2014 annual report

2014 ANNUAL REPORT
A Group with international presence
The BFCM is CM11
Group’s financial arm.
It manages its cash,
subsidiaries and
investments. It also
participates in financing
large projects and
is active in financial
engineering.
Bankinsurance is the
Group’s third largest
business line in its
retail banking activities,
along with banking
and IT services.
The Banque Fédérative du Crédit Mutuel (BFCM)
is the holding company of CM11 Group.
Its capital is owned by the Caisses de Crédit Mutuel,
the Caisse Fédérale de Crédit Mutuel and other
regional companies of Crédit Mutuel.
It holds the Group’s specialized subsidiaries.
Fédérations
93.1%
Caisse Fédérale
de Crédit Mutuel
5.5%
Banque Fédérative
du Crédit Mutuel
BFCM
93.7%
100%
Germany
96.1%
100%
Network
Caisses de
Crédit Mutuel et
Caisses Régionales
3.9%
Subsidiaries
•
•
•
•
•
•
Finance
Technology
Real estate
Insurance
Private banking
Private equity
54.6%
34%
32.8%
50%
4%
50%
50%
Spain
Canada
Norvège
New York
U.K.
United Kingdom
Guyana
West
Indies
Belgium
Lux.
Germany
France
Czech Republic
Slovakia
Switzerland
Portugal
Spain
Hungary
Croatie
Italy
Morocco
Tunisia
Algérie
Singapore
United Kingdom
• CIC branch
Spain
• Serbrock Correduria (Insurance)
• Cofidis Espanã
• Royal Automobile Club
de Catalogne (Insurance)
• Targobank
• Agrupació
Italy
• Cofidis Italia
Tunisia
• Banque de Tunisie
• ASTREE (Insurance)
• Information International
Developments (IID)
• Direct Phone Services
Germany
• BFCM Frankfurt
• BECM Frankfurt,
Düsseldorf and Stuttgart
• CM-CIC Leasing GMBH
• Targobank
Belgium
• CM-CIC Leasing
Belgique
• BT Belgium
• Partners (Insurance)
• Cofidis Belgique
Morocco
• BMCE (Banque Marocaine
du Commerce Extérieur)
• RMA Watanya (Insurance)
• EurAfric Information
Luxembourg
• Banque de Luxembourg
• BT Luxembourg
• ICM Life (Insurance)
Switzerland
• CIC Private Banking Banque Pasche
• Banque CIC Suisse
2014 ANNUAL REPORT
Management and supervisory bodies at December 31, 2014
Executive Board
Honorary Chairman
René Dangel – Chairman
Étienne Pflimlin
Claude Brun
Maurice Fauvet
Bruno Ligonnet
Supervisory Board
Nicolas Théry – Chairman
Jean-Louis Boisson – Vice-Chairman
Jean-Daniel Azaïs
Gérard Bontoux
Hervé Brochard
Hervé Chatanay
Roger Danguel
Gérard Diacquenod
Representatives of the Works Council
on the Supervisory Board
Matthieu Bazin
Céline Taesch
Statutory Auditors
Ernst & Young et Autres
Member of the French Regional Institute
of Accountants of Versailles
KPMG S.A.
Member of the French Regional Institute
of Accountants of Versailles
François Duret
Alternate Statutory Auditors
Bernard Flouriot
Malcolm Mac Larty
Rémy Grosz
Picarle & Associés
Pierre Hussherr
Robert Laval
Patrick Morel
Michel Paoli
Daniel Schoepf
Alain Têtedoie
Michel Vieux
5
CONTENTS
1 REPORTS AND RESOLUTIONS
6
Executive Board’s management report
7
Report of the Supervisory Board 14
Statutory Auditors’ reports 15
Draft resolutions 17
2 FINANCIAL STATEMENTS
19
Balance sheet
20
Income statement
22
3 FINANCIAL RESULTS
23
1
Reports and resolutions
7
The Executive Board, from left to right: Claude Brun, Maurice Fauvet, René Dangel and Bruno Ligonnet
Executive Board’s management report
n
A year of transition
The year 2014 revealed divergent paths out of the financial
crisis depending on the country, following the economic
improvement that drove the confidence of private sector
operators in major developed countries in 2013. In the
second half, however, the sharp drop in oil prices changed
the game. By lowering the inflation outlook, the fall in
energy costs encouraged the US and British central banks
to gradually change their tone and eventually take a more
cautious approach, postponing the anticipated initial increase
in key interest rates in both countries. In the euro zone,
growth was disappointing, adding to expectations of further
monetary easing by the European Central Bank (ECB). These
developments caused the sovereign borrowing rates of riskfree countries to decline throughout the year. As for emerging
countries, some managed to end the cycle of rising interest
rates, bringing a bit of breathing room to their economy.
Europe: a disappointing recovery
In the euro zone, the year was marked by successive
disappointments in terms of growth, combined with a sharp
drop in inflation rates (-0.2% in December). The ECB took
bold steps in response to this situation, with a series of
decisions including the reduction of its key interest rates, the
launch of asset purchase programs – asset-backed securities
and covered bonds – and long-term refinancing – Targeted
Long-Term Refinancing Operations. It also conducted a
detailed review of bank assets, which has given banks some
leeway to step up the pace of lending. For now, however,
these decisions have not had a notable impact on the real
economy. This observation, along with the impact of oil
prices on inflation, has increased the likelihood of further
major announcements at the beginning of 2015, particularly
as political stability remains fragile in some countries, such
as in Greece following the failure of the election of a new
President. At the same time, the European Commission has
been more accommodating with regard to budgetary policy
issues. It has emphasized the possibility of easing deficit
objectives in return for efforts made in public investments
and structural reforms.
