The world`s local bank Annual Report and Accounts CCF

Transcription

CCF
The world’s local bank
Annual Report
and Accounts
This reference document was registered with the Autorité des Marchés Financiers on 14 June 2004 in accordance with
Regulation no. 98-01 / no. 95-01. It may be used in support of a financial transaction when supplemented by a
Transaction Note that has received approval from the Autorité des Marchés Financiers.
CCF
Annual Report and Accounts 2003
Contents
3
Report of the Board of Directors to the Annual General Meeting of shareholders
10
Executive Management Committee and General Managers
13
Corporate Governance
21
Chairman’s Report on corporate governance and internal control procedures
33
Corporate social responsibility policy
34
Risk management
43
International Financial Reporting Standards (IFRS)
44
Financial highlights
48
Consolidated financial statements
51
Notes to the consolidated financial statements
90
Parent company financial statements
104
Summary of business activities of CCF’s principal subsidiaries
110
Investment policy
113
CCF group offices
114
Other legal documents relating to the Annual General Meeting of shareholders
123
Annual General Meeting of 12 May 2004 – Resolutions adopted
127
Information on CCF and its share capital
132
Employees, remuneration, share offering and incentive schemes
141
Recent developments and outlook
143
Persons responsible for the reference document and for auditing the financial statements
146
Cross-Reference Table
147
Network of offices
1
CCF
CCF joined the HSBC Group in July 2000.
Headquartered in London, the HSBC Group is one of the largest banking and financial services
organisations in the world. HSBC’s international network comprises over 9,500 offices worldwide in 79
countries and territories in Europe, the Asia-Pacific region, the Americas, the Middle East and Africa.
With listings on the London, Hong Kong, New York, Paris and Bermuda stock exchanges, shares in
the Group’s parent company, HSBC Holdings plc, are held by around 200,000 shareholders in some
100 countries and territories.
In 2003, HSBC’s profit before tax (after goodwill amortisation–reported earnings) was US$12,816 million
and profit attributable was US$8,774 million. Total assets amounted to US$1,034 billion.
Geographical breakdown of profit before tax:
Year ended 31 December 2003
2
US$m
%
Europe
4,862
33.7
Hong Kong
3,730
25.9
Rest of Asia-Pacific
1,426
9.9
North America
4,257
29.6
South America
126
0.9
Profit before tax–excluding goodwill amortisation
14,401
100.0
Goodwill amortisation
(1,585)
Profit before tax (after goodwill amortisation–reported earnings)
12,816
CCF
Report of the Board of Directors to the Annual General Meeting of shareholders
Once again, CCF has delivered a robust performance
amid a persistently difficult economic climate. Drawing
on the talent of our own teams and on synergies with the
HSBC Group, we continue to pursue our strategy of
growth in our target markets and have succeeded in
achieving some very ambitious commercial goals.
CCF’s integration within the HSBC Group is now
complete. The benefits can been seen in the commercial
and financial performance achieved by the company’s
core businesses. CCF has continued to develop its
business activities and rationalise its organisational
structure to improve efficiency and productivity. Its goal
is to become one of France’s leading banks in its target
markets, drawing on the resources of the one of the world’s
leading banking and financial services organisations.
CCF’s development within the HSBC Group
Two restructuring projects took place in 2003:
– In employee savings, CCF bought out the minority
interests in Élysées Fonds, which was then merged
with Élysées Gestion to create HSBC CCF Épargne
Entreprise on 1 January 2004. HSBC CCF
Épargne Entreprise is drawing on HSBC Asset
Management Europe’s expertise in asset
management for employee savings plans. The aim
of this new subsidiary is to be a leading player
in the employee savings market and to offer a comprehensive range of products and services.
– In private banking, CCF combined its four specialist
subsidiaries – HSBC Republic, CCF Banque Privée
Internationale, Banque Eurofin and Banque du
Louvre – to create HSBC Private Bank France on
1 October 2003. After the capital reduction in
January 2004 HSBC Private Bank France’s capital is
94.0% held by CCF group (66.8% are held by its
British subsidiary Charterhouse Management
Services Limited). This capital reduction concerned
principally CCF Holding Suisse which sold its
whole participation in the new company. Thanks
to an internationally recognised brand name, the
new bank will continue with all the business
activities previously conducted by the four subsidiaries,
combining their expertise and generating major
synergies within the business area.
CCF Holding Suisse sold also its participation
in Financière Groupe Dewaay to Charterhouse
Management Services Limited in December 2003. So
CCF Holding Suisse does not hold any more operational participations.
Finally the simplification of Charterhouse’s
structures has been finished with the liquidation of
European Corporate Finance Holding in Luxembourg
in 2003.
The retail banking business continued to expand
and improve its efficiency. During the year, it acquired
two additional Banque Worms branches following the
11 acquired in 2002, and combined all back-offices
services for the CCF branch network in the Paris
region.
Lastly, CCF has embarked on a radical upgrade of
its information systems and databases. Preparations
were made for CCF’s migration to HUB, the HSBC
Group’s universal banking system, which will be rolled
out gradually from the end of 2004. In time, the new
system will lead to large cost savings and revenue
synergies within the HSBC Group. The consolidation
of data processing centres has also begun (combination
of IT centers, mutualisation of servers).
CCF has also developed a financial data warehouse
for all units, which will facilitate reporting.
Lastly, significant financial investment and human
resources are being devoted to the continued implementation of regulatory requirements concerning high
security transport and the prevention of money
laundering and terrorism financing, and to the IAS and
Basel II projects. CCF complied fully with the timetables
set for these various projects in 2003. To gain maximum
benefit from its commitment, CCF intends to use certain
mechanisms developed as part of the Basel II project in
other areas, for example by improving its rating system
to boost productivity in the lending business.
CCF’s financial results in 2003
CCF made a net attributable profit (excluding goodwill
amortisation) of €692 million in 2003, an increase of
14.9 per cent compared with 2002. On a reported basis,
the net attributable profit for 2003 was €627 million, an
increase of 11.7 per cent on 20021.
In a relatively difficult economic environment, operating income from CCF’s core businesses rose by 3.7
per cent to €2,306 million. Including the sharp decline
1 Changes in scope have not been restated in the reported figures as they are limited (disposal of Loxxia and HSIL in 2002 and acquisition of HSBC Republic France in 2003) and have no significant impact:
– impact of changes in scope of business on operating income: €(15) million;
– impact of changes in scope of business on operating profit before provisions: €(6) million;
– excluding changes in scope of business, operating income would have increased by 1.0 per cent and operating profit by 1.0 per cent.
3
CCF
Report of the Board of Directors to the Annual General Meeting of shareholders (continued)
in private equity revenues, total operating income rose
by 0.4 per cent to €2,345 million.
management (CRM) tools. The total number of retail
customers increased by 6.0 per cent during the year.
Operating costs were kept well under control at
€1,614 million1, an increase of just 0.4 per cent after
1.5 per cent in 2002. This was despite the cost of
restructuring the private banking business.
Net interest income was the main driver of growth
in operating income, reflecting an increase during the
year in both customer assets and customer loans,
particularly in the personal segment. Another contributory factor was an improvement in interest spreads.
Operating profit before provisions from core businesses increased by 11.3 per cent and the cost:income
ratio fell from 71.8 per cent to 69.8 per cent. After
taking into account private equity activity, operating
profit before provisions increased by 0.2 per cent to
€731 million.
Below operating profit before provisions, an
exceptionally low tax charge following settlement of
prior year items, together with a reduction in the reserve
for general banking risks, more than offset the movement
in the charge for provisions against two deteriorating
industries and the decrease of intra-group capital gains.
Shareholders’ funds amounted to €3.4 billion after
the year’s transfer to retained earnings and accruing
for a payout ratio of 74.2 per cent. The tier one capital
ratio remained high at 8.8 per cent. Return on equity,
calculated on the basis of average shareholders’ funds
after the year’s transfer to retained earnings, stood at
18.1 per cent including the write-back from the reserve
for general banking risks, and at 15.7 per cent excluding
this write-back.
Business segment results
Retail and commercial banking
Retail and commercial banking accounts for 66.8 per
cent of CCF’s operating income. Once again, this
business produced good results in 2003, with 4.6 per
cent growth in operating income to €1,566 million and
a decrease of 0.6 per cent in operating costs to €1,058
million, leading to a 17.3 per cent increase in operating profit before provisions to €508 million.
Both the CCF retail network (operating profit
before provisions up 19.9 per cent) and the regional
banking subsidiaries (operating profit before provisions up 15.6 per cent) contributed to this growth. The
cost:income ratio improved by more than 3.5 percentage
points to 67.6 per cent. This performance reflects a
dynamic commercial approach, supported by the
implementation of effective customer relations
Total loans and advances to customers increased
by 2.2 per cent, although this figure masks some
contrasting trends: loans and advances to personal
customers progressed by 7.6 per cent, with 11.0 per
cent growth in outstanding mortgage loans and 25.0
per cent growth in new mortgage lending. By contrast,
demand for business loans (mainly on short-term
loans) decreased by 1.3 per cent due to poor economic
conditions, although medium and long-term business
loans rose by 3.9 per cent.
Sight deposits were up by 3.1 per cent in both the
personal and commercial segments. Special regulated
savings accounts rose by 15.5 per cent and €350 million
were collected by guaranteed funds developed by
Sinopia, reflecting the willingness of personal customers
to protect their investments against stock market
fluctuations.
Furthermore, the success of guaranteed funds
and asset management products with personal and
commercial customers led to an increase in banking
commissions and a recovery in financial commissions,
in particular in the second half of the year.
Personal customers now have access to HSBC’s Visa
Infinite card, which is aimed at a highly selective
customer base, as well as HSBC Premier International
Services, designed for the bank’s most valuable
international customers. HSBC Premier was successful
and covers more than 33,000 customers at end 2003,
an increase of 27% over the year.
A dynamic commercial approach, particularly in
the mid-corporate market, led to an increase in this
segment and in banking commissions. Furthermore,
the successful launch of new structured products partly
offset the decrease in equity-related financial
commissions. International business services such as
trade services, cash management and the regional
treasury centres are an important differentiation element
from French competitors and make a strong contribution to winning new customers in this market.
1 2002 costs have been restated in order to integrate a change in accounting methodology on two items. These items were previously included
in “exceptional results” and are now included in operating expenses: cost of stock options (€17 million) and contribution towards the
banking system stabilisation mechanism (€2 million).
4
400 customers are now authorised to deal with the
four Regional Treasury Centres (RTCs). These RTCs
led to a strong growth in financial fees, particularly
through the development of derivatives products. The
Trade Services activity also met significative results
despite a relatively poor economic climate. Concerning
Payments and Cash Management, CCF won 170 tenders
in 2003, compared to 130 in 2002.
Fund managers dedicated to the corporate market
were appointed in the wealth management centres. A
range of products offering varied investment opportunities, as structured products with capital protection
tailored to commercial customers, has been developed.
These events have led a sharp increase in new inflows,
in particular in asset management.
The business cards increased of 20%, higher than
the 12% increase of Visa Business market in 2003.
The e-banking products dedicated to commercial
customers also rose significantly through the development of Elys PC services (Elys Info Mail, direct alert
service), e-bills of exchange and RIB management
(account detail forms). The electronic certification
also increased strongly by 125%.
Multi-channel banking continues to develop, with
the establishment of a call centre with staff 75% of
whom are drawn from the CCF branch networks and
so who are able to provide customers with immediate
advice. This branch deals with outgoing marketing
calls as well as incoming calls. The number of customers
using CCF’s e-banking facilities has increased by 37.0
per cent, with more than six million log-ins during
2003. The penetration rate reached 25% of all CCF
retail network customers.
In November 2003, and for the first time since 2001,
CCF launched an advertising campaign on TV and in
newspapers. This campaign shows that CCF is close
to its customers while belonging to a worldwide Group.
Corporate, investment banking and markets
Corporate, investment banking and markets reported
an excellent performance, with 9.8 per cent growth in
operating income to €473 million and a 4.0 per cent
decrease in operating costs to €243 million. Operating
profit before provisions rose by 29.3 per cent to
€230 million and the cost:income ratio improved by
almost 8 percentage points to 51.3 per cent.
Corporate banking continued to grow, with
operating profit before provisions up by 10.5 per cent
to €123 million. This performance was driven principally by structured finance and syndicated finance. In
this latter segment, CCF ranks fourth in the French
issuers market, according to Loanware Dealogic.
International project finance was affected by a weaker
dollar and a decline in the number of large contracts
due to difficulties experienced by some major exporters.
However, HSBC CCF Trade services reaped the benefits
of its role as HSBC Group’s centre of expertise in structured trade finance.
Property lending was down slightly compared with
2002, a year in which CCF completed several large
deals.
Fixed income and forex capital market activities
reported strong growth of 87.6 per cent in operating
profit before provisions to €102 million. CCF continued
to win new major clients in both the corporate and
institutional segments, particularly in fixed income
derivatives in Europe and Asia, and in origination
business for clients in the eurozone. HSBC CCF has
continued to rise in the league tables and now ranks
second in euro corporate bonds and third for corporates
and financial institutions combined. This illustrates the
continued synergies brought by integration with the
HSBC Group. HSBC CCF has also strengthened its
government bond trading capability, helping increase
market share among the HSBC Group’s institutional
clients. HSBC CCF took part to the first 30-year bond
issue for a French company (Michelin). Furthermore,
three euro issues (Altadis, Auchan and Veolia) received
awards from ‘Financial News’.
Investment banking continued to suffer in persistently volatile markets, reporting a 45.8 per cent
decrease in operating profit before provisions to €8 million. Mergers and acquisitions remained active in a
weak market thanks to cross-border deals. HSBC CCF
ranked 14th in the 2003 M&A league tables compiled
by Les Echos and F&A magazine, up two places
compared with 2002. CCF now ranks second in the
French leveraged buy-out market (according to
Mergermarket).
HSBC CCF was in particular the advisor of
Montagu Private Equity for the acquisition of Actaris
and the advisor of Altadis for the acquisition of 80%
of Régie des Tabacs du Maroc (Moroccan tobacco).
The Altadis operation has shown CCF’s global
strategy and the close collaboration between the different business to be able to propose to customers the
whole range of products necessary to achieve such an
5
CCF
operation (credits, bond issues, forex risk management,
international guarantees…).
The volatile stockmarkets continued to put pressure
on the equities business. In addition, CCF’s performance
in 2002 was bolstered by the HSBC Group’s participation in Europe’s largest initial public offering for the
year, for Autoroutes du Sud de la France (ASF). In
2003, the most important operation is HSBC CCF’s
participation in France Telecom’s capital increase of
€15 billion, as advisor of ERAP and as joint-lead
manager of the banking syndicate which guaranteed
the non-subscribed part of the capital increase.
Major investment has been made in the equity
derivatives business and CCF has become the centre
of expertise in this activity for the HSBC Group.
Asset management and private banking
Asset management achieved a strong performance.
Funds under management increased by 28.9 per cent
to €47.3 billion. Operating income rose by 12.1 per
cent to €115 million and operating costs by 7.8 per cent
to €96 million leading to 41.3 per cent growth in
operating profit before provisions of €19 million.
The achievement of the reorganisation which
began in 2002 led to a clearer and more efficient structure : qualitative asset management by HSBC Asset
Management Europe, quantitative asset management
by Sinopia, distribution of employee benefits products
by HSBC CCF Epargne Entreprise and Insurance by
Erisa and Erisa Iard.
HSBC Asset Management Europe consolidated its
presence in the institutional segment with a number of
major commercial successes. Funds under management
increased by 17.3 per cent to €31.1 billion. This growth
was achieved through an influx of new corporate
clients and the distribution in Europe of two equity
products new to the region, HGIF Chinese Equity and
HGIF Indian Equity. This is another example of the
benefits of integration with the HSBC Group. HSBC
AME also won several awards for its investment
performance. The HSBC GIF Pan European Equity
fund was awarded best five-year performance by
La Tribune/S&P and was ranked third by the Journal
des Finances.
Sinopia enjoyed considerable success in Hong Kong
and the United Kingdom with its capital protected
investment funds, bringing in more than €5.7 billion
of new business. Funds under management increased
by 68.4 per cent to €14.1 billion. This success is an
excellent illustration of CCF’s role as a specialist for
the HSBC Group in certain businesses, including
quantitative investment management.
In private banking, CCF combined its four specialist
subsidiaries to create HSBC Private Bank France, a
leading player in the French market. Funds under
management grew by 7.2 per cent to €16.3 billion
despite a continued volatile environment. The business
produced a positive result before provisions despite
merger-related costs of restructuring, and for employee
stock options contracts. Results are expected to recover
sharply in 2004, driven by revenue and cost synergies
generated by the merger. Finally, several funds managed
by Louvre Gestion, a subsidiary of the new bank, won
awards. In particular, the Integral Valor fund won the
awards from La Tribune/S&P for one-year, three-year
and five-year best performance.
Eurozone
Group branches in the eurozone 1 managed by CCF
reported a 9.3 per cent increase in banking revenues,
following a series of prime lending transactions to
major corporates in Italy, Spain, France and Belgium.
A further contributory factor was a 4.6 per cent
decrease in operating costs, principally due to disposal
of the private banking business in Italy. Operating
profit before provisions was up 40.0 per cent.
Equity portfolio operations
Private equity and equity investment operations made
a contrasting contribution to results. In 2003,
Charterhouse’s private equity portfolio did not generate the significant capital gains it did in 2002.
Operating profit before provisions therefore amounted
to only €34 million in 2003 compared with €103 million
in 2002, a decrease of €70 million which depressed
growth in CCF’s overall operating results. However,
following the recovery of the stockmarkets during 2003,
capital gains were realised on the listed portfolio which
had been affected last year by substantial write-downs.
Net profit amounted to €47 million in 2003 compared
with €29 million the previous year, a rise of €18 million.
At 31 December 2003, CCF’s equity investment
portfolio was valued at €887 million, based on latest
prices for listed equities and most recent valuations for
unlisted equities, generating unrealised capital gains of
€253 million.
1 CCF’s published figures only include the results of HSBC branches in Belgium and Greece, which are legally owned by CCF. HSBC
branches in Italy, Spain, France and the Netherlands are managed by CCF but are legally owned by HSBC Bank plc.
6
In light of these results, the Board is proposing
a dividend of €6.25 per share. The total dividend
payment will be €465 million, representing a payout of
74.2 per cent.
interim dividend of €3 per share (plus a tax credit of
€1.50) voted by the Board of Directors at its meeting
of 25 July 2003 and paid in respect of shares in issue
as of that date.
At its meeting of 24 February 2004, the Board of
Directors appointed Mr. Charles-Henri Filippi as
Chairman of CCF with effect from 1 March 2004.
The third resolution seeks approval of the consolidated financial statements for the year ended 31 December
2003, as required under Article L. 225-100 of the Code de
Commerce.
By resolution of the shareholders at their annual
general meeting of 8 April 2002, the company made a
number of changes to its Articles of Association to
bring them into line with the provisions of France’s
“New Economic Regulations” Act no. 2001-420 of
15 May 2001. After the AGM, the Board of Directors
met and decided that it would not split the offices of
Chairman and Chief Executive Officer and that the
Chairman would therefore remain in office as
Chief Executive Officer for the remainder of his term
as Chairman of the Board.
Pursuant to Article 15 of the Articles of Association
and in accordance with Article 148 of decree no. 67-236
of 23 March 1967, at its meeting of 24 February 2004,
the Board renewed its decision not to split the offices of
Chairman and Chief Executive Officer. Consequently,
the Chairman of the Board, Mr. Charles-Henri Filippi,
will also take up the office of Chief Executive Officer.
At the proposal of Mr. Charles-Henri Filippi,
the Board has appointed Mr. Gilles Denoyel and
Mr. Patrick Careil as Deputy Chief Executive Officers.
The Board has also co-opted them as Directors to
replace Mr. Charles de Croisset and Mr. Dominique
Léger, from 1st March 2004.
The Board of Directors will put the following
resolutions to the vote at the annual general meeting
of 12 May 2004.
Proposed resolutions
Ordinary business
The purpose of the first resolution is to seek approval
of the Company’s annual financial statements for the
year ended 31 December 2003, after hearing the reports
of the Directors and the Auditors, and the Chairman’s
report on corporate governance and internal control.
The second resolution concerns the allocation
of the year’s net profit. The Board is proposing to
pay €464,687,912.50 in dividends and to transfer
€220,984,308.87 to retained profits. The dividend will
be payable on 12 May 2004, after deduction of the
The fourth resolution seeks approval of agreements
governed by Article L.225-38 of the Code de
Commerce, after hearing the Auditors’ report on those
agreements.
In the fifth resolution, we are seeking ratification
of the Board’s co-option on 24 February 2004 of
Mr. Patrick Careil to replace Mr. Charles de Croisset,
who has resigned, for the remainder of Mr. de Croisset’s
term of office. As Mr. de Croisset was due to retire by
rotation at this Annual General Meeting, we are also
seeking the re-election of Mr. Patrick Careil for a further term of four years.
In the sixth resolution, we are seeking ratification
of the Board’s co-option on 24 February 2004 of Mr. Gilles
Denoyel as Director to replace Mr. Dominique Léger,
who has resigned.
In the seventh resolution, we are proposing the
election of Mr. Michael Geoghegan for a term of four
years to replace Mr. William Dalton, who is due to
retire by rotation at this year’s Annual General Meeting
and is not standing for re-election.
In the eighth, ninth and tenth resolutions, we are
proposing the re-election of Messrs. Charles-Henri
Filippi, Philippe Houzé and Igor Landau for a further
term of four years ending at the conclusion of the
Annual General Meeting held to approve the financial
statements for the year ending 31 December 2007.
In the eleventh resolution, we are seeking official
acknowledgement that Mr. Jean-Antoine Chabannes,
due to retire by rotation at this year’s Annual General
Meeting, is not standing for re-election.
In the twelfth resolution, we are proposing to
appoint RSM Salustro Reydel as statutory auditors
and Mr. Benoît Lebrun as alternate auditor for the
remainder of their predecessor’s term of office, that is
until the conclusion of the Annual General Meeting
held to approve the financial statements for the year
ending 31 December 2005.
7
CCF
In accordance to the provisions of Article L. 225-228
of the Code de Commerce, you are informed in this
resolution of the business transfers or mergers
concerning CCF or companies it controls within the
meaning of paragraphs I and II of Article L. 233-16
of the Code de Commerce over the past two years that
Mr. Benoît Lebrun, a partner in the firm proposed as
statutory auditors, who has been proposed as alternate
auditor, was responsible for verifying.
The thirteenth resolution seeks five-year authority
for the Board to issue bonds, which will cancel and
supersede the authority granted at the Annual General
Meeting of 29 March 2001. The Board will be empowered to issue bonds on one or more occasions in all
markets up to a maximum amount of €20 billion or
the equivalent thereof in any other currency or composite monetary unit.
The fourteenth resolution seeks approval of amendments to the agreement governing the participating
notes issued by CCF, providing for early retirement of
all the notes should the Board deem it appropriate.
The following issues were made by CCF:
–
4 June 1984: 800,000 participating notes each with
a nominal value of FRF1,000;
– 22 July 1985: 120,000 perpetual subordinated notes
with warrants to subscribe for participating notes.
A total of 453,098 participating notes were issued
in 1987 and 1988 upon the exercise of warrants exercisable in 1987 (A warrants) and 1988 (B warrants).
In 1990, CCF made a public offer to exchange the
participating notes for CCF shares on the basis of
11 CCF shares for 2 participating notes. Those notes
tendered to the offer were cancelled, leaving the
following notes in issue:
CCF wishes to offer all holders the opportunity of
achieving a fair return on their investment should the
notes be retired early. It has therefore examined the
terms and conditions of an offer open to all holders,
and has calculated the intrinsic value of the participating notes.
The interest rate payable on the notes is still equal
to its maximum, given CCF’s published results. The
net present value of the participating notes (P), being
the sum (∑) of the discounted coupon payments, is
therefore computed as follows:
∞
130% x TMOn x N
1
(1 + TZn + S)n
P=∑
.
Where:
– TMOn = TEC10n + 0.25% (following Euronext’s
notice dated 11 October 2001) or any other rate
which would substitute;
– N is the nominal value, i.e. €152.45 (FRF1,000);
– TZn is the zero coupon n years rate based on the
swap yield to Euribor curve, or any other rate which
would substitute;
– S is the spread representative of a perpetual note
issued by CCF at market conditions at time t;
– TZn + S is the discount rate.
The Board of Directors is proposing to improve
the redemption terms by increasing the value of the
participating notes by 5%, computed as follows:
V = 105% x
∞
130% x TMOn x N
1
(1 + TZn + S)n
∑
.
– 34,256 1984 participating notes (4.28% of the total
issued in 1984);
However, the price may not be less than 105% of
the nominal value of the participating notes.
– 7,280 1987/1988 participating notes (1.6% of the total
issued in 1987 and 1988 upon exercise of warrants
attached to the 1985 perpetual subordinated notes).
This formula has been validated by an independent
expert. In addition, when the remaining participating
notes are redeemed, an independent expert will verify
that the formula has been properly applied.
Given the small number of notes still in issue and
their lack of liquidity, the proposed amendment to the
issue agreement gives CCF the option of retiring these
notes before maturity. In addition, the participating
notes were issued when CCF was still nationalised, and
they represent a class of securities available only
to state-owned companies and the cooperative
sector. They are therefore no longer appropriate to the
company’s current circumstances.
8
To ensure that holders have adequate time to obtain
full information, CCF may only retire the participating
notes on 4 June each year, which is the coupon
payment date, and not before 4 June 2005.
These amendments will also be proposed to the
class meeting of participating notes holders which will
take place on 11 May 2004.
Special business
Pursuant to the provisions of Article L. 225-129 VII,
every three years the shareholders are required to
consider a resolution granting the Board authority to
allot shares to members of the company’s employee
share ownership plan in accordance with the provisions of Article L. 443-5 of the Code du Travail. Any
resolutions passed in breach of this provision will be
null and void.
The last time we proposed such a resolution was
at the Annual General Meeting of 8 April 2002.
Accordingly, in this year’s fifteenth resolution, we are
seeking authority to make employee share offerings in
order to comply with legal requirements.
concerned may purchase HSBC shares under their
employee share ownership plan. We therefore recommend that you reject this resolution.
The sixteenth resolution seeks approval to amend
the company’s Articles of Association to bring them
into line with the new Financial Security Act no. 2003-706
of 1 August 2003.
Powers (seventeenth resolution)
This resolution simply seeks empowerment to complete
the requisite filing and legal formalities with respect to
this annual general meeting.
We trust that the proposed resolutions will meet
with your approval.
However, the Board of Directors does not intend
to make such share offerings as the employees
9
CCF
Executive Management Committee and General Managers*
The Board of Directors of CCF met on 24 February 2004 to approve the financial statements for 2003 and has
appointed Charles-Henri Filippi as Chairman and Chief Executive Officer of CCF, with effect from 1 March 2004.
*
At the proposal of Charles-Henri Filippi, the Board appointed Gilles Denoyel and Patrick Careil as Deputy Chief
Executive Officers.
CCF’s Executive Management Committee has been reorganised, referring to the HSBC Group’s organisation in
5 Customer Groups:
–
–
–
–
–
Personal Financial Services,
Consumer Finance,
Commercial Banking,
Corporate, Investment Banking and Markets,
Private Banking.
Executive Management Committee
Charles-Henri Filippi Chairman and Chief Executive Officer. A Group Managing Director, a Director of
HSBC Bank plc.
Age 51. Joined CCF in 1987 having previously held senior appointments in the French civil
service. Appointed a Group General Manager in 2001 as Global Head of Corporate and
Institutional Banking. From 1 March 2004, also Responsible for co-ordinating HSBC’s strategy
in the Eurozone.
Patrick Careil Deputy Chief Executive Officer, in charge of Retail Banking and Personal Financial Service’s
customer group.
Age 56. Having previously held senior appointments in the French Civil Service and as Adviser
to several Ministers, appointed Chairman and CEO of Banque Hervet in 1989. Chairman of
Société Marseillaise de Crédit (SMC) 1997-1998.
Gilles Denoyel Deputy Chief Executive Officer, in charge of Support Services and Finance.
Age 49. Joined CCF in 1996 as Finance Director, then Company Secretary in charge of Strategy
and Operations and from 2000, Senior Corporate Vice President, Finance. Has previously
held senior appointments in the French Ministry of Finance.
Samir Assaf Senior Corporate Vice President, in charge of Global Markets and co-head of Corporate, Investment
Banking and Markets’s customer group.
Age 43. Joined CCF in 1994. He held several posts as Head of Treasury and Forex, and
Capital Markets. From 1988 to 1994, he held several managerial positions in the Financial
Department of Total Group.
Christophe de Backer Senior Corporate Vice President, in charge of Asset Management, Insurance and Wealth
Management Co-ordination.
Age 41. Joined CCF’s Brokerage Company Securities in 1991 and appointed Chairman and
CEO of CCF Securities in 1998. In charge of Asset Management and Insurance from January
2001.
10
Peter Boyles Senior Corporate Vice President, in charge of Transactional Banking, Corporate, Investment
Banking and Markets support functions and Commercial Banking’s customer group.
Age 48. With CCF since 2000. Joined HSBC Group in 1975 as an International Manager.
He held senior appointments in the Middle East, the Hong Kong SAR and Malaysia.
Henri des Déserts Senior Corporate Vice President, in charge of Private Banking, Chairman of the Supervisory
Board of HSBC Private Bank France until 11 May.
Age 56. Joined CCF in 1981. Head of Private Banking activities since 1993.
Michel Wohrer Senior Corporate Vice President, in charge of Strategy, Organisation and IT.
Age 49. Joined CCF in 1988. Between 1988 and 2000 held positions in Merger and
Acquisitions, headed CCF’s Brokerage Company before being named Head of Fixed Income
and Capital Markets. General Secretary until 2001. Having previously held senior appointments
in the French Ministry of Finance.
Jean Beunardeau Executive Vice President, in charge of Corporate and Institutional Banking and co-head of
Corporate, Investment Banking and Markets’s customer group.
Age 42. Joined CCF in 1997, Corporate Finance. Appointed Head of Corporate Banking in
January 2004. Having previously held senior appointments in the French civil service.
11
CCF
Executive Management Committee and General Managers (continued)
General Managers
Bernard Azoulay
Emmanuel Barthélémy
Gérard de Bartillat
Jean Baudoin
Jalil Berrada
Raymond Bert
(appointed 25 March)
Jacques-Emmanuel Blanchet
Loïc Bonnat
Rémi Bourette
Catherine Bussery
Alain Cadiou
Patrick Cazalaa
Johnny Crichton
Didier Descamps
Joëlle Durieux
Jérôme J Ferracci
Dominique Feutry
Bernard Francisoud
Sylvie François
Monique Frugier
Philippe Goimard
Eric Groven
Philippe Henry
Pierre Jammes
(appointed 25 March)
Pierre Jolain (until 30 April)
Jean-Pierre Leclerc
(appointed 1 March)
Gilberte Lombard
François Mallet
Olivier Méric
Yves Meynial
François Morlat
(appointed 1 March)
Chantal Nedjib
Corinne Orémus
(appointed in March)
Dominique Paulhac
Joseph Perez
Marc de Lapérouse
(appointed 2 April)
Tony Rhodes (until March)
Thierry Roland
Thibaud de Roux
Pierre Ruhlman (appointed 4 May)
Pierre Sorbets
12
Head of Asset and Liability Management
Chief Operating Officer, Société Marseillaise de Crédit (from 1 March),
previously General Manager
Chairman of the Management Board, HSBC Private Bank France
Head of Credit and Market Risk Management
Head of Information Technology
Head of the Consumer Finance’s customer group,
Co-ordination of the regional banks
Chief Operating Officer, CCF Retail Bank
Chief Operating Officer, Corporate, Investment Banking and Markets
Head of Market and Risks
Head of Compliance
Head of Group Eurozone Audit
Co-Head of Corporate Finance
Deputy Head of Credit Risk Management
Chief Operating Officer, Markets
Chief Executive Officer, Erisa
Head of Equity Derivatives
Head of Operations
Chairman of the Executive Board, Crédit Commercial du Sud Ouest
Head of Human Resources
Head of Management Accounting and Chief Accountant
Chief Executive Officer, Sinopia Asset Management
Development Manager, CCF Retail Bank
Head of Debt Finance & Advisory
Chairman and Chief Executive Officer, Union de Banques à Paris
Head of Professional Ethics
Chief Operating Officer, Retail Banking, Branch Network
Company Secretary, Head of Financial Operations
Head of Cash Equity activities
CCF Retail Bank, Head of Marketing
Head of Eurozone Management Offices
Chairman and Chief Executive Officer, Banque Hervet
Head of Corporate Communication
Deputy Head of Commercial Banking, Retail Banking
Head of Real Estate
Chairman, Société Marseillaise de Crédit (from 1 March), previously
Chairman and Chief Executive Officer
Head of Legal Department
Co-Head Debt Finance and Advisory, Global Head of Syndicated
Finance and European Head of Debt Finance
Head of Treasury
Head of Fixed Income and Derivatives
Head of Strategic Planning
Head of Financial Institutions
CCF
Corporate Governance
Composition of the Board of Directors as of 1 March 2004
Charles-Henri Filippi Born in 1952
Holds 1 CCF share. Year of first appointment: 1998. Year of last re-election: 2004. Year in which current mandate will expire: 2008.
Principal position:
Chairman and CEO, CCF since 1 March 2004. Group Managing Director, HSBC Holdings plc. since 1 March
2004.
Other functions1:
Member of the Group Management Board, HSBC Holdings plc. Director, HSBC Bank plc. Director, Seita (permanent representative of CCF). Director and member of the Executive Commission, Altadis.
Resume:
Graduate of the Ecole Nationale d’Administration. Inspecteur des Finances. After several years working in the civil
service and as an adviser to government ministers, he joined the Banque Stern Group before moving to CCF in
September 1987, as special adviser to the Managing Director. He was appointed Deputy Chief Executive Officer
in 1995 and Managing Director and Head of Corporate and Investment Banking in 1998. He became Global
Head of Corporate and Institutional Banking for the entire HSBC Group in November 2001, and at the same
time, Group General Manager and member of the Group Executive Committee for the HSBC Group.
Gilles Denoyel Born in 1954
Holds 1 CCF share. Year of first appointment: 2004. Year in which current mandate will expire: 2006.
Principal position:
Deputy CEO, CCF.
