends are received, with any surplus
being refunded by the tax authorities.
Subject to compliance with the conditions set out in Article 117 quater and 242 quater
of the French General Tax Code, taxpayers may be exempted from this levy, however.
Dividends are eligible for the 40% tax deduction referred to in Article 158-3-2 of the
French General Tax Code.
193
3
As required by law, shareholders are hereby reminded that the following dividends
were distributed over the past three years:
– in respect of Fiscal Year 2011:
EUR 2.00 per share*
no dividend
EUR 3.50 per share*”
* Dividend eligible for the 40% tax deduction in favour of individual shareholders
or for the flat-rate withholding tax.
Fourth resolution
Agreements addressed
by Article L. 225-38
et seq. of the French
Commercial Code
Fifth resolution
Reappointment
of a Director
Sixth resolution
Reappointment
of a Director
Seventh resolution
Powers
194
«Acting in accordance with the quorum and majority requirements laid down for
Ordinary General Shareholders’ Meetings, the General Shareholders’ Meeting has
read the Statutory Auditors’ Special Report on agreements and commitments
addressed by Articles L.225–38 et seq. of the French Commercial Code and hereby
approves said report.”
reappoints Mr. Jean-François Sammarcelli as a Director for a term of four years. His
mandate will expire at the end of the General Shareholders’ Meeting convened to
approve the financial statements for the fiscal year ending December 31, 2016.”
reappoints Mr. Patrick Daher as a Director for a term of four years. His mandate will
expire at the end of the General Shareholders’ Meeting convened to approve the
financial statements for the fiscal year ending December 31, 2016.”
«All powers are granted to bearers of a copy or extract of the minutes of this General
Shareholders’ Meeting to carry out all formalities and publications relating to the
preceding resolutions.»
Additional
information
4
General description of Crédit du Nord __________________________________________ 196
Group activity _______________________________________________________________ 199
Corporate Social Responsibility (CSR) report _____________________________________ 201
Responsibility for the Registration Document and audit ____________________________ 213
Cross Reference tables _______________________________________________________ 214
195
4
Additional information
General description of Crédit du Nord
Company name
– all banking transactions;
Crédit du Nord
– any and all transactions related to banking
transactions, including in particular all investment or
related services as governed by Articles L. 321-1 and
321-2 of the French Monetary and Financial Code;
Head office
28, place Rihour – 59000 Lille, France
– any and all acquisitions of ownership interests in other
companies.
Legal form
In accordance with the conditions set forth by the
French Banking and Financial Regulation Committee,
the company may also regularly engage in any and
all transactions other than those mentioned above,
including in particular insurance brokerage.
A limited liability company (société anonyme) registered
in France and governed by Articles L. 210-1 et seq. of
the French Commercial Code.
The company has the status of a bank governed by
Articles L. 311-1 et seq. of the French Monetary and
Financial Code.
Registration number
SIREN 456 504 851 RCS Lille
APE activity code
6419 Z
Creation and expiration date
Crédit du Nord was founded in 1848 under the name
“Comptoir national d’escompte de l’arrondissement
de Lille”.
It adopted the status of a limited liability company
(société anonyme) in 1870 and took the name “Crédit
du Nord” in 1871.
The date of expiration of the company is May 21, 2068,
barring dissolution before this date or extension thereof
as provided for by law.
196
Generally, the company may, on its own behalf, on behalf
of third parties or jointly, engage in any and all financial,
commercial, industrial, agricultural, movable property or
real property transactions that are directly or indirectly
related to the abovementioned activities or are likely to
facilitate the execution thereof.
Share capital
Crédit du Nord’s share capital stands at EUR
890,263,248, divided into 111,282,906 fully paid-up
shares with a face value of EUR 8.
The shares comprising the company’s capital are not
subject to any pledge agreements.
Form of shares
All shares must be registered.
Disclosure requirements
No restrictions have been made to legal provisions
concerning ownership thresholds.
Corporate purpose (Article 3 of the bylaws)
Share transfer approval
The purpose of the company, under the conditions set
forth by the laws and regulations applicable to credit
institutions, is to perform with individuals or corporate
entities, in France or abroad:
The General Shareholders’ Meeting of April 28, 1997
ruled that the assignment, sale or transfer of shares
to a third party which does not have the right to be a
shareholder for any reason whatsoever, except in the
event of estate transmission, liquidation, communal
property between spouses or transfer to a spouse or
next-of-kin, is subject to the company’s prior approval in
order to become final.
Parent company documents
The documents relating to Crédit du Nord, including its
bylaws, financial statements, and the reports presented
at its General Shareholders’ Meetings by the Board of
Directors or Statutory Auditors, may be consulted at the
Bank’s Corporate Secretariat / Corporate Office at 59,
boulevard Haussmann, 75008 Paris, France.
Fiscal Year
From January 1 to December 31.
Allocation and distribution of income
(Article 22 of the bylaws)
Net income for the year is determined in accordance
with all currently applicable laws and regulations.
At least 5% of net income for the year, less previous
accumulated losses, if any, must, by law, be set aside to
form a legal reserve until this reserve reaches one-tenth
of share capital.
Net income available after said allocation to legal
reserves, as well as any retained earnings, constitutes
“income available for distribution” from which dividends
may be paid out and/or funds allocated to ordinary,
extraordinary or special capital reserves or to retained
earnings as approved by the Shareholders’ Meeting on
the basis of the recommendations made by the Board
of Directors.
The General Shareholders’ Meeting called to approve
the financial statements for the fiscal year may, in respect
of all or part of final or interim dividends proposed for
distribution, offer each shareholder the choice between
payment of the final or interim dividends in cash or in
shares, under the conditions set forth by the currently
applicable legislation. Shareholders must exercise this
4
option for the entire amount of final or interim dividends
to be received for the fiscal year.
Except in the case of a reduction in share capital,
no distribution to shareholders may take place
where shareholders’ equity is or would as a result
of said distribution be lower than the amount of the
company’s share capital plus any legal reserves which,
in accordance with the law or under the company’s
bylaws, are not available for distribution.
General Shareholders’ Meeting
(Article 19 of the bylaws)
The General Shareholders’ Meeting, when duly formed,
represents all shareholders and exercises all powers
devolved to it by law.