This change in attitude is of great importance in France.
In parallel to this, the French government has agreed to
lower taxes for companies as part of the “responsibility pact”
and has promised the equivalent of €50 billion in budgetary
savings between 2015 and 2017.
United States, United Kingdom: the gap widens
In the United States, particularly harsh weather conditions
took a toll on business early in the year. However, favorable
statistics later in the year, particularly in terms of job market
improvement, provided reassurance of sound growth. The
resilience of the economy enabled the US central bank (the
Fed) to end its monthly asset purchase program. However,
the risks to recovery, combined with the dramatic fall in oil
prices, encouraged the Fed to remain very accommodating.
While the drop in prices will give households more
purchasing power, it will also give the Fed more time and
allow it to postpone the date for raising its key interest rates.
In the UK, as in the US, the economic situation remained
very favorable. However, signs of fragility became more
apparent, with an over-dependence on real estate. As a
result, the English central bank (BoE) postponed any action,
also gaining some leeway with the effect on prices of the
drop in the price per barrel of oil.
8
Reports and resolutions
Japan: the battle is not won
In Japan, the negative impact of the VAT increase in April
2014 (from 5% to 8%) triggered a technical recession.
To prevent this backdrop, the Bank of Japan (BoJ) launched
a new large-scale quantitative easing program in October,
dragging the Japanese currency down to new record
lows. At the same time, Prime Minister Shinzo Abe chose
to postpone the second tax increase, previously scheduled
for October 2015, and to hold early legislative elections
on December 14, in which he came out the winner. But his
structural reforms are still not convincing and are not enough
to avoid new actions by the central bank in the coming
months.
Emerging countries: relief for reformers
The Fed’s cautious approach benefited emerging countries
by slowing down the repatriation of funds to developed
countries. Some countries – India and China in particular –
took advantage of this to implement structural reforms.
However, there are still significant vulnerabilities, especially
for oil producers, which were heavily impacted by the fall in
prices. Russia is a somewhat special case because it also
endured sanctions imposed by the West and strong mistrust
which led to significant outflows of capital and a drop in the
ruble (of nearly half its value over the year).
n
Banque Européenne du Crédit Mutuel
BECM is a network bank that complements and works
in tandem with the Crédit Mutuel and CIC regional bank
networks.
It conducts its business in four main markets:
• large and medium-sized companies;
• fi nancing real estate development and real estate investors,
mainly in the housing sector;
• r eal estate companies that manage mainly commercial
and business rental properties;
•p
ayment processing for major players in the retail,
transportation and services sectors.
BECM is involved in the corporate market and in the
financing of professional real estate clients, in a subsidiarity
capacity relative to the Crédit Mutuel regional banking
network, and with thresholds for intervention adapted
to each region.
A year marked by economic, financial and regulatory
constraints
Despite some signs of hope at the beginning of 2014,
the economic environment remained lackluster in France
and, by and large, in Europe.
Against this backdrop, the wait-and-see stance, lack
of visibility and cautious investment approach negatively
impacted demand for credit.
The ECB’s accommodating key interest rate policy and the
injection of liquidity through the bank refinancing operation
(TLTRO program) in the form of bond purchases triggered
an exceptional drop in interest rates and a strong
depreciation of the euro.
The aim of this new phase of the monetary policy was to
stimulate lending and prevent the risk of deflation resulting
from the decrease in the cost of raw materials, particularly
oil. During the year, this environment placed new constraints
on interest margins with market indexes close to zero and
interest rates dipping into negative territory. It also helped
support the liquidity of economic players, creating new
opportunities for deposit-taking.
Companies sought to take advantage of the available supply
of credit, fierce competition among banks arising from weak
demand for financing, low interest rates and a relatively flat
long-term interest rate curve.
This resulted in a trend of “amend and extend”, in which
companies seek to renegotiate the terms of outstanding
loans by extending their term and amending their financial
ratio covenants. In addition to this practice, seen primarily
in large and medium-sized companies, disintermediation
of bank financing continued to increase, in favor of bond
issues underpinned by the investment needs of institutional
investors in search of more lucrative assets than government
bonds.
Faced with these unprofitable, destabilizing environments for
operating conditions, BECM also had to take on two major
regulatory projects in 2014:
• a n audit by the ECB of its counterparty risks (Asset Quality
Review) as part of the implementation of the European
Banking Union. This operation, which concerned the entire
Group, was carried out over the first half of the year and
covered 52% of loan outstandings. It required the active
involvement of the teams in the branches and the credit
risk departments and ultimately had no impact on
the provisions for the year, thereby confirming the quality
of the customer portfolio;
• fi nalization of the migration of means of payment as part
of SEPA (direct debits and transfers). Given the significance
of BECM in the Group’s payment activities, particularly
in terms of large issuers in transport, retail and services,
this project was a strategic priority. As of August 1, 2014,
switchover date, all customers were able to comply with
the new European regulations. All in all, this migration
covered nearly 5,000 customers for a total of 135 million
transactions by the specified deadline.
9
Commercial policy guidelines
To support its development, adapt its activities to the
year’s challenges and constraints, continue to improve its
profitability, move forward in achieving the objectives set
out in its 2014-2016 medium-term plan and provide its
customers with high-quality service in line with their projects,
BECM focused its efforts on the following key orientations
of its commercial policy.
• Take advantage of its sales network of 47 nationwide and
European branches to continue to increase its customer
portfolio through active prospecting in France and Germany
by mining the potential of its 2,000 active contacts
earmarked for forming new customer relationships.