Other functions1:
Director, Banque Hervet. Director, HSBC CCF Asset Management Holding. Director, Société Marseillaise de
Crédit. Member of the Supervisory Board, HSBC Private Bank France. Chairman, CCF Charterhouse Ltd.
Resume:
Graduate of the Ecole des Mines and the Ecole Nationale d’Administration. Inspecteur des Finances. In 1985, he
joined the French Treasury where he held a series of positions. He joined CCF in 1996 as Senior Vice President
of Finance, becoming Company Secretary and Head of Strategy and Operations in 1998. He has been Chief
Financial Officer since 2000.
Patrick Careil Born in 1947
Principal position:
Deputy CEO, CCF.
Other functions1:
Director, Banque Hervet. Director, Banque de Baecque Beau. Director, UBP. Director, Copari. Chairman of the
Supervisory Board, Crédit Commercial du Sud-Ouest. Member of the Supervisory Board, Banque Pelletier.
Directorships expired in 2004 : Director, Banque Alcyon; Chairman and CEO, Banque Hervet.
Resume:
Graduate of the Ecole Nationale d’Administration. Inspecteur des Finances. After several years working in the civil
service and as an adviser to government ministers, in 1989 he joined Banque Hervet, which became a subsidiary
of CCF in 2001, as Chairman and Chief Executive Officer. From 1997 to 1998, he was Chairman and Chief
Executive Officer of Société Marseillaise de Crédit, which was then nationalised. In 2001, he was also appointed
to CCF’s senior management team as co-ordinator of the regional banking subsidiaries.
1 For the most part, appointments held in companies which do not belong to the group in which the Directors have their principal position.
13
CCF
Corporate Governance (continued)
Patricia Bizien-Legay Born in 1954
Director elected by employees.
Principal position:
Subsidiaries’ books (CCF Financial Operations Department).
Resume:
Joined CCF in 1975.
Martin Bouygues Born in 1952
Independent Director.
Principal position:
Chairman and CEO, Bouygues.
Other functions1:
Director, TF1. Director, Société de Distribution d’Eau de la Côte d’Ivoire (SODECI). Director, Compagnie
Ivoirienne d’Electricité (CIE). Chairman, SCDM. Directorship expired in 2003: Director, Actiby.
Resume:
He joined the Bouygues Group in 1974 as works foreman. In 1978, he created Maison Bouygues and became
Chairman and Chief Executive Officer in 1984. He is Chairman and Chief Executive Officer of Bouygues
since 1989.
Evelyn Cesari Born in 1949
Principal position:
Head of SCPI Management Team (CCF Real Estate Department).
Resume:
Joined CCF in 1967.
Jean-Antoine Chabannes Born in 1938
Independent Director. Member of the CCF Audit Committee.
Principal position:
Honorary Chairman, Swiss Life (France) since 1 September 2003.
Other functions1:
Chairman, Erisa. Chairman, Erisa Iard. Director, Creserfi. Director, Rema. Director and member of the Executive
Committee, Altadis. Directorships expired in 2003: Chairman, Groupe Société Suisse (France); Director, Scor;
Director, Chambre de Commerce Suisse en France.
Resume:
He joined Société Suisse in May 1965 as legal adviser, and was appointed Chairman in 1979.
2 Mandate expired at the Annual General Meeting held on 12 May 2004.
14
William P. Dalton Born in 1943
Principal position:
Executive Director, HSBC Holdings plc.
Other functions2::
Vice-President, The Chartered Institute of Bankers.. Director, Household International Inc. (since 31 March
2003). Director, Centre for the Study of Financial Innovation. Director, Crimestoppers Trust. Director, HRH
The Duke of Edinburgh’s Commonwealth Study Conferences. Director, MasterCard International Inc.. Director,
MasterCard Incorporated. Directorships expired in 2003: Chief Executive Officer, HSBC Bank plc; Vice-President,
British Bankers’ Association; Chairman, Young Enterprise (15 January 2004).
Resume:
Canadian and Irish nationality. Director and Chief Operating Officer (1987-1991) then Director and Chief Executive
Officer (1992-1997) of HSBC Bank, Canada. Director and Chief Executive Officer of HSBC Bank plc (19982003). Executive Director of HSBC Holdings plc since 1998.
Jean-Claude Decaux Born in 1937
Principal position:
Chairman and CEO, JC Decaux Holding.
Other functions2:
Chairman of the Supervisory Board, JC Decaux SA. Chairman, Sopact. Manager, SCI Troisjean. Manager, SCI
Le Clos de la Chaîne. Manager, SCI Lyonnaise d’Entrepôt. Directorships expired in 2003: CEO, Sopact; Chairman,
Gommage Graffitis.
Resume:
Founder of JC Decaux in 1964, a billboard, street furniture and public transport advertising company.
Paul Dubrule Born in 1934
Independent Director. Chairman of the CCF Nomination and Remuneration Committee since 2002.
Principal position:
Founding Co-Chairman, Member of the Management Board, Accor.
Resume:
Chairman and founder of Novotel (1963). Co-Chairman of Accor (1983-1997). Senator of Seine-et-Marne
Department since 1999.
1 Mandate expired at the Annual General Meeting held on 12 May 2004.
15
CCF
Yves Fontaine Born in 1945
Principal position:
Central Administration Department – Head of the Paris-Élysées business centre.
Other functions1:
Director, CCF Change since 24 June 2003.
Resume:
Joined CCF in 1969.
Stephen Green Born in 1948
Member of the CCF Nomination and Remuneration Committee. Member of the CCF Audit Committee until 10
December 2003.
Principal position:
Director and Group Chief Executive, HSBC Holdings plc since May 2003.
Other functions1:
Director, Friends of the Archbishop of Canterbury’s Anglican Communion Fund Inc. Director, Grupo Financiero
HSBC, S.A. de C.V. (since 7 July 2003). Directorships expired in 2003: Director, Poplar Housing and Regeneration
Community Association Ltd; Director, St Paul’s Cathedral Foundation.
Resume:
British nationality. HSBC Group Treasurer 1992-1998. Executive Director, Corporate, Investment Banking and
Markets, HSBC Holdings plc 1998-2003. HSBC Group Chief Executive since May 2003.
Philippe Houzé Born in 1947
Independent Director. Member of the CCF Nomination and Remuneration Committee.
Principal position:
Co-Chairman of the Management Board, Galeries Lafayette.
Other functions1:
Chairman and CEO, Monoprix SA. Member of the Supervisory Board, Casino Guichard-Perrachon.
Resume:
Director of Galeries Lafayette since 1974. Chairman of Monoprix since 1994. Vice-President of the Conseil
National du Commerce since 1991.
16
Jean-Claude Jolain Born in 1943
Independent Director. Chairman of the CCF Audit Committee.
Principal position:
Chairman and CEO, Sagi.
Other functions1:
Chairman and CEO, Ville Service Plus. Chairman, UESL. Director, Unibail.
Resume:
From 1968 to 1986, he held a number of ministerial positions, and in the Paris Town Hall. From 1968 to 1998, he
was Chairman of the insurance group La Mutuelle Générale Française, which after its privatisation in 1987 became
the Mutuelle du Mans Group. In 1993 he was appointed Chairman and Chief Executive Officer of Sagi.
Igor Landau Born in 1944
Principal position:
Chairman of the Management Board, Aventis.
Other functions1:
Director, Fisons Limited (since 11 March 2003). Director, Insead. Director, Essilor. Director, IDI (Institut de
Développement Industriel). Director, Thomson. Member of the Advisory Committee, Banque de France (since
13 March 2003). Member of the Supervisory Board, Dresdner Bank AG (since 8 April 2003). Directorships expired
in 2003: Chairman, Insead; Chairman of the Supervisory Board, Aventis Pharma AG; Director, Rhône Poulenc
Rorer Inc.; Director, Hoechst AG.
Resume:
After a few years with McKinsey, he joined Rhône Poulenc in 1975 as assistant to the Health Division’s General
Manager. In 1987, he was appointed member of Rhône-Poulenc Group’s Executive Committee and General
Manager of the Health Division.
Jean-Charles Naouri Born in 1949
Principal position:
Chairman, Groupe Euris.
Other functions1:
Chairman and CEO, Rallye. Chairman, Casino, Guichard-Perrachon (since 4 September 2003). Chairman, Finatis.
Member of the Supervisory Board, Groupe Marc de Lacharrière. Managing Partner, Rothschild et Compagnie
Banque. Manager, SCI Penthièvre (since 7 January 2003). Censor, Fimalac. Censor, Caisse Nationale des Caisses
d’Epargne (since 1 January 2004). Directorships expired in 2003: Member of the Supervisory Board, Casino
Guichard-Perrachon.
Resume:
Inspecteur des Finances. After almost ten years as an adviser to government ministers, he became Managing Partner
of Rothschild et Cie Banque in 1987. The same year he created Euris, an investment company. He was appointed
Chairman of the Management Board of Euris in 1987, then Chairman and Chief Executive Officer in 1990.
17
CCF
Marcel Roulet Born in 1933
Independent Director. Member of the CCF Audit Committee since 14 May 2003.
Other functions1:
Chairman of the Supervisory Board, Gimar Finances. Member of the Supervisory Board, Eurazeo. Director,
Thomson. Director,Thales, permanent representative of Thomson. Director, France Telecom (since 25 February
2003).
Resume:
Ingénieur général des télécommunications. Honorary Chairman of France Telecom. Chairman of France Telecom
from 1991 to 1995. Chairman and Chief Executive Officer of Thomson from 1996 to 1997 and Thomson CSF
(now Thales) from 1996 to 1998.
Gérard Turc Born in 1962
Principal position:
Reception Supervisor of the CCF Menton branch.
Resume:
Joined CCF in 1982.
Rémi Vermeiren Born in 1940
Other functions1:
Director, San Paolo IMI. Directorships expired in 2003 : Director delegate and Chairman of the Executive
Management Committee, KBC Bancassurance Holding SA; Director delegate and Chairman of the Executive
Management Committee, KBC Bank SA; Chairman of the Board, CSOB.
Resume:
Belgian nationality. Over 43 years with KBC and KBC Bancassurance Holding.
Director nominated for election at the Annual General Meeting of 12 May 2004
Michael Geoghegan Born in 1953
Principal position:
Executive Director, HSBC Holdings plc since 1 March 2004. Chief Executive Officer, HSBC Bank plc since January
2004.
Other functions1:
Non-Executive Director: Young Enterprise (since 15 January 2004).
Resume:
British nationality. Joined HSBC in 1973. Chairman of HSBC Bank Brasil S.A. – Banco Múltiplo from 1997 to
2003 and head of HSBC’s South American operations from 2000 to 2003.
18
CCF
Corporate governance
Remuneration of Directors and Senior
Management
Remuneration of Directors
Executive Directors’ remuneration policy
The remuneration of Executive Directors is agreed
each year by the Board of Directors at the proposal of
the Nomination and Remuneration Committee. It
includes a fixed component and a variable component.
The fixed component is determined by reference to
market data supported by the advice of specialist consultants. The variable component is equal to a percentage of the fixed component, agreed by the Board
of Directors each year once the financial statements
have been approved. The percentage agreed is based
on performance in terms of operating profit before
provisions, earnings per share and return on equity,
taking account of the economic climate and a comparison against the budget and prior year results. The
Executive Directors and Senior Corporate VicePresidents have a defined benefits supplementary pension scheme and the Executive Directors also have a
company car.
2003 remuneration
The following table shows the total emoluments, including all benefits in kind, payable to each Executive
Director in respect of 2003 by CCF, the companies it
controls and the companies which control it (the HSBC
Group).
(in €)
Charles de Croisset
Dominique Léger
Fixed
Component
541,660
481,706
Variable
Component1
374,287
275,000
11,161
6,388
Benefits in kind
Directors’ fees
Total
49,700
18,294
976,808
781,388
The total amount of direct and indirect remuneration
received in 2003 by members of the Executive
Committee in office at 31 December 2003, including
the Executive Directors, amounted to €3,489,688 for
the fixed component and €2,822,037 for the variable
component.
Directors’ fees
At the Annual General Meeting of 7 April 1999, the
maximum amount of Directors’ fees payable each year
was fixed at €426,850. At its meeting of the same date,
the Board of Directors decided to allocate these fees
as follows:
– All Directors receive an annual flat fee of €18,294
at the conclusion of the Annual General Meeting.
– Those Directors who sit on the Audit Committee
or Nomination and Remuneration Committee also
receive an annual flat fee of €9,147.
Within the HSBC Group, it is customary for
Directors representing HSBC on the Board of several
different Group companies to receive Directors’ fees
from only one of them. Following the Board’s
decision of 20 February 2001, this rule applies to four
CCF Directors, Messrs de Croisset, Dalton, Filippi
and Green, who will not receive Directors’ fees in
respect of their directorship of CCF with effect from
the date of their co-optation onto the Board of another
HSBC Group company.
Total Directors’ fees paid in May 2003 in respect of
2002 amounted to €0.288 million against €0.284 million
the previous year.
The individual amount of Directors’ fees for 2003
remains unchanged. The total amount of Directors’
fees which will be paid at the conclusion of the Annual
General Meeting of 12 May 2004 amounts to €308,710.
1 Bonus payable in respect of 2003 and paid in 2004.
19
CCF
Corporate governance (continued)
The following table shows the total emoluments paid to each Director in respect of 2003 by CCF, the companies it controls and the companies which control it (the HSBC Group).
Salary and
Directors’
other fixed
fees remuneration
Variable
remuneration
Benefits
in kind
Total
Group1
Executive Directors of the HSBC
William R. P. Dalton2 . . . . . . . . . . . . . . . . . . . .
Charles-Henri Filippi2 . . . . . . . . . . . . . . . . . . . .
Stephen K. Green2 . . . . . . . . . . . . . . . . . . . . . .
£35,000
£25,000
£35,000
Employee representatives7
Patricia Bizien-Legay . . . . . . . . . . . . . . . . . . . .
Evelyn Césari . . . . . . . . . . . . . . . . . . . . . . . . . .
Yves Fontaine . . . . . . . . . . . . . . . . . . . . . . . . . .
Gérard Turc . . . . . . . . . . . . . . . . . . . . . . . . . . . .
€18,2948
€18,294
€18,294
€18,294
–
–
–
–
–
–
–
–
–
–
–
–
€18,2948
€18,294
€18,294
€18,294
Independent Directors
Martin Bouygues . . . . . . . . . . . . . . . . . . . . . . .
Jean-Antoine Chabannes . . . . . . . . . . . . . . . .
Jean-Claude Decaux . . . . . . . . . . . . . . . . . . . .
Paul Dubrule . . . . . . . . . . . . . . . . . . . . . . . . . . .
Philippe Houzé . . . . . . . . . . . . . . . . . . . . . . . . .
Jean-Claude Jolain . . . . . . . . . . . . . . . . . . . . .
Igor Landau . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jean-Charles Naouri . . . . . . . . . . . . . . . . . . . .
Marcel Roulet . . . . . . . . . . . . . . . . . . . . . . . . . .
Rémi Vermeiren . . . . . . . . . . . . . . . . . . . . . . . .
€18,294
€27,441
€13,720
€27,441
€27,441
€27,441
€18,294
€18,294
€25,154
€13,720
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
€18,294
€27,441
€13,720
€27,441
€27,441
€27,441
€18,294
€18,294
€25,154
€13,720
£582,320
£206,745
£551,477
–3
£400,0004 5
£650,0004
£14,301
£631,621
£149,6636
£781,408
£1,098 £1,237,575
1 Excluding Charles de Croisset and Dominique Léger, whose total emoluments including Directors’ fees are shown on page 19.
2 Emoluments shown are those paid by other HSBC Group companies in respect of their executive functions within the Group.
3 In exchange for the prior waiver of bonus, the employer contribution into the pension scheme has been increased by the amount of £1,250,000 which would
otherwise have been paid.
4 Amounts payable in respect of 2003, to be paid in 2004.
5 In return for the prior waiver of part of the bonus, the employer contribution into the pension scheme has been increased by the amount of £400,000 which
would otherwise have been paid.
6 It comprises £143,000 paid by the Group for the cost of accommodation in the UK.
7 Total gross remuneration other than Directors’ fees for the employee representatives who have an employment contract with the company amounted to
€228,778.62 for 2003.
8 Directors’ fees paid to a trade union organisation.
Auditors’ fees paid in 2003 by the CCF group
(in € thousands)
KPMG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cabinet Laîné . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deloitte . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ernst & Young . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PricewaterhouseCoopers . . . . . . . . . . . . . . . . . . . . . . . . . .
Salustro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total inclusive of recoverable VAT . . . . . . . . . . . . . . . . . . .
Audit
assignments
Other
assignments
Total
%
2,821
72
213
–
166
56
281
3,609
673
–
398
–
–
–
–
1,071
3,494
72
611
–
166
56
281
4,680
74.7
1.5
13.1
–
3.5
1.2
6.0
100.0
Audit fees paid to KPMG were €2,466,000 excluding VAT. They include the sum of €170,000 inclusive of
recoverable VAT (or €147,000 excluding VAT) in respect of services provided in the previous year.
For regulatory reasons specific to HSBC, non-audit fees include the sum €328,000 inclusive of recoverable VAT
(or approximately €284,000 excluding VAT) paid to KPMG in respect of interim review fees.
Total fees paid by the CCF group to KPMG in respect of the 2003 financial statements, within the meaning of
French law, therefore amount to: €2,466,000 + €284,000 - €147,000 = €2,603,000.
20
CCF
Chairman’s report on corporate governance and internal control procedures
Under the August 2003 law on financial security, the
Chairman of the Board of Directors of a French société
anonyme is now required to report to shareholders annually on the company’s corporate governance, internal control procedures and any restrictions on the powers of the
Chief Executive Officer. I am pleased to present my first
report in this respect for the year ended 31 December 2003.
Management is responsible for defining and implementing adequate and effective internal controls, with
oversight by the Board of Directors. The Chairman is
required to report on how the Board of Directors prepares and organises its work and on the internal control
procedures implemented by the company.
This is the first time the provisions of the new law
have been applied. We have been unable to provide some
of the information in this initial report due to the
extremely tight timing between the law’s publication on
1 August 2003 and its date of effect. This is notably the
case with respect to assessment of the adequacy of internal controls relative to the stated objectives, their proper
application and effectiveness.
The report has been drawn up on the basis of guidance issued by Medef on 17 December 2003 and the
Autorité des Marchés Financiers (AMF) on 23 January
2004. The report is intended to be part of a dynamic
process, which in time will lead to a better assessment of
the adequacy and effectiveness of internal controls
through the implementation and development of more
appropriate procedures and tools.
The composition of CCF’s Board still complies with
the recommendations of the Bouton report in terms
of independent directors, as half of all Board members are independent Directors having no special relationship with the company.
Lastly, the Board’s method of operation has been
governed by a set of internal rules adopted in 1996,
which were amended in 2001 and 2003 to include new
recommendations on corporate governance.
Board of Directors
At 31 December 2003, the Board of Directors had
19 members, including:
– 2 Executive Directors within the meaning of the
French Banking Act;
– 3 Directors representing the HSBC Group, which
owns 99.9 per cent of CCF;
– 10 independent Directors according to the criteria
set out in the Bouton report. Two of these
Directors, Jean-Claude Jolain and Jean-Antoine
Chabannes, have been in office for more than twelve
years. However, the Nomination and Remuneration
Committee does not believe this affects their
freedom of judgement with respect to the company.
– 4 Directors elected by the employees in 2000 for
a term of four years, in accordance with the
provisions of the French law of 21 October 1986.
Three Directors are non-French nationals.
CHAIRMAN’S REPORT ON CORPORATE
GOVERNANCE
Since 1995, CCF has applied the standards of corporate
governance as recommended successively in the Viénot
reports I and II, the Bouton report and lastly the amalgamated report on corporate governance published by
Afep and Medef. In 2003, CCF incorporated the provisions of the new French law on Financial Security.
CCF’s integration into the HSBC Group has not
resulted in any changes to its corporate governance
practices as this area has always been a key priority
within the Group. However, some tasks of the
Nomination and Remuneration Committee have been
amended slightly to reflect the fact that CCF is no
longer an independently quoted company. The Board
of Directors of CCF is no longer responsible for devising
share option plans, as employees of the CCF group
are now awarded HSBC options.
During 2003, there was one change in the composition of the Board. Jean-Claude Decaux was elected by
the shareholders at their AGM of 14 May 2003 at the proposal of the Nomination and Remuneration Committee,
which had obtained assurance that Mr. Decaux had no
particular relationship with the company.
The Directors’ term of office was reduced from six
to four years at the AGM of 12 April 2000 and the
Articles of Association amended accordingly.
Board of Directors’ Internal Rules
The Board of Directors first established its internal
rules in 1996. These rules set out the principal duties
of the Board, which are to appoint the Executive
Directors responsible for managing the company, to set
strategic guidelines for the company on a regular basis
and to ensure the reliability of financial information
provided to shareholders and the markets.
21
CCF
Chairman’s report on corporate governance and internal control procedures (continued)
They also set out the procedures for conducting
Board meetings and, in accordance with HSBC rules,
the duties, powers and responsibilities of the Audit
Committee and the Nomination and Remuneration
Committee (see below).
At its meeting of 25 July 2003, the Board decided
to incorporate a code of conduct in its internal rules,
which requires Directors of CCF to comply with the
same rules as restricted employees of the HSBC Group.
Directors must now seek prior authorisation from the
Secretary of the Board of HSBC Holdings plc before
dealing in HSBC Group listed securities and may not
deal in these securities during the close periods immediately preceding the publication of results or if they
are privy to price-sensitive information which has not
yet been made public.
Preparation and organisation of the Board’s work
in 2003
Before each Board meeting, Directors receive an agenda
together with the draft minutes of the previous Board
meeting. In the week prior to the meeting, they also
receive background information on agenda items and,
a few days ahead of the meeting, a summary of key
financial indicators. In the case of highly confidential
issues, which cannot be disclosed in advance, the information is provided during the meeting itself.
The Board of Directors met four times during 2003:
– 25 February 2003 (72.2 per cent attendance rate);
– 14 May 2003 (79 per cent attendance rate);
– 25 July 2003 (84.2 per cent attendance rate);
buyout of the minority interests in its subsidiary Elysées
Fonds, to be followed by a merger with another
subsidiary Elysées Gestion, both of which specialise in
employee savings schemes. The Board also decided to
combine CCF’s four private banking subsidiaries into a
single entity called HSBC Private Bank France.
The Board discussed the strategic guidelines
for CCF’s retail banking business and the project to
upgrade its information systems and migrate to HUB,
the HSBC Group’s universal banking system. It was
kept informed of CCF’s work on preparations for
theintroduction of international financial reporting
(IFRS) standards and the new “Basel II” capital
accord.
Lastly, the Board examined CCF’s action plan for
incorporating the new requirements of the French
Banking Commission on money laundering controls,
as set out in regulations issued by the French Banking
Regulations Committee (CRBF).
The Board considered and discussed the detailed
reports submitted by its special committees, particularly with regard to the future of C F W de Croisset,
Chairman and Chief Executive Officer, and Dominique
Léger, Executive Director.
At its meeting of 14 May 2003, the Board appointed
Marcel Roulet to the Audit Committee and, at its
meeting of 10 December 2003, took note of S K Green’s
decision to step down from the Audit Committee.
Apart from these major issues, the Board also discussed various other issues which are legally its responsibility.
– 10 December 2003 (89.5 per cent attendance rate).
The Board of Directors reviewed the Group’s
quarterly, half-yearly and annual financial statements.
In its first meeting of the year, it approved the budget
for 2003.
As part of the continuing process of rationalising
CCF’s business structures, the Board approved the
22
Self-assessment
The Board decided to implement the Afep/Medef
recommendations on self-assessment without delay.
Responsibility for this has been delegated to the
Chairman of the Nomination and Remuneration
Committee. The first assessment will take place in the
first few months of 2004.
The Audit Committee’s main duties are defined in
the Board’s internal rules. These duties are:
Special committees
Nomination and Remuneration Committee
Composition:
Chairman:
– Paul Dubrule
(independent)
Appointed 1999
and 2002 as Chairman
Members :
– Philippe Houzé
(independent)
Appointed 1999
– Stephen Green
Appointed 2000
The Nomination and Remuneration Committee’s
principal duties are to make recommendations to the
Board regarding the nomination of candidates to fill
vacancies on the Board of Directors, key succession
planning, and Executive Directors’ remuneration, pension, health and other benefits. Its recommendations
about Director’s remuneration are first approved by
the Remuneration Committee of HSBC Holdings plc.
The Committee met three times during 2003, with
an average attendance rate of 89 per cent.
– to examine the quarterly, half-yearly and annual
financial statements submitted to the Board of
Directors to ensure that the data and information
provided by management gives a true and fair picture of the company’s operations and position;
– to discuss with the external auditors the scope of
business audited, restatements made, compliance
with accounting principles, market rules and legal
requirements, and the impact of any changes in
accounting policies;
– to express an opinion on the appointment or
re-appointment of the external auditors, their fees
and any other issues concerning their duties;
– to review the external auditors’ management letter
together with any responses to it;
– to review the company’s report on internal control
systems;
– to review the internal audit system and internal
audit programme and resources;
– proposals for the fixed and performance-related
components of the Executive Directors’ remuneration;
– to ensure that the company’s compliance reports
and money laundering prevention measures comply
with directives issued by the supervisory authorities and other regulations governing CCF and its
subsidiaries;
– proposals regarding the appointment of a new
Director;
– to review the significant risks and litigations
arising from CCF’s business operations.
– proposals concerning the terms of departure of
C F W de Croisset, Chairman and Chief Executive
Officer, and Dominique Léger, Executive Director.
As required under HSBC Group rules, once the
Audit Committee has verified the accounting procedures
used to prepare the financial statements, the Chairman
of the Committee sends a letter of confirmation to the
Chairman of the Audit Committee of HSBC Bank plc,
CCF’s direct shareholder.
Its work encompassed:
The Chairman of the Committee reported to
the Board on its work at the Board meetings of
26 February 2003, 25 July 2003 and 10 December 2003.
Audit Committee
Composition:
Chairman:
– Jean-Claude Jolain
(independent)
Members:
– Jean-Antoine Chabannes
(independent)
– Marcel Roulet
(independent)
Appointed 1992
Appointed 1992
Appointed 2003
In 2003, the Audit Committee met four times
on 24 February, 13 May, 24 July and 5 December, in
the presence of the external auditors and those CCF
managers responsible for the issues discussed. All three
members of the Committee attended all four meetings.
At least one of CCF’s Executive Directors attended
each meeting to answer questions.
The Committee reviewed the parent company and
consolidated financial statements, analysed the impact
of changes in scope of consolidation on group earnings, and examined earnings restated for businesses
managed by CCF. It also discussed the accounting
policies used to prepare the financial statements,
23
CCF
assisted by the external auditors who commented on
their management letter in the meetings devoted to the
annual accounts for 2002 and the interim accounts for
2003. A key point of concern was to verify the adequacy of provisions for identified risks and the level
of provisions taken against the bank’s equity book.
The Committee also verified the quarterly accounting
certificates produced at the request of the HSBC
Group.
At each meeting, the Committee reviewed the
bank’s significant risks assisted by the person responsible for internal control in each case:
– credit risk, with an individual review of major
exposures;
– market risk and trends compared with limits;
Chief Executive Officer and that Mr. de Croisset would
therefore continue in office as Chief Executive Officer
for the remainder of his term as Chairman of the
Board. The Chairman and Chief Executive Officer
has widest powers to represent the company in all circumstances within the limits of its corporate objects.
At its meeting of 24 February 2004, the Board of
Director appointed Mr. Charles-Henri Filippi as
Chairman of CCF with effect from 1 March 2004. The
Board renewed also at this meeting its decision not to
split the offices of Chairman and Chief Executive Officer.
Mr. Charles-Henri Filippi, Chairman of the Board, also
takes up the office of Chief Executive Officer.
CHAIRMAN’S REPORT ON INTERNAL
CONTROL PROCEDURES
– legal and litigation risk;
– operational and information technology risk.
The Committee regularly reviewed the company’s
internal audit work and monitored changes in
the group’s internal control teams. At its meeting of
13 May 2003, it conducted a detailed review of the
annual internal control report required under the
CRBF’s regulations no. 97-02 and 2001-01.
The Committee devoted much time in 2003 to
compliance work and particularly to reviewing the
action plan implemented by CCF to improve its money
laundering prevention systems, in accordance with the
French Banking Commission’s directives. It examined
the annual report submitted to the Conseil des Marchés
Financiers (CMF) on the organisation and operation
of internal control systems for investment services, a
specific report on the control of margin provision for
stock market transactions, and the annual report on
cheque controls as required by the CRBF’s regulation
no. 2002-01. Quarterly compliance certificates, which
list the key shortcomings, are discussed at each meeting.
The Chairman of the Audit Committee reported
in detail on the Committee’s work at the Board
meetings held on 25 February, 14 May, 30 July and
10 December 2003.
Internal Control objectives
The purpose of the internal control procedures implemented by CCF is to ensure that:
– management, operations and personal conduct
comply with the guidance issued by the company’s
governing bodies, with applicable laws and regulations and with the company’s own values, standards
and internal rules;
– accounting, financial and management information
reported to the company’s governing bodies gives
a true and fair picture of the company’s operations
and position.
CCF’s internal control system follows the guidance
set out in the CRBF’s regulation no. 97-02 and in the
HSBC Group Standards Manual (GSM).
One of the key objectives of the internal control
system is to prevent and manage risk arising from the
company’s business operations and the risk of error or
fraud, particularly in the areas of accounting and
finance. No control system can provide absolute
assurance that all risk will be eliminated.
Description of internal control procedures
Restrictions on the Chief Executive Officer’s
powers
The Articles of Association were amended in 2002
to incorporate the provisions of law no. 2001-420 of
15 May 2001, as approved at the AGM of 8 April 2002.
At its meeting the same day, the Board of Directors
decided not to split the functions of Chairman and
24
General internal control environment
Organisation
The Group has established a structured system of internal
controls as required by the CRBF’s regulation no. 97-02,
supplemented and amended by regulation no. 2001-01.
All the control objectives are described in internal
circulars issued by CCF’s senior executives. Accounting
controls are documented in the Accounting Controls
Manual and in the CCF Group Manual. The HSBC
Group Standards Manual (GSM) has been translated
into French and circulated to all CCF group business
units. All business unit heads have acknowledged
receipt and confirmed that they have read and circulated the GSM to their key managers.
The internal control structure is decentralised
to business unit level and provides permanent and
periodic controls in order to ensure the integrity and
reliability of transactions. Senior management is
responsible for establishing controls for all transactions
and for ensuring their effectiveness. The quality and
effectiveness of the internal control system is monitored
at top level by the Audit Committee.
The internal control system has a three-tier structure. First line controls are described in the procedures
and are performed by staff as an integral part of their
job. Second line controls are the responsibility of the
business unit or subsidiary’s management and third
line controls are the responsibility of the internal audit
team.
CCF also has specific control objectives, covering
all business operations. These include:
– issuing directives, rules and procedures for conducting operations through circulars and departmental
procedures manuals;
effective risk management. The Functional Instruction
Manuals (FIM) and the Business Instruction Manuals
(BIM) therefore contain detailed policies and procedures for each specific function or business activity.
All subsidiaries exercising a particular function or
business activity are required to comply with the
relevant manual.
Code of Conduct and Handbook
The Code of Conduct, which is incorporated in CCF’s
general Handbook, applies to all staff and requires
respect for the highest standards of integrity and professionalism.
Employees in sensitive positions are required to
obtain authorisation for their personal share dealings
and to confirm in writing that they will respect the
Code of Conduct. They are also required to sign a
confidentiality agreement. In addition, “Chinese
Walls” have been established to prevent leakage of
sensitive or confidential information.
Money laundering prevention Intranet site
The money laundering prevention Intranet site,
developed by CCF Group Compliance, has been
operational since December 2003. It gives all members
of staff easy access to CCF’s money laundering
prevention procedures.
Accounting controls manual
– establishing comprehensive limits, procedures, and
committees to manage ALM, market risk, credit
risk, legal and tax risk;
– establishing sound financial controls, authorised
expenditure limits, budgets and plans, and monitoring performance against budget on a monthly
basis;
– establishing procedures and committees to identify
and manage operational risk.
Reference manuals
HSBC Group Manuals
The GSM sets out the policies, procedures, standards
and other general conditions which govern the HSBC
Group’s business operations. All Group units without
exception are required to comply with the GSM,
regardless of the nature of their business or their
geographical location.
The HSBC Group believes that formal written
policies and procedures at all levels are essential to
The CCF Group Finance Department has developed
an Accounting Controls Manual to improve the effectiveness and quality of internal accounting controls
throughout the CCF group. This manual provides a
methodology and sets out a number of daily, monthly,
periodic and specific controls to be performed by each
business unit’s accounts department. The manual is
updated regularly and complies with French accounting standards.
In addition to specific accounting and financial
publications, internal circulars are sent regularly to
accountants throughout the CCF group in order to
maintain a good level of knowledge and understanding
of new accounting standards.
Internal circulars
The key vehicle for communicating policies to management and staff is internal circulars, which are categorised
by nature, type and distribution list. Annual plans and
budgets are sent to all business heads after approval by
CCF Group Finance and the Board of Directors.
25
CCF
Persons responsible for control activities and their role
b
Internal control
a
Risk committees
CCF has a centralised risk control system. Each
type of risk, with its related limits and rules, is monitored by a specific committee headed by the
Chairman and Chief Executive Officer. Committee
members are those senior executives responsible for
the businesses or functions concerned by each type
of risk. The specific risk committees are:
Their objectives are:
– to ensure consistent, effective internal controls
and their compliance with group rules;
– to oversee implementation of recommendations made by Group Eurozone Audit;
– to ensure compliance with HSBC Group
standards.
– Audit, Internal Control and Compliance
Committee, which meets monthly to review all
significant internal audit reports and compliance matters, particularly issues relating to
money laundering controls. The committee is
regularly advised of any developments in internal control systems and of any fraud or
attempted fraud. It reviews all potential risks
which are not already the responsibility of
another special committee. These may be operational risks, information technology risks,
accounting risks, legal risks, security risks or
regulatory change related risks.
– Credit Committee, which meets monthly to
review all credit risk. It is also responsible for
the Group’s overall lending strategy, and particularly its policy with regard to exposure to
certain types of counterparty or certain types
of financing.
– Legal and Tax Committee, which reviews positions of principle on legal and fiscal issues
liable to affect the drafting and management
of contracts.