It is convened to rule on those items listed on the
agenda in accordance with the currently applicable legal
and regulatory provisions.
The right to take part in the Meeting is subject to
registration of shares in the name of the shareholder at
least five days before the date of the meeting.
Profit-sharing
A profit-sharing agreement was signed on June 30,
2010 which applies to fiscal years 2010 through 2012.
All payments therein are calculated on the basis of
6.5% of gross operating income adjusted for certain
parameters. 35% of profit-sharing is paid out in equal
amounts (capped at EUR 4 million), with the remainder
paid in proportion to gross annual salaries excluding
performance bonuses. Total profit-sharing is capped at
8.5% of gross fiscal remuneration paid to all company
employees in the year in question.
Crédit du Nord makes an additional “employer’s
contribution” where employees pay any sums arising
from profit-sharing into the Company Savings Plan or
into the Company Pension Savings Plan (PERCO), in
accordance with pre-defined scales and limits.
197
4
Change in capital
2012
Shares outstanding
Par value per share (in euros)
Capital stock (in euros)
Maximum number of shares to be created**
111,282,906*
2011
2010
2009
2008
111,282,906*
111,282,906*
92,532,906
92,532,906
8
890,263,248*
8
8
8
8
890,263,248*
890,263,248*
740,263,248
740,263,248
-
-
-
-
Total number of potential shares
111,282,906*
-
111,282,906*
111,282,906*
92,532,906
92,532,906
Potential share capital (in euros)
890,263,248*
890,263,248*
890,263,248*
740,263,248
740,263,248
*
Capital increase of EUR 150,000,000 approved by the Extraordinary Shareholders’ Meeting of September 15, 2010, fully subscribed by Societe Generale with a view to
financing the acquisition of Société Marseillaise de Crédit.
**
Created by convertible debt and/or the exercise of stock options.
Ownership and voting rights at December 31, 2012
Societe Generale
100 %
Members of the Management Bodies
-
Employees (via specialised fund managers)
-
Double voting rights
None.
Changes in ownership in the last three years
On December 11, 2009, Dexia Crédit Local and Dexia Banque Belgique each sold their 10% interest in Crédit du Nord
to Societe Generale.
Societe Generale now owns more than 99% of Crédit du Nord.
Dividend payments
– A dividend per share of EUR 1.40 was paid out in respect of FY 2008.
– No dividend was paid in respect of FY 2010.
– On May 16, 2013, a proposal will be put forward to the General Shareholders’ Meeting to pay a dividend
of EUR 2.00 per share in respect of fiscal year 2012.
Stock market information
Not applicable: Crédit du Nord shares are not listed on any markets.
198
Group activity
4
Group activity
Use of patents and licences
Not relevant
Legal risks
Crédit du Nord is a credit institution approved to operate
as a bank. As such, it may engage in any and all
banking transactions.
It is also authorised to provide any and all investment or
related services as referred to in Articles L. 321-1 and L.
321-2 of the French Monetary and Financial Code. As
an investment service provider, Crédit du Nord is subject
to the applicable regulatory framework, in particular
prudential rules and the controls of the French Banking
Commission. All managers and employees are bound by
professional secrecy, the breach of which is subject to
criminal penalties.
Crédit du Nord is also an insurance broker.
Litigation and extraordinary
circumstances
To date there are no extraordinary circumstances and/or
ongoing litigation that may have, or may have had in the
recent past, a significant effect on the business, income,
financial position or assets and liabilities of Crédit du
Nord or its subsidiaries.
Other special risks
To the best of Crédit du Nord’s knowledge, no such risk
currently applies.
Insurance
General policy
Crédit du Nord’s insurance policy aims to obtain the best
coverage with respect to the risks to which it is exposed.
A certain number of major risks are covered by policies
taken out as part of Societe Generale’s Global Insurance
Policy, while others are covered by policies taken out by
Crédit du Nord.
Risks covered by the Societe Generale
Global Insurance Policy
1. Theft/fraud
These risks are included in a “global banking” policy that
insures the banking activities of Crédit du Nord and its
subsidiaries.
2. Professional liability insurance
The consequences of any lawsuits are insured under the
global policy. The level of coverage is the best available
on the market.
3. Operating losses
The consequences of an accidental interruption in
activity are insured under the global policy. This policy
complements the business continuity plans.
4. Third-party liability insurance of the
corporate officers
The purpose of this policy is to cover the company’s
managers and directors in the event of claims filed
against them and invoking their liability.
199
4
Group activity
Risks covered by Crédit du Nord policies
1. Buildings and their contents
Buildings and their contents are insured by a multi-risk
policy with a ceiling of EUR 80,000,000.
3. Liability insurance linked to operations
This insurance covers any pecuniary damages to third
parties incurred by all persons or equipment deemed
necessary for the company’s operations.
Other risks linked to activities
2. IT risks
This insurance covers any loss or damages to equipment
(hardware, media) used to process information.
200
Within the framework of all Group contracts, Crédit du
Nord offers customers insurance on their loans covering
death, invalidity and inability to work (property loans,
consumer loans, etc.).
Corporate Social Responsibility (CSR) report
4
The legal obligation for all companies listed on a regulated market to report in their yearly management report on
the social and environmental consequences of their activities was reinforced by the passing of the “Grenelle 2”
Law of July 12, 2010 on France’s national commitment to the environment, including Article 225 therein (“Article
225”) and its implementing decree of April 24, 2012 on corporate transparency requirements for social and
environmental issues. These new provisions amend Article L.225-102-1 of the French Commercial Code based
on Article 116 of the Law on New Economic Regulations (NER) of 2001.
The information presented in this report is structured according to the 42 indicators given in the implementing
decree of April 24, 2012. It is prepared on the basis of contributions from the Group’s internal network of CSR
officers, in line with CSR reporting protocol and the “Planethic Reporting”(*) application used for the standardised
collection of CSR indicators. The entire reporting protocol is coordinated by the Corporate Secretariat. The CSR
indicator and data collection process is reviewed and optimised each year.
(*)
Quantitative data from Planethic Reporting are calculated from January to November in the case of social data and over a sliding 12-month period
in the case of environmental data.