As part of this organic growth strategy, the German network
was expanded in September 2014 with the opening of a
branch in Hamburg which has a potential of 845 prospects
generating more than €100 million in revenues.
• Strengthen the deposits/loans balance through an active,
well-managed and diversified deposit-taking policy
based on a steady contribution by the corporate market
in Germany.
• Stimulate new business in investment loans based on an
updated supply of credit adapted to market interest rate
conditions.
• Pursue efforts to serve customers in the area of social
engineering by acknowledging the opportunity provided
by the widening implementation of group health insurance.
• Develop specialized financing operations to support
the restructuring of syndicated loans in the real estate
companies market, be a driving force in the mergers/
acquisitions movement which is likely to expand and,
more generally, strengthen value-added lending activities
that generate arrangement and participation fees.
• Support customers that have an active presence
internationally through appropriate financing and products
and services designed for French and foreign parent
companies and subsidiaries organized based on the
Group’s establishments abroad and its partnerships
and equity interests. This approach is tied to changes
in exchange rate parities and their impact on the
competitiveness of the bank’s customers.
• Orient financing, in a still uncertain risk context, mainly
towards loans backed by ownership of the assets being
financed (equipment leasing, real estate leasing, factoring).
• Promote the recommendation of wealth management
activities through the operational partnership built
with Banque Transatlantique, and of the activities of the
real estate business subsidiaries through financing for
developers.
These orientations, integrated into the commercial action
plan, directly drove the training plan and helped make 2014
a year of significant growth in business volumes and income,
thanks to the competence and active involvement of all
employees. This growth also confirmed the appropriateness
of the options chosen.
Growth in activities and further improvement
in profitability
Loans (average monthly balances)
Despite weak demand, total commitments (balance sheet +
off-balance sheet) grew by 5.3% to €19.88 billion (compared
with a 1.7% increase in 2013) with undrawn confirmed
balances under approved lines totaling €5.4 billion.
Customers’ credit lines were increased in order to benefit,
at the appropriate time, from the upturn in investments.
After falling by 2.3% in 2013, utilized credit facilities were
again on an upward trend, increasing by 5.0% to €11.04
billion, in line with the €11 billion target set for the year.
Deposits (average monthly balances)
In a context of abundant liquidity for customers, deposit
inflows, which rose by 18.3% in 2013, continued at very
high levels, increasing by 32.9% to €8.6 billion. This growth
in deposit-taking was accompanied by a policy aimed
at controlling and reducing the cost of customer deposits
by decreasing the average term, passing on the decrease
in liquidity spreads and increasing deposits from the
German market.
The sharp increase in current account credit balances,
up 41.5% to €2.7 billion mainly as a result of an increase
in the volume of funds entrusted by customers,
also contributed to the decrease in the cost of funds.
These business developments allowed a further reduction
of €1.6 billion in the commercial liquidity gap over the year,
reducing the loan to deposit ratio from 163% to 129%.
Results
Thanks to the decrease in the cost of funds, renewed
growth in loan outstandings and the strong commercial
performance, NBI rose by 10.1% to €226 million, following
an increase of 7.5% in 2013. This represents the highest
level achieved in the bank’s history.
Net provision allocations/reversals for loan losses represented
0.18% of average annual loan outstandings, down slightly
from 2013, bringing net income to €82.7 million, up 13.3%
following growth of 14.8% in 2013.
Thanks to an improvement in profitability, the bank’s
fundamentals were strengthened during the year:
• total shareholders’ equity and reserves (including the fund
for general banking risks and income for 2014), totaled
€939 million;
• the solvency ratio was 10.3% according to Basel III rules;
• the cost/income ratio fell from 36% in 2013 to 34%,
the level initially targeted for 2016 under the medium-term
plan.
10
Reports and resolutions
In parallel to the progress made in terms of growth, efficiency
and profitability to ensure the financing of its development,
in 2014 BECM also moved forward in achieving the
qualitative objectives of its medium-term plan, particularly
in the following areas:
• the powers delegated to the branches were broadened
to allow them to respond to customers more quickly and
independently;
• the corporate brand requirements were updated to take
full advantage of the group’s corporate communication;
• the technological services that support proximity were
enhanced to make the bank even more accessible
(secure messaging, file validation by mobile phone, etc.);
• the branches’ sales activities were restructured to ensure
consistency between the markets and to allow a matrix
organization that combines geographic regions and areas
of activity.
Corporate market
To meet the challenge posed by ever evasive growth, BECM
redoubled its efforts in the corporate market to ensure the
development of its business.
In terms of customer acquisition, the prospecting targets are
adjusted to ensure complementarity with the Crédit Mutuel
retail banking network based on the regional federations
affiliated with the Caisse Fédérale de Crédit Mutuel.
Throughout the country, however, priority for development is
given to companies with revenues of more than €10 million,
with a core target of over €50 million. Based on this target,
new customer relationships concerned 240 companies.
In total, the corporate customer portfolio, all segments
combined, includes 11,450 clients, up 1.8%.
New medium-to-long term repayment loans rose significantly
thanks to actions taken by the network and measures aimed
at adapting the loan range, including the launch of a bullet
loan designed to strengthen the equity of the portfolio’s
core customers, called Crédit Premium, introduction of
the Privilège loan as part of the ECB’s TLTRO mechanism,
and launch of a variable-rate loan product with a fixed-rate
option. New lending totaled €1.7 billion compared with
€1.3 billion in 2013, up 30.8%. In terms of utilized loans
of all types, outstandings rose by 4.2%, including 3.3%
in France and 8.9% in Germany, after stagnating in 2013.