– Asset and Liability Committee, which monitors structural risks relating to interest rates,
ALM and risk weighted assets.
– Market Risk Committee, which is responsible
for counterparty and proprietary trading risks.
– Structured Transactions Committee, which
reviews all legal, accounting, tax and finance
risks connected with complex structured transactions.
– Non-Performing Assets Committee, which
reviews the need for provisions against nonperforming assets (loans, securities books) on
a consolidated basis.
26
Internal control teams
The group’s main operational divisions and subsidiaries each have their own internal control team
who assist the management in its mission to maintain a coherent internal control system.
The second line internal control structure within
the CCF retail network has been significantly
strengthened following a recommendation by the
French Banking Commission and as part of the
group’s drive for continuing progress in the prevention of money laundering, which is one of its
key priorities. A separate unit, forming part of the
second line internal control team, has been established to control the quality of the retail network’s
money laundering prevention system.
c
CCF Group Compliance Department
CCF Group Compliance is responsible for efforts
to combat money laundering and terrorism
financing, and for ensuring that the group’s
activities comply with rules, regulations and good
professional practice in these fields. The structure
of CCF Group Compliance is based on that of the
HSBC Group’s compliance function. It has a
compliance officer responsible for each of the
Group’s core businesses (Retail Banking, Private
Banking, Corporate, Investment Banking
& Markets, and Asset Management) and is
supported by a network of Local Compliance
Officers (LCOs) and Money Laundering
Compliance Officers (MLCOs) in each business unit.
In association with the Training Department,
CCF Group Compliance organises refresher courses
on current regulations and workshops on specific
regulatory issues.
It is also responsible for ensuring respect for rules
of conduct throughout the group and for control
over investment services. It draws up and circulates
appropriate compliance rules for the Group’s
different business activities and runs many training
sessions, particularly for the LCOs and retail
network compliance officers. Annual appraisals are
performed to assess compliance with rules, professional behaviour and integrity.
d
CCF Group Finance Department
CCF Group Finance is responsible for the proper
application of the group’s accounting principles and
accounting control procedures. It defines the procedures and controls to be applied under its responsibility by the accounting departments of the group’s
business units, and more particularly accounting
and reconciliation procedures designed to verify the
existence and validity of general ledger accounts.
These procedures and controls are communicated
via internal circulars.
All business units have a finance department
which reports monthly to CCF Group Finance.
These departments are responsible for drawing up
budgets and action plans in line with guidance given
by senior management.
CCF Group Finance organises an annual
seminar to keep all finance departments and senior
accountants abreast of current accounting rules
and practices. Technical training in specific topics
is provided for accounting staff as required, as well
as a full range of more general training courses.
e
Operational Risk Managers (ORM)
Each business unit has its own Operational Risk
Manager (ORM), who is responsible for identifying operational risks liable to affect their business.
In conjunction with the business head
concerned, they analyse and quantify the risks of
loss in terms of frequency, severity and exposure
(exposure also takes account of the impact on risk
relating to existing procedures). The ORMs are
required to document risk exposure at known
control points.
An action plan is drawn up to mitigate risks
classified as material in light of these three criteria.
The ORMs are responsible for monitoring the
action plans (rollout, planning, budget control,
etc.) and more generally for measuring their
business’s exposure and its trends, particularly
through exposure indicators.
They report regularly to their business unit head
and to CCF Group Risk Management on trends in
exposure, including an analysis of historical loss
(or gain) experience.
From 2004, a Risk Committee will review business segment risks regularly, together with trends
in risk exposure measurement indicators.
CCF plans to introduce an annual review of
operational risks concerning all business segments,
together with a quarterly review of trends in exposure and the impact of measures taken to limit or
eliminate material risks identified by the ORMs.
External control
a
Group Eurozone Audit
Group Eurozone Audit (GEA) covers all operations and business units (both domestic and abroad)
and certain HSBC Group branches and subsidiaries
operating within the Eurozone. Its duties are to
verify the quality of internal control systems and
to make recommendations for improvement. GEA
reports to the Chairman and Chief Executive
Officer of CCF and has a functional reporting line
to the HSBC Group’s Internal Audit Department.
GEA has adopted HSBC Group Audit Standards.
The frequency of audits is determined by a risk
matrix set out in the HSBC Group Audit Standards
Manual. GEA has taken over the internal audit
teams at Banque Hervet, UBP, Picardie and
Pelletier, together with some of the internal controllers in the retail banking business. Regional
audit teams are currently being established and
GEA aims to introduce greater staff specialisation
and task automation during 2004 with a view to
improving productivity.
HSBC Group Financial Services Audit (GFA),
which is based in London and has worldwide
expertise, controls some of CCF’s specialist businesses, principally fixed-income and foreign
exchange trading, CCF Securities, Erisa Vie and
Banque Dewaay.
Internal audit reports including a detailed risk
assessment are sent to audited unit’s management,
together with a letter indicating the risk rating
assigned to the audit. Senior management is
responsible for implementing recommendations
made by GEA, those made in external audit reports
and the external auditors’ management letters, and
in reports issued by the supervisory authorities.
GEA oversees the implementation of recommendations, which is subject to a strict monitoring
process. It also keeps a centralised register of any
dispensations from Group standards.
27
CCF
Audits performed during 2003 revealed a big
improvement in the application of HSBC’s GSM,
FIM and BIM in many business segments, and
particularly the central support functions of the
regional banks. Audit conclusions were therefore
broadly more favourable than before.
Significant progress has also been made in
implementing HSBC standards in information technology. CCF must continue its efforts to improve
information systems security.
b
c
Audit Committee
The Audit Committee is key to the CCF group’s
internal control system. Its duties and composition
are set out in the section of this report on corporate governance.
Supervisory authorities and external auditors
The supervisory authorities and external auditors
may make recommendations on CCF’s internal control procedures. In this case, the divisions concerned
are responsible for drawing up action plans for their
implementation.
Description of internal control procedures
Control environment and oversight
Management is responsible for creating a sound overarching control environment. This involves establishing, implementing and ensuring the effectiveness of
first line controls. Oversight of the control environment is also a key means of verifying whether internal
controls are appropriate and have been adapted to take
account of changing circumstances.
GEA checks and tests the quality of the overall
internal control system. It performed almost 160 audit
assignments in 2003, covering all business activities.
Implementation of its recommendations is monitored
closely.
Questionnaire (ICQ), also known as the Cadbury questionnaire. This information is reported to the Financial
Services Authority (FSA) in London.
Procedures for controlling compliance with laws
and regulations
As indicated on page 26, CCF established a Group
Compliance Department in 2001, which is responsible
for ensuring compliance with laws and
regulations (certain more specialised laws remain the
responsibilities of other departments, such as Human
Resources, Legal and Tax Affairs, etc.).
A chart of compliance risks by type of business,
based on the HSBC Group model, has been established
and distributed to assist LCOs in performing their advisory and control tasks. The LCOs have a functional
reporting line to CCF Group Compliance, which gives
them the independence they require to carry out their
duties effectively. Their operational reporting line is
to the local business head.
The LCOs submit a quarterly report on compliance
with laws and regulations to the head of CCF Group
Compliance. The business head concerned is required
to co-sign these reports on a half-yearly basis. They
also describe the measures taken (procedures, training,
etc.) to ensure compliance with laws and regulations.
In addition, a quarterly consolidated report for the
CCF group is prepared based on the information contained in the LCOs’ quarterly reports and the comments of the head of CCF Group Compliance. The
report is co-signed half-yearly by the head of CCF
Group Compliance and the Chairman and Chief
Executive Officer.
The head of CCF Group Compliance reports quarterly to the Audit Committee on any issues raised in
these reports and any other material matters. An
annual report, validated by the Audit Committee is
sent to the Autorité des Marchés Financiers (AMF).
CCF is required to draw up an annual report on its
internal control systems under the provisions of the
CRBF’s regulation no. 97-02, supplemented and
amended by regulation no. 2001-01. The report is
meant to take a critical look at internal control procedures, including a description of any significant
improvements made, the results of and follow up to
surveys carried out and specific control measures for
foreign branches. CCF therefore undertakes a regular
detailed review of its internal control systems.
Control procedures to limit risk of financial loss
and fraud
CCF has established comprehensive procedures for
limiting the risk of financial loss and fraud. These
include segregation of key duties in branches and the
processing/payment departments. Strict rules are in
place for the protection, receipt, storage and archiving
of documents, and for the storage of cash, assets, safe
keys, etc.
CCF, like all HSBC Group subsidiaries, is also
required to complete an annual Internal Control
With regard to the prevention of money laundering and other fraud/security related issues,
28
CCF regularly issues internal circulars and procedures,
which were enhanced and updated in 2003. An intranet
site dedicated to combating money laundering is
accessible to all employees of the CCF group. The
LCOs are responsible for staff training. In 2003, over
900 CCF employees received training in money
laundering controls.
In respect of money laundering information systems, CCF has introduced a system for communication between the retail network LCOs and the branches
themselves, which enables the relationship managers
to specifically follow up and ensure centralised reporting for sensitive client accounts. The system for ex
post control over payments has been upgraded to
improve detection of suspicious transactions.
Finally, in June 2003, a system which blocks inward
and outward international payments was introduced
as part of the group’s efforts to combat terrorism
financing. The system filters payments for CCF and
four regional banks (Banque Hervet, CCSO, UBP and
Picardie), while the remaining regional banks have their
own specific systems.
Authorisation limits and approval procedures
Tiered structures of approval and expenditure limits
are in place in all CCF group businesses. Detailed control procedures are contained in the procedures manuals.
Credit risk
The Chairman and Chief Executive Officer has delegated his lending authority to the head of CCF Group
Credit. Credit proposals exceeding these limits are
referred to the HSBC Group’s Credit Department.
All business units receive delegated limits from the
head of CCF Group Credit. Subsidiaries receive
delegated limits from their respective Boards within
general guidelines laid down by the head of CCF
Group Credit. Within this framework, each account
manager receives a personal lending limit which varies
according to experience, expertise and business needs.
Limits are advised in writing. They are allocated
to individuals by name and not position. The limits
given to branch managers reflect the business characteristics and size of the branch.
All excesses over authorised limits must be referred
upwards to the relevant level of authority. All credit
facilities are subject to periodic review on at least an
annual basis, in accordance with HSBC Group standards.
Market risk
Limits, authorisations and control processes for market
risks are set out in a CCF group procedure.
Risks limits are set for all business activities by the
Market Risk Committee, which meets monthly and is
headed by the Chairman and Chief Executive Officer.
Committee members include the heads of businesses
involved in market activities and heads of central functions in charge of risk management.
CCF Group Market Risk Management is responsible for overseeing group market risk exposures,
control processes and limits monitoring. The head of
CCF Group Market Risk Management sets the agenda
for Market Risk Committee meetings.
Each dealing room has a control team specifically
in charge of daily control and limits monitoring.
Market risks are measured and risk limits fixed using
a Value at Risk (VaR) model. CCF has developed its
own internal VaR model which was approved by the
authorities in 1998.
Each trading desk has a risk limit which is revised
at least once a year by the Market Risk Committee
and may be amended on an ad hoc basis.
Specific exposure limits (FX position, IR sensitivities, equity volumes, etc.) are fixed at trading book
level, taking account of VaR limits. They are authorised by the Operational Limits Committee, which
meets on an ad hoc basis under the chairmanship of
the head of CCF Group Market Risk Management.
Following CCF’s integration with the HSBC
Group, global VaR and exposure limits for CCF group
have been set for each risk type (FX, IR and equities).
Global risk and exposure is reported daily.
Procedures for ensuring reliability of data processing
Information system developments
Information system developments comply with the
methodology recommended by the HSBC Group, from
the early design stage until the system goes live.
Milestones are defined to ensure that each stage of
development is completed and approved as planned.
More specifically, the functional specifications are formally validated by users before any development takes
place. In addition, CCF Group Information Systems
has created an Architecture Committee and a IT
Validation Committee to ensure that projects comply
with its architecture rules as defined in accordance with
29
CCF
HSBC Group Standards. These methodologies are
used for new development projects, not for maintenance of existing systems. They are completed by a
set of documents known as “Quasar”. Quasar comprises a set of checklists to be used for each project
throughout the development process and which must
be completed before the system can go live.
mainframe operations are recorded in a log file. Most
transactions executed by CCF branches are recorded
in log files, depending on the application.
Testing
a
Control procedures for producing and processing financial
and accounting information
Production of financial and accounting information
Testing is conducted throughout the development life
cycle. There are three different types of test:
– unit testing at the programming level;
– integration testing at functional level; once these
tests are completed, approval is required from the
business manager before the process can continue;
– production testing, designed to ensure that the new
application operates properly in a live environment.
Persons involved
– Decentralised accounting departments, which
are responsible for controlling and monitoring
one or more accounting centres and foreign
CCF branches. They produce monthly reports
which are sent to the General Accounting
department of CCF Group Finance and the
business line’s Financial Control analysts.
– CCF Group Finance – General Accounting.
The General Accounting department centralises
all CCF parent company accounting data in GL
Expert. It produces parent company financial
statements on a monthly basis and completes
the consolidation package. It also produces
most regulatory ratios.
System implementation control
All releases of applications are controlled by a “configuration control tool”, either on mainframe or on
distributed environment. These tools ensure the completeness of programs upon installation and serve as
a back-up in case of system failure.
– CCF Group Finance – Consolidation. On a
monthly basis, the Consolidation team collects
the reporting package from all companies in the
group (approximately 70), produces the financial statements using French GAAP and makes
the restatements required to convert to UK
GAAP before sending the package to HSBC in
London.
In addition to these back-up plans, CCF is currently
working on a high-level Business Recovery Plan to
ensure that the bank’s key functions can become reoperational without delay, principally through the use
of independent back-up sites in different geographical
locations.
System access control
Password controls are set for any person accessing
mainframe applications. Program libraries and system
libraries are also protected by appropriate user lists.
Access rights are centrally controlled by a special
team forming part of the Security department of CCF
Group Information Systems.
b
Method of producing financial data
– Frequency and content:
There are three types of monthly financial
reporting both on a parent company and consolidated basis:
•
Regulatory reporting:
BAFI (Base des Agents Financiers), ECB
(European Central Bank) and EMI
(European Monetary Institute) reports,
liquidity and solvency ratios, balance of
payments, Bank of France central risk and
major exposures reports.
•
CCF senior management reporting:
A table is produced showing the Group’s
consolidated results by business line
together with activity indicators.
Change control
CCF has a change control system which has been
reinforced by the establishment of a Change Control
Committee responsible for examining and approving
all material changes and monitoring progress on a
monthly basis.
Operations control
Computer equipment is installed in a secured
computer centre, with round-the-clock security. All
30
•
on a systems convergence plan to standardise
accounting systems throughout the CCF group.
HSBC reporting:
This principally comprises the monthly
reporting package produced by Hyperion.
A list of specific reports has also been
established by HSBC and gradually implemented in accordance with the HSBC
format and accounting standards.
– Accounting standards and principles:
The main accounting principles are summarised
in the Accounting Controls Manual which is
available to all Group accountants on the CCF
intranet. These principles are essentially those
set out in the French Code du Commerce and
the 4th European Directive.
CCF uses Hyperion consolidation software to
meet regulatory and financial reporting requirements
and to produce consolidated financial statements
using UK GAAP for HSBC reporting purposes.
d
As CCF is part of the HSBC Group, it produces financial statements using both French
and UK GAAP.
A questionnaire on accounting principles
and valuation methods is sent to subsidiaries
and the parent company at the time of the year
end consolidation, to ensure that the principles
used are consistent throughout the group.
The forthcoming introduction of IASC
standards will undoubtedly have an impact both
on the method of producing the financial
statements and their content.
c
Financial statement production process
CCF parent company’s accounting architecture is
based on functional operating systems in which
transactions are entered. At the end of the day, an
accounting interpreter converts the events into journal entries.
The operating systems are specialised applications devoted to a particular activity (loans, credit,
securities transactions, foreign exchange transactions, etc.).
Some transactions, which are not managed by
these systems or which are not ordinary events
(taxes, provisions, etc.) are recorded in the accounting system under Sundry Transactions.
CCF’s subsidiaries have their own accounting
systems, which may be similar to those of CCF, or
else they use integrated software suites.
In preparation for migration to the HSBC Group’s
universal banking system, HUB, CCF has embarked
Information systems
CCF’s banking operations are heavily automated
(less than 5 per cent of data entries are manual)
using internally and externally developed software
systems to provide consistent, accurate and timely
management information. Systems are tested by
the developers before user acceptance tests. Specific
internal training programs are designed to ensure
that users fully understand the new process and its
consequences.
The development of a financial data warehouse
will facilitate reconciliation and consistency between
reporting for accounting, financial, regulatory and
management purposes.
Internal control over accounting information production
a
First and second line accounting controls
CCF’s financial control environment includes routine controls such as reconciliations, audit trails and
spot checks by financial control staff. Management
controls over the accuracy of data entry and transaction allocation, including editing, audit trails and
reconciliations, form an integral part of the control
environment. CCF draws up a monthly certificate
of accounting reconciliations which is sent to the
HSBC Group Finance Division. Each general
ledger account is assigned to a specific person who
is responsible for its reconciliation. Any anomalies
identified by the reconciliations certificate is used as
a basis for corrective action by the business units
concerned, with the establishment of an action plan.
Documents containing accounting information
are prepared directly by the operational units. Each
business head examines and validates the information before submitting it to the head of CCF Group
Finance. Financial reports are submitted to a group
financial controller and CCF’s Executive Committee
before being sent to HSBC Group Finance Division
for presentation to the Group Management Board
and the HSBC Bank Executive Committee and
prior to publication.
31
CCF
b
Accounting and financial controls
Financial control is decentralised at business unit
and subsidiary level. The business units and subsidiaries report to senior management and to CCF
Group Finance on a monthly basis.
The Chief Financial Officer holds a monthly
meeting with each core business division to examine its results, and particularly any variances
against budget. The CFO presents the results to
the Executive Committee each month and reports
to the Board of Directors at each Board meeting.
32
All these procedures form the backbone of CCF’s
internal control system. They are updated and improved
regularly. The ongoing development and implementation of more appropriate tools will, in time, lead to better
assessment of the adequacy and effectiveness of internal controls.
CCF
Corporate social responsibility policy
Continuously improving our social and
environmental impacts
The HSBC Group, of which CCF is a principal
member, has made corporate social responsibility
(CSR) a key pillar of its business strategy. It has underlined this commitment publicly through its support for
the United Nations Global Compact, designed to
encourage companies to comply with and promote a
set of CSR principles. HSBC is also a member of two
ethical indices: Dow Jones Sustainability Index and
FTSE4Good.
Like its parent company, CCF is keenly aware of
its duties in a world that has ever higher expectations
of businesses. Its approach to CSR is one of continuous improvement. The direction is set by a CSR
Committee, headed by the Chief Executive Officer and
with a cross-functional representation including lending, human resources, asset management, purchasing,
real estate, finance and communications. The committee is responsible for setting guidelines and identifying areas of potential progress in terms of ethics,
human resources, community and the environment.
report 1 ,
CCF publishes an annual CSR
which
describes its commitments and practices, provides social
and environmental data, and reviews the CSR work
carried out by its subsidiaries.
Promoting socially responsible financing
The HSBC Group, including CCF, recognises that it
has a responsibility for the social, ethical and environmental impacts that result from the activities of
those organisations to which it lends money. The HSBC
Group has had in place, for a long time, the safeguards
needed to ensure that the finance it provides is made
in a socially and environmentally responsible manner.
However, as the world has changed, and the impacts
of industrial development have multiplied, it has been
necessary for the HSBC Group to take steps to ensure
that it keeps up to date with the requirements of
responsible lending. To facilitate this, the HSBC Group
has expressed its support for a number of international
codes of conduct which enshrine the values it seeks to
uphold. These codes include the Universal Declaration
of Human Rights, the UN Global Compact and the
Global Sullivan Principles.
The HSBC Group also makes its lending decisions
in line with the Equator Principles, a set of guidelines
that helps banks to assess the social and environmental impacts of financing major infrastructure projects.
These codes augment the HSBC Group own internal
standards and those which are higher always apply.
Promoting socially responsible investment
There is an increasing demand from institutions
and individual customers for financial products that
have been screened using social, ethical and environmental criteria. These socially responsible investment
products invest only in those companies that have
adopted acceptable practices, which support human
development in a sustainable manner. Of course, the
standard business and financial performance criteria
also apply.
Through its subsidiary, HSBC Asset Management
(Europe) SA, CCF has developed significant experience in socially responsible investment products and
services.
1 The 2002 and 2003 reports are available on request from CCF’s Corporate Communications.
33
CCF
Risk management1
Credit risk
Market risk
Credit risk management within the CCF group is the
responsibility of the Credit and Market Risk Division
(CMRD) . The CMRD reports directly to Senior
Management and is completely independent from the
operational units which present applications for credit
facilities.
Structural interest rate, exchange rate and
liquidity exposure (excluding trading exposures)
The CMRD is responsible for credit approvals, risk
supervision and credit systems development.
The credit approval process is based on a system of
designated limits. All credit applications which exceed
an operational unit’s designated limit must be presented
to the CMRD for assessment and approval. All applications above certain limits ($50 million for new deals
and $100 million for renewals) approved by the CMRD
are sent to HSBC Holdings plc for confirmation.
The CMRD has been responsible for all credit
approvals since April 2003, when the Credit Committee
previously in charge of large exposures was disbanded.
An ALCO-Credit Committee was also created at that
time. It meets monthly to formulate credit policies in
line with HSBC Group lending guidelines and to review
all major credit decisions taken during the month,
together with existing large exposures and trends in
risk profile.
General policy
The objective is to manage all structural risks arising
from the differing repricing characteristics of commercial assets and liabilities. This does not include
market positions which are run deliberately as part of
a trading activity, and which are subject to limits, oversight and management in accordance with the provisions set out in next section “Market risk
management”.
The three main structural risks are:
– structural foreign exchange exposure, which is managed through a general policy of financing all
assets in their currency of origin, a policy which is
applied through all administrative procedures;
– structural liquidity exposure, which is monitored
through an analysis of each of the CCF group’s
commitments and active management of its longterm sources of funds;
– structural interest rate exposure, which is measured
accurately by appropriate instruments and hedged
on a monthly basis.
As regards credit derivatives, CCF only purchases
these instruments on an occasional basis to hedge its
exposure. The amounts concerned are not material.
All rules and assumptions have been reviewed and
validated by the HSBC Group.
The CMRD is also responsible for risk supervision
and control over designated limits.
Management and control systems
Lastly, the CMRD has established a project management team in charge of credit systems development. This team is involved in implementing the new
Basel capital accord, in association with the
Information Systems division. The “Basel II project”,
which is broken down into a number of sub-projects,
is headed by a Steering Committee, comprising members of Senior Management, supported by a number
of Project Committees. It has the tools and systems
required for effective project progress monitoring.
In 2004, in line with the Basel II timetable, CCF is
adopting a ratings-based approach, and has begun to
deploy rating systems for its various customer segments
in those divisions concerned (users include account managers, management, Risk Management Division, etc.).
Foreign exchange exposure
The CCF group’s policy with regard to structural
foreign exchange exposure is highly conservative .
It has set a zero limit for non-trading exposure and
all operating procedures are determined accordingly.
Structural foreign exchange exposure is monitored
by the financial control and internal control functions.
Liquidity management
The CCF group’s Treasury and ALM departments,
which report to the CCF group Finance Division, are
responsible for monitoring the group’s liquidity position
and for making recommendations to the Asset and
Liability Management Committee (ALCO). Various
stress tests are conducted to ensure that the group can
weather even the most severe liquidity crisis.
1 Cf. Chairman’s report on internal control which also deals largely with risk issues and more particularly, the role of the various risk
management committees is described on page 26.
34
Due to its robust financial structure, the CCF group
has ready access to the capital markets and commands
excellent financing terms.
Interest rate exposure
The ALM department is responsible for monitoring
and hedging the CCF group’s structural interest rate
and liquidity exposure.
Each month, the ALM department uses a powerful system to collect the information required to measure the structural position of each unit with a material
exposure. It also measures exposure on a consolidated
basis in accordance with regulatory requirements.
The ALM department recommends the appropriate maturity mismatching policy to the Asset and
Liability Management Committee (ALCO) . This
prudent policy is further reflected in different sets
of management rules for each balance sheet item,
depending on their commercial and financial characteristics.
The units concerned are then responsible for hedging their exposure so as to comply with the guidelines
set by the parent company.
Asset and Liability Management Committee
The ALCO meets once a month to determine the CCF
group’s asset and liability management policy (maturity mismatching, liquidity, etc.), to review indicators
and take decisions on risk management issues. It is
chaired by a member of Senior Management and
includes other Senior Management members, the heads
of the business units directly concerned, the head
of Capital Markets, the head of Accounting and
Management Control and the head of the Finance
Division, who also acts as secretary to the Committee.
Where issues discussed require the advice of specialists, a Technical Committee (TALCO) meets to prepare the groundwork for the ALCO’s decisions.
Market risk management
Risk management procedures
Market risk management for trading exposures is the
responsibility of the Market Risks and Modelling
Department. Responsibility may be delegated to the
operating units provided they have the requisite human,
technical and control resources, within a framework
of limits set by a Senior Management sub-committee
known as the “Market Risks Committee”.
The Market Risks Committee, following guidelines
set by the Market Risks and Modelling Division, determines the methodology used to measure the market
risk and also sets market risk policy . One of the
Division’s responsibilities is to examine requests submitted by operating units and to set limits in the light
of risks taken, quality of supervision, and future
prospects in terms of growth, returns and profits.
The Market Risks and Modelling Division reports
to Senior Management and is also responsible for
consolidating risks. The Division monitors the CCF
group’s large exposures on a daily basis. It oversees
compliance with CCF group risk policy, and in particular compliance with operating limits, either using
its own resources or through its correspondents in the
various operating units. The Division also works in
conjunction with the CCF group’s Internal Audit
department to verify procedures used to calculate and
report the relevant information.
In accordance with HSBC rules, overall limits per
type of risk have been set and are monitored and
reported to London on a daily basis.
Each time they meet, the Board of Directors and
Audit Committee are advised of any changes to
the CCF group’s risk policy or its major exposures,
together with any material information pertaining to
market risks and market risk management.
The Market Risks and Modelling Division translates approvals granted by the Market Risks Committee
into operational limits (nominal amounts, number of
contracts, sensitivity, stop-loss). Its controllers monitor exposures on a daily basis and consolidate risks.
Risk measurement methodology
The internal market risk measurement model was
introduced in 1998 for general interest rate exposure
and foreign exchange exposure. It was extended to
include equities exposure in July 1999, covering both
general and specific risk, where each equity is treated
as an independent risk factor.
The model is used to calculate Value at Risk (VaR)
on these positions on a daily basis. It has been validated by the French Banking Commission for calculating regulatory capital requirements. At 31 December
2003, the model covered almost 95% of these exposures for the CCF group as a whole.
A VaR model for specific interest rate risks has also
been developed, but has not yet been submitted to the
Banking Commission for validation.
35
CCF
Risk management (continued)
Exposures not yet covered by the internal VaR
model are measured using the standardised approach
recommended by the Bank for International
Settlements.
“Profil”, the internal risk measurement model
Profil calculates three types of risk measurement for
all positions or books monitored:
– sensitivity to key risk factors to ensure that exposures do not breach the operational limits set;
– VaR for each entity (at all levels: book, activity,
Group);
– stress test outcomes.
From a functional standpoint, the system comprises
three main components, namely:
– a database that stores, updates, imports and exports
input data (instrument, position, market price) and
results of calculations;
– a calculation engine;
– a database of the historical data required for VaR
models which use simulations.
Market risk measurement using Profil and
the standardised method
Value at Risk (VaR)
Value at Risk (VaR) is an estimation of the maximum
potential loss that could arise over a given time horizon and to a given level of confidence. In accordance
with regulations, CCF group calculates VaR on a tenday time horizon and a 99 per cent confidence interval, which means that the maximum loss in any one
ten-day period should not exceed the estimated VaR
more than once in one hundred times.
The methods used are:
– historical VaR for all equities exposure, using
equally-weighted three-year historical data;
– historical VaR for interest rate and currency options,
using equally-weighted three-year historical data;
– parametric VaR for all other exposure, using
equally-weighted eighteen-month variance and
covariance matrices.
Standardised approach
Market risks for entities which do not yet use Profil
are measured using the BIS standardised approach,
36
the key features of which are:
– Interest-rate exposure:
– directional shock of 1 per cent for short-term
rates (1-year maturity) to 0.6 per cent for longterm rates (10-year maturity);
– breakdown into bands and zones to determine
spread and yield curve risk.
– Currency exposure:
–
8 per cent of the greater of total foreign currency assets or total foreign currency liabilities.
– Equities exposure:
–
8 per cent of general market risk, plus specific
risks ranging from 4 per cent (liquid securities,
diversified positions) to 8 per cent.
Results of the internal model
The results of the internal model are presented below:
Value at risk (VaR)
The chart below shows historical VaR for exposures
covered, calculated in accordance with the criteria
described in paragraph “Value at risk” above, for the
period 1 January 2003 – 31 December 2003.
The maximum, minimum and average values over
that period were as follows:
– average VaR:
€21.7 million,
– minimum VaR:
€13.4 million,
– maximum VaR:
€30.8 million.
Back testing
The chart below presents our back testing results over
the period 1 January 2003 to 31 December 2003. This
ex post control procedure is based on 99 per cent, oneday VaR, compared with daily “pro forma” results calculated on the basis of actual changes in market prices
on identical positions.
(in case of crisis or in response to the size of a given
position).
The Market Risks Committee also sets loss alert
thresholds in stress situations.
At 31 December 2003, CCF group’s main exposures
resulting from these stress tests were as follows:
– Interest-rate exposure:
High overall sensitivity to a rise in euro interest
rates, predominantly on short and medium-term maturities:
Euro: 300 bp rise in short rates: €(81) million;
300 bp rise in medium rates: €(67) million.
Exposure to movements in swaps/Treasury spreads:
French Treasury: 40 bp rise in swap spreads:
€(20) million.
German Treasury: 40 bp rise in swap spreads:
€(32) million.
Italian Treasury: 40 bp fall in swap spreads:
€(20) million.
During the year, our back testing revealed that estimated VaR was exceeded on our positions on 25 June
based on changes in market data between 25 and
26 June. This was caused by sharp upward movements
in interest rates in the euro, US dollar and sterling.
The following charts show movements during the
year in main exposures under various stress scenarios.
Stress testing
Profil conducts continuous stress tests to monitor
potential losses. In addition, a monthly control is performed on the CCF group as a whole. Specific simulations are also performed at appropriate intervals in
all units which are undergoing crisis or serious stress.
The Market Risks Committee determines which
stress tests are to be used at the proposal of a group
of specialists comprising heads of trading and controllers. Three different stress scenario are tested:
– Permanent scenarios covering all major risk factors and corresponding to shocks of 1-day duration with consequences lasting 50 years on average.
These scenarios cover either isolated risk factors
or combinations of several risk factors.
– Temporary scenarios attributable to currency,
economic or political events. These are reviewed
regularly in the light of current events.
– Local scenarios connected with a given market or
type of instrument are applied when the need arises
37
CCF
The table below shows a breakdown of capital
requirements for market risks (€ million):
Internal model: . .
Foreign exchange
risk . . . . . . . . . . .
General interest
rate risk . . . . . . .
General equities
risk . . . . . . . . . . .
Netting effect
31.12.2003
31.12.2002
BIS
CAD
BIS
72.1
72.1
102.4
102.4
3.2
3.2
3.0
3.0
69.3
69.3
86.6
86.6
18.8
(6.0)
18.8
(6.0)
16.9
16.9
(17.3) (17.3)
All-in risks: . . . . . .
Foreign exchange
risk . . . . . . . . . . .
General interest
rate risk . . . . . . .
Specific interest
rate risk . . . . . . .
General interest
rate risk . . . . . . .
Specific equities
risk . . . . . . . . . . .
CAD
41.3
40.8
30.0
29.0
0.04
0.04
0.01
0.01
0.9
0.8
1.2
0.6
38.8*
38.8*
27.5*
27.5*
0.8
0.8
0.6
0.6
0.9
0.4
0.7
0.3
113.4
112.9
132.4
131.4
* Capital requirements for specific interest rate risk measured using
VaR (see paragraph “Risk measurement methodology” on page 35)
amounted to €30.7 million.
Capital adequacy reporting
The Banking Commission has audited the Profil internal model and authorised the CCF group to use it for
reporting capital requirements for market risks and
specific equity exposures. On completion of its audit
and in light of the results of the back testing model
(which tests the internal model’s predictive capability),
the Banking Commission has recommended applying
the following multipliers:
– 3.5 in respect of the quality of the model for
general risks;
– 4.5 in respect of the quality of the model for specific risks;
– 0 in respect of the back testing model (see paragraph “Back Testing” page 37).
Note that the minimum multipliers set by the BIS
are 3 for general risks and 4 for specific risks (as part
of an intermediary model).
VaRs used to calculate capital requirements are
the averages recorded over the past 60 days. For instruments not covered by Profil, the standardised CAD
and BIS approaches are used in accordance with
regulations.
38
Risk cover and regulatory ratios
Large exposures
The CCF group complies with the French Banking
Commission’s rules, which require the following:
– exposure to a group of clients deemed to have the
same beneficial owner is limited to 25 per cent of
net capital;
– the aggregate of individual exposures exceeding
10 per cent of net capital is limited to 8 times net
capital. Twelve groups had individual exposures
exceeding 10 per cent of net capital at the end of
2002.
Loan loss provisions
At 31 December 2003, loan loss provisions represented
62.5 per cent (74.4 per cent including free RGBR) of
the CCF group’s total doubtful and non-performing
exposure.
Liquidity ratio
The CCF group’s regulatory ratios reflect its good
liquidity risk cover. The regulatory liquidity ratio,
which measures the potential one month liquidity gap,
averaged 126.5 per cent in 2003.
Operational risk
International solvency ratio (BIS ratio)
The CCF group’s international solvency ratio (BIS
ratio) was 9.1 per cent at 31 December 2003, compared
with a minimum requirement of 8 per cent. The CCF
group’s Tier One capital ratio was 8.8 per cent compared with a minimum requirement of 4 per cent.
Under the BIS definition, total CCF group capital
amounted to €3.2 billion as at 31 December 2003, of
which €3.1 billion in Tier One capital.