SOCIAL INFORMATION
Employment
Total headcount and breakdown of staff by gender, age bracket and region
Crédit du Nord Group headcount at December 31, 2012: 9,646 employees (bank staff on permanent contracts, active
fixed-term contracts or on long-term leave). The average age for Group employees is 42.06 (43.8 for men and 40.69
for women), broken down as follows:
< 25 ans
Men
153
295
536
960
541
881
485
648
436
523
383
476
541
494
> 55 years old
1,168
1,200
1,000
800
600
400
200
Women
1,126
0
200
400
600
800
1000
1200
For the breakdown of staff by region, see the section entitled “Jobs and regional development”
201
4
New hires and dismissals
Recruitment
Total number of new hires
Permanent contracts
2012 (*)
1,244
548
Women
323
Men
225
Fixed-term contracts
When redundancies are being made, a number of
support measures are available including the possibility
of alternative employment in or outside the company as
well as financial assistance.
696
Women
430
Remuneration and changes in pay
Men
266
The remuneration of all Crédit du Nord Group
employees, regardless of position, contains both a
fixed and a variable portion. Remuneration is assessed
each year by the remuneration panel with reference
to the results of the annual appraisal of professional
performance.
Departures
Total number of departures
Retirement and early retirement
2012 (*)
1,365
304
Resignations of members of permanent staff
247
Termination of employment
122
Deaths among members of permanent staff
15
Total number of departures of staff on fixedterm contracts
670
Departures for other reasons
7
Crédit du Nord has signed a workforce and competency
planning (GPEC) agreement aimed at:
– providing a set of information to employees and their
representatives about careers and the company’s
businesses and prospects;
– supporting employees at every stage of their careers,
particularly when they first join the company;
– managing careers and skills, ensuring equal
opportunities for men and women;
– ensuring support for older workers within the
company.
Termination of employment, of any kind, is subject to
contractual procedures.
202
A number of steps involving consultation with
staff representatives must take place prior to any
redundancies.
Since 2008, a specific budget has been allocated to
reducing pay gaps between men and women. The
Group is currently experiencing a high turnover of staff
and an increasing proportion of women in its workforce.
The annual appraisal reflects Crédit du Nord Group’s
eagerness to support each member of staff in
developing his or her career and expertise.
The annual appraisal also affirms the Group’s
determination to pursue a policy of managing
competencies and developing talent within the Company
in order to meet the challenges of the future.
All Group employees attend an individual performance
and development assessment interview each year.
This interview provides an opportunity for the manager
to sit down with the member of staff and go over his
or her activities and performance over the past year,
discuss ways of improving his or her job performance
and establishing business targets for the following year.
Organisation of work
The Employee Representative Bodies include:
Working hours
– the Group’s unions and their branch offices,
delegates and representatives, which have exclusive
control when it comes to collective bargaining;
Crédit du Nord signed an agreement on October 26,
2000 on the reduction and organisation of working
hours, which provides for basic annualised working time
of 39 hours per week.
There are also a number of specific work cycles,
including a 37.5 hour work week (branches open from
Tuesday to midday Saturday) and specific arrangements
for remote banking.
Absenteeism
Absenteeism (in numbers of working days)
Number of days of paid leave
Number of days of paid sick leave
Number of days of paid maternity leave
Number of days of paid leave
for other reasons
Total number of days paid
Paid absenteeism rate
2012 (*)
185,974
122,991
53,605
4
– the Regional Works Councils and the Central Works
Council, which act as advisory bodies for all matters
concerning the general running of establishments
and the Group. They also manage social and cultural
activities for staff;
– the staff delegates, whose responsibility is to
represent individual or Group employee claims
pertaining to regulations and collective bargaining
agreements;
– the Health and Safety Committee (CHSCT), whose
main purpose is to protect the health and safety of
employees, improve working conditions, and ensure
compliance with legal and regulatory requirements.
9,378
Collective bargaining agreements
3,192,550
5.83%
Employee relations
Social dialogue: information, consultation and
negotiation
Social dialogue is a collaborative process between
employer and employee (or their representatives)
on common-interest issues relating to a company’s
economic and social policy. Applied at a Group-wide
or individual entity level, it can take various forms, from
the simple exchange of information to consultation and
negotiations.
Crédit du Nord’s bylaws provide for the inclusion of a
staff-elected representative on its Board of Directors.
In recent years, Crédit du Nord has signed a large
number of collective bargaining agreements, including:
– draft agreement on gender equality targets and the
steps to be taken to achieve them;
– workforce and competency planning agreement and
an agreement related to the management of strategic
projects within the company;
– agreement to promote the employment and
integration of persons with disabilities at Crédit du
Nord;
– agreement on support for older workers;
– agreement on preventing and treating stress in the
workplace and psychological risk;
– agreement on handling abusive and aggressive
behaviour;
– draft agreement on profit-sharing;
– agreement on incentive bonuses;
– agreement relating to health insurance;
– agreement relating to employment and union law;
– draft agreements on employee benefits.
203
4
Health and safety
– agreement in favour of the employment and inclusion
of persons with disabilities at Crédit du Nord.
Occupational health and safety
Crédit Nord signed a number of agreements on the
prevention and treatment of stress and psychological
risk in the workplace. The areas covered by the
agreements include:
Accidents in the workplace, including frequency
and severity, and work-related illnesses
The number of reported accidents for the Crédit du Nord
parent company was 114.
– stress;
– abusive and aggressive behaviour in business
relationships;
– attacks/branch security.
The agreements are accompanied by leaflets from the
French Banking Association (AFB) such as “Acting
together against abusive and aggressive behaviour” and
“Preventing harassment and violence in the workplace”.
Crédit du Nord has established a system of support and
assistance including a leaflet entitled “After an attack”,
which outlines the medical, psychological and legal
support available.
While initially intended for victims of armed robberies,
this information is now also provided to victims of
serious abusive or aggressive incidents. Crédit du Nord
Group has chosen Preventis – an occupational health
intervention agency – to assist it in its activities.
As required by current legislation, in early 2013 Crédit du
Nord also designated a suitably qualified member of staff
to be in charge of security matters and one person to be
involved in occupational risk prevention (IPRP).
Agreements signed with trade unions or staff
representatives governing occupational health
and safety
A number of agreements were signed between Crédit du
Nord’s senior management and trade unions relating to:
– stress;
– abusive and aggressive behaviour in business
relationships;
– attacks/branch security.