Of the €1.36 billion in deposits collected, 62.5% came from
the German market. The diversification and service activities,
which are built on the skills and product and service offering
of the Group’s business centers and specialized subsidiaries,
also performed well and grew as follows compared with
2013:
•M
erchant electronic payments +2%
• Equipment leasing
+11%
•R
eal estate leasing
+15%
•E
mployee savings plans
+6%
•V
olume of factoring in entrusted funds +2%
As a result, net fee and commission income rose by 4.2%
to €121 million.
Financing of real estate professionals
BECM is responsible for the business division that finances
real estate professionals for the CM11 Group.
As such, it handles relations with real estate companies and
major investors that manage residential, commercial and
business rental properties.
It also manages relations with national and multi-regional
real estate developers and has leading property dealers, land
developers and professional real estate investors as clients.
Locally, it works alongside the Crédit Mutuel regional banks
to finance their professional or ad hoc real estate business
customers.
With branches located throughout the country, BECM is
involved in financing real estate development projects geared
mainly towards housing, together with the Group’s banking
networks and real estate subsidiaries.
Thanks to its knowledge of the markets and operators,
it plays a key role in the real estate value chain, notably
helping CM-CIC Agence Immobilière obtain real estate listing
contracts, contributing to the development of EPS remote
surveillance by bundling it into financed programs and
supporting the financing of home loans through the Group’s
retail networks.
Lastly, in the area of real estate, BECM organizes
and oversees, on behalf of the CM11 Group, training,
procedures and guidelines, legal watch and management
and development of the “business” IT tools for which
it is responsible.
In the area of new residential properties, the market in
2014 was very low in terms of sales, new listings and new
housing starts after professionals reduced their production.
As a result, 2014 was the worst year since 1997 for the
construction sector, with fewer than 300,000 new housing
starts.
Despite this situation, which BECM had anticipated, sales
activity grew by 7% compared with 2013, thanks in particular
to its diversification policy aimed at property investors.
Visibility remains limited on the real estate development
market given the economic environment; however,
professionals expect a modest recovery in 2015
as a result of recent support measures for new housing
and the currently very low interest rates.
Financing offered by BECM to real estate developers is
governed by strict prudential rules that are adapted to the
particular characteristics of each deal. The average utilization
rate of granted credit facilities, now slightly more than 50%,
and the loans to be extended, reflect the slowdown in sales.
Yet even though the situation is currently more difficult,
because of its strict operator and transaction selection policy,
BECM stands out on account of a risk level that is at an
all-time low.
11
BECM’s decentralized organization close to the markets in
which it operates, its highly specialized teams, its dedicated
analysis and management tool and the financing guidelines
framework enable the bank to manage its risks rigorously.
In light of current real estate conditions, BECM anticipates
similar levels of new lending in 2015, while continuing to
make every effort to secure its commitments.
In the real estate companies and major investors segment,
the year was marked by the very strong performance of the
French corporate real estate investment market, which grew
by more than 40% compared with 2013, representing the
highest level of investment since the 2007 reference year.
The market was driven by a large number of exceptionally
large transactions (> €500 million), very strong interest
on the part of investors, including foreign investors, the
influx of liquidity and historically low interest rates boosting
investment.
In this context, BECM formed customer relationships that
ensure new business in line with its targets and took the
initiative to rework the existing credit lines of a number of
real estate companies to obtain longer maturities, thereby
generating an increase in arrangement fees.
This new business led to a stabilization of outstandings,
despite a bond market still largely driven by listed real estate
companies, which accounted for nearly 10% of the issues
of French companies in 2014. BECM also facilitated the
involvement of CM-CIC Securities in more than 40% of real
estate bond issues.
Overall, 2014 was the best year for BECM in the real estate
market, with an extremely low risk level that contributed
significantly to the income for the year.
Human resources
BECM’s workforce averaged 393 in 2014.
Employees devoted their efforts to achieving the “Ambition
2014-2016” medium-term plan, with the aim of meeting the
economic, social, technological, competitive and regulatory
challenges facing the Group. The employees’ availability
and the quality and technical sophistication of the products
and services are the result of the proactive training policy
that continued in 2014.
The training courses, which are updated each year
as needed, were geared towards methods, products
and sales tools, as well as the needs identified through job
management planning. They also took technological and
regulatory changes into account.
The training plan is one of the means implemented
to support all of BECM’s objectives, including continued
development, deepened customer relations, higher
profitability through expansion of activities and effective
risk management.
Composition of the governing bodies
The General Meeting of May 7, 2014 renewed the terms
of office as members of the Supervisory Board of Messrs.
Jean-Daniel Azaïs, Jean-Louis Boisson, François Duret,
Michel Paoli, Alain Têtedoie and Michel Vieux and confirmed
the co-option, approved by the Supervisory Board on May 7,
2013, of Mr. Hervé Brochard for the remainder of the term
of office of Mr. Eckart Thomä.
In application of Article L.225-102-1 of the French
Commercial Code, the list of offices held and functions
exercised by each corporate officer during the year
is provided in the appendices.
Equity interests
At December 31, 2014, shareholdings in subsidiaries and
other equity interests stood at €10,889,346.82, of which
€9,999,900 related to the Monaco subsidiary. For 2014,
Banque Européenne du Crédit Mutuel Monaco posted net
income of €413,074.38 after amortization of start-up costs.
Subsidiary company SNC Foncière du Crédit Mutuel
acts as a property dealer in handling security relating to
cases in dispute or litigation. The company posted a profit
of €984.49 for the year.
Recent developments and outlook
The upturn in new business and loan outstandings in 2014
and the factors conducive to growth observed in the fourth
quarter (liquidity injected into the banking system by
the ECB through the purchase of private sector assets and
government bonds, the drop in the euro/US dollar exchange
rate, falling oil prices, lower interest rates) suggest a less
pessimistic business outlook.