The corresponding risk-weighted assets totalled
€34.8 billion, broken down as follows:
(In € billion)
Credit risks, not including
trading book
32.3
Trading book credit risks
1.5
Market risks
1.0
Breakdown of risks
Operational risk is the risk of loss arising from the
inefficiency or failure of procedures, people and internal
systems, or from external events. It includes information systems security risks, legal and regulatory risks,
environmental risks and reputational risk.
Identification and management of operational risks
An operational risk management system was established in 2003 based on actual reported losses by all
CCF group business units in 2002. In addition to a
small central operational risk management team, each
business unit has its own Operational Risk Manager
(ORM), responsible for identifying operational risks
liable to affect their business.
In conjunction with the business head concerned,
they analyse and quantify the risk of loss in terms of
frequency, severity and exposure (exposure takes
account of the effectiveness of existing procedures),
using a grading system similar to that recommended
by the HSBC Group1.
During 2004, action plans will be drawn up for all
risks identified by the system as significant, after review
by an Operational Risk Management Committee. The
ORMs are responsible for monitoring these action
plans and more generally for measuring trends in their
business unit’s exposure to risk.
The Operational Risk Management Committee
will review risks by business segment on a regular basis,
focusing initially on those identified as significant,
together with trends in exposure indicators.
CCF plans to introduce an annual review of operational risks for all business segments, together with
a quarterly review of trends in exposure and the impact
of measures taken to mitigate risks identified as
significant.
Legal risks and litigation
The Legal and Tax Division (DAJF) assists CCF’s
operating units in preventing legal risks, and is responsible for litigation.
– Prevention of legal risks:
The DAJF manages the Legal and Tax Risks
Committee, which may be consulted on situations
likely to generate specific substantive legal and tax
risks . It is also represented on the Structured
1 The role of the ORM is described in more detail in the Chairman’s report on internal control, page 27.
39
CCF
Transactions Committee, which reviews the legal,
accounting, tax and financial risks connected with
complex structured transactions, and on the NonPerforming Assets Committee, which reviews the
need on a consolidated basis for provisions against
all non-performing assets (loans, securities).
The DAJF is responsible for managing risks
directly or indirectly connected with all contentious
matters. It is also involved in handling large exposures at risk or doubtful debts, and monitors all other
risks which may have legal or tax implications.
– Litigation:
matters are the responsibility of the Corporate Social
Responsibility (CSR) Committee, chaired by the
Managing Director of CCF and comprising a team
drawn from different disciplines2.
Insurance and risk coverage
Insurance strategy
As a wholly-owned subsidiary of the HSBC Group,
the CCF group is covered by the world public liability
and fraud insurance programme taken out by HSBC
Holdings plc.
The CCF group is currently involved in legal actions
taking place in the United States, relating to banking operations and fiduciary loans. At this stage,
it is impossible to evaluate the outcome, but CCF
believes it has a strong defence case.
CCF and its subsidiaries are also covered under
HSBC’s master international insurance programme for
property damage (buildings, contents and information
systems) and loss of income, via a policy written in
France and tailored to the risks specific to the CCF
group.
To the company’s knowledge, there are no other
exceptional events, lawsuits or arbitration proceedings likely to have a material impact on the CCF
group’s assets, financial position or results.
CCF and its subsidiaries have taken out insurance
policies against the risks inherent in their various business activities and/or any specific insurance required
by French law.
Business recovery plan
During 2003, CCF established a system for analysing
and validating the needs of various business units in
the event of material damage to one of its central
premises, with the aim of drawing up a Business
Recovery Plan (BRP).
At the end of 2003, the Management Committee
approved the strategy and concrete solutions proposed.
Back-up sites will be established and main detailed
plans drawn up in the second half of 2004.
Dependency
CCF is not dependent on any patents, licences or industrial, commercial and financial supply contracts.
Environmental risks1
As a services company, the CCF group is less concerned by environmental issues than an industrial company. It nonetheless takes an active approach towards
the environment and sustainable development. These
Insurance and reinsurance providers are selected in
accordance with a strict selection and solvency supervision policy, established and controlled by HSBC
Insurance Holdings.
Description of insurance cover for material risks
at the year end: protection of assets and
operations
CCF determines the appropriate levels of insurance
cover, retentions and excesses, together with the appropriate contractual conditions, based on the value of its
assets, risks and potential losses, its risk management
systems, procedures and controls, the Group’s prevention and back-up plans, and the potential impact
on CCF’s and HSBC’s balance sheets. They are in line
with market conditions, industry practice and legislation.
Existing insurance programmes are likely to be
renewed upon expiry, providing market conditions are
appropriate.
The total amount of insurance premiums paid
by the CCF group for 2003 represented 0.42% of net
operating income.
1 Further information on sustainable development can be found on page 33.
2 The 2002 and 2003 reports are available on request from CCF’s Communications Department.
40
Compliance and money laundering
The Group Compliance division was established in
September 2001 and compliance officers appointed for
each business segment during 2002. Its resources were
further strengthened during 2003, with the number of
employees rising from 88 to almost 100.
Every business unit now has its own local compliance officer (LCO) and the compliance teams are adequately staffed to guarantee optimum management of
regulatory risk. With three or four exceptions (where
the size of business unit does not permit) the LCOs
are dedicated entirely to the compliance function .
Alongside centralisation of the internal audit function
within Group Eurozone Audit (GEA), employees in
the regional banking subsidiaries who previously doubled up as both internal auditors and compliance officers are now dedicated entirely to compliance.
In 2003, the compliance function’s principal focus
was to strengthen the group’s money laundering and
terrorism financing prevention systems and to fully
update the compliance manual.
Prevention of money laundering and terrorism
financing
French and European regulations on money laundering and terrorism financing have been tightened up
considerably over the past few years. In April 2002,
the French Banking Regulations Committee (CRBF)
issued Regulation no. 2002-01, which places more stringent obligations on banks in terms of monitoring and
controlling domestic and international cheques. Recent
European legislation on terrorism financing requires
banks to take specific measures to prevent the flow of
funds to or from suspected terrorists, and to report all
suspicious accounts and transactions to the relevant
authorities.
CCF pursued its action in three key areas during
2003 – procedures, information systems and control –
to ensure that it complies fully with the new provisions
and to further strengthen its money laundering prevention systems.
Procedures
In 2003, CCF launched a dedicated anti-money laundering intranet site. It is accessible to all group employees
and contains the entire set of relevant procedures,
which are updated regularly to take account of regulatory developments. Employees therefore have online
access to all the information they need to fulfil their
duties in terms of ‘know your customer”, vigilance and
reporting. The site also contains concrete examples
and general information obtained from the websites
of organisations such as the Financial Action Task
Force (FATF), Transparency International, a nongovernmental anti-corruption organisation, and the
Wolfsberg Group, of which HSBC has been a member
for several years.
Information systems
At the end of 2002, a new database was created to
comply with the requirements of regulation CRBF
2002-01. The database creates a link between the relationship managers and the Compliance department,
grouping together all sensitive accounts which warrant
special attention from a money laundering perspective,
particularly in terms of cheques issued and received.
The Compliance department defines the criteria for
identifying sensitive accounts and manages the database. Sensitive accounts include customers who have
received funds from abroad from an anonymous principle, customers in countries on the FATF’s black list,
accounts which have been subject to legal investigation
or reported to Tracfin but not yet closed, and accounts
which warrant special attention due to the nature of
transactions (e.g . large amounts of cash paid in
followed by the issue of cheques).
The database’s functionalities were enriched during
2003 and it now provides a highly effective system for
flagging potentially sensitive accounts from a money
laundering perspective, and more particularly ensures
full control over cheques as required under regulation
CRBF 2002-01. The alert criteria have been substantially upgraded to broaden the base of customers warranting special care or vigilance.
A new payment filtering system was also installed
in June 2003. It filters inward and outward payments
made by or to persons appearing on the European
authorities’ black list. It is fully operational in terms
of practical use, accounting treatment, freezing transactions and if necessary reporting them to the competent authorities. During 2003, three transactions
were frozen and reported by the system.
Control
Control systems were substantially strengthened during
2003. A team of controllers has been appointed to deal
exclusively with the prevention of money laundering
in the CCF branch network. The network’s local com-
41
CCF
pliance teams have also been reinforced to place a
greater focus on identifying accounts which should be
reported to Tracfin as suspicious.
Staff training
To support these anti-money laundering measures, the
major training campaign launched in 2002 was stepped
up in 2003 with over 4,500 employees receiving training. The programme will continue throughout 2004
and the training package developed by a professional
consultancy in conjunction with Tracfin and the French
Banking Commission will be adapted to CCF’s various business segments.
Compliance
2002 saw some major developments in the code of conduct governing financial research. During 2003, the
Commission des Opérations des Bourse tightened up its
compliance regulations governing the asset management business, most of which will come into force in
2004. Consequently, CCF took measures to integrate
these new procedures and upgrade its information systems to comply with the new regulations.
42
Meanwhile, CCF has also substantially modified
its internal code of conduct. The code sets out the precautions to be taken by all employees in terms of the
vigilance and reporting duties imposed by law on the
banking industry to help prevent terrorism financing
and money laundering. The definition of price sensitive information and the risks involved in its use or disclosure, notably in terms of criminal and civil penalties,
have also been supplemented and clarified.
The definition of “hypersensitive” employees, who
are subject to specific compliance rules, particularly in
terms of personal share dealings, has been extended
following the absorption of HSBC Investment Bank
by CCF in 2002. Specific provisions covering salesmen
and traders, asset managers and wealth managers have
also been incorporated into the internal code of conduct. Their main aim is to protect the client’s interests
and uphold market integrity.
In accordance with developments in HSBC Group
rules, only hypersensitive employees are now subject
to a closed period for dealing in HSBC shares from
1 January or 30 June until the date of publication of
the Group’s results.
CCF
International Financial Reporting Standards (IFRS)
In line with European regulation no. 1606/2002 of
19 July 2002, the CCF group will adopt international
financial reporting standards (IFRS) as of 2005.
CCF has embarked on a project to examine the implications of this change and to ensure that its information
and consolidation systems can handle the new financial
reporting standards as of 2005. It forms part of a similar project being conducted by the HSBC Group.
CCF has created a dedicated project team whose
members are drawn from the accounting and information systems functions. The first stage of the project –
analysis of the new standards and identification of
their impact – was completed place during 2002 and
early 2003. The project has now entered the detailed
specification and implementation stage.
A project committee headed jointly by the accounting project manager and the information systems project manager meets twice monthly to review progress
and risk issues. An operational monitoring committee, headed by a member of senior management and
comprising the heads of the main business lines and
support functions taking part in the project work, meets
twice monthly to monitor progress, budget and risks,
and to validate proposals made by the project committee. A steering committee meets every six weeks,
and comprises representatives of all business lines, support functions and other CCF group business units.
To date, the project group has taken the majority
of decisions on the new accounting treatment to be
adopted and on information systems developments,
drawn up the systems specifications and begun the
upgrade work. All systems are due to be operational
by the end of 2004. The group has also introduced a
major training programme which will ultimately involve
about 850 people.
The CCF group currently prepares its financial
statements using French generally accepted accounting
principles, as set out in regulations 99-07 and 2000-04
of the Comité de la Réglementation Comptable. The
main differences identified between French GAAP and
the IFRS standards adopted by the European
Accounting Regulatory Committee on 16 July 2003
are listed below. The list does not include IAS 39 and
IAS 32 on financial instruments nor the exposure drafts
to be published in 2004 by the IASB.
The main identified differences likely to have a
material impact on the CCF group’s financial statements are:
– Reserve for general banking risks: the reserve for
general banking risks does not qualify for recognition as provisions under IAS 37 on provisions,
contingent liabilities and contingent assets. The
corresponding amounts will therefore be added to
shareholders’ equity.
– Tangible fixed assets: CCF has, like the HSBC
Group, opted to revalue its tangible fixed assets,
but will not use the fair value as of 1 January 2004
as the historical cost by convention.
– Fees and commissions: the requirement to defer
certain fees and commissions received or paid will
lead to the reversal of revenue and expense booked
at the time the loans were granted under current
rules, and their recognition at the effective interest
rate of the loans in accordance with IAS 18.
– Staff benefits: the valuation methods and broader
scope of application required under IAS 19 will
lead to a revaluation of the provisions booked by
the Group under current rules.
43
CCF
Financial highlights
2003
2002
% change
CCF group
Figures in € billion
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ funds, group share 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customers accounts 2 3 (including accrued interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and advances to customers 2 (including accrued interest) . . . . . . . . . . . . . . . . . . . . .
Figures in € million
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit before provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on ordinary activities before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Attributable net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
71.2
3.4
26.6
28.2
66.3
3.3
24.9
28.6
+7.4%
+4.7%
+6.9%
-1,5%
2,345.1
731.4
642.5
627.1
2,336.8
749.4
769.7
561.6
+0.4%
-2.4%
-16.5%
+11.7%
Earnings per share 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
€8.46
€7.50
+12.8%
2003
2002
% change
60.2
0.4
2.6
54.2
0.4
2.6
+11.0%
+0.3%
+0.7%
1,374.7
549.0
434.0
466.6
1,486.8
688.9
640.9
620.2
-7.5%
-20.3%
-32.3%
-24.8%
CCF SA
Figures in € billion
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share capital 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholders’ funds 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Figures in € million
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit before provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on ordinary activitie before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
2
3
4
After appropriation of net profit for the financial year, excluding the reserve for general banking risks.
At 31 December each year.
Excluding certificates of deposit, medium-term notes and interest-bearing notes.
Figures calculated on the basis of the average number of shares outstanding (excluding own shares held), i.e. 74,928,199 in 2002 and 74,129,833 in 2003.
Main changes in scope of consolidation from 2002
Consolidated for the first time in 2003
– Neuilly Saint Paul and Excofipar
– Sinopia AM Luxembourg, Sinopia Greater China Limited, Sinopia International Ltd, Sinopia T&D AM Co.
Ltd and E.M.I Advisory Company SA
– Finanpar 17
– CCF Change
No longer consolidated in 2003
– SFI (sold)
– Finance et Participation (sold)
44
On the liabilities side, deposits by banks amounted
to €16.8 billion, an increase of €0.4 billion compared
with the previous year, reflecting a rise in DMTC repos
offset by a decrease in deposits by foreign banks.
Discussion of the main items
of the consolidated balance sheet
(after appropriation of net profit)
(in € billion)
Assets
Loans and advances
to banks . . . . . . . . . . . . . . . .
Treasury bills and other
negotiable instruments . . . .
Loans and advances
to customers . . . . . . . . . . . . .
Prepayments, receivables
from banks and other . . . . .
Equity shares
and debt securities . . . . . . . .
Fixed assets . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . .
Liabilities
Deposits by banks . . . . . . . . . .
Customer deposits . . . . . . . . .
Accruals, payables to banks
and other . . . . . . . . . . . . . . .
Debt securities in issue . . . . .
Subordinated liabilities . . . . .
Reserve for general
banking risks . . . . . . . . . . . .
Shareholders’ funds
– group . . . . . . . . . . . . . . . . . . .
– Minority interests . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . .
2003
2002
10.9
12.0
14.0
9.8
28.2
28.6
7.4
5.8
7.4
3.3
6.6
3.5
71.2
66.3
16.8
26.6
16.4
24.9
Loans and advances to customers
13.0
10.1
1.0
12.1
8.1
1.1
Gross customer loans, including reverse repo transactions, amounted to €28.2 billion compared with
€28.6 billion at the end of 2002.
0.3
0.4
3.4
–
3.3
–
71.2
66.3
Total customer deposits were up €1.7 billion to
€26.6 billion from €24.9 billion at the end of 2002. This
growth was driven by an increase of €1.1 billion in
demand deposits and €0.8 billion in special regulated
savings accounts.
Debt securities in issue increased by €2.0 billion to
€10.1 billion.
Group shareholders’ funds, after appropriation of
net profit for the year, stood at €3.4 billion (see comments below).
Consolidated balance sheet
(after appropriation of net profit for the year)
Total consolidated assets amounted to €71.2 billion as
at 31 December 2003, compared with €66.3 billion as
at 31 December 2002, an increase of 7.4% or €4.9 billion. The increase was principally due to sustained
growth in DMTC trading activities, particularly in the
euro bond market.
On the assets side, short-term funds and loans to
banks decreased by €1.1 billion, with growth in DMTC
trading activities offset by a decrease in interbank lending.
Treasury bills and other negotiable instruments
increased by €4.2 billion, driven by DMTC trading
activities.
Loans and advances to customers decreased by €0.4
billion to €28.2 billion. This small change masks contrasting trends, with a significant increase in loans and
advances to personal customers (particularly mortgage
loans) and a decrease in business loans.
Equity shares and debt securities increased by €0.8
billion to €7.4 billion.
45
CCF
Financial highlights (continued)
Based on the average principal outstanding in the
year, customer loans granted by CCF’s branch networks in France rose by 1.1 per cent, due to sustained
activity in the retail market.
Based on the average principal outstanding in the
year, demand deposits taken by CCF’s branch networks
rose by 3.1 per cent in total. Business deposits rose by
3.4 per cent and retail deposits by 2.8 per cent.
Retail loans increased by 7.6 per cent to €7.0 billion.
Shareholders’ funds
(after appropriation of net profit for the year)
Customer deposits
Customer deposits including repo transactions
amounted to €26.6 billion compared with €24.9 billion at the end of 2002.
Excluding repo transactions, customer accounts
were up 2.5 per cent to €24.3 billion, compared with
€23.7 billion at the end of 2002.
46
Group shareholders’ funds, after appropriation of net
profit for the year, amounted to €3.4 billion compared
with €3.3 billion at the end of 2002.
The increase was principally due to the transfer of
part of the net profit for the year to retained earnings
(dividend payout of 74.2 per cent).
Consolidated profit and loss account
31.12.2003
31.12.2002
% change
(in € million)
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses and depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit before provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for bad and doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit after provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share in operating profit of associates . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains or losses on asset disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on ordinary activities before tax . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporation tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net change in reserve for general banking risk . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Attributable net profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,345.1
(1,613.6)
731.4
(137.6)
593.8
16.2
32.5
642.5
10.2
(44.2)
(64.6)
84.9
(1.7)
ddddddd
627.1
ffffffff
2,336.8
(1,587.4)
749.4
33.8
783.1
16.3
(29.7)
769.7
67.7
(212.9)
(40.2)
(18.1)
(4.5)
ddddddd
561.6
ffffffff
+0.4%
+1.7%
-2.4%
–
-24.2%
–
–
-16.5%
–
–
–
–
–
ddddddd
+11.7%
ffffffff
47
CCF
Consolidated financial statements
Consolidated balance sheets 2003 - 2002 - 2001
ASSETS
(in € thousands)
Cash and balances at central banks . . . . . . . . . . . . . . . . .
Treasury bills and other eligible bills . . . . . . . . . . . . . . . .
Loans and advances to banks . . . . . . . . . . . . . . . . . . . . . .
Loans and advances to customers . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other participating interests and long-term securities . . .
Interests in associates . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments and accrued income . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes
6
4
5
6
6
7
8
9
11
12
13
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MEMORANDUM ITEMS
Financing commitments . . . . . . . . . . . . . . . . . . . . . . . . . .
Guarantees and endorsements . . . . . . . . . . . . . . . . . . . . .
Securities commitments . . . . . . . . . . . . . . . . . . . . . . . . . .
– Financial instruments and other . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
659,533
14,045,098
10,263,377
28,176,607
4,063,678
3,330,769
1,943,926
103,716
106,083
587,407
5,400,220
1,972,656
537,719
1,757,541
9,847,801
10,197,390
28,607,297
3,631,489
3,001,979
2,090,202
98,850
101,488
634,178
4,145,531
1,589,783
581,643
1,226,946
6,296,101
10,809,256
31,458,402
6,602,719
2,686,550
1,836,986
533,227
96,806
829,890
2,533,438
1,843,439
649,154
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
10,643,696
6,586,316
3,546,702
821,371,941
7,822,691
6,640,090
2,600,681
657,353,382
6,187,544
7,658,386
1,284,787
748,300,280
71,190,789
26
26
26
27
66,285,172
67,402,914
Numbers in the notes column refer to the accompanying notes, which form an integral part of these consolidated
financial statements.
48
Consolidated balance sheets 2003 - 2002 - 2001 (continued)
LIABILITIES
2003
ddddddddddddddddd
(in € thousands)
Notes
Deposits by banks . . . . . . . . . . . . . . . . . . .
Customer accounts . . . . . . . . . . . . . . . . . .
Debt securities in issue . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . .
Accruals and deferred income . . . . . . . . . .
Negative goodwill . . . . . . . . . . . . . . . . . . .
Provisions for liabilities and charges . . . .
Reserve for general banking risks . . . . . . .
Subordinated liabilities . . . . . . . . . . . . . . .
Called up share capital . . . . . . . . . . . . . . .
Share premium account . . . . . . . . . . . . . .
Consolidated reserves,
revaluation reserve,
translation difference . . . . . . . . . . . . . .
Group share . . . . . . . . . . . . . . . . . . . . .
Of wich interim dividend deducted
from reserves 1 . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . .
Net profit for the year . . . . . . . . . . . . . . . .
Group share . . . . . . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . .
2001
dddddddd
Before
appropriation
After
appropriation
After
appropriation
After
appropriation
ddddddddd
ddddddddd
ddddddddd
ddddddddd
14
15
16
18
19
13
17
21
20
22
23
16,828,071
26,646,035
10,144,108
10,855,052
1,143,840
1,336
657,191
294,535
955,852
371,748
1,063,618
16,828,071
26,646,035
10,144,108
11,097,112
1,143,840
1,336
657,191
294,535
955,852
371,748
1,063,618
16,352,439
24,929,105
8,096,595
9,319,420
2,128,366
1,365
706,967
378,620
1,101,766
370,585
1,050,800
20,664,232
24,514,250
8,125,455
6,338,562
1,838,990
1,627
775,066
360,361
1,255,320
377,048
1,144,332
23
1,600,552
1,828,073
1,987,343
1,990,521
1,849,144
1,836,515
2,007,671
1,979,744
–
12,629
–
–
–
–
27,927
–
–
–
(222,628)
(4,893)
628,851
627,136
1,715
TOTAL LIABILITIES . . . . . . . . . . . . . .
MEMORANDUM ITEMS
Financing commitments . . . . . . . . . . . . . .
Guarantees and endorsements . . . . . . . . .
Securities commitments . . . . . . . . . . . . . .
2002
dddddddd
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
ffffffffff
178,706
2,458,839
3,571,623
178,706
2,458,839
3,571,623
105,107
1,774,459
2,255,191
424,342
2,657,491
1,739,555
71,190,789
26
26
26
–
(3,178)
–
–
–
71,190,789
66,285,172
67,402,914
1 Of which 219,000 € thousands deducted from consolidated reserves and 3,628 € thousands deducted from net profit.
49
CCF
Consolidated financial statements (continued)
Consolidated profit and loss accounts 2003 - 2002 - 2001 (continued)
Expenses in brackets
(in € thousands)
Interest and similar income . . . . . . . . . . . . . . . . . . . . .
Interest and similar expense . . . . . . . . . . . . . . . . . . . .
Income from equity shares . . . . . . . . . . . . . . . . . . . . .
Fees and commissions received . . . . . . . . . . . . . . . . . .
Fees and commissions paid . . . . . . . . . . . . . . . . . . . . .
Dealing profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains or losses on available-for-sale securities . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense . . . . . . . . . . . . . . . . . . . . . . .
Notes
28
28
29
30
30
31
32
NET OPERATING INCOME . . . . . . . . . . . . . . . . . . . .
General operating expenses . . . . . . . . . . . . . . . . . . . .
Depreciation and amortisation . . . . . . . . . . . . . . . . . .
33
34
10
NET ATTRIBUTABLE PROFIT . . . . . . . . . . . . . . . . .
2,344,077
(1,333,721)
111,506
1,071,302
(171,339)
164,482
78,942
147,361
(67,531)
36
4,579,446
(3,715,509)
78,493
1,217,845
(196,802)
208,166
174,390
204,957
(95,005)
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
(1,510,430)1
(103,208)
2,336,769
(1,483,567)
(103,829)
2,455,981
(1,523,558)
(103,558)
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
749,373
828,865
33,776
786
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
(137,595)
16,212
32,471
783,149
16,258
(29,692)
829,651
41,594
(1,905)
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
642,529
37
38
34
2,808,427
(1,833,253)
119,091
1,072,782
(138,882)
146,526
65,087
166,608
(69,617)
ddddddddd
593,846
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporation tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill amortisation . . . . . . . . . . . . . . . . . . . . . . . .
Reserve for general banking risks . . . . . . . . . . . . . . . .
Minority interests . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2001
dddddddd
731,441
OPERATING PROFIT AFTER PROVISIONS . . . . .
Share of operating profit in associates . . . . . . . . . . . .
Gains or losses on asset disposals . . . . . . . . . . . . . . . .
2002
dddddddd
2,345,079
OPERATING PROFIT BEFORE PROVISIONS . . . .
Provisions for bad and doubtful debts . . . . . . . . . . . .
2003
dddddddd
10,2441
(44,194)
(64,599)
84,871
(1,715)
769,715
67,650
(212,936)
(40,150)
(18,088)
(4,543)
869,340
114,508
(233,805)
(37,953)
(174,951)
(20,102)
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
627,136
561,648
517,037
1 After reclassification of provisions for stock option commitments and expenses connected with the deposit protection mechanism from
exceptional items to operating expenses.
50
CCF
Notes to the consolidated financial statements
Group consolidation and accounting policies
1 Principal consolidation policies
The consolidated financial statements of the CCF group, whose parent company is a financial institution, are
prepared in accordance with the current regulations of the French Accounting Regulations Committee (CRC),
the opinions of the French National Accounting Board and the instructions of the French Banking Commission.
Effective 1st January 2001, the CCF group has applied CRC Regulation number 00-04 governing the presentation
of financial statements for banks and effective 1st January 2002, the CCF group has applied CRC Regulation number
2000-06 governing liabilities.
The annual financial statements of consolidated foreign subsidiaries prepared in accordance with local accounting
principals are restated for purposes of comparability, prior to consolidation to comply with group accounting policies.
1.1
Consolidation criteria (see note 40)
Under CRC Regulation 99-07 governing consolidation of financial statements of French banks and financial
institutions, the consolidated financial statements of CCF SA include those of its principal banking and nonbanking subsidiaries whose total assets exceed €15 million.
a Fully-consolidated companies
Banks and financial institutions in which CCF SA directly or indirectly owns more than 50% are fully
consolidated. Full consolidation consists of aggregating in all assets and liabilities carried by the consolidated companies after elimination of intercompany items and profits, and of determining the value
of the minority interests in net assets and earnings.
b Companies accounted for under the equity method
Companies in which CCF SA exercises significant influence are accounted for under the equity method.
Significant influence is deemed to exist when CCF SA directly or indirectly owns 20-50 percent of the
capital. The equity method consists of accounting for the group’s interest in the underlying net assets
and results of the companies concerned, rather than the book value of their assets and liabilities and
any dividends received.
c
Companies consolidated by the proportional method
Companies that are jointly controlled by CCF SA are consolidated under the proportional method.
Proportional consolidation consists of integrating in the CCF group’s financial statements the balance sheet
and income statement of the subsidiary prorated to the percentage of capital held by the parent company.
d Non-consolidated companies
Companies which meet the above criteria but which are not considered to be long-term investments are
not consolidated. This is particularly the case for equity investments held with the intention of their
subsequent divestment under structured financing arrangements.
Economic interest groupings and other special purpose entities created specifically to manage transactions on behalf of a company through the provision of assets, goods, services or capital, are not consolidated, provided that the financing granted to them is carried as an asset in the financial statements
and this accounting treatment better reflects the substance of the transaction and the risks involved.
Finov, a special purpose securitisation vehicle, has not been consolidated as permitted by the interim
measures set forth in Art. 51 (see note 25).
1.2
Year-end
All group companies are consolidated on the basis of their financial statements as at 31 December.
For companies which do not have a 31 December year-end, interim financial statements are drawn up as
of that date.
51
CCF
Notes to the consolidated financial statements (continued)
1 Principal consolidation policies (continued)
1.3
Accounting for acquisitions
Any difference between the acquisition cost of shares in a consolidated company and the net book value
of the assets acquired is allocated as far as possible to identifiable assets and liabilities of the investee company, in order to reflect their fair value.
As permitted under the terms of opinion no. 97B of the French National Accounting Board’s Urgent Issues
Task Force, the fair values of recently acquired assets and liabilities may be revised, following detailed
analysis, until the end of the first financial year after their acquisition. Any change in fair values entails
a corresponding re-estimation of goodwill.
Any residual balance is recognised as goodwill or negative goodwill. Goodwill is amortised over a period
of no more than 20 years and negative goodwill is written back to income over a period of 10 years.
The amortisation period may be modified if a deterioration in the investee company’s financial position
warrants an accelerated depreciation method.
1.4
Translation of foreign subsidiaries’ assets and liabilities
Assets and liabilities denominated in foreign currencies are translated into euros at the year-end exchange
rate.
Profit and loss items are translated at the average rate for the period (defined as the arithmetic average of
month-end rates).
Equity accounts are maintained at the historical rates. Any translation differences are allocated to reserves.
1.5
Capital gains on internal disposals
Capital gains and losses arising on transactions between consolidated companies are eliminated as appropriate. However, property assets that have been revalued as a result of mergers or similar operations between
consolidated companies are treated in accordance with French Banking Commission instructions applicable at the time of the operation. They are therefore carried at their revised value and a revaluation reserve
has been established.
1.6
Restatement and reclassification of loan loss provisions
Flat-rate provisions made by foreign subsidiaries as a result of local fiscal or regulatory requirements are
written back in the consolidated income statement account provided they are not intended to cover some
specific risk.
The group may also make provisions in the consolidated income statement account to cover exposure of
foreign subsidiaries where they are unable to make such provisions in their own financial statements due
to local restrictions.
1.7
Deferred tax
The deferred taxes resulting from timing differences between the book value of an asset or a liability and
the tax value coming from consolidation restatements are carried on the consolidated balance sheet and
income statement. The deferred tax asset arising on tax loss carryforwards is not recognised unless there
is a strong probability of its recovery in the future.
Deferred tax is calculated on 100% of the lease equalisation reserve.
All deferred tax items recognised in prior years are adjusted if there is a change in the applicable statutory
tax rates.
52
2 Group accounting policies and valuation methods
2.1
Group accounting policies
The consolidated financial statements are prepared in accordance with the principles set forth by the French
Banking Regulations Committee and the French Accounting Regulations Committee, the opinions of the
French National Accounting Board and the instructions of the French Banking Commission. Any transactions which are not covered by these principles are treated in accordance with French generally accepted
accounting principles.
2.1.1
Fixed assets
Fixed assets are valued at cost less accumulated depreciation or amortisation, except where such value is
revised as a result of legal asset revaluations or, in the case of property assets, as a result of mergers between
consolidated companies.
a Depreciation and amortisation
Land is not depreciated. Acquisition-related expenses on buildings are expensed in the year in which
they occur, as are preliminary costs.
Fixed and intangible assets are depreciated or amortised over their estimated useful lives on a straightline basis or, in the case of certain items of equipment, on an accelerated basis. Depreciation or amortisation periods are as follows:
–
–
–
–
–
b
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 to 75 years
Fixtures and fittings . . . . . . . . . . . . . . . . . . . . . . . .
10 years
Furniture and equipment . . . . . . . . . . . . . . . . . . . . 5 to 10 years
Purchased goodwill . . . . . . . . . . . . . . . . . . . . . . . . . 5 to 10 years
Software purchased . . . . . . . . . . . . . . . . . . . . . . . . .
3 to 5 years
Buildings acquired under loan guarantees
Buildings acquired by CCF as a result of loan foreclosures are valued according to CCF’s intent as to
their continuing ownership.
– Buildings which the bank intends to sell in the short term are considered to be stock. Accordingly,
they are not depreciated, but a provision for impairment may be established if necessary. They are
posted to “other assets”, and any provision is recorded under the heading “miscellaneous provisions”.
– Buildings which the bank intends to hold on a long term basis and which have been let are treated as
fixed assets and depreciated over the same period as other similar buildings used by the bank for its
own operations. Pursuant to instructions issued by the French supervisory authorities, provisions
have been established in cases where the market value of such assets is lower than their net book value.
The provisions of regulation CRC 2002-10 on asset depreciation and impairment, as amended by regulation
CRC 2003-07, will become compulsory as of 1 January 2005. In accordance with the transitional measures
provided for under regulation CRC 2003-07, CCF has decided not to opt for early adoption of component
accounting. Furthermore, CCF does not carry any material items on its balance sheet liable to meet the
definition of expenditure on medium or long term major repair and renovation programmes.
2.1.2
Equity shares and debt securities
Pursuant to the provisions of CRC Regulation 00-02, equity shares and debt securities are classified into
the following categories:
–
–
–
–
–
–
trading securities
available-for-sale securities
held-to-maturity securities
portfolio securities
other long term securities
interests in associates and other participating interests.
53
CCF
2 Group accounting policies and valuation methods (continued)
Specific accounting methods apply to each of these categories:
– Trading securities:
These are securities traded on a liquid market, which are bought or sold with the intention of reselling
or repurchasing them in the near future. They may not be held for more than six months, except where
the bank is acting as a market maker.
Trading securities are carried at cost (including accrued interest in the case of fixed interest securities).
They are marked to market at the year-end and any unrealised gains or losses are recognised in income
statement.
– Available-for-sale securities:
Securities acquired for their yield, but held principally with the intention of reselling them in the
relatively short term are considered to be available-for-sale.
On the acquisition date, they are recorded at cost (less accrued interest at the time of purchase in
the case of fixed interest securities). At the year-end, they are valued on a line-by-line basis at the lower
of cost or market value. In the case of equities, market value is the price on 31 December for listed
securities and the anticipated resale price for unlisted securities. In the case of fixed interest securities,
market value is the price quoted on the last working day of the year.
Actual or unrealised gains or losses on hedging instruments are recognised on a line-by-line basis, and
a provision for impairment made where necessary.
– Held-to-maturity securities:
These are fixed interest securities acquired with the intention of holding them over the long term, in
principle, until maturity.
They are carried at cost and any premium or discount is amortised over their residual life. A provision
for impairment may be taken to cover counterparty risk.
Securities purchased for their yield or held for regulatory reasons by certain foreign subsidiaries or
branches are classified as held-to-maturity securities.