Examples of agreements:
– agreement on preventing and treating stress and
psychological risk in the workplace;
– agreement on handling abusive and aggressive
behaviour;
204
Training
Training policies implemented
A distinctive and individually tailored training support
system has been in place for many years at Crédit
du Nord, both to facilitate the induction process and
support employees who are taking on new roles.
This system is reviewed annually, particularly in light of
changes in applications and processes, and adjusted in
order to better meet the needs of employees and the
Bank’s requirements.
A training plan is defined each year to meet market and
business line needs.
The 2013 training plan will be structured around the
following key areas:
– induction and training of new employees in a business
line and support for employees who are taking on a
new role;
– upskilling;
– training as a key driver of the Bank’s strategy;
– “Individual Training Entitlement (DIF)” provision.
This plan has an accompanying training map:
– induction and training of employees – overview;
– induction programmes;
– security programmes;
– validation of AMF knowledge (Autorité des Marchés
Financiers);
– business programmes;
– business cycles;
– internships;
– “Individual Training Entitlement (DIF)” provision.
Total number of training hours
Training (basis of calculation: 1 day = 8 hours)
Total number of training days
Fighting discrimination
2012 (*)
33,037
Women
18,313
Men
14,724
Number of employees who took
at least one course during the year
6,037
Women
3,267
Men
2,770
Percentage of employees who took
at least one course during the year
4
63.35%
Diversity and equal opportunity
Measures taken to promote gender equality
A gender equality and diversity agreement is in place
within the company. This agreement focuses on three
areas for action: recruitment, career development and
job classification, each of which is linked to quantitative
progress targets which are monitored for the duration of
the agreement. A dedicated budget for reducing wage
gaps has been in use since 2008.
Measures taken to promote the employment
and integration of disabled workers
A company agreement exists in favour of the
employment and integration of persons with disabilities
which also provides for the introduction of a dedicated
contact person – the disability officer – who is in charge
of activities that contribute to the recruitment and
integration of persons with disabilities and responsible
for reporting on these activities and monitoring dedicated
resources and achievements.
In 2009, an agreement was reached on supporting older
workers in their careers, including a quantitative target
of continued employment of workers aged 55 years and
older and based on three priority areas for action:
– recruiting employees aged 45 and older in the
company;
– forward-thinking on the career development of
employees aged 45 and above;
– developing the skills and qualifications of these
employees and enhancing their access to training.
Promotion and observation of the
fundamental conventions of the
International Labour Organisation
Non-discrimination
Occupation)
(Employment
and
Crédit du Nord Group does not practise any form of
discrimination whatsoever, whether towards its staff
and prospective employees or its customers, business
partners or suppliers.
Freedom of
bargaining
association
and
collective
Forced or compulsory labour
Child labour
Crédit du Nord operates exclusively in France and
complies with all applicable labour laws, which cover
all three of the above areas. Societe Generale Group’s
Code of Conduct provides additional guidance.
205
4
INFORMATION ON CSR COMMITMENTS
With its strong regional presence, Crédit du Nord
serves the needs of its customers through its banking
and financing activities and seeks to contribute to the
social and economic progress of the départements and
regions in which it operates.
Regional, economic and social
impacts of the company’s activities
Jobs and regional development
Crédit du Nord Group was established through the
combination of some 80 regional banks that have been
pooling their respective strengths and talents for over
160 years. Today, the Group comprises, among others,
eight banks – Courtois, Kolb, Laydernier, Nuger, RhôneAlpes, Société Marseillaise de Crédit (SMC), Tarneaud
and Crédit du Nord.
Customer satisfaction and financing the economy remain
at the heart of the Group’s regional banking model. The
buyback of non-controlling shares in Banque Tarneaud,
which operates in the Centre-Ouest Atlantique region,
illustrates the Group’s desire to strengthen its regional
presence.
Crédit du Nord Group’s entities enjoy a large degree of
autonomy in the management of their activities, ensuring
rapid decisionmaking and the capacity to respond
quickly to their customers’ needs. The strategy of the
Group’s banks is based on three core aims:
The Group’s strong regional ties enable it to play a
leading role in the development of the regions, either
through the presence of a regional office or through a
subsidiary. It provides jobs to local economies, supports
the creation and development of businesses and
provides backing for their projects.
– to be a reference bank in terms of the quality of its
customer relationships;
Spread across the whole of France, its points of sale
enable the Group to forge strong local relationships
between its specialist advisors and customers that
ensure the Group is able to meet their personal and
professional banking and finance needs. Crédit du
Nord is continuing its ambitious programme of branch
openings which was launched in the middle of the
last decade and has so far resulted in some 150 new
branches.
– to develop a high degree of individual and collective
professionalism;
– to offer their customers state-of-the-art services and
technologies.
The quality and strength of Crédit du Nord Group’s
results is recognised by the market and through
Standard & Poor’s long-term A rating and Fitch’s longterm A+ rating.
Crédit du Nord Group
Lille
Région « Provinces du Nord » (CDN)
Arras
Amiens
Rouen
Région « Nord Métropole » (CDN)
Paris
Nancy
Banque Kolb
Région « Picardie » (CDN)
Banque Nuger
Région « Normandie/Haute Bretagne » (CDN)
Banque Rhône-Alpes
Limoges
Région « Ile-de-France » (CDN)
Clermond-Ferrand
Lyon
Annecy
Banque Tarneaud
Banque Laydernier
Monaco
Marseille
Toulouse
Banque Courtois
206
4
Geographic presence of branches and breakdown of workforce by region and subsidiary at December 31:
Crédit du Nord Regions
Nord
Métropole
Provinces
du Nord
Corporate division
Lille
Arras Picardie
Normandie
Haute
Bretagne
Monaco
Amiens Rouen Monaco
Paris Paris 1
119
12
Number of branches
65
87
54
52
Number of divisions
13
12
10
11
634
763
483
409
Number of employees
Crédit du Nord subsidiaries
Corporate division
Number of branches
Number of divisions
Number of employees
Ile de France
Corporate
Loiret Client division
Corporate
divisions + IT
Paris Lille
0
129
35
2,829
Banque
Kolb
Banque
Tarneaud
Banque
Nuger
Banque
Rhône-Alpes
Banque
Laydernier
Banque
Courtois
Société
Marseillaise
de Crédit
Nancy
Limoges ClermontFerrand
Grenoble
Annecy Toulouse Marseille 43
74
23
80
46
90
172
19
20
11
25
17
14
42
323
596
173
652
334
681
1,734
Surrounding and local communities
As part of a regional approach, Crédit du Nord and its
subsidiaries are developing a strategy of becoming a
local relationship bank on all retail banking markets in
France: the employees of the Group and its network
of 918 branches serve over 2.1 million individual
customers, 217,700 professional customers and 46,800
business customers.