A positive impact on the economic situation is expected and
further growth likely to restore confidence should therefore
benefit the BECM activities.
To take full advantage of this positive spiral, the bank’s
objectives include continuing to increase its customer
portfolio, strengthening relations with insufficiently active
customers, maintaining balanced growth in assets under
management and enhancing the “value added” aspect
of its activities in the three areas of international banking,
capital structuring and private management.
In addition, new activities will be rolled out in collaboration
with the Group’s subsidiaries, including mobile phone
services for SMEs with EI Telecom and vendor credit with
Cofidis.
In terms of the Group’s organization, BECM will boost
its support for and involvement in the development of the
corporate market together with the Crédit Mutuel federations,
based on the local contexts, pursue its strategy of pooling
resources with the CM and CIC networks (technical-sales
functions, payment processing platforms) and endeavor
to implement the necessary operating processes to optimize
operational efficiency and credit risk management quality.
12
Reports and resolutions
n
Financial report
Assets
Management of financial risks
Interbank transactions mostly reflect cash surpluses
placed with BFCM.
The ALM technical committee of the CM11 Group manages
all the interest rate, exchange rate and liquidity risks of the
group, including those of BECM. As part of overall asset and
liability management, the duration and type of refinancing
is decided according to asset/liability management rules,
particularly in terms of transformation and interest rate risk
and regulatory ratios.
At the end of the reporting period, loans to customers
(including accrued interest) were up by 6%, at €10.9 billion,
from €10.2 billion in 2013.
As cash centralizer, BFCM ensures that group entities have
sufficient liquidity; accordingly, BECM does not bear any
liquidity risk on its own account.
Balance sheet
Total assets at December 31, 2014 amounted to €14.1 billion,
compared with €12.4 billion at year-end 2013, an increase
of 13.6%.
Cash facilities (€2.0 billion), capital equipment loans
(€5.2 billion), loans to developers (€0.9 billion) and customer
current account overdrafts (€0.9 billion) accounted for the
major part of facilities granted.
Non-performing loans to customers (gross outstandings
of €220 million) were 48% covered by provisions.
BECM pursues a prudent loan reclassification and
provisioning policy.
Income statement
Liabilities
At December 31, 2014, interest and similar income totaled
€290 million, consisting mainly of interest received
on lending transactions with customers (€232 million).
Interbank transactions amounted to €3.9 billion and
consisted almost exclusively of refinancing activities with
BFCM.
Interest and similar expenses (€129 million) essentially
consist of interest paid to BFCM in respect of refinancing,
and interest paid on customers’ term deposits.
Customer deposits, up by 25.8% at €8.5 billion (including
accrued interest) consist mainly of term deposits
(€4.8 billion), customer checking account credit balances
(€2.5 billion) and savings account balances (€1.2 billion).
Net banking income amounted to €226 million, compared
with €205 million in 2013.
The fund for general banking risks amounted to €160 million.
Total shareholders’ equity and reserves (including
the fund for general banking risks and income), totaled
€939 million compared with €879 million in 2013,
following the appropriation of profit for 2013.
Subordinated debt totaled €415 million (excluding accrued
interest), including €50 million in the form of supersubordinated securities subscribed by BFCM to enable
BECM to bolster its long-term funding resources and meet
requirements in terms of prudential ratios.
Articles L.441-6-1 and D.441-4 of the French Commercial
Code provide for specific disclosures relating to the due dates
of trade payables; the amounts involved are not material
for BECM.
Total general operating expenses came to €81.4 million,
of which €4.6 million was incurred on behalf of other CM11
entities and was subsequently recovered. Net general
operating expenses for BECM thus totaled €76.8 million.
Net provision allocations/reversals for loan losses came
to €19.7 million.
An amount of €29,797 corresponding to non tax-deductible
rental and depreciation of company cars was added back
to taxable income.
After an income tax charge of €47.3 million, net income for
the year came to €82.7 million, compared with €73 million
in 2013.
13
Appropriation of prior year earnings and net income
proposed to the General Meeting
The appropriation of net income and prior year earnings
submitted to the General Meeting is as follows:
82,747,612.68
Net income for 2014
Retained earnings (previous credit
balance)
489,454.96
83,237,067.64
Total available for appropriation
The Executive Board proposes to:
•d
istribute to each of the 5,440,086 shares entitled to
the full year’s dividend a dividend of €4.53, i.e. a total of
€24,643,589.58;
• a llocate an amount of €58,000,000.00 to the revenue
reserve;
• c arry the remaining balance of €593,478.06 forward as
retained earnings.
This dividend is eligible for the tax allowance provided for in
Article 158 of the French Tax Code.
In accordance with currently applicable legal provisions, the
Executive Board reminds you that the following dividends
per share were distributed in respect of the previous three
financial years:
Year
Amounts in euros
Dividend eligible for the tax
allowance provided for in Article
158 of the French Tax Code
2011
2012
2013
4.78
3.64(1)
4.04(1)
1.91(2)
2.12(3)
yes
yes
yes
(1) For shares entitled to the full year’s dividend.
(2) For new shares entitled from June 23, 2012.
(3) For new shares entitled from June 23, 2013.
Strasbourg, February 27, 2015
The Executive Board
14
Reports and resolutions
Report of the Supervisory Board
Ladies and Gentleman,
Your company’s Executive Board has convened this Annual
Ordinary General Meeting, in accordance with the law
and the company’s Articles of Association, in order to report
to you on the situation and the business of the company
during the financial year ended December 31, 2014 and to
submit for your approval the financial statements for the said
financial year, and the appropriation of the earnings.