– Portfolio securities:
Portfolio securities comprise investments purchased with the intention of realising a medium term
capital gain, but with no intention of investing in the business on a long-term basis. This is notably the
case for securities held as part of a venture capital business.
Portfolio securities are carried at the lower of cost or fair value, determined by taking account of the
issuer’s general prospects and the forecast holding period. The methods of determining fair value are
described below.
– Other long term securities:
Other long term securities comprise equities and similar securities acquired with the intention of achieving
a satisfactory return in the relatively long term by building an ongoing business relationship with the
issuing company, but with no influence over its management.
These securities are accounted for on a line-by-line basis and they are carried at the lower of cost or
fair value.
– Interests in related parties and other participating interests:
The category “interests in associates and other participating interests” regroups the securities held
with a long-term intention (participating interests) and the securities of non-consolidated subsidiaries
(interests in associates). They are valued at the lower of cost or fair value, determined as described
below.
54
Fair value for portfolio securities, other long-term securities and other participating interests is determined
on a multi-criteria approach, as follows:
– economic and financial appraisal of the company, based primarily on net asset value;
– market appraisal based on financial analysts’ reports;
– share price performance for listed companies, taking account of any specific relationships existing
between CCF and each of the companies concerned.
Gains or losses:
Gains or losses on disposal and movements in provisions are recorded on the income statement under
“net gains on asset disposals”, except for gains realised as part of restructuring operations, which are
booked as exceptional items, and gains on the disposal of interests in associates, which are booked as
operating income.
Presentation of securities in reported financial statements:
European Directive 86/635 concerning the standardisation of financial statement presentation of financial
institutions in the European Union does not recognise the concept of intention as a basis for classifying
securities. Classification of securities on the European Directive basis is reported in note 6.
Securities are classified in the balance sheet according to their legal category:
– treasury bills and other negotiable instruments: all negotiable securities issued by central governments (T-bills and notes, bonds, etc.);
– bonds and other fixed revenue securities: all securities issued by private or public sector issuers, which
are not eligible for central bank refinancing in their country of issue;
– shares and other variable revenue securities, including portfolio securities;
– participating interests other and long-term securities;
– interests in related parties;
– interests in associates.
Securities bought or sold under repurchase agreements:
Repurchase agreements recorded off balance sheet of individual companies result in securities being
derecognised (in the case of sale) or recognised (in the case of purchase), and the resulting liability being
recognised under contingent liabilities and commitments. However, insofar as the repurchase option
is almost always exercised:
– capital gains or losses on disposal are eliminated, except in the case of trading securities;
– provisions are made in the same way as if the repurchase transaction had not taken place;
– consideration for repurchase agreements is recorded on an accruals basis, as is accrued interest.
“Buy and sell back” transactions are treated similarly.
“Delivered securities” repo transactions:
Temporary sales or purchases of securities governed by the regulations of Act no. 93-1444 of 31 December
1993, as amended by ordinance no. 2000-1223, known as “delivered securities” repos, have no impact
on the composition and valuation of the securities portfolio. From an accounting perspective, and in
accordance with Article 5 of Regulation 89-07, as amended by regulation 94-05, the securities are treated
as financing operations, the cash movement is matched either by a receivable or a debt. Revenues
received or expenses incurred by the seller or buyer are booked as interest income or expense.
Securities bought or sold under repurchase agreements:
Repurchase transactions which do not fall within the provisions of Act no. 93-1444 are classified as
securities bought or sold under repurchase agreements on the balance sheet. Their accounting treatment is the same as for the delivered securities repo transactions described above.
55
CCF
Securities borrowed or loaned against cash:
Securities borrowed or loaned against cash are treated in the same way as delivered securities repos
transactions.
2.1.3
Provisions for bad and doubtful debts
Provisions for bad and doubtful debts recognised in the income statement are determined by the Group each
year in light of estimated potential losses and are based on an individual analysis of each loan concerned.
All loans are classified as bad and doubtful debts, even if secured by a guarantee, where there is a probability or certainty of total or partial non-recovery, or where amounts have been in arrears for more than
three months in the case of most loans and operating leases, or more than six months in the case of property loans or leasing, or more than nine months in the case of local authority loans. Loans are also deemed
to be at risk where legal proceedings are already in progress (e.g. receivership, court-ordered liquidation,
personal bankruptcy, etc.), or where it is likely that the borrower will be unable to meet their obligations.
Loans to property developers are assessed on a case-by-case basis utilising various criteria, including the
likely outcome of the project, the capacity of partners to contribute the necessary equity as well as their
solvability. In this context, all interest on doubtful property loans booked as operating income is fully provided. Moreover, provisions are made against the principal outstanding are also based on a case-by-case
assessment using various criteria, including the credibility of the project’s intended sale price, its rental
income potential, the soundness of the investor pool and the value of any guarantees received.
Pursuant to regulation CRC 2002-03 on the accounting treatment of credit risk by companies governed
by the French Banking and Financial Regulations Committee, CCF has established specific provisions for
restructured loans and bad debts.
Loans restructured on off-market terms are identified separately and a discount recognised representing
the difference between the new interest rate and the lower of the original interest rate of the loan and the
market rate prevailing at the time of restructuring, applied to future expected cash flows. This discount is
booked as a provision for bad and doubtful debts and written back to net interest income over the remaining term of the loan.
Bad debts include debts which have become accelerated as a result of certain events, restructured debts
which are in default, and debts classified as doubtful for more than one year, where they are in arrears and
not accompanied by guarantees covering virtually the entire amount. Interest on bad debts is not booked
to profit and loss until actually received.
As the impact of this change is not material, the 2001 and 2002 figures relating to doubtful debts and provisions have not been restated.
In compliance with standard banking practice, the bank establishes country risk provisions against exposure in certain countries generally considered by the banking industry as involving a high degree of risk.
In the income statement, provisions made or recovered, losses on unrecoverable debts and recoveries against
debts written off are all recorded under the heading “provisions”.
2.1.4
Provisions for pension and other post-retirement benefits
In France, retirement and pension payments are made on a pay-as-you-go basis by outside agencies to
which the group contributes. Contributions are expensed as incurred.
Provisions for future expenses relating to employees no longer in active service are made in the income
statement. Provisions are also made for future expenses relating to end-of-career bonuses and length of
service awards for employees in active service.
2.1.5
Reserve for general banking risks
Pursuant to the provisions of regulations 90-02 and 91-01 of the French Banking Regulations Committee,
CCF has constituted a reserve designed to cover general banking risks, and notably any potential addi-
56
tional contributions which may be required in the future under the terms of the AFB-AGIRC-ARRCO
agreement of 13 September 1993 relating to the pension regimes of banking personnel.
In addition to these pension commitments, a charge may be made from time to time in the income statement to cover general banking risks related to the group’s various activities.
2.1.6
Foreign exchange positions
With the exception of structural positions, which are valued at historical cost, all foreign currency positions are
revalued at the year-end rate, and any resulting gains or losses are recognised as operating income or expense.
2.1.7
Forward currency transactions
Forward currency transactions outstanding at the year-end which are hedged by spot transactions are revalued
at year-end spot rates. Premiums or discounts calculated when the transaction is entered into are booked
the income statement on an accrual basis. Unhedged forward transactions and transactions hedged by
futures are revalued at the forward rate prevailing for the remaining term.
2.1.8
Leasing
The results of leasing and rental companies are restated to take account the lease equalisation reserve,
which corresponds to the difference between amortisation recognised for tax and accounting purposes.
Deferred tax is calculated on the full amount of the lease equalisation reserve.
Property transactions in which the CCF group is lessee are restated. The leased assets are capitalised as
fixed assets and depreciated, and the corresponding liability is recognised.
2.1.9
Financial instruments
The CCF group trades actively in all new financial instruments, either on behalf of its customers or to
hedge balance sheet items or for arbitrage purposes.
Accounting principles used differ depending on the instrument and whether the transaction was originated
for hedging or trading purposes. However, certain general rules apply to all market positions, while others
are specific to certain categories of instrument.
a Foreign currency and interest-rate options:
Options are two party contracts which grant the buyer the right to acquire or sell an asset or other
financial instrument known as the “underlying” within a pre-determined period of time and at a price
determined at the time the contract is originated. The buyer pays the seller a premium for the option.
CCF trades in interest-rate and foreign currency options. The accounting treatment for these instruments is identical.
At the origination of the options contract, the notional amount of the underlying is recognised as an
off-balance sheet item.
For income and expenses, a distinction is made between hedging transactions and trading or arbitrage
transactions:
– income and expense items related to hedging transactions are recognised symmetrically with those
arising on the hedged item;
– in the case of trading transactions, positions are marked to market at the year-end. For transactions on an organised market or an equivalent market defined in Regulation CRB 88-02, changes
in the value of the position are booked to the income statement either by means of margin calls or,
in the case of unlisted options, directly by means of a mathematical calculation.
57
CCF
b Index and equity options
Index and equity options are entered into for trading purposes. Changes in the value of options
outstanding at the year-end are booked directly to the income statement.
c
Interest-rate futures
The accounting treatment is identical to that which is described above for options, and is in accordance
with the French Banking Commission’s instruction 94-04, as amended by instruction 2003-03.
d Currency and/or interest-rate swaps (swaps, FRAs)
Pursuant to CRB Regulation 90-15, as amended by CRB Regulations 92-04 and 2002-01, the accounting
treatment for foreign currency and interest-rate swaps is dependant upon their purpose. These contracts are accounted for differently if their purpose is:
–
to maintain isolated open positions in order to benefit from changes in interest rates, if and when
they occur;
–
to hedge interest-rate risk on a specific item or homogeneous group of items, defined as such at
the outset pursuant to Article 4 of CRB Regulation 88-02;
–
to hedge and manage the bank’s structural interest-rate risk on all its assets, liabilities and off-balance
sheet items, except for those transactions referred to in paragraphs 2 and 4;
–
to allow for specialised management of a trading book.
Accounting treatments differ depending on whether the transaction is entered into for hedging or trading
purposes.
Gains or losses on instruments designed to hedge assets or liabilities are booked to the income statement
on an accrual basis, unless the hedged items are themselves marked to market in the balance sheet. This
applies in particular to swaps traded for Asset and Liability Management purposes.
Gains or losses on positions managed as part of a swap trading book are booked to the income statement
at their present value, after deducting a percentage for counterparty risk and future management costs.
Trading transactions are marked to market on the day of the trade. The corresponding liability is
recorded as an off-balance sheet item from the date of the trade to the value date. The value date
generally corresponds to the date on which an exchange of monetary flows takes place that is normally
booked to the balance sheet.
Notional amounts are recorded off balance sheet whether they are actually swapped or simply used as
a benchmark.
Currency swaps which are not hedged by spot transactions are valued at the forward rate prevailing for
the remainder of their term.
2.1.10 Recognition of income and expense
All income and expense is booked on an accrual basis, with the exception of dividend income and
commissions, which are booked on a cash basis.
Long and short trading positions are generally valued at the mid-market price as listed on organised
exchanges or by a market-making panel of banks. Certain highly specific derivatives, generally resulting
from a combination of different plain-vanilla products, are valued by means of models which use market
data but also take account of their reduced liquidity, the specific characteristics of which are unlikely to
command mid-market prices.
Accrued interest is booked according to the legal rules applicable to each instrument. For instance, fixedincome securities are marked to market excluding accrued interest at the transaction date. Interest is
booked for the period during which the bank holds the securities, i.e. from the date of delivery upon purchase to the date of delivery upon sale. In the Paris marketplace, three days elapse between the trade date
and the delivery date for this type of instrument.
58
2.1.11 Exceptional items
All income and expenses which do not arise in the normal course of the group’s ongoing ordinary
activities are treated as exceptional items.
Accordingly, gains or losses arising from restructuring operations following CCF’s integration with the
HSBC Group are booked as exceptional items. Gains or losses on other disposals of subsidiaries or equity
interests are booked within Group operating profit before tax.
2.2
Analysis by line of business
Key income statement aggregates are presented by line of business for analysis. In order to make
meaningful comparisons from one year to the next, these figures are restated as described in note 3.
Ratios are also calculated by line of business, and in particular the cost:income ratio (operating expenses
as a percentage of net operating income) and return on allocated capital (line of business net profit as a
percentage of capital allocated to that line of business).
2.2.1
Lines of business:
The presentation of results by line of business is based on the group’s consolidated results.
The group’s four key lines of business are:
1 Banking and distribution networks which encompasses three sub sections:
– the CCF network;
– the regional banking subsidiaries;
– distribution which includes the specialised French subsidiaries (Elysées Factor, Netvalor, etc.).
2 Corporate and investment banking, which comprises three sub sections:
– corporate and institutional banking;
– capital markets;
– equity and corporate finance.
3 Asset management and private banking, which comprises:
– management of mutual funds and corporate employee savings plans in France and abroad;
– private banking in France and abroad.
Other activities principally comprise own investments (Nobel, centralised management of CCF’s subsidiaries and associated companies).
2.2.2
Determination of the key income statement aggregates:
These are presented according the following rules:
a Operating income
– CCF parent company profit centres.
Value added over capital takes account of internal refinancing of capital according to the following rules:
– in order to manage interest-rate risk, the Finance Division enters into hedging transactions in
accordance with policies set by the Asset and Liability Management Committee; these hedging
transactions are charged in full to the profit centres concerned by means of internal contracts;
– each profit centre’s treasury position, which is not already hedged by these internal contracts, is
calculated daily and valued at the overnight money-market rate (plus a charge to cover the cost
of liquidity).
59
CCF
Return on allocated equity, calculated using the internal model (see c below), is included in
operating income.
Commission income is attributed to the profit centres in charge of the customer relationship and
responsible for providing the service billed to the customer.
– Subsidiaries
The contribution of subsidiaries is calculated on the basis of the company’s operating income, less
dividends received from other consolidated companies, the return on their own capital and the cost
of funding investments in consolidated subsidiaries, but adding return on allocated equity using the
internal model.
b Operating expenses and depreciation
Expenses for each line of business include all costs attributable to it, and in particular:
– the full cost of processing customer transactions;
– a percentage of general overheads.
c
Return on allocated capital
This item is included in operating income, operating profit before provisions and attributable net profit
for each line of business, using the following internal allocation method:
– For counterparty risks, regulatory capital requirements are used as a basis for calculating weighted
assets. However, actual allocation rates are generally higher than regulatory requirements (for Tier
1 capital), except where actual loss rates and customer loan quality justify the adoption of lower
rates. Allocation rates take account of the following:
– customer type (corporate, personal, etc.);
– geographical location (capital allocation are over-weighted for credits granted in zones considered to be at risk);
– loan type.
– For market risks, an internal model validated by the French Banking Commission is used, with the
intention of covering 8% of total capital (Tier 1, 2 and 3), three quarters of this amount being treated
as Tier 1 capital for internal allocation purposes.
– For certain activities (notably advisory services, structured financing, mutual fund and securities
management, and private banking), capital is allocated to cover operational risk, based on a
multi-criteria approach established in conjunction with the lines of business concerned.
– Finally, capital is allocated to business segments involved in proprietary equity trading in order to
cover any potential fall in value.
d Attributable net profit
Attributable net profit is calculated for each line of business, taking account of the above factors and
assuming a theoretical tax charge at a normalised local rate for all restatements, specifically with the
respect to capital.
60
3 Presentation of financial statements
Main changes in the scope of consolidation in 2003
Reported figures
The main changes in the scope of consolidation during 2003 were as follows:
Consolidated for the first time:
–
Neuilly Saint Paul, Excofipar, Finanpar, CCF Change, Sinopia AM Luxembourg, Sinopia Greater China
Limited, Sinopia International Ltd, Sinopia T&D AM Co. Ltd and EMI Adisory Company SA.
No longer consolidated:
–
SFI Suisse.
Application of the new accounting presentation rules to the profit and loss account
The Conseil National de la Comptabilité has introduced the following changes of accounting treatment, applicable
as of 1 January 2001.
The CCF group has applied the provisions of CRC Regulation 00-04 since 1 January 2001.
The main changes are as follows:
–
capital gains or losses on securities are identified separately as “gains or losses on asset disposals”, providing
they are not part of an ongoing, ordinary business activity,
–
miscellaneous provisions are reclassified according to their purpose under the various P&L headings (operating
income, operating expenses, exceptional items and corporation tax).
–
security held as part of a venture capital business are reclassified as portfolio securities.
4 Loans and advances to banks
(in € million)
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 year or less but over 3 months . . . . . . . . . . . . . . . . . . . . . . . . . . .
5 years or less but over 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for bad and doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . .
(45.8)
Loans and advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Of which repo transactions (excluding accrued interest) . . . . . . . . . .
Of which subordinated advances (excluding accrued interest) . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
884.7
9,368.3
7,938.3
915.2
362.0
152.8
(19.6)
1,573.2
8,593.5
6,450.4
1,415.9
572.6
154.6
(24.3)
1,456.0
9,322.1
6,158.0
2,429.6
679.1
55.4
30.0
55.0
77.0
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
7,348.9
85.5
5,758.1
69.4
10,263.4
10,197.4
10,809.3
5,125.0
83.1
61
CCF
5 Loans and advances to customers
ANALYSIS BY LOAN TYPE
(in € million)
Loans and advances to customers . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial loans and advances . . . . . . . . . . . . . . . . . . . . . . . . . .
Current accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leasing transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and advances to personal customers . . . . . . . . . . . . . . . . . . . .
Loans and advances to non-bank financial institutions . . . . . . . . . .
Loans and advances to other corporate customers . . . . . . . . . . . . . .
Repo transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Of which gross doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Of which gross bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Of which subordinated loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SEGMENTAL ANALYSIS
(in € million)
Personal customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commerce and services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ANALYSIS BY REMAINING MATURITY
(in € million)
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for doubtful debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for bad debts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62
2003
2002
2001
dddddddd
dddddddd
dddddddd
27,430.3
790.1
3,616.4
23,023.8
746.3
27,998.4
875.3
3,707.3
23,415.8
608.9
29,263.5
1,064.4
4,080.1
24,119.0
2,194.9
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
7,404.7
526.5
17,906.0
2,198.7
140.7
6,782.1
488.1
20,434.3
722.9
179.9
5,689.7
674.5
23,516.9
1,346.6
230.7
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
615.2
844.0
139.4
1,175.0
–
143.2
1,491.6
–
125.0
28,176.6
28,176.6
28,607.3
28,607.3
31,458.4
31,458.4
2003
2002
2001
dddddddd
dddddddd
dddddddd
7,410.6
6,079.4
5,272.3
3,857.9
2,767.9
2,788.5
6,791.5
7,291.8
6,220.6
3,516.6
1,294.5
3,492.3
5,689.7
8,017.2
5,493.8
3,324.9
3,961.8
4,971.0
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
28,176.6
28,607.3
31,458.4
2003
2002
2001
dddddddd
dddddddd
dddddddd
4,271.1
24,703.1
8,057.8
4,062.1
6,619.4
5,963.8
(255.4)
(682.9)
140.7
4,762.6
24,576.6
8,591.2
4,121.1
6,465.4
5,398.9
(911.8)
–
179.9
4,557.6
27,639.5
11,090.0
4,296.9
6,500.0
5,752.6
(969.4)
–
230.7
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
28,176.6
28,607.3
31,458.4
6 Treasury bills, debt securities and equity shares
ANALYSIS BY TYPE OF SECURITY
(in € million)
Treasury bills and other eligible bills . . . . . . . . . . . . . . . . . . . . . . . . . .
– Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Held-to maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Bonds and other listed securities . . . . . . . . . . . . . . . . . . . . . . .
– Unlisted bonds, interbank market instruments
and negotiable debt securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Bonds and other listed securities . . . . . . . . . . . . . . . . . . . . . . .
– Unlisted bonds, money market instruments
Held-to maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Listed bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Unlisted bonds, money market instruments
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Listed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Unlisted and other variable-income securities . . . . . . . . . . . .
Available-for-sale securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Listed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Unlisted and other variable-income securities . . . . . . . . . . . .
Portfolio securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Unlisted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Listed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
14,045.1
10,758.5
225.8
2,990.0
70.8
4,063.7
2,454.0
1,794.8
9,847.8
8,737.3
948.2
141.6
20.7
3,631.5
2,074.0
1,253.1
6,296.1
5,386.0
754.3
142.1
13.7
6,602.7
2,910.0
1,821.2
659.2
929.4
827.0
820.9
785.0
409.3
1,088.8
2,768.0
938.9
102.4
650.1
321.2
375.7
739.2
355.6
1,829.1
840.2
642.3
328.9
30.2
3,330.7
1,853.5
1,845.0
8.5
923.6
73.0
850.6
553.4
239.0
314.4
0.2
383.6
33.3
3,002.0
1,526.1
1,526.1
–
893.1
41.9
851.2
582.4
268.0
314.4
0.4
197.9
84.5
2,686.5
1,259.2
1,255.8
3.4
776.6
140.7
635.9
650.3
340.7
309.6
0.4
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
Net
book value
21,439.5
Net
book value
16,481.3
Net
book value
15,585.3
63
CCF
6 Treasury bills, debt securities and equity shares (continued)
Analysis of treasury bills, other eligible bills and debt securities by remaining maturity
TYPE OF SECURITY
(in € million)
Treasury bills and other eligible bills
1 year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities
1 year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
2,451.4
6,508.7
5,014.2
70.8
2,914.2
5,157.2
1,755.7
20.7
2,002.4
2,748.6
1,531.4
13.7
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
1,356.4
1,836.2
840.9
30.2
1,937.2
984.6
676.4
33.3
3,481.5
1,997.2
1,040.8
83.2
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
14,045.1
4,063.7
9,847.8
3,631.5
6,296.1
6,602.7
Estimated value of available-for-sale securities and portfolio securities
TYPE OF SECURITY
(in € million)
Treasury bills and other eligible bills . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total available-for-sale securities
(excluding accrued income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
232.5
958.1
1,709.2
950.5
785.8
1,629.5
755.9
2,768.2
1,672.0
ddddddddd
ddddddddd
ddddddddd
2,899.8
3,365.8
5,196.1
ffffffffff
ffffffffff
ffffffffff
Additional information on securities provided under article 16 of regulation 90-01 of the French Banking Regulations
Committee (CRBF 90-01)
Securities reclassified as at 31 December 2003
Available-for-sale securities reclassified as held-to-maturity securities: €915 million.
Held-to-maturity securities sold as at 31 December 2002
Disposals amounted to €217.3 million in 2003.
Unamortised difference between acquisition price and redemption price of held-to-maturity securities
The difference is equal to €82.9 million.
64
7 Long term securities and other participating interests
a
Analysis by issuer type
(in € million)
ISSUER TYPE
– Listed securities . .
Banks . . . . . . . . . .
Other . . . . . . . . . .
– Unlisted securities .
Banks . . . . . . . . . .
Other . . . . . . . . . .
– Advances to property
companies and
accrued interest . . .
TOTAL.......................
b
2003
2002
2001
dddddddddddddddddd
dddddddddddddddddd
dddddddddddddddddd
Net book
value
Estimated
fair value
(unaudited)
Net book
value
Estimated
fair value
(unaudited)
Net book
value
Estimated
fair value
(unaudited)
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
145.9
52.6
93.3
1,787.8
728.3
1,059.5
182.7
76.2
106.5
1,821.9
730.8
1,091.1
185.4
68.7
116.7
1,895.8
776.5
1,119.3
233.9
105.8
128.1
1,932.3
777.0
1,155.3
266.5
34.5
232.0
1,559.4
797.0
762.4
281.9
44.3
237.6
1,586.9
810.2
776.7
10.2
10.2
9.0
9.0
11.1
11.1
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
ffffffff
ffffffff
ffffffff
ffffffff
ffffffff
ffffffff
1,943.9
2,014.8
2,090.2
2,175.2
1,837.0
1,879.9
Movements in other participating interests and long-term securities
(in € million)
2003
dddddddd
Cost at January 1 (excluding advances and accrued interest) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Movements during the year:
Purchases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of translation differences and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost at December 31 (excluding advances and accrued interest)
2,242.0
400.0
(388.9)
(172.8)
(3.4)
ddddddddd
2,076.9
ffffffffff
Provisions at January 1 (excluding advances and accrued interest) . . . . . . . . . . . . . . . . . . . . . . . . . .
Movements during the year
Provisions for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recovery of provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of translation differences and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions at December 31 (excluding advances and accrued interest) . . . . . . . . . . . . . . . . . . . . . . . .
Advances to property companies and accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book value including advances and accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(160.8)
(6.3)
25.5
0.3
(1.9)
ddddddddd
(143.2)
10.2
ddddddddd
1,943.9
ffffffffff
65
CCF
7 Long term securities and other participating interests (continued)
c
Companies in which the Group’s interest exceeded €30 million as of 31 December 2003 (net book value)
(in million of currency units)
Consolidated
shareholders’ Consolidated
Registered
funds
net profit
office
2002
2002
dddddddd
– Merck Boringuen Holding1 . . . . . . .
– Swiss Life Holding . . . . . . . . . . . . . . .
– HSBC Private Banking Switzerland
(Suisse) SA . . . . . . . . . . . . . . . . . . . .
– HSBC Guyerzeller Bank AG . . . . . .
– Banian Investment UK2 . . . . . . . . . .
– VEA Limited3 . . . . . . . . . . . . . . . . . . .
dddddddd
dddddddd
Net book
value
2003
%
holding
dddddddd
dddddddd
Wilmington US $18,200.5
Zurich CHF4,170.0
US $7,149.5
(CHF1,694.0)
US $300.0
CHF89.4
5.0
1.8
Geneva CHF3,621.4
Geneva
CHF449.6
St Helier CHF16,686.0
(Jersey)
St Peter Port GBP2,660.2
(Guernsey)
CHF232.4
CHF26.3
(CHF91.0)
CHF995.9
CHF72.9
GBP300.0
13.4
10.0
19.0
GBP187.4
GBP199.8
19.0
1 Amounts shown for consolidated shareholders’ funds and consolidated net profit are those of the parent company, Merck & Co.
2 Amounts shown for consolidated shareholders’ funds and consolidated net profit are those of the parent company, Swiss Ré.
3 Amounts shown for consolidated shareholders’ funds and consolidated net profit are those of the parent company, Hanson plc.
The interest in VEA Limited was made during 2003.
8 Intangible fixed assets
(in € million)
Cost at 1st January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in scope of consolidation, disposals, retirements
and other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation and provisions at 1st January . . . . . . . . . . . . . . . . . . . . .
Change in scope of consolidation, disposals, retirements
and other movements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortisation and provisions for the year . . . . . . . . . . . . . . . . . . . . .
Amortisation and provisions at 31 December . . . . . . . . . . . . . . . . . . .
Net book value at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
2003
2002
2001
dddddddd
dddddddd
dddddddd
275.2
249.3
211.9
1.2
39.3
(10.8)
36.7
(9.3)
46.7
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
173.7
152.5
117.9
0.3
35.6
(12.8)
34.0
315.7
275.2
249.3
(0.7)
35.3
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
209.6
106.1
173.7
101.5
152.5
96.8
9 Tangible fixed assets
(in € million)
Cost at 1st January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirements and other movements . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation at 1st January . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in scope of consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and provisions for the year . . . . . . . . . . . . . . . . . . . . . .
Disposals, retirements and other movements . . . . . . . . . . . . . . . . . .
Depreciation at 31 December . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land and buildings used by the group for operating purposes . . . . .
Other land and buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
1,327.2
1,504.6
1,439.9
19.9
71.3
(98.4)
(9.7)
(161.3)
61.6
(71.1)
(6.6)
38.8
144.3
(77.4)
(41.0)
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
693.0
674.7
602.6
(3.9)
68.5
(34.7)
(16.1)
74.6
(40.2)
13.5
93.4
(34.8)
1,310.3
1,327.2
1,504.6
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
722.9
587.4
363.2
23.1
201.1
693.0
634.2
419.8
23.9 1
190.5
674.7
829.9
405.8
190.7
233.4
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
587.4
634.2
829.9
1 Change due to the disposal of HSIL: £99.9 million (€163.6 million).
67
CCF
10 Provisions
(in € million)
At
31.12.2002
Additions
Recoveries
Amounts
written off
dddddddd
dddddddd
dddddddd
dddddddd
915.9
235.3
42.3
1.3
–
3.6
24.5
–
Provisions deducted
directly from assets
– Provisions against
advances to banks
and customers
(excluding doubtful
interest) . . . . . . . .
– Provisions for
country risk . . . . .
– Provisions for
counterparty risk
on securities held . .
Provisions recognised
as liabilities
– Provisions for
contingent liabilities
and litigation . . . .
TOTAL PROVISIONS . .
(66.3)
dddddddd
At
31.12.2003
dddddddd
(116.9)
(26.2)
941.8
(8.2)
(0.1)
35.3
–
93.9
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
ffffffff
ffffffff
ffffffff
ffffffff
ffffffff
ffffffff
(69.9)
(209.6)
(1.7)
28.1
237.6
355.0
(84.5)
–
dddddddd
1,199.4
(3.6)
Other
movements 1
(28.0)
241.7
1,246.9
1 “Other movements” include the impact of consolidation changes and exchange movements.
Net charge to profit and loss
2003
dddddddd
Net provisions for the year 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Provisions against advances to banks and customers (excluding doubtful interest) . . . . . . . . . .
– Country risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Counterparty risk on securities held . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Provisions for contingent liabilities and litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recoveries of amounts written off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET CREDIT TO PROFIT AND LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(145.4)
(118.4)
6.9
(24.5)
(9.4)
7.8
ddddddddd
(137.6)
ffffffffff
1 Including losses not covered by provisions.
11 Other assets
(in € million)
Securities transaction settlement accounts . . . . . . . . . . . . . . . . . . . . .
Deferred taxation (note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sundry debtors and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
2003
2002
2001
dddddddd
dddddddd
dddddddd
2,043.5
4.6
3,352.1
ddddddddd
5,400.2
707.5
3.1
3,434.9
ddddddddd
4,145.5
901.9
32.0
1,599.5
ddddddddd
2,533.4
ffffffffff
ffffffffff
ffffffffff
12 Prepayments and accrued income
(in € million)
Items in the course of collection from other banks . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
461.7
1,511.0
ddddddddd
1,972.7
592.2
997.6
ddddddddd
1,589.8
808.8
1,034.6
ddddddddd
1,843.4
ffffffffff
ffffffffff
ffffffffff
13 Goodwill
GOODWILL (ASSETS)
Analysis by company
(in millions of currency units)
Gross amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Main companies
– HSBC Private Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Lixxbail . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Sinopia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Banque Hervet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Framlington Group 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– CCF Suisse Holding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Nobel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Union de Banques à Paris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Banque Chaix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– ECFH - Charterhouse Group holding company . . . . . . . . . . . . .
– Dewaay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– SMC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Dewaay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Analysis by amortisation period
(in € million)
Goodwill written down over 10 years . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill written down over 20 years . . . . . . . . . . . . . . . . . . . . . . . .
Net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
€832.4
€823.0
€856.6
ddddddddd
ddddddddd
ddddddddd
€80.5
–
€48.0
€285.4
GBP64.8
CHF50.4
€21.9
€11.1
€10.2
GBP23.5
CHF40.3
€9.5
€60.2
ddddddddd
€294.7 2
€63.4
–
€48.0
€285.4
GBP64.8
CHF50.4
€21.9
€11.1
€10.2
GBP23.5
CHF40.3
€9.5
€60.2
ddddddddd
€241.4
–
€45.1
€49.3
€281.4
GBP64.8
CHF50.4
€21.9
€11.1
€10.2
GBP23.5
CHF40.3
€9.5
€60.2
ddddddddd
€207.4
ddddddddd
€537.7
ddddddddd
€581.6
ddddddddd
ffffffffff
ffffffffff
ffffffffff
€649.2
2003
2002
2001
dddddddd
dddddddd
dddddddd
32.2
505.5
ddddddddd
537.7
37.3
544.3
ddddddddd
581.6
38.4
610.8
ddddddddd
649.2
ffffffffff
ffffffffff
ffffffffff
NEGATIVE GOODWILL (LIABILITIES)
(in € million)
Net amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
1.3
1.4
1.6
1 The figure of GBP64.8 million corresponds to 100 per cent of the goodwill arising on the Framlington Group, CCF Group’s share being
51 per cent.
2 Exceptional writedown of €23.9 million against goodwill arising on ECFH, the Charterhouse Group holding company.
69
CCF
14 Deposits by banks
Deposits by central banks and credit institutions
(in € million)
Central banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit institutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Including repo transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
–
16,799.0
4,201.1
12,597.9
11,221.8
778.0
350.4
247.7
29.1
–
16,290.2
1,743.2
14,547.0
10,727.2
2,887.4
501.6
430.8
62.2
0.1
20,541.9
1,949.6
18,592.3
13,582.7
3,118.6
1,306.4
584.6
122.3
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
6,348.0
3,000.6
3,783.7
16,828.1
16,352.4
20,664.2
15 Customer accounts
Analysis by account type
(in € million)
–
–
–
–
–
Demand deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special regulated demand accounts . . . . . . . . . . . . . . . . . . . . . . .
Special regulated savings accounts . . . . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest-bearing notes and saving certificates 1 . . . . . . . . . . . . . .
TOTAL DEPOSITS
(excluding repo transactions, including interest-bearing notes
and saving certificates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deposits (excluding interest-bearing notes
and saving certificates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repo transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL CUSTOMER ACCOUNTS . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
14,219.3
3,610.3
2,494.0
3,951.8
45.5
13,074.9
2,784.4
2,480.8
5,324.2
58.5
13,111.4
2,372.1
2,450.7
4,351.6
118.5
ddddddddd
ddddddddd
ddddddddd
24,320.9
23,722.8
22,404.3
ffffffffff
ffffffffff
ffffffffff
24,275.4
2,184.8
185.8
23,664.3
1,046.8
218.0
22,285.8
2,000.8
227.6
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
26,646.0
24,929.1
24,514.2
1 Interest-bearing notes are booked under “debt securities in issue”.
Analysis by remaining maturity
Demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3 months or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70
2003
2002
2001
dddddddd
dddddddd
dddddddd
17,829.6
8,630.6
7,502.3
458.6
630.7
39.0
185.8
15,859.3
8,851.8
7,605.5
563.5
639.0
43.8
218.0
15,483.6
8,803.0
6,679.8
1,014.0
968.9
140.3
227.6
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
26,646.0
24,929.1
24,514.2
16 Debt securities in issue
(in € million)
Interest-bearing notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market instruments and negotiable debt securities . . . . . . . . .