In general, Crédit du Nord and its specialist advisors
support local people in their day-to-day needs and their
plans for the future with products and services to suit
their individual needs.
The Group offers specifically tailored products and
services for customers in financial difficulty. As part of
the commitment undertaken by the banking profession
in 2005 to “make banking easier for everyone”, the
Group offers customers a range of alternatives to
cheque payments that are designed to provide eligible
customers with a comprehensive solution for the day-today management of their accounts. This includes a bank
card that requires systematic authorisation for payments
and withdrawals in France and Europe, the ability to
carry out deposit and debit transactions, bank cheques,
account balance alerts and capped charges in the event
of a payment incident.
For customers with a serious health risk, the Group offers
products and services under the terms of the AERAS
agreement (s’Assurer et Emprunter avec un Risque
Aggravé de Santé), which was signed between French
banking and insurance professionals in 2007 and revised
in 2011. The agreement is aimed at facilitating access
to credit (home and consumer loans) and insurance
(a partial mutualisation system, which balances out
additional premiums, is provided for persons with low
incomes).
Relations with persons or
organisations concerned
by the company’s activities
Conditions for dialogue with these persons or
organisations
At Crédit du Nord, corporate social responsibility
means understanding and integrating the needs and
expectations of the Group’s different stakeholders,
including customers, employees and suppliers.
Customers:
Each of the Crédit du Nord banks aims to be a
relationship bank that is close to its customers and
chosen for the quality and commitment of its teams.
Within each of the main market segments serviced by
the Retail Banking network, Crédit du Nord has been
surveying representative samples of its customers and
207
4
those of its competitors for some 20 years in order to
assess their level of satisfaction. Customers are asked
about their overall satisfaction, but also about the
different aspects of the banking relationship (branch,
account manager, telephone and internet banking,
products and pricing). The importance of each of these
aspects in the overall level of customer satisfaction is
calculated on the basis of various statistics. Customers
are also asked whether they intend to stay with the bank
and whether they would recommend the bank to friends
and family.
For the eighth consecutive year, the competition
surveys (1) conducted by the Conseil Supérieur de
l’Audiovisuel (CSA) with major French banking groups
ranked the Crédit du Nord banks number one for
individual customer satisfaction.
The Crédit du Nord Group is also ranked number one
for business customer satisfaction and number two for
customer satisfaction on the professional segment.
Crédit du Nord branches are also visited by “mystery
shoppers”, which is an excellent means of gathering
accurate feedback on the quality of the welcome and
advice given, and of identifying areas for improvement.
A number of other targeted customer studies and
surveys are carried out, particularly of new customers.
All Crédit du Nord Group employees are made aware of
the importance of maintaining high levels of customer
satisfaction.
Claims and mediator
The Group is committed to finding a rapid if not
immediate solution to complaints or problems as soon
as the branch is informed of such by its customer.
However, in the case of a continuing disagreement,
customers may file a complaint with their Customer
Relations Centre and, if the dispute is still not resolved,
request the intervention of the mediator.
The free mediator services established by the Crédit
du Nord Group, which are intended to achieve an outof-court solution to disputes, are widely publicised by
the bank including through information provided on the
back of all account statements. Crédit du Nord has
undertaken to comply in full with all decisions taken by
the independent mediator (Mrs. Christiane Scrivener).
Employees
The Group places great importance on promoting lasting
relationships with its employees as part of a commitment
to mutual development in an environment favouring both
individual and collective well-being.
Suppliers
Please refer to the “Subcontractors and suppliers”
section below.
Crédit du Nord uses the protected sector, within the
limits of the possibilities offered by the Group, when
products and services are governed by framework
agreements. In 2011, Crédit du Nord worked with more
than 15 companies in the protected sector.
Rating agencies
Crédit du Nord Group answers questionnaires from
extra-financial rating agencies on a consolidated basis
through its parent company.
Partnerships and corporate sponsorship
At Crédit du Nord, solidarity, art and music and sports
sponsorships are a day-to-day commitment. Getting
involved in the cultural life and local associations of
their regions and reinforcing links with partners are key
priorities of the Crédit du Nord Group banks. In 2012,
Crédit du Nord donated more than EUR 1.5 million to
over 200 sports clubs, associations, exhibitions and
cultural events.
The types of projects that Crédit du Nord supports
can be local initiatives, such as a charity sports day, or,
equally, national projects such as “Marseilles-Provence
2013 – European Capital of Culture” of which SMC is an
Official Partner.
This year, Crédit du Nord decided to get involved in
a community cause and to raise funds for childhood
cancer research by taking part in the first Children
without Cancer race. The money raised was used to
fund clinical trials of a highly innovative drug for the most
common type of brain tumours in children. By joining
in the organisation of the first ever Children without
Cancer run, the Group’s aim was to get truly involved in
a community initiative alongside individual members of
staff, who also raised over EUR 33,000.
(1) Competition surveys carried out by the CSA: from February 27 to March 30, 2012, a survey of 4,600 individual customers of the 11 main banks
In the marketplace; from March 1 to April 12, 2012, a survey of 3,430 professional customers of the 10 main banks in the marketplace;
from February 29 to April 6, 2012, a survey of 2,800 business customers of the 10 main banks in the marketplace.
208
Subcontractors and suppliers
Incorporation of CSR criteria in the company’s
purchasing policy
For its main purchases, Crédit du Nord Group uses the
Societe Generale Group Purchasing Department, which
implements a series of multi-annual action plans that
seek the proactive involvement of all stakeholders in the
value chain (prescribers, purchasers and suppliers).