The Executive Board has kept us regularly informed of the
progress of the business, the main corporate operations and
their results. At a time when demand for financing is low,
growth in utilized credit facilities accelerated, rising from
1% to 5%. Thanks to an abundance of liquidity, deposit-taking
increased by 31%, which led to a further reduction in
the liquidity gap between loans and deposits, in line with
the Group’s strategic objectives.
Development of the corporate business in Germany,
mainly geared towards French and German parent companysubsidiary relations, accounted for 35% of the growth
in assets under management.
The Executive Board sought all the authorizations required
under the company’s Articles of Association and internal
rules.
In accordance with Article L.225-68 of the French
Commercial Code, we have examined and checked the
annual financial statements.
We consider that the Executive Board’s report and the annual
financial statements accurately reflect the company’s activity
and do not require any particular comment.
We approve the Executive Board’s management and the
content of its report and we therefore invite you to approve
the balance sheet and income statement for the 2014
financial year, the proposed appropriation of earnings and
the resolutions.
We propose that you renew the terms of office of
Messrs. Gérard Bontoux, Hervé Brochard, Hervé Chatanay,
Gérard Diacquenod, Bernard Flouriot, Pierre Hussherr,
Robert Laval and Daniel Schoepf and that you ratify the
co-option of Mr. Nicolas Théry.
In addition, the terms of office of KPMG SA, Principal Statutory
Auditor, and Malcolm Mac Larty, Alternate Statutory Auditor,
are due to expire. We propose that you renew them for
a period of six years and that the Alternate Statutory Auditor
signatory be changed to Ms. Isabelle Goalec.
Despite a lukewarm economic environment, BECM managed
to expand its sales activities, improve its profitability by
controlling credit risk cost and strengthen its balance sheet.
We congratulate the Executive Board and all the bank’s
employees on this performance.
Strasbourg, February 27, 2015
The Supervisory Board
15
Statutory Auditors’ report on the financial statements
(year ended December 31, 2014)
To the Shareholders,
In compliance with the assignment entrusted to us by your
annual general meetings, we hereby report to you, for the
year ended December 31, 2014 on:
• the audit of the financial statements of Banque Européenne
du Crédit Mutuel, as attached to this report;
• the justification of our assessments;
• the specific verifications and information required by law.
The financial statements have been approved by
the Executive Board. Our role is to express an opinion
on these financial statements based on our audit.
I. Opinion on the annual financial statements
We conducted our audit in accordance with the professional
standards applicable in France. Those standards require that
we plan and perform our audit so as to obtain reasonable
assurance that the annual financial statements are free
from 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 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.
II. Justification of our assessments
In accordance with the requirements of article L.823-9 of the
French Commercial Code (Code de commerce) concerning
the basis of our opinion, we inform you that the assessments
that we have carried out concerned the appropriateness
of the accounting principles applied, the reasonableness
of significant estimates made, and the overall presentation
of the financial statements, particularly as regards the
provisions to cover the credit risks inherent in the company’s
business. We have examined the control system relating
to the monitoring of credit risks, the measurement of the risk
of non-collection and their coverage by specific provisions.
These assessments were made as part of our audit of
the annual financial statements taken as a whole, and have
therefore contributed to forming the opinion expressed
in the first part of this report.
III. Specific verifications and information
We also performed, in accordance with the 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 annual financial statements
of the information given in the Executive Board’s report,
and in the documents addressed to the shareholders
concerning the company’s financial position and annual
financial statements.
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 December 31, 2014 and of the results
of its operations for the year then ended in accordance
with French accounting principles.
Paris-La Défense, April 17, 2015
KPMG Audit – A department of KPMG SA
Arnaud Bourdeille
The Statutory Auditors
Paris-La Défense, April 17, 2015
Ernst & Young et Autres
Olivier Durand
16
Reports and resolutions
Statutory Auditors’ special report on regulated agreements
(year ended December 31, 2014)
To the Shareholders,
In our capacity as your company’s Statutory Auditors,
we present to you our report on regulated agreements.
It is our responsibility to inform you, based on the information
given to us, of the characteristics and essential features of
the agreements of which we have been notified or which
we have discovered in the course of our audit, with no duty
to comment on their relevance or substance or to investigate
the possible existence of other agreements. It is for you
to evaluate the benefits arising from these agreements prior
to their approval.
Agreements subject to approval
by the General Meeting
We inform you that we have not been advised of any
agreement entered into during the past financial year for
submission to the General Meeting for approval pursuant
to the provisions of Article L.227-10 of the French
Commercial Code.
We performed the procedures we considered necessary in
accordance with professional guidance issued by the national
institute of auditors (Compagnie nationale des commissaires
aux comptes) relating to this engagement.
Paris-La Défense, April 17, 2015
KPMG Audit – A department of KPMG SA
Arnaud Bourdeille
The Statutory Auditors
Paris-La Défense, April 17, 2015
Ernst & Young et Autres
Olivier Durand
17
Draft resolutions
First resolution
Third resolution
The General Meeting, having heard the reports of the
Executive Board and the Supervisory Board and the
Statutory Auditors’ general report, approves the annual
financial statements, comprising the balance sheet, income
statement and notes to the financial statements for the
year ended December 31, 2014, as presented, as well as
the transactions covered by these financial statements and
summarized in these reports.
The General Meeting, having heard the Statutory Auditors’
Special Report on the agreements referred to in Article
L.227-10 of the French Commercial Code, notes that
no agreement of this kind was concluded during the year
under review.