Other debt securities in issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Analysis of debt securities in issue by remaining maturity
Debt securities in issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 year or less . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Over 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
45.5
4,607.0
4.7
5,316.1
170.8
58.5
3,703.5
6.0
4,082.7
245.9
118.5
5,368.7
83.6
2,314.2
240.5
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
10,144.1
8,096.6
8,125.5
2003
2002
2001
dddddddd
dddddddd
dddddddd
9,973.3
6,741.7
2,452.8
778.8
170.8
7,850.7
3,915.6
3,619.3
315.8
245.9
7,885.0
4,887.0
2,555.0
443.0
240.5
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
10,144.1
8,096.6
8,125.5
17 Provisions for liabilities and charges
(in € million)
Provisions for contingent liabilities and litigation . . . . . . . . . . . . . . .
Provisions for employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions for deferred taxation liabilities . . . . . . . . . . . . . . . . . . . . .
Other provisions for liabilities and charges . . . . . . . . . . . . . . . . . . . .
TOTAL PROVISIONS FOR LIABILITIES AND CHARGES . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
241.6
129.9
63.8
221.9
237.5
138.7
117.0
213.8
246.1
166.4
130.2
232.4
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
657.2
707.0
775.1
(in € million)
Amount as at
1st Jan. 2003
dddddddd
Provisions for contingent
liabilities and litigation . . . . . . .
Provisions for employee benefits . . .
Provisions for deferred
taxation liabilities . . . . . . . . . . .
Other provisions for liabilities
and charges . . . . . . . . . . . . . . . .
TOTAL PROVISIONS
FOR LIABILITIES
AND CHARGES . . . . . . . . . . . .
dddddddddddddddddddddddddd
Charge
Reversal
Other
movements
Amount as at
31 Dec. 2003
dddddddd
dddddddd
dddddddd
dddddddd
237.5
138.7
93.9
(5.5)
117.0
(47.6)
213.8
ddddddddd
707.0
ffffffffff
(41.5)
ddddddddd
(0.7)
ffffffffff
(88.2)
(2.6)
–
(1.6)
(0.7)
241.6
129.9
(5.6)
63.8
40.6
9.0
221.9
ddddddddd
ddddddddd
ddddddddd
(50.2)
ffffffffff
1.1
657.2
ffffffffff
ffffffffff
71
CCF
17 Provisions for liabilities and charges (continued)
Provisions for deferred taxation
(in € million)
Amount as at
1st Jan. 2003
dddddddd
– Deferred taxation liabilities 1 . . .
– Deferred taxation benefits
(see note 11) . . . . . . . . . . . . . .
Net deferred taxation provision . . .
Analysis of net deferred taxation
provision
Timing differences . . . . . . . . . . . . .
Lease equalisation reserve . . . . . . .
Other items . . . . . . . . . . . . . . . . . .
117.0
(3.1)
dddddddddddddddddddddddddd
Net
Charge 2
dddddddd
(47.6)
Other
movements
Amount as at
31 Dec. 2003
dddddddd
dddddddd
dddddddd
–
(5.6)
63.8
–
0.3
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ffffffffff
ffffffffff
ffffffffff
ffffffffff
ffffffffff
113.9
(1.8)
Reversal
(49.4)
0
(5.3)
(4.6)
59.2
24.0
35.4
(0.2)
ddddddddd
59.2
ffffffffff
1 Included in provisions for liabilities and charges.
2 Excluding losses on deferred taxation covered by provisions.
18 Other liabilities
(in € million)
Securities transaction settlement accounts . . . . . . . . . . . . . . . . . . . . .
Liabilities in respect of securities borrowed . . . . . . . . . . . . . . . . . . . .
Sundry creditors and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short positions in securities and securities received
under repo transactions sold firm . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
Before
appropriation
of net profit
After
appropration
of net profit
After
appropration
of net profit
dddddddd
dddddddd
dddddddd
1,436.3
624.4
3,218.2
1,028.3
1,270.1
2,801.3
1,050.5
308.7
1,915.8
5,576.1
4,219.7
3,063.6
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
10,855.0
9,319.4
6,338.6
19 Accruals and deferred income
(in € million)
Items in course of transmission to other banks . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
72
2003
2002
2001
dddddddd
dddddddd
dddddddd
245.1
898.7
494.2
1,634.2
579.3
1,259.7
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
1,143.8
2,128.4
1,839.0
20 Subordinated liabilities
(in € million)
Dated subordinated loan capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
of which
– Issued by CCF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Issued by subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Participating notes and undated subordinated loan capital . . . . . . . . .
of which
– Issued by CCF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Issued by subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
809.4
916.0
1,044.7
760.3
49.1
141.4
866.0
50.0
172.8
984.7
60.0
192.1
134.8
6.6
5.0
166.1
6.7
13.0
175.6
16.5
18.5
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
955.8
1,101.8
1,255.3
SUBORDINATED BONDS AND NOTES ISSUED BY CCF
Subordinated notes issued by CCF in French francs or other currencies are redeemable, in the event of liquidation,
only after waiver of all claims by other creditors, but before payment to holders of participating notes or equity shares.
Details of the main subordinated bonds and notes issued are provided below:
Dated subordinated notes
(in € million)
Date of issue
Maturity
date
Interest rate
type
Currency
2003
2002
2001
ddddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
12.08.2005
18.03.2004
25.03.2008
15.12.2015
19.12.2011
Fixed rate
Floating rate
Floating rate
Floating rate
Floating rate
Floating rate
BEF
USD
USD
FRF
EUR
EUR
–
63.9
29.0
152.4
15.0
500.0
2.2
86.9
76.9
34.9
152.4
14.9
500.0
8.7
184.3
91.5
41.6
152.4
14.9
500.0
13.0
dddddddd
dddddddd
dddddddd
ffffffff
ffffffff
ffffffff
Other issues 1
12.08.1993
18.03.1994
25.03.1998
15.12.2000
19.12.2001
Accrued interest
TOTAL CCF FRANCE ISSUES (including accrued interest) . . . . . .
762.5
874.7
997.7
1 Six issues were made between 1992 and 1993 with maturities staggered between February 2002 and March 2003.
73
CCF
20 Subordinated liabilities (continued)
Participating notes, undated subordinated notes and bonds issued by CCF
(in € million)
Reference
Date of issue
Type of issue
date
Currency
2003
2002
2001
ddddddddd
dddddddddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
04.06.1984
22.07.1985
Participating notes 1
130% TMO
Undated subordinated
notes 2
TMO - 0.25
Subordinated bonds
TF 3
Subordinated bonds
TF 3
Subordinated bonds
TF 3
Subordinated step-up
4
floating rate notes
Subordinated step-up
4
floating rate notes
Accrued interest
FRF
6.4
6.4
6.4
FRF
NLG
NLG
NLG
17.4
–
–
–
18.0
14.5
2.3
4.6
18.0
14.5
2.3
4.6
YEN
74.0
80.1
86.5
YEN
37.0
0.9
40.2
2.2
43.3
1.0
dddddddd
dddddddd
dddddddd
ffffffff
ffffffff
ffffffff
29.01.1993
31.08.1993
01.09.1993
22.09.1993
19.11.1993
TOTAL CCF FRANCE ISSUES (including accrued interest) . . . . . . .
135.7
168.3
176.6
1 Following the 1990 share exchange offer and partial repurchase in 1999, the total amount of participating notes outstanding is €6.4 million.
Moreover, these notes have reached their maximum remuneration of 130% of TMO since 1990, in accordance with their terms of issue.
2 These undated subordinated notes were partially retired following a cancellation in 1995. The amount outstanding fell from €91.4 million
to €18 million.
3 Fixed rate subject to revision over time, based on 5-year Government bond yields.
4 Initially fixed rate then floating rate (Libor) plus a margin increasing over time.
21 Reserve for general banking risks
(in € million)
2003
2002
20001
dddddddd
dddddddd
dddddddd
99.2
195.3
99.7
278.9
102.7
257.7
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
Risks arising from the AFB-AGIRC-ARRCO agreement
of 13 September 1993 relating to the pension regimes
of banking personnel 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other general banking risks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
294.5
378.6
360.4
1 The annual write-back covers contributions paid to the CRPB.
22 Called up share capital
(Nominal value
of shares: €5)
Amount at 1st January . .
– Exercise of share
options . . . . . . .
– Capital reduction . .
Amount at 31 December
2003
2002
2001
dddddddddddddddddd
dddddddddddddddddd
dddddddddddddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
74,117,066
370,585
75,409,701
377,048
74,888,902
374,445
233,000
–
1,163
–
520,799
–
2,603
–
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
ffffffff
ffffffff
ffffffff
ffffffff
ffffffff
ffffffff
Number
of shares
outstanding
74,350,066
Amount
Number
(in €
of shares
thousands) outstanding
371,748
229,066
(1,521,701)
74,117,066
Amount
Number
(in €
of shares
thousands) outstanding
1,145
(7,608)
370,585
75,409,701
Amount
(in €
thousands)
377,048
Share options:
The exercise of all outstanding share options granted to executives, directors and officers of the company would lead to the issuance of
2,615,660 new shares, raising the total number of shares in issue to 76,965,726.
Voting rights:
The total number of voting rights at 31 December 2003 was 74,350,066. There have no longer been any shares in issue carrying double
voting rights since the cash offer and compulsory purchase made by HSBC Holdings plc.
74
23 Consolidated shareholders’ funds
(in € million)
Group interest
dddddddddddddddddddddddddddddddddddddddd
Share
capital
Balance at
31 December 2002
before appropriation
of net profit . . . . . . . . . . .
Appropriation of 2002
net profit . . . . . . . . . . . . .
2002 net profit . . . . . . . . . . .
2002 dividend . . . . . . . . . . .
Balance at
31 December 2002
after appropriation
of net profit . . . . . . . . . . .
Employee share offering . . .
Translation difference . . . .
Change in minority
interests . . . . . . . . . . . . . .
Impact of private banking
merger . . . . . . . . . . . . . .
Interim dividend 1 . . . . . . . .
Balance at
31 December 2003
before appropriation
of net profit . . . . . . . . . . .
2003 net profit . . . . . . . . . . .
Shareholders’ funds . . . . . . .
Share
premium Translation
account difference
dddddd
dddddd
dddddd
370.5
1,050.8
–
–
–
–
–
–
370.5
1.2
–
1,050.8
12.8
–
–
–
–
–
–
–
–
–
–
371.7
–
371.7
1,063.6
–
1,063.6
(27.6)
–
–
–
(27.6)
–
(5.8)
(33.4)
–
(33.4)
Other
consolidated
reserves
Minority
Group interests in
shareconsoliholders’
dated
funds
reserves
Total
group
and
minorities
dddddd
dddddd
dddddd
dddddd
1,839.9
3,233.6
8.1
3,241.7
–
561.6
(537.4)
1,864.1
–
–
–
561.6
(537.4)
–
4.5
(4.2)
–
566.1
(541.6)
3,257.8
14.0
(5.8)
8.4
–
–
3,266.2
14.0
(5.8)
–
–
(2.6)
(222.6)
1,638.9
627.1
2,266.0
(2.6)
(222.6)
3,040.8
627.1
3,667.9
(13.3)
–
–
(4.9)
1.7
(3.2)
(13.3)
(2.6)
(222.6)
3,035.9
628.8
3,664.7
1 Of which €219.0 million deducted from consolidated reserves and €3.6 million deducted from net profit.
Legal reserve
At least one twentieth of the net profit for the year must be transferred to the legal reserve each year until it is
equal to one tenth of the issued share capital. The legal reserve is not available for distribution.
Special long-term capital gains reserve
Distribution of this reserve would lead to an additional tax liability equal to the difference between taxation at the
standard rate and taxation at the reduced rate.
Revaluation reserve (1976 legal revaluation of assets)
This reserve may be capitalised but may not be distributed or used to offset losses.
Other reserves
Amounts posted to reserves more than five years ago would be liable to tax if distributed.
75
CCF
24 Pension and other post-retirement benefits
(in € million)
Pension commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Reserve for general banking risks . . . . . . . . . . . . . . . . . . . . . . . . .
– Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
End-of-career bonuses and long-service awards . . . . . . . . . . . . . . . .
– Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
157.4
99.2
58.2
71.6
71.6
173.6
99.7
73.9 1
64.8
64.8
204.9
102.7
102.2
64.2
64.2
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
229.0
238.4
269.1
1 The decrease in provisions is principally due to the disposal of HSBC Specialist Investment Limited.
a Pension commitments
Membership of AGIRC and ARRCO
An agreement entered into on 13 September 1993 by the AFB (Association of French Banks), ARRCO and
AGIRC (French state pension schemes for employees and executives) set out the terms and conditions
governing the French banks’ membership of AGIRC and strengthening their membership of ARRCO.
The potential liabilities arising from the agreement are included in the reserve for general banking risks set up
in 1993, for CCF and its subsidiaries, with the exception of Société Marseillaise de Crédit and Banque Hervet,
which have specific provisions in their own books.
Other pension commitments
In France, the CCF group’s commitments in respect of end-of career bonuses and early retirement commitments
are provided for in full.
b End-of-career bonuses and long-service awards
In France, the group’s liability in respect of end-of-career bonuses and long-service awards amounted to
€71.6 million at the end of December 2003. Future expenses in respect of this liability have been provided for
in full since 2000.
76
25 Sovereign risks
In 1989, CCF securitised a substantial portion of its sovereign risks, transferring a pool of loans with a face value
of USD 1 billion to a special purpose vehicle called Financial Overseas Holding (Finov).
As part of the transaction, CCF granted Finov a 25-year loan of USD1 billion, with the principal and part of the
interest secured by investment-grade assets.
Country risk has improved substantially since the transaction took place, leading to a significant increase in Finov’s
net asset value. Finov therefore repaid three quarters of the loan, i.e. USD750 million, well ahead of schedule,
on 31 August 1992. CCF’s exposure to Finov has therefore fallen to USD250 million.
Pursuant to the provisions of Article 51 of Regulation 99.07, CCF has undertaken to liquidate Finov within
a maximum term of 5 years, and for reasons of prudence, has made a provision for the terminal loss based on
the fair market value of assets and liabilities existing as of 31 December 2003.
26 Memorandum items
(in € million)
2003
2002
2001
dddddddd
dddddddd
dddddddd
259.1
10,384.6
540.4
7,282.3
445.9
5,741.7
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
Commitments received
– Financing commitments received from banks . . . . . . . . . . . . . . .
178.7
105.1
424.3
GUARANTEE COMMITMENTS
Commitments given
– Guarantees and endorsements given on behalf of banks . . . . . .
– Guarantees and endorsements given on behalf of customers . . .
332.4
6,253.9
704.7
5,935.4
1,375.7
6,282.7
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
2,458.8
1,774.4
2,657.5
FINANCING COMMITMENTS
Commitments given
– Financing commitments given to banks . . . . . . . . . . . . . . . . . . .
– Financing commitments given to customers . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments received
– Guarantees and endorsements received from banks . . . . . . . . . .
SECURITIES COMMITMENTS
Commitments given: securities to be delivered
– New issue settlement accounts and other guarantees
on the monthly settlement market and others . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments received: securities receivable
– New issue settlement accounts and other guarantees
on the monthly settlement market and others . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10,643.7
6,586.3
7,822.7
6,640.1
6,187.6
7,658.4
3,571.6
2,255.2
1,739.6
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
3,571.6
2,255.2
1,739.6
3,546.7
2,600.7
1,284.8
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
3,546.7
2,600.7
1,284.8
77
CCF
27 Financial instruments
a Forwards, futures and options
2003
2002
dddddddddddddddddddddddddddd
Hedging
Trading
Total
Hedging
Trading
Total
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
Forwards and futures . .
Transactions on
organised markets . .
– fixed-income
contracts . . . . . .
– currency contracts
– stock indices
and equities . . .
Over-the-counter
transactions . . . . . .
– interest rate futures .
– interest rate swaps . .
– currency swaps . . .
– others . . . . . . . . . .
17.2
664.7
681.9
25.5
545.8
571.3
–
62.0
62.0
–
48.7
48.7
–
–
60.6
–
60.6
–
–
–
47.6
–
47.6
–
–
1.4
1.4
–
1.1
1.1
17.2
–
11.1
6.1
–
602.7
–
554.2
48.4
0.1
619.9
–
565.37
54.5
0.1
25.5
–
20.8
4.7
–
497.1
–
454.9
41.9
0.3
522.6
–
475.7
46.6
0.3
Options . . . . . . . . . . . .
Transactions on
recognised exchanges
Interest rate options . .
Currency options . . . .
Other options . . . . . . .
Over-the-counter
transactions . . . . . .
Caps and floors . . . . .
Swaptions and options
1.5
138.0
139.5
0.5
85.5
86.0
–
–
–
–
25.0
17.3
1.6
6.1
25.0
17.3
1.6
6.1
–
–
–
–
10.0
5.9
0.9
3.2
10.0
5.9
0.9
3.2
1.5
1.0
0.5
113.0
3.0
110.0
114.5
4.0
110.5
0.5
0.5
–
75.5
0.5
75.0
76.0
1.0
75.0
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
dddddddd
ffffffff
ffffffff
ffffffff
ffffffff
ffffffff
ffffffff
(in € billion)
TOTAL . . . . . . . . . . .
18.7
802.7
821.4
26.0
631.3
657.3
b Additional information concerning outstanding fixed-income contracts
(in € billion)
Specific hedging contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Macro hedging contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Specialised management of a trading book . . . . . . . . . . . . . . . . . . . .
Specific trading transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c
2003
2002
2001
dddddddd
dddddddd
dddddddd
8.6
0.9
553.6
2.1
17.4
3.4
454.2
0.6
21.8
2.3
522.9
–
Financial instruments: residual maturity
TOTAL
2003
dddddddddddddddddddddddddddddddd
(in € billion)
Financial instruments:
Currency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed-income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
78
Under
1 year
1 to
5 years
Over
5 years
dddddddd
dddddddd
dddddddd
48.3
330.5
8.1
7.8
262.9
1.7
1.7
160.4
–
27 Financial instruments (continued)
d Credit risk associated with financial instruments
(in € million)
2003
2002
dddddddd
dddddddd
3,234.6
2,482.5
752.1
506.4
323.8
56.2
108.7
71.8
87.1
182.6
65.5
66.8
50.3
2,123.6
1,619.3
504.3
685.7
270.0
189.0
66.0
15.0
–
415.7
137.7
143.0
135.0
ddddddddd
ddddddddd
ffffffff
ffffffff
Representing a weighted credit risk equivalent of: . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,028.6
838.1
FINANCIAL INSTRUMENTS – ACCRUED INTEREST RECORDED
IN THE BALANCE SHEET
– Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
423.1
129.6
327.0
93.6
A – Contracts negotiated within the framework of master
agreements and eligible for netting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a) Transactions with banks in OECD countries . . . . . . . . . . . . . . . . . . . . . . . . .
b) Transactions with customers and with banks outside the OECD . . . . . . . . .
B – Other contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
a) Transactions with banks in OECD countries . . . . . . . . . . . . . . . . . . . . . . . . .
– Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Currency contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Commodities contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
b) Transactions with customers and with banks outside the OECD . . . . . . . . .
– Interest rate contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Currency contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Equity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL CREDIT RISK ASSOCIATED WITH FINANCIAL INSTRUMENTS . . .
3,741.0
2,809.3
28 Interest rate spread
(in € million)
Interest and similar income
– Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and similar expense
– Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Leasing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
376.3
1,520.9
61.3
385.5
0.1
744.4
1,688.3
39.5 1
335.1
1.1
947.1
1,966.2
971.9
691.0
3.2
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
2,344.1
(440.7)
(532.2)
(33.8)
(324.7)
(2.3)
2,808.4
(776.3)
(629.1)
(15.0)1
(408.0)
(4.9)
4,579.4
(1,412.5)
(927.8)
(848.1)
(526.3)
(0.8)
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
(1,333.7)
(1,833.3)
(3,715.5)
1 Impact of disposal of Lixxbail.
79
CCF
29 Analysis of income from equity shares
(in € million)
– Available-for-sale and portfolio securities . . . . . . . . . . . . . . . . . .
– Other participating interests and long-term securities . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
8.4
103.1
25.2
93.9
16.8
61.7
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
111.5
119.1
78.5
30 Analysis of fee income and commissions
(in € million)
INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions received from banking services . . . . . . . . . . . . .
Customer accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank cards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Import/export operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions received from financial transactions . . . . . . . . .
Securities commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brokerage activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Custody services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Assets under management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate finance business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions received from insurance business . . . . . . . . . . .
Insurance brokerage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPENSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions paid on banking services . . . . . . . . . . . . . . . . . .
Maintenance and rentals
Brokerage business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions paid on financial transactions . . . . . . . . . . . . .
TOTAL FEES AND COMMISSIONS . . . . . . . . . . . . . . . . . . . . . .
80
2003
2002
2001
dddddddd
dddddddd
dddddddd
1,071.3
446.1
192.7
93.4
34.2
96.4
9.8
19.6
550.6
43.4
101.6
23.8
315.8
37.2
28.8
74.6
72.7
1.9
1,072.8
425.5
181.3
92.1
35.3
83.2
11.3
22.3
578.4
31.5
112.0
25.9
340.1
38.7
30.2
68.9
67.4
1.5
1,217.8
440.5
230.3
42.2
35.9
79.5
5.7
46.9
709.9
34.5
172.1
40.8
379.2
35.6
47.7
67.4
67.4
-
(171.3)
(109.8)
(138.9)
(96.0)
(196.8)
(55.2)
(49.3)
(60.5)
(61.5)
(61.5)
(39.3)
(56.7)
(42.9)
(42.9)
(10.5)
(44.7)
(141.6)
(141.6)
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
900.0
933.9
1,021.0
31 Dealing profits
(in € million)
Trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
66.6
47.7
32.2
64.6
25.1
118.5
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
(157.0)
(46.4)
367.9
164.5
146.5
208.2
32 Gains and losses on available-for-sale securities
(in € million)
Gains or losses on available-for-sale securities
Capital gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains or losses on portfolio securities
Capital gains . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
30.9
16.1
(12.2)
0.5
9.6
2.3
27.4
4.5
104.9
(28.1)
148.8
13.7
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
78.9
65.1
174.4
33 Analysis of general operating expenses
(in € million)
Personnel expenses
Salaries and wages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee profit-sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Incentive plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total personnel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
(900.9)1
(32.2)
(14.6)
(882.0)1
(31.6)
(14.1)
(911.4)
(23.0)
(11.5)
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
(947.7)
(562.7)2
(927.7)
(555.9)2
(945.9)
(577.7)
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
(1,510.4)
(1,483.6)
(1,523.6)
1 The provisions for stock option, previously booked as exceptional items, are now booked as personnel expenses. At constant accounting
methods, the 2002 figure for salaries and wages would have been €899.0 million.
2 Expenses connected with the deposit protection mechanism, previously booked as exceptional items, are now booked as other administrative expenses. At constant accounting methods, the 2002 figure for other administrative expenses would have been €558.0 million.
81
CCF
34 Depreciation and amortisation
(in € million)
Tangible and intangible fixed assets, excluding goodwill . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill amortisation and movements in provisions . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
103.2
103.8
103.6
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
ffffffff
ffffffff
ffffffff
103.2
64.61
103.8
40.2
103.6
38.0
1 Including an exceptional writedown of €23.9 million against goodwill arising on ECFH, the Charterhouse Group holding company.
35 Segmental data
(in € million)
Operating income
Retail and commercial banking . . . . . . . . . . . . . . . . .
Corporate and investment banking . . . . . . . . . . . . . .
Asset management and private banking . . . . . . . . . .
Other activities and miscellaneous . . . . . . . . . . . . . . . .
Total activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity investment portfolio . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating profit before provisions
Retail and commercial banking . . . . . . . . . . . . . . . . .
Corporate and investment banking . . . . . . . . . . . . . .
Asset management and private banking . . . . . . . . . .
Other activities and miscellaneous . . . . . . . . . . . . . . . .
Total activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity investment portfolio . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change
Amount
dddddddddddddddddd
2003
2002
dddddddd
dddddddd
1,566.1
472.6
239.4
28.5
1,496.9
430.5
228.7
67.7
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
ffffffff
2,306.6
2,223.8
dddddddd
69.2
42.1
10.7
(39.2)
82.8
4.6
9.8
4.7
NS
3.7
38.5
113.0
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
ffffffff
2,345.1
508.0
230.1
20.3
(61.0)
2,336.8
432.9
178.0
21.9
(6.1)
(74.5)
%
dddddddd
8.3
75.1
52.1
(1.6)
(54.9)
(65.9)
0.4
17.3
29.3
(7.4)
NS
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
ffffffff
697.4
626.7
70.7
34.0
103.5
ddddddddd
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
ffffffff
731.4
730.2
(69.5)
11.3
1.2
(67.2)
0.2
36 Gains or losses on asset disposals
(in € million)
Gains or losses on held-to-maturity securities . . . . . . . . . . . . . . . . . .
Gains or losses on tangible and intangible fixed assets . . . . . . . . . . .
Gains or losses on other participating interests
and long-term securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
82
2003
2002
2001
dddddddd
dddddddd
dddddddd
0.1
(1.1)
33.5
(0.9)
(2.3)
(26.5)
(0.6)
0.4
(1.7)
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
32.5
(29.7)
(1.9)
37 Exceptional items
(in € million)
Deposit protection mechanism 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net restructuring effect 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
–
1.7
8.5
(2.1)
92.1
(22.4)
(5.2)
161.4
(41.7)
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
10.2
67.6
114.5
1 The net restructuring effect includes capital gains or losses on the disposal of subsidiaries and expenses incurred in closing or restructuring certain branches or offices in connection with CCF’s integration into HSBC. Gains or losses not connected with integration are
booked as ordinary items.
2 From 2003, provisions for stock option and expenses connected with the deposit protection mechanism are booked as operating expenses
(see Note 33).
38 Corporation tax
(in € million)
Current year tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Standard rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reduced rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2003
2002
2001
dddddddd
dddddddd
dddddddd
179.6
169.2
10.4
33.3
173.0
159.5
13.5
60.8
ddddddddd
ddddddddd
ddddddddd
ffffffff
ffffffff
ffffffff
93.6
86.2
7.4
(49.4)
44.2
212.9
233.8
The method used to calculate deferred taxation is described in paragraph 1.7. of note 1 to the consolidated financial
statements.
Analysis of the effective tax rate
2003
dddddddd
Standard rate tax in France (including temporary surcharges) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of disposals (reduced rate and consolidation restatements) . . . . . . . . . . . . . . . . . . . . . . . . .
Results of associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference in standard tax rates applicable to foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . .
Permanent differences and other items 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1 Of which:
Reversal of unused ECFH tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefit from group tax relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35.43%
(0.83%)
(0.85%)
(4.52%)
(22.66%)
dddddddd
6.57%
(6.57%)
(10.22%)
39 Litigation
The CCF group is currently involved in legal actions taking place in the United States, relating to banking
operations and fiduciary loans.
At this stage, it is impossible to evaluate the outcome, but CCF believes it has a strong defence case.
83
CCF
40 List of consolidated companies
Consolidated companies
Consolidation
method*
Main line of business
2003
2002
2001
dddddddddddddddd dddddddd
RETAIL AND COMMERCIAL BANKING
ddddd
ddddddddddd
ddd
ddd
ddd
Banque Alcyon . . . . . . . . . . . . . . . . . .
Banque Chaix . . . . . . . . . . . . . . . . . .
Banque de Baecque Beau . . . . . . . . .
Banque de Picardie . . . . . . . . . . . . . .
Banque de Savoie . . . . . . . . . . . . . . . .
Banque Dupuy, de Parseval . . . . . . . .
Banque Hervet . . . . . . . . . . . . . . . . . .
Banque Marze . . . . . . . . . . . . . . . . . .
Banque Pelletier . . . . . . . . . . . . . . . . .
CCF Change . . . . . . . . . . . . . . . . . . .
Compagnie Financière Iles-du-Rhône .
Compagnie Interbancaire de
Développement (CID) . . . . . . . . .
Crédit Commercial du Sud-Ouest . . .
Elysées Factor . . . . . . . . . . . . . . . . . .
Financière d’Uzès . . . . . . . . . . . . . . .
Financo . . . . . . . . . . . . . . . . . . . . . . .
Hervet Mathurins . . . . . . . . . . . . . . .
Lixxbail . . . . . . . . . . . . . . . . . . . . . . .
Marly Courtage . . . . . . . . . . . . . . . . .
Marly Gestion . . . . . . . . . . . . . . . . . .
Netvalor . . . . . . . . . . . . . . . . . . . . . . .
Société Anonyme Professionnelle
de Crédit . . . . . . . . . . . . . . . . . . . .
Société Immobilière et
Foncière Savoisienne . . . . . . . . . . .
Société Marseillaise de Crédit (Group)
Sofimurs . . . . . . . . . . . . . . . . . . . . . . .
Sté Immobilière de la Région
Rhône-Alpes . . . . . . . . . . . . . . . . .
Union de Banques à Paris . . . . . . . . .
France
France
France
France
France
France
France
France
France
France
France
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
Bank
Bank
Bank
Bank
Bank
Bank
Bank
Bank
Bank
Service company
Holding company
100.0%
100.0%
100.0%
100.0%
99.9%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
98.2%
100.0%
100.0%
100.0%
100.0%
–
100.0%
100.0%
100.0%
100.0%
100.0%
98.2%
100.0%
100.0%
100.0%
100.0%
–
100.0%
France
France
France
France
France
France
France
France
France
France
FC
FC
FC
EM
EM
FC
FC
FC
FC
FC
Service company
Bank
Financial company
Financial company
Financial company
Property company
Leasing company
Broker
Investment company
Financial company
100.0%
100.0%
66.0%
34.0%
–
100.0%
–
100.0%
100.0%
100.0%
100.0%
100.0%
66.0%
34.0%
–
100.0%
–
100.0%
100.0%
100.0%
100.0%
100.0%
66.0%
34.0%
25.0%
100.0%
50.0%
100.0%
100.0%
100.0%
France
FC
Bank
100.0%
100.0%
100.0%
France
France
France
FC
FC
FC
Property company
Bank
Property leasing company
98.2%
100.0%
100.0%
98.2%
100.0%
100.0%
98.2%
100.0%
100.0%
France
France
FC
FC
Service company
Bank
98.2%
100.0%
98.2%
100.0%
98.2%
100.0%
84
Country
CCF group interest
ddddddddddddd
40 List of consolidated companies (continued)
Country
Consolidation
method*
CCF group interest
ddddddddddddd
2003
2002
2001
dddddddddddddddd dddddddd ddddd
CORPORATE AND INVESTMENT BANKING
ddddddddddd
ddd
ddd
ddd
Auxilia . . . . . . . . . . . . . . . . . . . . . . . .
Excofipar . . . . . . . . . . . . . . . . . . . . . .
Finance et participation . . . . . . . . . . .
Foncière Elysées . . . . . . . . . . . . . . . . .
Hôtelière Haussmann . . . . . . . . . . . .
HSBC CCF Financial Products . . . .
HSBC CCF Investment Bank . . . . . .
HSBC CCF Leasing . . . . . . . . . . . . .
HSBC CCF Securities . . . . . . . . . . . .
Immobiliaria Jose Abascal 45, SA . .
Immobilier Elybail . . . . . . . . . . . . . . .
Immobilière Bauchard . . . . . . . . . . . .
Neuilly Saint Paul . . . . . . . . . . . . . . .
Société Financière et Mobilière . . . . .
Société Immobilière
Malesherbes-Anjou . . . . . . . . . . . .
France
France
Luxembourg
France
France
France
France
France
France
Spain
France
France
France
France
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
Service company
Property company
Service company
Property company
Property company
Financial company
Bank
Financial company
Financial company
Service company
Financial company
Property company
Investment company
Financial company
100.0%
100.0%
–
100.0%
100.0%
100.0%
–
100.0%
100.0%
–
100.0%
100.0%
100.0%
100.0%
100.0%
–
100.0%
100.0%
100.0%
100.0%
–
100.0%
100.0%
–
100.0%
100.0%
–
100.0%
100.0%
–
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
–
–
100.0%
France
FC
Property company
100.0%
100.0%
100.0%
United Kingdom FC
Financial company
100.0%
100.0%
100.0%
United Kingdom
France
France
France
France
FC
FC
FC
FC
FC
Financial company
Asset management
Asset management
Asset management
Asset management
100.0%
100.0%
–
–
100.0%
100.0%
100.0%
–
–
100.0%
100.0%
100.0%
100.0%
100.0%
100.0%
France
France
Luxembourg
France
France
FC
FC
EM
EM
EM
Financial company
Service company
Asset management
Insurance company
Insurance company
100.0%
–
33.3%
50.0%
50.0%
100.0%
51.0%
–
50.0%
50.0%
100.0%
51.0%
–
50.0%
–
France
United Kingdom
United Kingdom
France
France
FC
FC
FC
FC
FC
Asset management
Financial company
Financial company
Financial company
Asset management
100.0%
51.0%
51.0%
100.0%
100.0%
100.0%
51.0%
51.0%
100.0%
100.0%
100.0%
51.0%
51.0%
100.0%
100.0%
France
France
France
Luxembourg
France
France
Hong Kong
United Kingdom
France
Japan
France
FC
FC
FC
FC
FC
FC
FC
FC
FC
EM
FC
Financial company
Asset management
Financial company
Asset management
Financial company
Financial company
Asset management
Service company
Service company
Asset management
Financial company
100.0%
100.0%
–
99.9%
99.9%
100.0%
100.0%
100.0%
99.9%
49.0%
100.0%
100.0%
100.0%
–
–
99.9%
99.9%
–
–
99.9%
–
100.0%
100.0%
100.0%
100.0%
–
99.9%
99.9%
–
–
99.9%
–
100.0%
ASSET MANAGEMENT AND INSURANCE
CCF Holdings Ltd . . . . . . . . . . . . . .
CCF & Partners Asset
Management Ltd . . . . . . . . . . . . . .
CCF Capital Management Europe . .
CCF Capital Management FCP 1 . . .
CCF Capital Management FCP 2 . . .
CCF Capital Management Monde . .
HSBC CCF Epargne Entreprise
(ex-Elysées Gestion) . . . . . . . . . . .
Elysées-Fonds1 . . . . . . . . . . . . . . . . . .
EMI Advisory Company . . . . . . . . . .
Erisa . . . . . . . . . . . . . . . . . . . . . . . . . .