These action plans, known as the Ethical Sourcing
Program (ESP 2006-2010) and the Sustainable Sourcing
Program (SSP 2011-2015), demonstrate the Group’s
determination to make CSR a fundamental part of its
purchasing processes. This commitment is reflected in
different key initiatives:
– the signing of compliance rules governing purchasing
by 100% of purchasers;
– the inclusion of a sustainable development clause in
all contracts that commits all suppliers to upholding
any labour laws (and where no such laws apply, to
at least comply with the provisions of the ILO) or
environmental legislation in force in the countries in
which they operate;
– environmental and social risk mapping on products
and services purchased (49 out of 132 purchasing
categories are classed as presenting a risk);
– the evaluation of suppliers prior to each purchase
which has a minimum weighting of 3% in the selection
criteria (1,050 suppliers were invited to undergo the
Group’s CSR evaluation in 2012);
4
• Social pillar: promotion and use of subcontractors
within the protected sector.
• Environmental pillar: participation in the Carbon
Reduction Plan through the inclusion of environmental
criteria in the selection process for products and
services.
For purchases that are handled directly, Crédit du Nord
Group very much follows Societe Generale Group’s
policy and favours local Region and Subsidiary suppliers.
Importance of outsourcing and incorporation
of CSR criteria in relations with suppliers and
subcontractors
In 2006, the Societe Generale Group Purchasing
Department formalised a CSR supplier selection process
aimed at covering the largest possible cost base. When
a call for tenders is sent out, all suppliers are assessed
and given a CSR rating. Once the evaluation is complete,
the CSR rating is factored into the selection criteria, with
a minimum weighting of 3%.
Since 2011, the Societe Generale Group Purchasing
Department has worked with independent firm Ecovadis,
recognised for its expertise in sustainable development.
Suppliers invited to bid are surveyed by Ecovadis using
a questionnaire that is tailored to their business sector
and the size of their company as well as their geographic
coverage.
The methodology and criteria used in the Ecovadis
questionnaire are consistent with international CSR
standards (Global Reporting Initiative, United Nations
Global Compact, ISO 26000, ILO Conventions).
– the incorporation of CSR objectives by all purchasers
in a CSR initiative specific to their purchasing
category (for example contracts with protected
sector companies, inclusion of environmental criteria
in specifications);
Fair practices
– the launch of a CSR-specific “Purchasing and
Sustainable Development” training module in in-house
training (40 employees completed the training course
in 2012).
The Group’s anti-money laundering measures include
monitoring potential abuse of the banking system for
the purposes of corruption. Oversight is based primarily
on know-your-customer processes and on the use of
transaction filtering tools.
Anti-corruption initiatives
Societe Generale’s socially responsible purchasing policy
is based on three core pillars:
• Economic pillar: commitment to SMEs that makes
it less difficult for them to win Societe Generale
procurement contracts and to establishing a
framework of mutual trust with suppliers.
209
4
Transactions likely to represent acts of corruption are
analysed and may result in a declaration of suspicious
activity being filed with the competent authorities in
charge of combating money laundering.
The Purchasing Department has updated purchase
agreements to include an anti-corruption clause that
covers suppliers.
A system of continuous monitoring of employee
practices is in place.
Measures in favour of consumer health and
safety
to final repayment. This applies to consumer credit and
home loans for individual customers.
Its staff do not receive any fee-for-service remuneration
(commission), which ensures that the advice they give
customers is completely impartial.
Human rights
Human rights initiatives
Crédit du Nord Group pursues its development with the
utmost respect for fundamental human and workers’
rights and for the environment – all around the world.
Crédit du Nord Group sets itself very high standards in
the way it operates it business, particularly in terms of
customer satisfaction, the pace of business, fair pricing,
synergies between markets and the expansion of the
range of products and services (including multi-channel
offerings).
It aims to provide a courteous and respectful service to
borrowers at all stages of the credit cycle, from approval
ENVIRONMENTAL INFORMATION
General environmental policy
Company policy addressing environmental
issues and, where applicable, steps taken to
evaluate environmental performance or obtain
environmental certification.
In keeping with the three pillars of the Group’s banking
model (regional presence, relationship-building and
customer satisfaction) which are now more relevant
than ever and help to set us apart, Crédit du Nord aims
to reduce the environmental footprint of its internal
operations.
The Group’s environmental policy strives to meet three
major objectives:
– to reduce and minimise the direct impact of its
activities on the environment;
– to reduce natural resource and energy consumption
through careful and efficient utilisation;
210
– to ensure constant attention is paid to employee
comfort and customer service.
Since 2007, with the incorporation of the 2008-2012
carbon neutrality programme of Societe Generale
Group, Crédit du Nord has undertaken to foster a culture
of environmental awareness.
In July 2012, a new carbon reduction programme was
defined for the years 2012-2015, which takes over from
the previous programme and strengthens its ambitions
with the following two objectives:
– to reduce greenhouse gas (GHG) emissions;
– to reduce energy consumption.
Environmental information is managed by means of a
dedicated CSR reporting tool. This has improved the
oversight of environmental indicators, the scope of
which changes each year. All entities (Regional and
Subsidiaries) are actively involved in data feedback,
which helps to provide a clear view of the situation at the
consolidated level.
Implementation of a carbon neutrality and then
reduction programme with a cross-business impact:
Property: defining principles for building refurbishments
and renovations (better use of space and of new
technologies with a reduced environmental impact).
Consumables: stricter policy on the use of consumables,
particularly paper, by being more demanding when it
comes to suppliers and reducing the use of paper.
Transportation: improved monitoring and control of
business travel with greater use of alternative tools such
as audio and videoconferencing systems.
Employee training and
environmental protection
awareness
on
The Group intends to add a section to its intranet site on
sustainable development and CSR with a link to Societe
Generale’s CSR website. This will enable staff to find out
about sustainable development issues in general and for
the banking sector in particular and to be aware of what
actions are being taken.
It will inform consultations, best practices and decisions
related to sustainable development and CSR.
4
Pollution and waste management
Measures for preventing, reducing or offsetting
emissions into the air, water and soil with a
severe impact on the environment.
Not material given the nature of the company’s
operations and geographical location.