Consequently, it grants full discharge for the financial year
ended December 31, 2014 to the members of the Executive
Board and the Supervisory Board for their management.
Second resolution
The General Meeting approves the Executive Board’s
proposal and, having ascertained that the financial
statements for the year show net income of €82,747,612.68,
resolves that the sum of €83,237,067.64 available for
distribution and composed as follows, be appropriated
as follows:
Source of amount to be appropriated (in euros):
• retained earnings (previous credit balance) • net income for the year 489,454.96
82,747,612.68
Total83,237,067.64
Proposed appropriation (in euros):
• to the distribution of dividends of €4.53 per share entitled
to full year’s dividend (5,440,086 shares)
• to the revenue reserve
• to retained earnings
24,643,589.58
58,000,000.00
593,478.06
Total83,237,067.64
The dividend distributed is eligible for the tax allowance
provided for in Article 158 of the French Tax Code.
As required by Article 243 bis of the French Tax Code,
we inform you that the following dividends per share were
distributed in respect of the previous three financial years:
Year
Amounts in euros
Dividend eligible for the tax
allowance provided for in Article
158 of the French Tax Code
2011
2012
2013
4.78
(1)
3.64
4.04(1)
1.91(2)
2.12(3)
yes
yes
yes
(1) For shares entitled to the full year’s dividend.
(2) For new shares entitled from June 23, 2012.
(3) For new shares entitled from June 23, 2013.
Fourth resolution
The General Meeting renews the term of office as a member
of the Supervisory Board of Mr. Gérard Bontoux for a period
of three years expiring at the close of the General Meeting
called to approve the financial statements for the 2017
financial year.
Fifth resolution
The General Meeting renews the term of office as a member
of the Supervisory Board of Mr. Hervé Brochard for a period
of three years expiring at the close of the General Meeting
called to approve the financial statements for the 2017
financial year.
Sixth resolution
The General Meeting renews the term of office as a member
of the Supervisory Board of Mr. Hervé Chatanay for a period
of three years expiring at the close of the General Meeting
called to approve the financial statements for the 2017
financial year.
Seventh resolution
The General Meeting renews the term of office as a member
of the Supervisory Board of Mr. Gérard Diacquenod for
a period of three years expiring at the close of the General
Meeting called to approve the financial statements for the
2017 financial year.
Eighth resolution
The General Meeting renews the term of office as a member
of the Supervisory Board of Mr. Bernard Flouriot for a period
of three years expiring at the close of the General Meeting
called to approve the financial statements for the 2017
financial year.
Ninth resolution
The General Meeting renews the term of office as a member
of the Supervisory Board of Mr. Pierre Hussherr for a period
of three years expiring at the close of the General Meeting
called to approve the financial statements for the 2017
financial year.
18
Reports and resolutions
Tenth resolution
The General Meeting renews the term of office as a member
of the Supervisory Board of Mr. Robert Laval for a period
of three years expiring at the close of the General Meeting
called to approve the financial statements for the 2017
financial year.
Eleventh resolution
The General Meeting renews the term of office as a member
of the Supervisory Board of Mr. Daniel Schoepf for a period
of three years expiring at the close of the General Meeting
called to approve the financial statements for the 2017
financial year.
Twelfth resolution
The General Meeting ratifies the co-option of
Mr. Nicolas Théry as a member of the Supervisory Board
for the remainder of the term of office of Mr. Michel Lucas
expiring at the close of the General Meeting called to approve
the financial statements for the 2015 financial year.
Thirteenth resolution
The term of office of KPMG SA, Principal Statutory Auditor,
has now expired. The General Meeting resolves to renew
the term of office as Principal Statutory Auditor of KPMG SA
for a period of six years, i.e. until the close of the General
Meeting called to approve the financial statements for the
2020 financial year.
Fourteenth resolution
The term of office of Mr. Malcolm Mac Larty, Alternate
Statutory Auditor, has now expired. The General Meeting
resolves to appoint Ms. Isabelle Goalec as Alternate Statutory
Auditor for a period of six years, i.e. until the close of the
General Meeting called to approve the financial statements
for the 2020 financial year.