Erisa Iard . . . . . . . . . . . . . . . . . . . . . .
Exatis Financial Adviser
Europe (EFAE) . . . . . . . . . . . . . . .
Framlington Group PLC . . . . . . . . . .
Framlington Holdings Ltd . . . . . . . .
HSBC AME France (FCP) . . . . . . . .
HSBC Asset Management Europe . .
HSBC CCF Management Holding
(ex-HSBC CCF Asset Management) . .
IDF 10 . . . . . . . . . . . . . . . . . . . . . . . .
IDF 9 . . . . . . . . . . . . . . . . . . . . . . . . .
Sinopia AM Luxembourg . . . . . . . . .
Sinopia Asset Management . . . . . . .
Sinopia Financial Services . . . . . . . . .
Sinopia Greater China Limited . . . . .
Sinopia International Limited . . . . . .
Sinopia Société de Gestion . . . . . . . .
Sinopia T&D . . . . . . . . . . . . . . . . . . .
Vernet Valor . . . . . . . . . . . . . . . . . . .
85
CCF
CCF group interest
ddddddddddddd
Country
Consolidation
method*
2003
2002
2001
dddddddddddddddd
PRIVATE BANKING
dddddddd
ddddd
ddddddddddd
ddd
ddd
ddd
Banque du Louvre (Groupe)2 . . . . . .
Banque Eurofin2 . . . . . . . . . . . . . . . .
Banque Privée Internationale2 . . . . . .
CCF Holding Suisse . . . . . . . . . . . .
CCF Immos . . . . . . . . . . . . . . . . . . . .
Compagnie de Gestion du Patrimoine .
Delosfin SA3 . . . . . . . . . . . . . . . . . . .
Eurofin Capital Partners (ECP)3 . . . .
Eurofin Assurance SA3 . . . . . . . . . . .
Eurofin Gestion SA3 . . . . . . . . . . . . .
Groupe Dewaay . . . . . . . . . . . . . . . . .
Groupe PrimeCorp . . . . . . . . . . . . . .
HSBC Private Bank France
(ex-HSBC Bank France SA)2 4 . . . .
SCI Triangle d’or3 . . . . . . . . . . . . . . .
Société de Financement International
du CCF SA . . . . . . . . . . . . . . . . . .
Société des Cadres de la Banque
Eurofin . . . . . . . . . . . . . . . . . . . . .
HSBC Republic Assurance SARL4 . .
HSBC Finance France SA4 . . . . . . . .
France
France
France
Switzerland
Switzerland
France
France
France
France
France
Belgium
France
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
FC
Bank
Bank
Bank
Financial company
Mortgage bank
Bank
Investment company
Investment company
Insurance broker
Asset management
Bank
Financial company
–
–
–
100.0%
–
100.0%
96.8%
96.4%
96.8%
96.9%
100.0%
–
100.0%
68.0%
100.0%
100.0%
–
100.0%
67.9%
67.5%
67.9%
68.0%
100.0%
–
88.9%
68.0%
100.0%
100.0%
100.0%
100.0%
67.9%
67.5%
67.9%
68.0%
100.0%
100.0%
France
France
FC
FC
Bank
Property company
97.0%
97.0%
100.0%
68.0%
–
68.0%
Switzerland
FC
Financial company
–
100.0%
100.0%
France
France
France
FC
FC
FC
100.0%
97.0%
97.0%
–
–
–
–
–
–
Louvre Gestion5 . . . . . . . . . . . . . . . . .
Octogone Immobilier5 . . . . . . . . . . . .
Byron Equilibre5 . . . . . . . . . . . . . . . .
B.D.L Gestion5 . . . . . . . . . . . . . . . . .
France
France
France
France
FC
FC
FC
FC
97.0%
97.0%
97.0%
–
–
–
–
–
–
L.G.I.5 . . . . . . . . . . . . . . . . . . . . . . . .
Luxembourg
FC
Financial company
Insurance broker
Financial company
(investment fund)
Financial company
Property company
Insurance broker
Financial company
(UCITS)
Wealth management
97.0%
97.0%
–
–
–
–
*
1
2
3
4
5
86
FC: Full consolidation; EM: Equity method.
Buyout of minority interests and merger with Elysées Gestion.
Merger of private banking subsidiaries.
Change in percentage due to the merger of private banking subsidiaries.
Demerger of HSBC Bank France sub-group.
Demerger of Banque du Louvre sub-group.
Country
Consolidation
method*
dddddddddddddddd
OTHERS
dddddddd
ddddd
Charterhouse (ECFH Group) . . . . . .
Charterhouse Management
Service Limited . . . . . . . . . . . . . . .
Finanpar 17 . . . . . . . . . . . . . . . . . . . .
Finimmo . . . . . . . . . . . . . . . . . . . . . . .
Nobel . . . . . . . . . . . . . . . . . . . . . . . . .
Participaciones y Financiacion, SA . .
SAGP . . . . . . . . . . . . . . . . . . . . . . . . .
Société Parisienne de Participations .
Société Française et Suisse (SFS) . . .
Cedarstead . . . . . . . . . . . . . . . . . . . . .
Equity Finance . . . . . . . . . . . . . . . . . .
Financo . . . . . . . . . . . . . . . . . . . . . . .
Lombard Bank Malta Plc . . . . . . . . .
Myriade . . . . . . . . . . . . . . . . . . . . . . .
Pennel Finance . . . . . . . . . . . . . . . . . .
United Kingdom FC
Financial company
England
France
France
France
Spain
France
France
France
United States
France
France
Malta
France
France
Investment company
Investment company
Investment company
Investment company
Service company
Investment company
Investment company
Investment company
Investment company
Venture capital company
Financial company
Bank
Investment company
Financial company
FC
FC
FC
FC
FC
FC
FC
FC
EM
EM
EM
EM
EM
EM
ddddddddddd
CCF group interest
ddddddddddddd
2003
2002
2001
ddd
ddd
ddd
–
100.0%
100.0%
100.0%
100.0%
–
100.0%
100.0%
100.0%
100.0%
100.0%
–
32.5%
–
–
–
–
100.0%
–
100.0%
100.0%
100.0%
–
100.0%
100.0%
–
36.0%
–
–
–
–
–
–
100.0%
100.0%
100.0%
–
100.0%
100.0%
59.2%
40.6%
25.0%
21.7%
49.0%
40.2%
* FC: Full consolidation; EM: Equity method.
87
CCF
Exits
Year
ddddddddddddddddddddddddddddddddddd
ddd
ddddddddddddddddddddddddddddddddddd
ddd
Alcyon . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Banque de Baecque Beau . . . . . . . . . . . . . .
Banque Hervet . . . . . . . . . . . . . . . . . . . . . . .
CCF Immos . . . . . . . . . . . . . . . . . . . . . . . . .
Compagnie de Gestion du Patrimoine . . . .
Erisa Iard . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hervet Mathurins . . . . . . . . . . . . . . . . . . . .
HSBC CCF Financial Products . . . . . . . . .
Marly Courtage . . . . . . . . . . . . . . . . . . . . . .
Marly Gestion . . . . . . . . . . . . . . . . . . . . . . .
Myriade . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sofimurs . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charterhouse Management Services Limited .
HSBC Bank France SA . . . . . . . . . . . . . . . .
Immobilière Bauchard . . . . . . . . . . . . . . . . .
11 Bank Worms agencies . . . . . . . . . . . . . . .
HSIL, consolidated in the accounts
of Charterhouse UK (ECFH) in
February 2002, has no longer been
consolidated since June 2002 . . . .
Société des Cadres de la Banque Eurofin . .
Neuilly Saint Paul . . . . . . . . . . . . . . . . . . . .
Excofipar . . . . . . . . . . . . . . . . . . . . . . . . . . .
CCF Change . . . . . . . . . . . . . . . . . . . . . . . .
SAGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finanpar 17 . . . . . . . . . . . . . . . . . . . . . . . . .
Sinopia International Limited . . . . . . . . . . .
Sinopia Greater China Limited . . . . . . . . . .
Sinopia T&D . . . . . . . . . . . . . . . . . . . . . . . .
Sinopia AM Luxembourg . . . . . . . . . . . . . .
EMI Advisory Company . . . . . . . . . . . . . . .
2001
2001
2001
2001
2001
2001
2001
2001
2001
2001
2001
2001
2002
2002
2002
2002
Auxim . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brésil . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CCF Finance Moyen-Orient . . . . . . . . . . . .
CCF Holding Liban . . . . . . . . . . . . . . . . . .
CCF Luxembourg . . . . . . . . . . . . . . . . . . . .
CCF Monaco . . . . . . . . . . . . . . . . . . . . . . . .
CCF Suisse . . . . . . . . . . . . . . . . . . . . . . . . .
Cie Le Caire . . . . . . . . . . . . . . . . . . . . . . . . .
Compagnie Financière de la Garonne
et de l’Adour . . . . . . . . . . . . . . . . . . . . . .
Credival Latinsul . . . . . . . . . . . . . . . . . . . . .
Elyfact Participations . . . . . . . . . . . . . . . . .
Elymans . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finanzaria Francial . . . . . . . . . . . . . . . . . . .
Handelsfinanz CCF Bank . . . . . . . . . . . . . .
Handelsfinanz International Ltd . . . . . . . .
Pennel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Quilter . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Teaside Business . . . . . . . . . . . . . . . . . . . . .
CCF Immos . . . . . . . . . . . . . . . . . . . . . . . . .
Lombard Bank . . . . . . . . . . . . . . . . . . . . . .
Financo . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Myriade . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cedarstead . . . . . . . . . . . . . . . . . . . . . . . . . .
Loxxia Slibail . . . . . . . . . . . . . . . . . . . . . . . .
HSIL, consolidated in the accounts
of Charterhouse UK (ECFH) in
February 2002, has no longer been
consolidated since June 2002 . . . . . . . . . .
SFI Suisse . . . . . . . . . . . . . . . . . . . . . . . . . .
ECFH . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance et Participation . . . . . . . . . . . . . . .
2001
2001
2001
2001
2001
2001
2001
2001
Additions
88
Year
2002
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2001
2001
2001
2001
2001
2001
2001
2001
2001
2001
2002
2002
2002
2002
2002
2002
2002
2003
2003
2003
Change in consolidation method:
None.
Merger:
Elysées Gestion absorbed Elysées Fonds
HSBC Bank France SA absorbed:
BPI, Banque du Louvre, Banque Eurofin.
Change of name:
HSBC CCF Asset Management renamed HSBC CCF Asset Management Holding,
Elysées Gestion renamed HSBC CCF Epargne Entreprise,
HSBC Bank France SA renamed HSBC Private Bank France.
Transfer of assets:
Finimmo to Nobel.
Wound up:
Finance et Participation,
ECFH.
89
CCF
Parent company financial statements
Balance sheets 2003 - 2002 - 2001
ASSETS
(in € thousands)
Cash and balances at central banks . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury bills and other eligible bills . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and advances to banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and advances to customers . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other participating interests and long-term securities . . . . . . . . . . . .
Interests in associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tangible fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments and accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MEMORANDUM ITEMS
Financing commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guarantees and endorsements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities commitments (other commitments received) . . . . . . . . . . .
Financial instruments and other (notional principal) . . . . . . . . . . . .
90
2003
2002
2001
dddddddd
dddddddd
dddddddd
398,983
14,031,216
11,225,146
20,868,680
3,676,922
86,484
1,047,526
2,722,993
84,392
330,638
4,203,528
1,486,019
dddddd
60,162,527
ffffff
1,461,587
9,462,795
10,568,045
21,256,865
3,177,991
118,108
1,137,110
2,925,975
71,339
333,444
2,569,351
1,131,508
dddddd
54,214,118
ffffff
893,894
5,752,772
12,401,253
22,240,685
6,247,286
125,667
164,131
2,940,245
61,757
368,049
1,584,747
1,021,450
dddddd
53,801,936
ffffff
10,056,956
6,410,360
3,514,151
841,769,086
dddddd
6,865,703
6,501,558
2,481,795
688,453,914
dddddd
5,347,706
7,609,117
1,121,509
750,936,473
dddddd
Balance sheets 2003 - 2002 - 2001 (continued)
LIABILITIES
(in € thousands)
Deposits by banks . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer accounts . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities in issue . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals and deferred income . . . . . . . . . . . . . . . . . .
Provisions for liabilities and charges . . . . . . . . . . . . .
Reserve for general banking risks . . . . . . . . . . . . . . . .
Subordinated liabilities . . . . . . . . . . . . . . . . . . . . . . . .
Called up share capital . . . . . . . . . . . . . . . . . . . . . . . .
Share premium account . . . . . . . . . . . . . . . . . . . . . . .
Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Special tax-allowable reserves . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interim dividend deducted from retained earnings . .
Net profit for the year . . . . . . . . . . . . . . . . . . . . . . . . .
Interim dividend deducted from net result . . . . . . . . .
TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . .
MEMORANDUM ITEMS
Financing commitments . . . . . . . . . . . . . . . . . . . . . . .
Guarantees and endorsements . . . . . . . . . . . . . . . . . .
Securities commitments . . . . . . . . . . . . . . . . . . . . . . .
2003
dddddddddddd
Before
After
appropriation appropriation 1
dddddd dddddd
19,881,771
19,881,771
16,431,720
16,431,720
9,839,848
9,839,848
9,102,065
9,344,125
809,149
809,149
234,026
234,026
74,700
74,700
898,195
898,195
371,750
371,750
1,063,618
1,063,618
954,334
954,334
38,307
38,307
219,035
220,984
(219,000)
–
466,637
–
(3,628)
–
dddddd dddddd
60,162,527
60,162,527
ffffff ffffff
2002
dddddd
After
appropriation
dddddd
19,151,791
14,776,770
7,866,342
6,656,587
1,815,659
198,981
74,700
1,043,023
370,585
1,050,800
957,966
31,879
219,035
–
–
–
dddddd
54,214,118
ffffff
2001
ddddddd
After
appropriation
dddddd
22,042,771
14,620,007
7,545,411
4,414,743
1,123,727
165,139
74,700
1,174,438
377,048
1,144,333
956,126
27,322
136,171
–
–
–
dddddd
53,801,936
ffffff
709,914
1,851,328
3,521,339
dddddd
879,622
1,631,805
2,144,926
dddddd
1,046,494
4,385,010
1,566,376
dddddd
709,914
1,851,328
3,521,339
dddddd
1 Proposed appropriation.
91
CCF
Parent company financial statements (continued)
Profit and loss accounts 2003 - 2002 - 2001 (continued)
EXPENSES IN BRACKETS
(in € thousands)
Interest and similar income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and similar expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions received . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dealing profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gains or losses on available-for-sale securities . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NET OPERATING INCOME . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and amortisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
OPERATING PROFIT BEFORE PROVISIONS . . . . . . . . . . . . . .
Provisions for bad and doubtful debts . . . . . . . . . . . . . . . . . . . . . . . .
OPERATING PROFIT AFTER PROVISIONS . . . . . . . . . . . . . . .
Gains or losses on disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PROFIT ON ORDINARY ACTIVITIES BEFORE TAX
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporation tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net recovery from the reserve for general banking risks . . . . . . . . . .
NET ATTRIBUTABLE PROFIT . . . . . . . . . . . . . . . . . . . . . . . . . . .
92
2003
2002
2001
dddddddd
dddddddd
dddddddd
1,664,331
(1,198,293)
365,064
488,840
(102,242)
104,045
25,096
48,641
(20,765)
dddddd
1,374,717
dddddd
(761,508)
(64,206)
dddddd
549,003
dddddd
(124,337)
dddddd
424,666
dddddd
9,366
dddddd
434,032
dddddd
12,251
26,779
(6,425)
dddddd
466,637
ffffff
2,129,754
(1,678,756)
520,370
473,527
(75,336)
76,636
(3,876)
56,151
(11,707)
dddddd
1,486,763
dddddd
(735,639)
(62,273)
dddddd
688,851
dddddd
(1,583)
dddddd
687,268
dddddd
(46,322)
dddddd
640,946
dddddd
(2,753)
(13,425)
(4,555)
dddddd
620,213
ffffff
2,898,144
(2,473,219)
279,802
412,825
(64,526)
112,057
(12,254)
24,691
(15,268)
dddddd
1,162,252
dddddd
(670,128)
(59,486)
dddddd
432,638
dddddd
(10,656)
dddddd
421,982
dddddd
13,579
dddddd
435,561
dddddd
165,597
(36,068)
(22,439)
dddddd
542,651
ffffff
Statement of reported net profit and movements in shareholders’ funds and the reserve
for general banking risks
(Commission des Opérations de Bourse Recommendation - Bulletin no. 79, February 1979)
(in € thousands)
NET PROFIT FOR THE YEAR
– Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Per share (in euros) 1 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(based on number of shares outstanding at year end, excluding
own shares held)
MOVEMENTS IN SHAREHOLDERS’ FUNDS AND
THE RESERVE FOR GENERAL BANKING RISKS
(after appropriation of 2001 and 2002 net profit and proposed
appropriation for 2003 net profit)
– Change in revaluation difference . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Transfer to reserves and change in retained earnings . . . . . . . . . . .
– Change in revaluation reserve and special tax-allowable reserves . . .
– New shares issued upon exercise of stock options . . . . . . . . . . . . .
– Capital reduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Integration of Charterhouse, Webroker and Selectbourse . . . . . . .
CHANGE IN SHAREHOLDERS’ FUNDS . . . . . . . . . . . . . . . . . . .
– Per share (in euros) 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(based on number of shares outstanding at year end, excluding
own shares held)
PROPOSED DIVIDEND
– Gross . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Per share (in euros) 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
31.12.2003
dddddd
31.12.2002
dddddd
31.12.2001
dddddd
466,637.3
6.28
620,212.8
8.37
542,651.3
7.20
(64.4)
1,949.4
2,860.1
13,983.1
–
–
(112.0)
82,864.1
6,132.2
8,845.4
(255,037.1)
146,569.8
(100.7)
120,356.9
9,860.3
18,547.5
–
–
18,728.2
0.2
(10,737.6)
(0.2)
148,664.0
2.0
464,687.9
6.25
537,348.7
7.25
422,294.3
5.60
1 Number of shares outstanding at year end (excluding own shares held): 74,350,066 in 2003, 74,117,066 in 2002, and 75,409,701
in 2001.
2 Based on the weighted average number of shares outstanding (excluding own shares held), net earnings per share amounts to €6.29
in 2003 (74,129,833 shares), €8.28 in 2002 (74,928,199 shares), €7.23 in 2001 (75,019,102 shares).
93
CCF
Appropriation of net profit
(article 295 of Decree no. 67-236, 23 March 1967)
(in € thousands)
Sums available for distribution
– Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sub-total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Net profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Appropriation of income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Legal reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RETAINED EARNINGS (a - b) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
94
31.12.2003
dddddd
31.12.2002
dddddd
31.12.2001
dddddd
219,035
219,035
466,637
dddddd
685,672
ffffff
136,171
136,171
620,213
dddddd
756,384
ffffff
16,074
16,074
542,651
dddddd
558,725
ffffff
464,688
–
dddddd
464,688
ffffff
220,984
dddddd
537,349
–
dddddd
537,349
ffffff
219,035
dddddd
422,294
260
dddddd
422,554
ffffff
136,171
dddddd
Five-year highlights
(articles 133 and 148 of the decree of 23 March 1967 on commercial companies)
(in € thousands)
Share capital at year end
Called up share capital . . . . . . . . . . . .
Number of shares outstanding . . . . . .
Nominal value of shares in euros . . . .
Results of operations for the year
Gross operating income . . . . . . . . . . .
Profit before tax, depreciation
and provisions . . . . . . . . . . . . . . . . .
Profit after tax, depreciation
and provisions . . . . . . . . . . . . . . . . .
Per share data
(in €)
Profit after tax, but before depreciation
and provisions . . . . . . . . . . . . . . . . .
Profit after tax, depreciation
and provisions . . . . . . . . . . . . . . . . .
Dividend paid per ordinary share,
eligible as of 1st January . . . . . . . . .
Employees (France)
Number of employees d . . . . . . . . . . .
Average number of employees
(excluding employees available) . . .
Salaries and wages . . . . . . . . . . . . . . .
Employee benefits . . . . . . . . . . . . . . . .
Payroll and other taxes . . . . . . . . . . . .
Incentive schemes and/or employee
profit-sharing plan h . . . . . . . . . . . .
2003
dddddd
2002
dddddd
2001
dddddd
2000
dddddd
1999
dddddd
371,750 b
370,585 a
377,048 b
374,445 b
369,344 c
74,350,066
74,117,066
75,409,701
74,888,902
73,868,858
5
5
5
5
5
dddddd dddddd dddddd dddddd dddddd
3,076,321
3,727,332
3,748,256
4,708,415
4,583,748
633,284
729,661
659,241
358,957
485,425
466,637
dddddd
620,213
dddddd
542,651
dddddd
287,302
dddddd
237,589
dddddd
€9.3
€10.0
€8.3
€4.2
€6.0
€6.3
€8.4
€7.2
€3.8
€3.2
€6.25
dddddd
€7.25
dddddd
€5.6
dddddd
€4.1
dddddd
€2.2
dddddd
6,997
6,847 e
288,738
123,398
34,711
19,619
dddddd
6,742 g
6,313
6,651 e
269,528
112,008
30,923
–
236,672
104,433
22,176
17,369
dddddd
22,396
dddddd
6,282 f
5,998
–
224,556
98,006
20,838
–
215,374
98,413
19,888
20,199
dddddd
12,135
dddddd
a Capital reduction of €7.6 million pursuant to cancellation of own shares and capital increase of €1.1 million pursuant to the exercise of
share options.
b Capital increases pursuant to the exercise of share options.
c The share capital was converted on the basis of a nominal value of €5 per share. The impact of adjusting the nominal value of the shares
to €5 was deducted from reserves. Other capital increases pursuant to the exercise of share options and employee share offerings, and a
capital reduction pursuant to cancellation of own shares.
d Banking status’ employees, registered as at 31 December of each year.
e Of which 3,689 executives and 3,158 non executives in 2003. Of which 3,263 executives and 3,388 non executives in 2002.
f Figures for 2000 are not comparable with those of 1999, due to the disposal of the electronic payments systems business and the
integration of HSBC Bank plc Paris Branch employees.
g Figures for 2002 are not comparable with those of 2001, due to the integration within CCF of HSBC Investment Bank, Selectbourse,
Webroker and eleven Banque Worms branches.
h Based on previous year’s profits.
95
CCF
List of equity shares and debt securities held at 31 December 2003
Held-to maturity, available-for-sale and trading securities
(in € thousands)
A – Held-to-maturity securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury bills and other eligible bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other public sector securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negotiable certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negotiable medium-term notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds and similar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B – Available-for-sale and trading securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Debt securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury bills and other eligible bills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other public sector securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money market instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negotiable certificates of deposit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negotiable medium-term notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset-backed securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds and similar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negotiable medium-term notes issued by banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity shares and similar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mutual fund units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL HELD-TO-MATURITY, AVAILABLE-FOR-SALE AND TRADING SECURITIES
96
3,462,849
3,462,849
350,297
2,638,212
–
–
–
399,823
74,517
1,173,739
1,087,255
–
225,781
–
–
4,449
–
15,351
835,861
–
5,813
86,484
63,228
23,256
dddddd
4,636,588
ffffff
List of equity shares and debt securities held at 31 December 2003 (continued)
Interests in associates, other participating interests and long-term securities
(in € thousands)
A – Other participating interests and long-term securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities listed on a recognised French exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unlisted French securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign securities listed on a recognised French exchange . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign securities listed elsewhere . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unlisted foreign securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
B – Interests in associates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Listed French securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unlisted French securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Listed foreign securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unlisted foreign securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL INTERESTS IN ASSOCIATES, OTHER PARTICIPATING INTERESTS
AND LONG-TERM SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,047,526
2,797
57,265
3,476
30,002
953,986
–
2,722,993
–
1,618,754
–
1,104,234
5
dddddd
3,770,519
ffffff
97
CCF
Interests in subsidiaries and associates at 31 December 2003
(as required under articles 247 and 295 of the 23 March 1967 decree on commercial companies)
Companies
Business
dddddd
Reserves
+ retained
earnings
before
Share appropriation
capital of net profit
dddddd dddddd
Ownership
interest
%
dddddd
(In thousand of currency units)
A – Companies whose book value at cost
exceeds 1% of CCF’s share capital
1 – Subsidiaries (over 50%)
Bank
€16,805
€163,440
97.90
CCF Holding (Suisse) . . . . . . . . . . . . . . . . . . . . . . . . . Financial co.
1, place Longemalle - Geneva (Switzerland)
CHF186,041
CHF266,718
100.00
Banque Hervet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1, place de la Sous-Préfecture - 18000 Bourges (France)
Crédit Commercial du Sud-Ouest . . . . . . . . . . . . . . .
17, allée James Watt - Parc Chemin-Long
33700 Mérignac (France)
Bank
€11,849
€35,978
99.50
Société Française et Suisse . . . . . . . . . . . . . . . . . . . . .
64, rue Galilée - 75008 Paris (France)
Investment
company
€45,658
€(45,674)
100.00
Société Parisienne de Participations . . . . . . . . . . . . . .
Investment
company
€72,282
€92,814
100.00
Banque de Savoie . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6, bd du Théâtre - 73000 Chambéry (France)
Bank
€6,611
€33,214
99,96
Banque de Picardie . . . . . . . . . . . . . . . . . . . . . . . . . . .
3, rue de la Sous-Préfecture - 60200 Compiègne (France)
Bank
€6,007
€17,303
100.00
Union des Banques à Paris . . . . . . . . . . . . . . . . . . . . .
22, place de la Madeleine - 75008 Paris (France)
Bank
€51,709
€40,284
99.44
HSBC CCF Asset Management Holding . . . . . . . . .
4, place de la Pyramide - 92800 Puteaux (France)
Investment
company
€47,990
€112,396
97.92
Participationes y Financiacions S.A. . . . . . . . . . . . . .
Paseo de la Castellana, Madrid (Spain)
Service
company
€23,571
Nobel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment
company
€128,468
€162,301
100.00
HSBC CCF Leasing . . . . . . . . . . . . . . . . . . . . . . . . . .
39, rue Bassano - 75008 Paris (France)
Finance
company
€13,050
€9,448
100.00
1 Loans, advances and guarantees granted outside the framework of normal banking business.
2 Net operating income in the case of banks.
98
€(1,600)
100.00
Book value
of securities held
dddddddddddddd
Cost
Net
dddddd dddddd
Dividends
received by
CCF in the
last financial
year
dddddd
Comments
dddddd
€53,367
€44,440
–
CHF57,123 CHF117,487
€25,979
–
€7,588
–
Loan and
advances
Guarantees
Prior-year
granted by
given by
Prior-year
net profit
CCF 1
CCF 1
sales 2
or loss
dddddd dddddd dddddd dddddd
€518,001
€518,001
–
–
€169,873
€590,421
€590,421
–
–
€14,539
€14,539
–
–
€56,006
€11,976
€48,380
–
€26,00
CHF 89,353
–
€1,696
€(3,558)
–
–
€82,727
€82,727
–
–
€3,633
€5,913
–
–
€26,847
€26,847
–
–
€44,357
€10,901
–
–
€18,939
€18,939
–
–
€22,190
€5,747
€4,565
–
€105,123
€105,123
–
–
€150,704
€35,835
€27,316
–
€126,172
€126,172
–
–
€32,257
€25,336
€7,930
€19,090
Interim
dividend
€22,320
€22,320
–
–
–
€439
–
–
€207,647
€207,647
–
–
€16,709
€17,676
€5,620
–
€13,046
€13,046
–
–
€(9,056)
€(4,659)
–
–
99
CCF
Companies
Business
dddddd
Reserves
+ retained
earnings
before
Share appropriation
dddddd dddddd
Ownership
interest
%
dddddd
Finance
company
€40,000
€49,906
100.00
Investment
company
€15,494
€121,938
99.49
Foncière Elysées SA . . . . . . . . . . . . . . . . . . . . . . . . . .
103, avenue des Champs-Elysées - 75008 Paris (France)
Property
company
€14,403
€26,400
100.00
HSBC CCF Securities . . . . . . . . . . . . . . . . . . . . . . . .
Finance
company
€12,626
€22,906
100.00
Investment
company
€5,955
€5,255
100.00
Property
company
€13,412
€4,752
100.00
Charterhouse Management Services Ltd . . . . . . . . . .
8, Canada Square - London (United Kingdom)
Investment
company
GBP325,711
GBP19,668
100.00
Elyfinance Corporation BV . . . . . . . . . . . . . . . . . . . .
P.O. Box 2838-1077 - Amsterdam (Netherlands)
Investment
company
€9,076
SAGP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15, rue Vernet - 75008 Paris (France)
Investment
company
€190
Eurimob . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service
company
€8,362
Société Financière et Mobilière . . . . . . . . . . . . . . . . .
Cie Financière des Iles-du-Rhône . . . . . . . . . . . . . . .
Vernet Expansion . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Société Immobilière Malesherbes Anjou . . . . . . . . . .
* Not available
100
€(8,783)
100.00
€2,849
100.00
€(13,928)
100.00
Book value
of securities held
dddddddddddddd
Cost
Net
dddddd dddddd
Loan and
advances
Guarantees
Prior-year
granted by
given by
Prior-year
net profit
CCF 1
CCF 1
sales 2
or loss
Dividends
received by
CCF in the
last financial
year
dddddd
Comments
dddddd
€84,053
€84,053
–
–
€8,319
€263
–
–
€119,108
€119,108
–
–
€42,250
€7,390
€16,570
€34,681
Interim
dividend
€44,476
€41,743
–
–
€4,074
€2,973
–
–
€55,988
€55,988
–
–
€19,641
€(8,024)
€6,018
€5,421
–
–
€1
€(16)
€49,386
€49,386
€1.021
–
€10,205
€489,543
€489,543
–
–
–
€9,076
€293
–
–
€5
€10,054
€10,054
–
–
€1,281
€8,362
–
–
–
N/A*
–
–
–
€1,012
–
–
GBP29,911
GBP44,333
–
–
as at
24.12.03 prior
to liquidation
€9,036
–
–
N/A*
–
Sold on
5.02.04
€(11)
101
CCF
Companies
Business
dddddd
Reserves
+ retained
earnings
before
Share appropriation
dddddd dddddd
Ownership
interest
%
dddddd
2 – Associated companies (10-50%)
Immobilier Elybail . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance
company
€14,550
€2,747
50.00
Erisa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance
company
€65,000
€158,213
33.85
Erisa Iard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Insurance
company
€7,500
HSBC Private Bank France . . . . . . . . . . . . . . . . . . . .
20, place Vendôme - 75001 Paris (France)
Bank
€47,993
€174,183
24.52
Aurel Leven . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29, rue de Berri - 75008 Paris (France)
–
€10,085
€12,248
14.68
Banian Invesments UK . . . . . . . . . . . . . . . . . . . . . . . .
22, Grenville Street, St Helier,
Jersey JE4 8PX, Channel Islands
–
GBP900 GBP899,137
19.00
V.E.A. Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ground Floor, Lancaster Court, Forest Lane
St Peter Port, Guernsey, Channel Island
–
GBP2,450 GBP352,800
19.00
Inter Pacific Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bank
€(1,254)
49.98
N/A*
N/A*
12.14
Wisma Metropolitan II 8 and 9 floor
Jalan jenderal Surdiman
12920 Jakarta (Indonesia)
B – Aggregate data concerning companies
whose book value at cost does not exceed 1%
of CCF’s share capital
1 – Subsidiaries not included in paragraph 1
a) French subsidiaries (aggregated) . . . . . . . . . . . .
b) Foreign subsidiaries (aggregated) . . . . . . . . . . .
–
–
–
–
–
–
–
–
2 – Associated companies not included in paragraph 2
a) French companies (aggregated) . . . . . . . . . . . .
b) Foreign companies (aggregated) . . . . . . . . . . . .
–
–
–
–
–
–
–
–
* Not available
102
Book value
of securities held
dddddddddddddd
Cost
Net
dddddd dddddd
Loan and
advances
Guarantees
Prior-year
granted by
given by
Prior-year
net profit
CCF 1
CCF 1
sales 2
or loss
Dividends
received by
CCF in the
last financial
year
dddddd
Comments
dddddd
€7,273
€7,273
–
–
€4,265
€1,780
–
–
€18,883
€18,883
–
–
€1,202,744
€19,810
€339
–
€3,727
€3,090
–
–
€21,292
€68
–
–
€107,213
€107,213
–
–
€81,161
€11,541
–
–
€4,131
–
–
–
N/A*
–
–
€425,653
€425,653
–
–
–
GBP 478
€19,659
–
€283,485
€283,485
–
–
–
GBP 415
€12,288
–
€16,101
€396
–
–
N/A*
N/A*
–
Sold
on 5.2.04
€5,509
€1,899
€3,218
€1,655
€662
–
–
–
–
–
–
–
€58,501
–
–
€72,996
€283,218
€59,925
€278,090
–
–
–
–
–
–
–
–
€1,578
€30,921
–
–
€(239)
103
CCF
Summary of business activities of CCF’s principal subsidiaries
COMPANIES COMMENTS
(In € thousands)
Retail and commercial banking
Total assets
dddddddddddddddd
2003
2002
dddddd
dddddd
Banque Hervet
Banque Hervet is principally involved in retail banking for personal and business
customers, with a network of 85 branches, chiefly in Paris and the Centre region of
France. In 2003, net operating income rose by 4.9 per cent to €208.8 million. Net
operating income from business customers rose by 5.5 per cent, driven by strong
growth in fee income from banking services, buoyant commissions on mutual funds
sales and growth in non-interest bearing deposits. Net operating income from personal customers rose by 3.2 per cent, with a very strong second half driven by sharp
growth in mortgage lending and a satisfactory increase in fee income from banking
services, despite a decline in financial commissions.
Due to tight cost control, operating costs were down by 2.9 per cent. The cost-income
ratio therefore fell to 61.0 per cent, an improvement of 4.9 percentage points on the
previous year. Excluding exceptional items, operating costs were down 0.8 per cent.
Net profit was up 10.9 per cent to €56.9 million.
3,873,447
4,647,083
Société
Marseillaise
de Crédit
SMC delivered further good results in 2003. Total customer assets increased by 7 per
cent and customer loans and advances by 5.4 per cent, driven by 23.8 per cent growth
in new lending compared with 2002. However, net operating income was up by only
1.9 per cent, due to the competition between banks over lending margins. Operating
costs were down by 1.8 per cent, leading to a 9.1 per cent increase in operating
profit before provisions. The cost:income ratio fell by almost two percentage points
to 65 per cent. SMC continued to focus on recruitment and investment in training
and commercial tools, which will underpin its growth in future years.