Waste prevention, recycling and disposal
measures
Waste at the central buildings is divided into 16
categories and treated appropriately. Service providers
are contracted to collect, sort and recycle the majority
of this waste. In 2013, the Bank will introduce sorting
and collection of food waste at the Anjou, Curial and
Rihour buildings. Data on this area has been gathered
for several years now, and is improving and becoming
more accurate each year.
A number of awareness campaigns will be carried out
in 2013 to encourage the occupants of the buildings
to take a more «eco-responsible” approach through
better recycling, such an information campaign on
the existence of a system for recovering and recycling
printer toners.
Pollution and environmental risk prevention
operations
Amount of provisions and guarantees for
environmental risks, provided that such
information is not liable to harm the company’s
interests in any ongoing legal disputes
There are no plans for a specific provision for
environmental risks, given the nature of the company’s
operations.
Sound pollution and any other form of businessspecific pollution
Sustainable use of resources
Water consumption and water supply based on
local constraints
Consumption of raw materials and steps taken
to improve efficient use of consumables
Because of nature of Crédit du Nord’s operations, the
main raw materials used by the Group are paper and
energy.
211
4
Paper consumption:
Measures taken to improve energy efficiency
Paper is constantly reviewed from both a qualitative (raw
materials, transport, etc.) and quantitative point of view.
Energy efficiency has become a key focus of
environmental policy.
In 2012, a new call for tenders was launched to select
paper meeting strict environmental requirements and
product life cycle analysis criteria. The main objective
was to select with paper with the lowest possible
environmental impact associated with its manufacture.
Measurement systems and ind icato rs enab le
consumption to be managed more efficiently.
A number of energy efficiency initiatives may be
identified: insulation work, installation of motion
detectors, LED lighting for signage and point-of-sale
advertising and the replacement of heating and airconditioning systems with more energy-efficient ones.
A questionnaire based solely on the paper life cycle (raw
materials, transport, pulp production process, sheet
manufacturing process and waste management) was
compiled and sent out to suppliers that had been invited
to bid. Audits were then conducted on the preselected
paper manufacturers according to these criteria.
Land use
Researching and implementing paperless systems
(electronic account statements, digital files, electronic
signatures, etc.) in order to reduce the amount of paper
used is an ongoing goal of the company. For example:
Climate change
– in 2012, the number of customers signing up to online
statements rose by 107% relative to 2011 (excluding
SMC, 146% with SMC);
– the “Scan agence” project will enable branches to
manage customer data electronically. The first step in
the process involves scanning customer documents.
The Group regularly runs awareness campaigns to
encourage staff to use paper more efficiently.
Consolidated information about the overall use of paper
was not available in 2012, but steps will be taken to
obtain this information in 2013.
operations.
Greenhouse gas (GHG) emissions
In addition to measurements, which help better identify
areas for improvement, all initiatives related to transport,
paper consumption and direct or indirect emissions from
energy consumption are aimed at reducing the Group’s
GHG emissions. Five subsidiaries of the Crédit du Nord
Group published GHG reviews on 2011 emissions.
Adapting to the impact of climate change
Preserving biodiversity
Energy consumption, steps taken to improve
energy efficiency and use of renewable energy
sources
Energy consumption(*):
Energy consumption in 2012 for the entire Regions and
Subsidiary scope (10,264 occupants) amounted to:
– Electricity : 44.40 GWh;
– Gas
: 15.73 GWh;
– Heating oil : 01.40 GWh:
212
Measures taken to preserve or develop
biodiversity
Responsibility for the Registration Document and audit
4
Responsibility for the Registration Document and audit
Person responsible for the Registration Document
Philippe Aymerich, Chief Executive Officer since January 11, 2012
Certification by the person responsible for the Registration Document
and the Annual Financial Report
I hereby certify, having taken all reasonable measures to this end, that to the best of my knowledge, the information
contained in this Registration Document is true and that there are no omissions that could impair its meaning.
I certify that, to the best of my knowledge, the financial statements were drawn up in accordance with applicable
accounting standards and present fairly, in all material respects, the financial position and results of the parent company
and of the entire Group as constituted by the consolidated companies, and that the Management Report (including
the cross-reference table for the annual report, in Chapter 4, page 217, which indicates the content) accurately
reflects the development of business, results and the financial situation of the parent company and of the entire
Group as constituted by the consolidated companies, as well as a description of the main risks and uncertainties
to which they are exposed.
I received a letter of completion from the Statutory Auditors in which they state that they verified the information
in respect of the financial position and accounts presented in the Registration Document, which they have read
in its entirety.
The historic financial information presented in the Registration Document was addressed in Statutory Auditors’
reports, appearing on pages 132 and 133, 188 and 189 of this document, in addition to financial information for
fiscal years 2010 and 2011, respectively on pages 138 and 139, 204 and 205 of the 2010 Registration Document
and pages 134 and 135, 196 and 197 of the 2011 Registration Document. The Statutory Auditors’ reports
referring to the 2010, 2011 and 2012 annual parent company financial statements contain observations.
Paris, April 26, 2013
Chief Executive Officer, Philippe Aymerich
Statutory Auditors
Represented by Bernard HELLER
DELOITTE & ASSOCIES
Represented by Jean-Marc MICKELER
Address: 1/2, place des Saisons
92 400 Courbevoie - Paris-La Défense 1
Address: 185, avenue Charles de Gaulle
92 200 Neuilly-sur-Seine
Date of appointment: May 4, 2000
Date of last reappointment :
May 11, 2012 for six fiscal years
Date of appointment: May 4, 2000
Date of last reappointment :
May 11, 2012 for six fiscal years
Expiry of this mandate :
At the end of the Ordinary General Shareholders’ Meeting
convened to approve the financial statements for the
fiscal year ending December 31, 2017.
Expiration du mandat en cours :
At the end of the Ordinary General Shareholders’ Meeting
convened to approve the financial statements for the
fiscal year ending December 31, 2017.