2
Financial statements
20
Financial statements
Balance sheet
Assets
(in euros)
Cash and due from central banks
Government securities and equivalent
Receivables due from credit institutions
Receivables due from customers
Bonds and other fixed-income securities
Shares and other variable-income securities
Shares in subsidiaries and other long-term investments
Investments in affiliates
Finance leases and hire purchase agreements
December 31, 2014
December 31, 2013
26,214,957.50
10,808,668.38
0.00
0.00
2,604,515,088.57
1,586,017,304.33
10,866,134,436.54
10,251,423,316.80
5,963,788.71
7,501,097.16
27,173.98
30,954.39
889,446.82
889,446.82
9,999,900.00
9,999,900.00
0.00
0.00
Operating leases
0.00
0.00
Intangible assets
1,030,389.37
1,050,579.70
877,372.50
995,968.96
0.00
0.00
Property, plant and equipment
Subscribed capital not paid
Own shares
0.00
0.00
Other assets
18,152,702.48
14,339,612.78
538,525,895.02
503,065,051.51
14,072,331,151.49
12,386,121,900.83
Prepayments and accrued income
Total assets
Off-balance sheet items
December 31, 2014
December 31, 2013
Financing commitments
5,422,492,738.61
5,296,099,484.07
Guarantees
3,104,476,135.13
2,811,427,176.29
0.00
0.00
(commitments given)
Securities commitments
21
Liabilities and equity
December 31, 2014
December 31, 2013
0.00
0.00
Due to credit institutions
3,898,527,783.33
3,655,962,270.94
Due to customers
8,464,417,407.32
6,723,908,708.39
Debt securities
39,422,864.05
239,797,584.36
Other liabilities
263,421,738.21
285,697,680.62
32,257,369.77
162,895,242.86
(in euros)
Due to central banks
Accruals and deferred income
19,858,992.64
23,672,238.99
Subordinated debt
415,189,312.56
415,212,896.50
Fund for general banking risks (FGBR)
160,000,000.00
160,000,000.00
Provisions
Shareholders' equity and reserves excluding FGBR
779,235,683.61
718,975,278.17
- Capital subscribed
108,801,720.00
108,801,720.00
- Additional paid-in capital
163,197,809.78
163,197,809.78
- Reserves
423,957,533.19
372,670,749.19
- Revaluation reserve
- Regulated provisions and investment subsidies
- Retained earnings (+/-)
- Net income for the year (+/-)
Total liabilities and equity
Off-balance sheet items
0.00
0.00
41,553.00
582,416.00
489,454.96
692,581.20
82,747,612.68
73,030,002.00
14,072,331,151.49
12,386,121,900.83
December 31, 2014
December 31, 2013
Financing commitments
2,400,000,000.00
2,400,000,000.00
Guarantees
2,910,137,813.03
2,950,887,211.01
0.00
0.00
(commitments received)
Securities commitments
22
Financial statements
Income statement
(in euros)
2014
2013
289,756,936.74
268,129,656.54
(129,401,983.26)
(133,146,112.12)
Income from finance leases and similar operations
0.00
0.00
Charges on finance leases and similar operations
0.00
0.00
Income from operating leases
0.00
0.00
Charges on operating leases
0.00
0.00
Interest and similar income
Interest and similar expense
Income from variable-income securities
Commission income
Commission expense
Gains or losses on trading account transactions
Gains or losses on investment portfolio and similar transactions
3,691.45
7,487.20
253,186,379.28
250,384,044.52
(188,144,799.96)
(183,353,838.03)
947,761.52
897,258.29
98,742.99
400,061.78
975,221.54
2,852,441.77
(1,318,423.36)
(761,753.89)
Net banking income
226,103,526.94
205,409,246.06
General operating expenses
(76,817,473.34)
(73,884,936.30)
(230,836.48)
(243,316.43)
Gross operating income
149,055,217.12
131,280,993.33
Net provision allocations/reversals for loan losses
(19,737,508.00)
(19,531,380.76)
Operating income
129,317,709.12
111,749,612.57
0.00
(15,330.19)
129,317,709.12
111,734,282.38
172,210.83
3,366,446.62
(47,283,170.27)
(42,090,491.00)
Other banking income
Other banking expense
Depreciation, amortization and impairment
Gains or losses on non-current assets
Income from ordinary operations before tax
Non-recurring items
Corporate income tax
Net allocation to the fund for general banking risks and to regulated provisions
Net income
540,863.00
19,764.00
82,747,612.68
73,030,002.00
3
Financial results
24
Financial results
(in euros)
2010
2011
2012
2013
2014
Capital at year end
a) Share capital
b) N
umber of ordinary shares
in issue
96,864,800.00 100,560,780.00 105,933,880.00 108,801,720.00 108,801,720.00
4,843,240
5,028,039
5,296,694
5,440,086
5,440,086
c) N
umber of preferential dividend
shares (non-voting) in issue
d) M
aximum number of shares
to be created
- by conversion of bonds
-b
y exercise of subscription
rights
Operations and results for the year
a) N
et banking income, income
from the securities portfolio
and other
205,165,964.49 206,476,580.69 191,125,513.34 205,409,246.06 226,103,526.94
b) Income before tax, employee
profit-sharing, depreciation,
amortization and provisions
137,469,710.00 126,576,367.18 111,784,524.10
99,796,669.55 124,764,411.49
44,256,696.00
49,533,062.20
40,488,436.57
42,090,491.00
47,283,170.27
533,135.71
694,545.41
366,118.57
526,003.73
442,195.61
e) Income after tax, employee
profit-sharing, depreciation,
amortization and provisions
68,364,651.60
68,983,528.73
63,640,588.96
73,030,002.00
82,747,612.68
f) Dividend distributed
24,480,672.56
24,034,026.42
19,103,013.11
21,946,344.24
24,643,589.58
a) Income after tax and employee
profit-sharing but before
depreciation, amortization
and provisions
19.50
15.18
13.52
10.53
14.16
b) Income after tax, employee
profit-sharing, depreciation,
amortization and provisions
14.38
13.72
12.13
13.44
15.21
5.15
4.78
3.64
4.04
4.53
360
372
395
400
393
17,830,924.82
19,598,588.75
21,487,830.93
21,433,005.45
22,492,550.47
8,380,660.65
9,145,429.24
10,527,821.96
10,142,415.74
10,052,980.33
c) Corporate income tax
d) E
mployee profit-sharing
for the year
Earnings per share
c) Dividend per share
Personnel
a) A
verage number of employees
during the year
b) Total payroll costs
c) Employee benefits (social
security, benefit plans, etc.)
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 audit opinion on the 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 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 standards applicable in France.
BECM – Simplified limited company (société par actions simplifiée) with share capital of €108,801,720
Registered with the Strasbourg Trade and Companies Registry under number B 379 522 600 – APE code 6419Z – VAT no: FR 48 379 522 600
Registered office: 34 rue du Wacken, 67913 Strasbourg Cedex 9, France
Tel. +33 (0)3 88 14 74 74 – Fax: +33 (0)3 88 14 75 10
E-mail: becm@becm.fr – Website: www.becm.fr – ORIAS no. 07 025 384
SWIFT code: CMCI FR 2A