Alternate Statutory Auditors:
PICARLE et Associés
Represented by Marc CHARLES
Alternate Statutory Auditors:
BEAS
Represented by Mireille BERTHELOT
213
4
Cross Reference tables
1. Cross Reference table for the Registration Document
In accordance with Article 28 of EC Regulation No. 809/2004 of April 29, 2004, the following information is included
for reference purposes in the Registration Document:
• individual and consolidated financial statements for the fiscal year ended December 31, 2011, the related Statutory
Auditors’ reports and the Group Management Report appearing on pages 42-184, pages 134-135, pages 196-197
and pages 13-29 of the Registration Document filed with the AMF on April 27, 2012 under No. D.12-0462;
• individual and consolidated financial statements for the fiscal year ended December 31, 2010, the related Statutory
Auditors’ reports and the Group Management Report appearing on pages 44-190, pages 138-139, pages 204-205
and pages 13-28 of the Registration Document filed with the AMF on April 28, 2011 under No. D.11-0392.
The chapters of Registration Documents Nos. D.12-0462 and D.11-0392 not listed above are either not applicable
for investors or are covered in another section of this Registration Document.
Section
Page number of the
1. Responsibility for the Registration Document
213
2. Statutory Auditors
213
3. Selected financial information
3.1. Select historic financial information for the issuer, for each fiscal year
3.2. Select financial information for interim periods
4. Risk factors
6-7
34 ; 75 to 86 ; 200
5. Information concerning the issuer
5.1. History and development of the company
5.2. Investments
196
8 ; 14 ; 25 ; 98-99
6. Overview of activities
6.1. Core businesses
6.2. Key markets
6.3. Exceptional events
6.4. Degree of issuer dependence on patents, licences, industrial, commercial,
and financial contracts, and on new manufacturing processes
6.5. Basis of issuer statements concerning its competitive position
15-19
94
8 ; 14 ; 143
199
-
7. Organisation chart
7.1. Overall description of the Group
7.2. List of major subsidiaries
214
11
11 ; 73-74 ; 174-175
4
Page number of the
Section
8. Buildings, plant and equipment
8.1. Major existing or planned tangible fixed assets
98-99
8.2. Environmental issues with the potential to influence the use
of tangible assets
201-212
9. Overview of financial situation and results
9.1. Financial situation
20-24
9.2. Operating income
20-24
10. Cash flow and capital
10.1. Information on the issuer’s capital
42-47
10.2. Source and amount of the issuer’s cash flow
48
10.3. Information on the issuer’s borrowing conditions and financing structure
93 ; 102 ; 103 ; 110
10.4. Information concerning any restrictions on the use of capital having
influenced or capable of influencing the issuer’s transactions
-
10.5. Information concerning the expected sources of financing needed
to honour the commitments listed in Sections 5.2 and 8.1
-
11. Research and development, patents and licences
12. Information on trends
25
13. Profit forecasts or estimates
-
14. Administrative, Management and Supervisory bodies
and General Management
14.1. Board of Directors and General Management
4
14.2. Conflicts of interest involving the administrative, management
and supervisory bodies and General Management
177-179
15. Compensation and benefits
15.1. Amount of compensation paid and benefits in kind
15.2. Total amount provisioned or recorded by the issuer for the payment
of pensions and other benefits
180-187
129
16. Corporate Governance
16.1. Expiry of current mandates
4 ; 177-179
16.2. Service agreements binding members of the administrative bodies
-
16.3. Information on the issuer’s Audit Committee and Compensation Committee
4 ; 26-27 ; 180-181
16.4. Declaration indicating whether or not the issuer complies with corporate
governance policy
-
17. Employees
17.1. Number of employees
21 ; 123 ; 167 ; 201
17.2. Ownership interests and stock options of Directors
17.3. Agreement allowing for employees to invest In the issuer’s capital
182 ; 184-186
198
215
4
Section
Page number of the
18. Key shareholders
18.1. Shareholders owning more than 5% of the share capital or voting rights
198
18.2. Other voting rights
198
18.3. Ownership of the issuer
198
18.4. Agreement of which the issuer is aware, the implementation of which
could lead to a change in ownership at a future date
19. Transactions with affiliates
-
129-130 ; 154-155 ; 190-192
20. Financial information concerning the issuer’s financial
situation and results
20.1. Historic financial Information
20.2. Pro forma financial information
20.3. Financial statements
20.4. Verification of annual historic financial information
20.5. Date of latest financial information
20.6. Interim financial information
42-131 ; 137-176
42-131 ; 137-176
132-133 ; 188-189
42 ; 139
-
20.7. Dividend policy
198
20.8. Legal and arbitration procedures
199
20.9. Significant changes in the financial or commercial situation
NA*
21. Additional information
21.1. Share capital
21.2. Articles of incorporation and bylaws
196-197
22. Major contracts
-
23. Information from third parties, expert certifications and interest
declaration
-
24. Documents available to the public
25. Information on ownership interests
*
216
196 ; 198
NA: Not applicable
197
11 ; 73-74 ; 174-175
4
2. Cross Reference table for the Annual Financial Report
In accordance with Article 222-3 of the General Regulations of the Autorité des Marchés Financiers (French Securities
Regulator), the annual financial report mentioned in Section I of Article L.451-1-2 of the French Monetary and Financial
Code includes the items described in the following pages of the Registration Document:
Annual financial report
Page number of the
Section
Certification by the person responsible for the Registration Document
213
Management report
- Analysis of the results, financial situation, and risks of the parent company and
the consolidated group and list of powers delegated for the purposes of capital
increases (Article L.225-100 and L.225-100-2 of the French Commercial Code)
NA*
- Information required by Article L.225-100-3 of the French Commercial Code
relating to items liable to have an impact on the public offer
NA*
- Information relating to share buybacks (Article L.225-211 paragraph 2
of the French Commercial Code).
NA*
Financial statements
- Annual financial statements
140-176
- Statutory Auditors’ Report on the annual financial statements
188-189
- Consolidated financial statements
42-131
- Statutory Auditors’ Report on the consolidated financial statements
*
132-133
NA: Not applicable
217
The original document was filed with the AMF (French Securities Regulator) on April 26, 2013, in accordance
with Article 212-13 of its General Regulation. As such, it may be used to support a financial transaction
if accompanied by a prospectus duly approved by the AMF.
This document was produced by the issuer and is binding upon its signatories.
This Registration Document is available online at www.groupe-credit-du-nord.com
Information officer: Frédéric Figer – Tel.: 33 (0)1 40 22 45 45 – E-mail: frederic.figer@cdn.fr

Registration Document And Annual Financial Report

Transcription

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