3,287,671
3,407,762
UBP
2003 was affected by the sharp slowdown in business activity among middle market
and small business customers in the Paris region, especially during the second half
of the year. Consequently, demand for short-term credit was down sharply and
payment volumes slumped. Activity in personal banking was buoyant, driven by
positive trends in the mortgage market. Mortgage lending increased for the third
consecutive year.
Earnings growth slowed in this challenging climate. Net banking income increased
by 1.1 per cent and operating profit before provisions by 3.8 per cent, excluding
changes in the classification and provisioning of doubtful debts. Taking account of
these legal changes, net banking income fell by 1.3 per cent and operating profit
before provisions by 2.3 per cent. The loss rate increased due to difficulties encountered
by one major branch. Net profit increased by 3.1 per cent, after a write-back of
€5.5 million from the provision for sector risks and €6.9 million from the available
reserve for general banking risks.
1,870,885
1,890,317
CCSO
Despite the slack financial markets, which had an adverse impact on fee income, net
operating income nonetheless increased by 8.15 per cent, driven by sharp growth in
customer loans and advances. Operating profit before provisions rose by 11.8 per
cent, despite a rise in operating costs following the initial expenses connected with
migration of its information systems facilities management. Combined with a relatively low provision charge, these factors resulted in a 25.9 per cent increase in net
profit to €11.98 million.
689,018
728,337
Banque
de Picardie
Banque de Picardie had an excellent year in 2003, delivering 21 per cent growth in
net profit despite the challenging regional economic conditions. Net operating
income increased by 10.9 per cent, driven by a strong commercial performance.
Coupled with a decrease in operating costs, this led to growth of 31.6 per cent in
operating profit before provisions.
254,891
232,752
Banque
de Savoie**
Banque de Savoie turned in an excellent performance in 2003, comfortably ahead of
its targets. As a result of strong growth in both deposits and loans, net operating
income increased by 12.70 per cent to €44.36 million. Tight cost control led to a
further improvement in the cost:income ratio, to 58.5 per cent, while operating
profit before provisions rose by 31.2 per cent to €18.21 million.
756,005
753,868
Banque Chaix
Despite the poor economic and financial climate, Banque Chaix posted 14.7 per cent
growth in net operating income to €75 million. Customer loans rose by 6.4 per cent
to €593.3 million, due principally to business lending. Deposits were up 8.5 per cent
to €912.3 million. This good commercial performance was driven by new product
launches, the introduction of account agreements for personal customers, and
recruitment of new staff in high potential areas. Tight cost control led to a 26.2 per
cent increase in operating profit before provisions, to €41.6 million. Net profit
amounted to €24.7 million, an increase of 36 per cent over 2002.
1,072,259
1,029,108
104
Shareholders’ funds*
Attributable net profit
CCF group’s percentage holding
dddddddddddddddd
2003
2002
dddddddddddddddd
2003
2002
dddddddddddddddd
2003
2002
dddddd
dddddd
dddddd
dddddd
dddddd
dddddd
260,165
255,103
56,873
51,306
97.9
100.0
254,328
225,078
86,777
49,334
100.0
100.0
101,153
101,809
35,835
33,741
100.0
100.0
61,627
56,092
11,976
9,515
100.0
100.0
24,272
24,102
5,748
4,749
100.0
100.0
49,424
39,321
10,901
10,251
100.0
98.2
71,407
73,473
24,746
18,181
100.0
100.0
105
CCF
Summary of business activities of CCF’s principal subsidiaries (continued)
COMPANIES COMMENTS
(In € thousands)
Retail and commercial banking (continued)
Total assets Shareholders’ funds*
dddddddddddddddd
2003
2002
dddddd
dddddd
Banque Marze
2003 was a good year for Banque Marze. Deposits rose by 5.4 per cent, long-term
savings by 4.3 per cent, and loans by 6 per cent. Net operating income therefore
increased by 9.3 per cent despite a 2 per cent fall in fee income. The cost:income
ratio improved from 58.2 per cent to 51 per cent. However, net profit decreased
sharply to €1.58 million due to an increase in provisions.
156,057
145,707
Banque
Pelletier
Banque Pelletier is a regional bank based in Dax in south west France, with branches
in the triangle between Bordeaux, Pau and Bayonne. Customer loans and advances
rose sharply, driven by a 19 per cent increase in medium and long-term lending.
Sight deposits increased by 5 per cent and special regulated savings accounts by
7.2 per cent. Consequently, net operating income rose by 14.2 per cent to €12.4 million.
207,14
189,373
Banque Dupuy,
de Parseval
2003 was a good year, driven by a relatively strong regional economy. Deposits
increased by 9.6 per cent and total customer assets managed by 6.9 per cent. Net
operating income was up 9.7 per cent and by 13.42 per cent excluding non-recurring
items. As a result of tight control over operating costs (up 1.4 per cent) and provisions, net profit rose by 42.9 per cent and 27 per cent excluding exceptional items.
471,226
431,730
Netvalor
Netvalor is CCF’s consumer finance subsidiary, created in April 2000. It continued
to grow rapidly in 2003 both in online credit, with 123crédit.com, which is the leader
in its sector, and through numerous partnerships. Netvalor now has 50,000 customers,
a rise of 67 per cent on the previous year. Net operating income doubled compared
with 2002, to over €14 million. Strict control over costs pushed the cost:income ratio
down to 68 per cent, which, coupled with a reduction in provisions, contained
the net loss to €6 million. A continuation of these trends should lead to a further
significant improvement in results in 2004.
231,848
173,287
Elysées Factor
CCF’s factoring specialist reported 4.5 per cent growth in business in 2003 in a fairly
slack market. Net operating income amounted to €9 million while net operating
profit increased by 9 per cent to €1.2 million due to a decrease in provisions.
A strong commercial drive should ensure robust business growth in 2004.
167,613
153,400
120,835
1,586,034
Corporate and Investment banking and markets
HSBC CCF
Securities
France (SA)
Supported by improved market conditions, HSBC CCF Securities consolidated on
its positions in the equity markets. Growth in its pan-European products accelerated
sharply. The equity derivatives business proved relatively robust in difficult market
conditions. It also continued its integration with the HSBC Group, becoming the
Group’s European trading platform.
Asset management and Private banking
HSBC Asset
Management
(Europe) SA
HSBC AM Europe SA is one of HSBC AM’s major world business units, covering
the whole of continental Europe. Business continued to expand, with new local
operations opening in Italy and Sweden. HSBC AM Europe SA has refocused
its offering and extended its capability to include HSBC AM’s expertise, both by
enriching the range offered by the world umbrella fund HSBC GIF in April 2003,
and through the creation of new high-performance funds geared to corporate
investors. It has also developed expertise in socially responsible investment, which
proved highly popular with first-class institutional investors. Assets managed and
distributed amounted to €31.1 billion, an increase of 14.72 per cent over the year.
Net operating income rose by 4 per cent, from €53.83 million to €55.950 million,
while operating profit before provisions increased by 10.65 per cent.
83,834
71,855
Framlington
Group**
2003 was an eventful year for both the world’s stock markets and for Framlington.
Stock markets plunged to their lows in March before staging a substantial and
consistent recovery. Framlington remained profitable throughout the year, which is
testimony to the strength of cost control within the group. The rebound in the stock
market and some excellent fund performance meant that Framlington achieved a
pre-tax profit of GBP 6 million for the year.
63,770
51,188
Sinopia**
In 2003, Sinopia ranked among the leading quantitative investment specialists in
Europe. Its offering is particularly well suited to the current climate of risk aversion,
through its broad array of capital guaranteed and structured products, low volatility alternative funds and inflation-linked bond products. Sinopia’s equity offering
stands out for its currency-hedged products and products which provide attractive
opportunities for investment diversification, such as sector funds and European
growth and value funds. Sinopia’s strategies and products also made a major breakthrough within the HSBC Group during 2003. All in all, it was a year of strong
growth with an increase of over 70 per cent in assets under management.
256,759
280,619
106
Attributable net profitCCF group’s percentage holding
dddddddddddddddd
2003
2002
dddddddddddddddd
2003
2002
dddddddddddddddd
2003
2002
dddddd
dddddd
dddddd
dddddd
dddddd
dddddd
9,839
9,833
1,582
2,359
100.0
100.0
11,831
9,403
1,582
2,588
100.0
100.0
21,371
20,177
9,286
6,498
100.0
100.0
17,293
16,111
(6,078)
(6,819)
100.0
100.0
6,269
5,568
719
66.0
66.0
35,532
40,209
8,024
(4,677)
100.0
100.0
56,841
39,799
8,748
7,577
100.0
100.0
34,918
29,728
6,037
9,461
51.0
51.0
43,637
46,004
4,563
3,925
99.9
99.9
701
107
CCF
Summary of business activities of CCF’s principal subsidiaries (continued)
COMPANIES COMMENTS
(In € thousands)
Asset management and private banking (continued)
Total assets
dddddddddddddddd
2003
2002
dddddd
dddddd
9,106,160
8,269,221
Erisa
Premium income increased by 4 per cent to €1.2 billion. Assets under management
rose by 9 per cent to €8.6 billion at end 2003, compared with €7.8 billion one year
earlier, driven by growth in business and an improvement in the stock markets. As
a result of these much improved conditions, coupled with a reduction in provisions
against equity investments, net profit amounted to €19.8 million compared with
€10.5 million in 2002.
HSBC CCF
Epargne
Entreprise
The CCF group has reorganised its employee savings business. On 1st January 2004,
HSBC CCF Epargne Entreprise became the group’s wholly-owned subsidiary and
specialist in employee savings, drawing on the expertise of HSBC Asset Management
(Europe) SA for its asset management needs. It has 7,500 corporate clients and
manages 825,000 employee savings accounts. Assets under management increased
by 15 per cent to €2.8 billion in 2003. The CCF group has also combined the
business development teams of Erisa and HSBC CCF Epargne Entreprise, with the
aim of promoting a global offering covering all employee savings products, and
particularly group retirement plans.
56,040
50,495
HSBC
Private Bank
France
During 2003, the CCF group combined its four private banking subsidiaries (Banque
Eurofin, Banque du Louvre, HSBC Bank France and CCF Banque Privée Internationale)
to create HSBC Private Bank France, a powerful new player in the French private
banking market. It is one the first private banking unit in the HSBC Group to operate
under the HSBC Private Bank brand. It has three target customer groups: resident
clients, international non-resident clients and institutional clients. Its offering covers
all aspects of private and business wealth management in France and abroad, with
tailored proposals for institutional clients. HSBC Private Bank France draws on the
expertise of its subsidiary, Louvre Gestion, which is acknowledged in the market
for its expertise in fund selection, fund management and multi-manager funds.
1,662,734
560,562
HSBC
Dewaay SA
Despite a difficult economic climate, HSBC Dewaay’s private banking business continued
to grow, with an increase of more than 7 per cent in assets under management. The
bank adopted the name HSBC Dewaay SA on 1st January 2004 to underline its
membership of the HSBC Group.
309,118
325,423
Own investment
SFS
The composition of SFS’s portfolio remained unchanged in 2003. But the net book
value has been reduced by a small provision, related to the negative trend of equity
markets.
84,618
107,955
Foncière
Elysées SA
In 2003, Foncière Elysées reported growth in net profit, despite impairment provisions
for certain assets. Operating results were satisfactory. This performance reflects the
Group’s overall policy in the property market, which consists of developing its
property leasing activities with major customers, and maintaining and developing
its property management services.
51,913
50,141
Immobilier
Elybail
This company provides property leasing for the Group’s large corporate customers.
First founded in 2000, growth has continued apace since then. Cumulative new
lending to 31 December 2003 amounted to €540 million. Net profit was down on
the previous year due to the postponement to 2004 of certain contracts originally
scheduled for 2003 and the absence of fee income on arrangement deals. In the
coming years, Immobilier Elybail will expand its business in the eurozone and
strengthen its equity base.
475,064
409,686
Nobel
Nobel is a holding company for the Group’s own investments. Its investment strategy
focuses principally on mid caps and private equity funds.
The extremely volatile stock market conditions in 2003 provided the opportunity to
acquire some major holdings in listed companies at very attractive prices, principally
in the technology sector. Nobel also maintains close relationships with several private
equity funds. The year’s results were good, supported by a highly selective investment approach.
405,978
303,196
* Comprising share capital + reserves + RGBR.
** Consolidated data.
108
Shareholders’ funds*
Attributable net profit
CCF group’s percentage holding
dddddddddddddddd
2003
2002
dddddddddddddddd
2003
2002
dddddddddddddddd
2003
2002
dddddd
dddddd
dddddd
dddddd
dddddd
dddddd
223,213
213,259
19,810
10,499
50.0
50.0
19,151
9,146
(1,316)
2,696
100.0
100.0
230,122
101,250
11,541
17,026
94.8
100.0
30,593
32,485
(279)
9,037
100.0
100.0
40,241
(3,558)
(40,256)
100.0
100.0
37,470
36,838
2,973
1,802
100.0
100.0
15,517
13,194
1,780
2,051
100.0
100.0
290,768
217,876
17,676
17,830
100.0
100.0
(15)
109
CCF
Investment policy
1999
2000
– Acquisition of 23 per cent of Banque de Picardie
via a cash offer followed by a squeeze-out made by
CSF, a subsidiary of CCF. Banque de Picardie is
now a wholly-owned subsidiary of CCF.
Cost: FFr65 million.
– Acquisition of Banque Pelletier by Compagnie
Financière de la Garonne et de l’Adour.
Cost: €18.3 million.
– Acquisition of MMA’s 45 per cent holding in
Elymans, giving CCF a 96 per cent interest in
Loxxia via Elymans and SPP.
Cost: FFr183.8 million.
– Creation of Netvalor, wholly-owned by SPP.
Cost: FFr56 million via a partial call on capital.
– Creation of WeBroker, wholly-owned by CCF.
– Creation of Selectbourse, 80 per cent-owned by
CCF Securities.
Cost: FFr15 million (first investment tranche).
– Acquisition of BNE’s shares in Crédit International
d’Egypte, raising CCF’s holding to 75 per cent.
– Acquisition by CCF Charterhouse plc of 95 per
cent of Themis Investment Mgt Ltd.
– Acquisition by CCF Holding Suisse of 33 per cent
of Gesconsult.
– Increase in CCF’s holding in Banque Eurofin to 74
per cent via CCF Banque Privée International, in
exchange for the transfer of CCF-BPI’s “resident”
customer portfolio.
– Acquisition of 1 per cent of Crédit Lyonnais on
the occasion of its privatisation.
– Disposal of CCF’s holding in BHF Bank on the
occasion of the cash offer made by ING.
Proceeds: FFr515 million.
– Acquisition by CSF of 2 per cent of Rentenanstalt
from UBS.
Cost: CHF227 million.
– Acquisition of 3 per cent of Crédit Logement.
Cost: FFr5 million.
– Tender of Seita shares under the share exchange
offer and reinvestment in Altadis shares, giving
CCF a 1 per cent holding.
Net additional cost: FFr328 million.
110
– Rights issue made by Compagnie Financière de la
Garonne et de l’Adour to recapitalise Banque
Pelletier.
– Rights issue made by Compagnie Financière des
Iles du Rhône, a holding company owning 98 per
cent of SMC, to pay the French government the
additional acquisition price for SMC.
Cost in 2000: €58.4 million.
– Pooling of the leasing activities of CCF and Crédit
Lyonnais through a merger of their respective subsidiaries Loxxia and Slibail. CCF owns 50 per cent
of the new group via Elymans and Société
Parisienne de Participations.
– Rights issue made by WeBroker, a subsidiary
of CCF.
– Capital increase made by Netvalor following a final
call on unpaid capital.
– Disposal of Charterhouse Securities in London to
ING as part of CCF’s integration into the HSBC
Group.
Proceeds: GBP127.4 million.
– Increase in CCF’s holding in Banque du Louvre
from 50.8 per cent to 83.3 per cent via three subsidiaries, CCF Holding (Suisse) SA, CCF Partners
Asset Management and CCF Charterhouse
European Holding.
Cost in 2000: €40.4 million.
– Creation of Compagnie de Gestion de Patrimoine
(CGP), owned by CCF Holding Suisse SA.
Cost: €15 million.
– Creation of Be-Partner, wholly-owned by HSBC
CCF Asset Management Group.
Cost: €5 million.
– Creation of a joint venture called CCF-SEI
Investments by HSBC CCF Asset Management
Group, a subsidiary of the CCF group, and SEI.
Cost: €1 million.
– Disposal of CCF’s 33.4 per cent holding in Banque
Harwanne.
Proceeds: €17 million.
– Disposal of CCF’s 26.5 per cent holding in Accord.
Proceeds: €13.6 million.
– Disposal of CCF’s 44.9 per cent holding in Sofidep.
2001
– Acquisition of 97.9 per cent of Banque Hervet.
– Transfer of Crédival Latinsul to HSBC Latin
America BV.
– Disposal of CCF’s 93.3 per cent holding in Crédit
International d’Egypte to Crédit Agricole Indosuez.
– Disposal of CCF’s 33.3 per cent holding in
Gesconsult and 2.6 per cent holding in Finconsult
to their respective partners.
– Acquisition of HSBC Securities (France) SA.
– Transfer of CCF Italy’s corporate finance, treasury and private banking activities to HSBC
Republic Italy.
– Acquisition by CCF Holding Suisse of the remaining 42.76 per cent minority interests in Primecorp.
– Acquisition by CCF of the remaining 25.1 per cent
minority interests in Banque Dewaay.
– Disposal to the KBL group of Teaside Business
SA, which owned a building in the Principality of
Monaco.
– Transfer of CCF’s private banking activities in
Switzerland (Handelsfinanz Geneva and CCF
Switzerland), Monaco and Luxembourg, together
with Handelsfinanz Nassau, to HSBC Private
Banking Holdings (Switzerland) SA (PBSU), in
exchange for shares in PBSU, and acquisition of 8
per cent of HSBC Guyerzeller Bank SA (HGZB).
Cost: €364 million (excluding PBSU shares received).
– Disposal of the 20.3 per cent holding in Quilter
Holdings Group owned by CCF Holdings (UK)
to Morgan Stanley.
– Acquisition by HSBC CCF AMG of the shares in
Sinopia owned by KBC Group, BBVA Group and
Mellon Group, raising its holding from 60.4 per
cent to 76.7 per cent, launch of a simplified cash
offer and squeeze-out for the remaining shares still
owned by the general public.
– Acquisition of shares issued by Euroclear Holding
on the occasion of the merger between Euroclear
and Sicovam.
– Subscription to the rights issue made by the Lafarge
group on the occasion of its bid for Blue Circle and
payment of a scrip dividend.
– Acquisition by Malesherbes Anjou of the Avenue II
property complex located in Nanterre.
– Acquisition by CCF Partners Asset Management Ltd.
and CCF Charterhouse European Holding Ltd. of
the shares in Banque du Louvre owned by the
employees, raising CCF’s holding to 86.5 per cent.
Cost: €7 million.
2002
– Disposal of 50 per cent stake in Lixxbail (formerly
Loxxia) to Crédit Lyonnais.
Proceeds: €160 million.
– Disposal of 25 per cent stake in Financo to Crédit
Mutuel de Bretagne.
– Subscription to the rights issue made by Netvalor
– Disposal of HSIL, a subsidiary specialising in
the management of property assets, property
funds and privatisation funds, to HSBC Asset
Management.
– Disposal of 21.74 per cent stake in Lombard Bank.
111
CCF
Investment policy (continued)
– Disposal of CCF Immo, a mortgage lending subsidiary.
Proceeds: CHF5 million.
– Disposal of 49 per cent stake in Myriade, an investment company.
Proceeds: CAD22 million.
– Subscription to rights issue made by Erisa IARD.
– Disposal of Cedel International shares to Deutsche
Börse.
– Acquisition of HSBC Republic Bank France SA
by CSML.
– Disposal of CCF SEI Investment to SEI
Investment Company.
–
Subscription to capital increase made by
Immobilier Elybail following a call for the remaining unpaid capital.
– Disposal of CCF Eurozone Italy (8 Italian
branches) to Banca Immobiliare.
– Subscription by SFS to rights issue made by Swiss
Life.
2003
– Acquisition by Elysées Gestion of the part of the
capital of Elysées Fonds held by Médéric and
Malakoff (49 per cent) and disposal by Elysées
Fonds to Médéric of a part of its activity.
Cost : €14 million.
Disposal : €2 million.
– Acquisition of 3 per cent of Société Marseillaise
de Crédit.
Cost : €13.1 million.
– Acquisition of Société des Cadres de la Banque
Eurofin and of other minority interests of Banque
Eurofin.
– Subscription to capital increases made by Netvalor.
– Subscription by HSBC CCF Asset Management
Holding to capital increase made by HSBC CCF
Epargne Entreprise.
– Disposal of Altadis shares.
Disposal : €29.5 million.
– Disposal by HSBC CCF Securities of a stake in
Euronext.
– Disposal of HSBC CCF Asset Management
Holding of HSBC Multimanager subsidiaries to
HSBC Multimanager Ltd.
– Disposal of 40 per cent of group CCF’s stake in
Société de la Tour Eiffel.
– Disposal of Crédit Lyonnais shares.
Disposal : €45 million.
– Subscription to capital increases made by Crédit
Logement.
112
CCF
CCF group offices
CCF’s main offices are located on the Champs-Elysées, the “Ile-de-France”, “Coeur Défense” and “Collines Sud”
sites at La Défense, the “Avenue II” and “Crystal” sites at Nanterre and the information processing centre at Lognes.
CCF also has a network of 218 branches and offices throughout France, including 102 in Paris and the suburbs.
The group’s principal regional banks in France are:
Banque Chaix (south east France): 66 branches
Banque Dupuy, de Parseval (south east France): 46 branches
Banque Hervet (Paris region and central France): 85 branches
Banque de Baecque Beau : 1 branch
Banque Marze (south east France): 10 branches
Banque Pelletier (south west France): 11 branches
Banque de Picardie (northern France): 16 branches
Banque de Savoie (Rhône-Alpes region): 55 branches
Crédit Commercial du Sud-Ouest (south west France): 54 branches
Société Marseillaise de Crédit: 157 branches
Union de Banques à Paris (Paris region): 55 branches
113
CCF
Other legal documents relating to the Annual General Meeting of shareholders
Agreements governed by Article L. 225-38 of the Code of Commerce
Article L. 235-38 of the French Commercial Code requires that any agreement entered into directly or indirectly
between a company and one of its Directors or senior executives, or between a company and one of its shareholders
owning at least 10% of the voting rights, or, in the case of a corporate shareholder, the company which controls
it, must first be authorised by the Board of Directors and subsequently approved at the annual general meeting of
shareholders. It also prohibits certain types of agreement between those parties, such as loans or guarantees.
Agreements entered into during 2003
The following agreements subject to the provisions of Article L. 235-38 of the French Commercial Code were submitted to the Board of Directors for approval during 2003:
– Acquisition by CCF of the business developed by Selectbourse, which is subject to a special agreement with
HSBC CCF Securities concerning account holding, custody and order execution on behalf of Selectbourse
clients. The value assigned to this business is €50,000.
– Agreement with HSBC Holdings plc for the provision of central support services. Amounts invoiced during
2001 and 2002 totalled USD5.3 million. An agreement was entered into under the terms of which HSBC
Holdings plc will provide CCF with central support services. The Directors concerned are Charles de Croisset
and Stephen Green.
– Agreement with HSBC Bank for the provision of services for the CCF group’s markets activities. Amounts
invoiced during 2002 and 2003 totalled £0.97 million. An agreement was entered into under the terms of which
HSBC Bank will provide CCF with services for all its markets activities for the sum of €0.58 million a year.
The Directors concerned are Charles de Croisset, Stephen Green, William Dalton and Charles-Henri Filippi.
– Development costs of the HUB project: service agreement under the terms of which HSBC Bank plc Paris
Branch will assume the refinancing costs of the HUB project in the sum of €149 million spread over five years
from 2003. Amounts paid by HSBC Bank plc Paris Branch under the agreement totalled €25 million in respect
of 2003. Charles de Croisset, Chairman of CCF, is head of HSBC Bank Paris Branch.
– Agreement with HSBC Bank for use of the Opsco system, software developed by HSBC Bank for forex and
derivative products. The total cost of access to the system and participation in research work is estimated at
USD 13 million. The Directors concerned are Charles de Croisset, Stephen Green, William Dalton and CharlesHenri Filippi.
Agreements entered into in prior years and still in full force and effect during 2003
In addition, three agreements governed by Article 225-38 of the French Commercial Code entered into during
2001 by CCF and its direct 99.99 per cent shareholder, HSBC Bank plc Paris Branch, remained in full force and
effect during 2003. These were a pooling of resources agreement designed to provide the parties with various services
relating to their activities at cost, an agreement for the provision of services covering various activities and a group
tax relief agreement.
114
Statutory auditors’ report on the financial statements
For the year ended 31 December 2003
Dear Shareholders,
In compliance with the assignment entrusted to us by the Annual General Meeting, we hereby report to you, for
the year ended 31 December 2003, on:
– the audit of the accompanying financial statements of CCF;
– 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 consolidated financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by the management, as well as evaluating the overall financial statements
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements give a true and fair view of the Company’s financial position and its
assets and liabilities, as of 31 December 2003, and of the results of its operations for the year then ended in accordance with the accounting rules and principles applicable in France.
Without qualifying our opinion, we draw your attention to Note 1 to the financial statements, which outlines
the changes in accounting policies resulting from the application of the regulation CRC no. 2002-03, relating to the
accounting treatment of credit risk, as well as from the application of the regulation CRC no. 2002-10 relating to
assets amortization and depreciation.
II - Justification of our assessments
In accordance with the requirements of Article L. 225-235 of the Commercial Code relating to the justification of
our assessments, introduced by the Financial Security Act of 1st August 2003 and which came into effect for the
first time this year, we bring to your attention the following matters:
As detailed on Note 1.3 to the financial statements, your company records provisions to cover the credit risks
inherent to its activities. We have reviewed the procedures implemented by the Management for identifying and
assessing these risks and determining the amount of provisions considered as necessary.
As detailed on Note 1.8 to the financial statements, your company records and values its financial instruments
in accordance with the applicable accounting policies, and uses internal models to value some of them. We have
reviewed the control procedures implemented by the Management for ensuring that the accounting policies are
regularly applied. We have also reviewed the control procedures dedicated to the determination of the parameters
used for the implementation of internal models.
On this basis, we have assessed whether the accounting policies were properly applied and whether the estimates
used were reasonable.
The assessments were made in the context of our audit of the financial statements, taken as a whole, and therefore contributed to the formation of the unqualified opinion expressed in the first part of this report.
115
CCF
Other legal documents relating to the Annual General Meeting of shareholders (continued)
III - Specific verifications and information
We have also performed the specific verifications required by law in accordance with professional standards applicable in France.
We have no matters to report regarding the fair presentation and the conformity with the financial statements
of the 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.
As required by law, we verified that the statutory disclosures regarding holdings and voting rights have been
made in the management report of the Board of Directors.
Paris La Défense and Paris, 26 February 2004
The Statutory Auditors
Cabinet Alain Lainé
Represented by Alain Lainé
116
KPMG Audit
Department of KPMG SA
Represented by Fabrice Odent
Statutory auditors’ report on the consolidated financial statements
For the year ended 31 December 2003
Dear Shareholders,
In compliance with the assignment entrusted to us by the Annual General Meeting, we have audited the accompanying consolidated financial statements of CCF for the year ended 31 December 2003.
The consolidated 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 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 includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by the management, as well as evaluating the overall financial statements
presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements give a true and fair view of the assets, liabilities, financial
position and results of the consolidated group of companies in accordance with the accounting rules and principles
applicable in France. Without qualifying our opinion, we draw your attention to Note 2A to the consolidated financial statements, which outlines the changes in accounting policies resulting from the application of the regulation
CRC n° 2002-03, relating to the accounting treatment of credit risk, as well as from the application of the regulation
CRC n° 2002-10 relating to assets amortization and depreciation.
II - Justification of our assessments
In accordance with the requirements of Article L. 225-235 of the Commercial Code relating to the justification of
our assessments, introduced by the Financial Security Act of 1st August 2003 and which came into effect for the
first time this year, we bring to your attention the following matters:
As detailed on Note 2.A.3 to the consolidated financial statements, your company records provisions to cover
the credit risks inherent to its activities. We have reviewed the procedures implemented by the Management for
identifying and assessing these risks and determining the amount of provisions considered as necessary.
As detailed on Note 2.A.9 to the consolidated financial statements, your company records and values its financial instruments in accordance with the applicable accounting policies, and uses internal models to value some of
them. We have reviewed the control procedures implemented by the Management for ensuring that the accounting
policies are regularly applied. We have also reviewed the control procedures dedicated to the determination of the
parameters used for the implementation of internal models.
On this basis, we have assessed whether the accounting policies were properly applied and whether the estimates
used were reasonable.
The assessments were made in the context of our audit of the consolidated financial statements, taken as a whole,
and therefore contributed to the formation of the unqualified opinion expressed in the first part of this report.
117
CCF
III - Specific verification
In accordance with professional standards applicable in France, we have also verified the information given in the
group management report. We have no matters to report regarding its fair presentation and conformity with the
consolidated financial statements.
118
KPMG Audit
Statutory auditor’s report, prepared in accordance with the last paragraph of Article L. 225-235
of the French Company Law (Code de Commerce), on the report prepared by the Chairman
of the Board of Directors of CCF, on the internal control procedures relating to the preparation
and processing of financial and accounting information.
Year ended 31 December, 2003
To the Shareholders of CCF,
In our capacity as statutory auditors of CCF, and in accordance with the last paragraph of Article L. 225-235 of
the French Company Law (Code de Commerce), we report to you on the report prepared by the Chairman of the
Board of Directors of your company in accordance with Article L. 225-37 of the French Company Law for the
year ended 31 December 2003.
Under the responsibility of the Board of Directors, the company’s management has to determine and implement appropriate and effective internal control procedures. The Chairman has to provide information in his report
regarding the preparation and the organization of the Board of Directors as well as regarding the internal control
procedures in place within the company.
It is our responsibility to report to you our observations on the information and assertions set out in the report
of the Chairman of the Board of Directors with respect to the internal control procedures relating to the preparation and processing of financial and accounting information.
We conducted our procedures in accordance with the professional guidelines applicable in France which requires
the implementation of procedures destined to assess the fairness of the information set out in the report of the Chairman
on the procedures on internal control relating to the preparation and processing of financial and accounting information.
Our procedures consist in :
– obtaining an understanding of the objectives and general organization of the internal control process, as well
as the internal control procedures relating to the preparation and processing of financial and accounting information, as set out in the report of the Chairman of the Board of Directors;
– understanding the works underlying the information set out in the report.
On the basis of these procedures, we have no matters to report in connection with the information and assertions given on the internal control procedures relating to the preparation and processing of financial and accounting information, contained in the report of the Chairman of the Board of Directors, prepared in accordance with
Article L. 225-37 of the French Company Law.
KPMG Audit
119
CCF
Auditor’s special report on regulated party agreements
Year ended 31 December 2003
To the Shareholders of CCF,
As statutory auditors of CCF, we present below our special report on regulated related party transactions.
Agreements authorised during the year
In accordance with article L. 225-40 of the French Commercial Code (Code du commerce), we have been advised
of the transactions previously authorised by your Board of Directors.
We have no obligation to perform any specific procedures aimed at identifying other transactions that may exist.
Our only obligation is to present to you the main characteristics and provisions of the transactions of which we
have been informed, without commenting as to their usefulness or appropriateness. For the purpose of approving
these transactions, it is your responsibility, in accordance with Article 92 of the Decree of 23 March 1967, to assess
the benefits arising from these transactions.
With HSBC CCF Securities
Under the terms of an agreement between CCF and its wholly-owned subsidiary HSBC CCF Securities, CCF
acquired the goodwill developed by Selectbourse. This goodwill is subject to a specific agreement with HSBC
Securities for account management, and for the custodian function and execution of orders for Selectbourse clients.
The assessed value of this goodwill is €50,000.
With HSBC Holdings plc
An agreement has been entered into by CCF and HSBC Holdings, company which controls a shareholding firm
holding over 10% of the voting stock. CCF and HSBC Holdings have Directors in common, Mr. de Croisset and
Mr. Green.
Under the terms of this agreement, services provided by central departments of HSBC Holdings are invoiced
to CCF. Invoices amounting to USD11.5 million (VAT recoverable excluded) were sent to CCF in 2003 with respect
to this agreement.
With HSBC Bank plc
Two agreements have been entered into with HSBC Bank, direct shareholder of over 10 per cent of the voting
stock. CCF and HSBC Bank plc have Directors in common, Mr. de Croisset, Mr. Filippi, Mr. Green, and Mr.
Dalton.
– Service level agreement for all market activities of CCF group. Invoices amounting to GPB0.59 million (VAT
recoverable excluded) were sent to CCF in 2003 with respect to this agreement.
– Agreement in order to use the system Opsco, software developed by HSBC Bank for foreign exchange and
derivative products. The access costs to the system Opsco and the participation in the research work are valued
at a total of USD13 million. Invoices amounting to USD3.45 million (VAT recoverable excluded) were sent to
CCF in 2003 with respect to this agreement.
An agreement has been entered into with HSBC Bank plc Paris Branch, direct shareholder of over 10 per cent of
the voting stock. CCF and HSBC Bank plc Paris Branch have an Executive in common, Mr. de Croisset, Chairman
of CCF, and executive of HSBC Bank plc Paris Branch and Directors in common, Mr. de Croisset, Mr. Filippi,
Mr. Green, and Mr. Dalton.
Service level contract for the HUB project, the funding costs of the project are paid by HSBC Bank plc Paris
Branch, amounting to €149 million for the next 5 years starting 2003. The services paid for by HSBC Bank plc
Paris Branch amounted to €23 million in 2003.
120
Agreements approved in prior years which remain in full force and effect
In accordance with the provisions of the Decree of 23 March 1967, we have been advised that the following agreements, which were approved in prior financial years, remained in full force and effect during 2003.
With HSBC Bank plc Paris Branch
Three agreements have been entered into by CCF and its direct shareholder of over 10 per cent of the voting stock,
remained in full force and effecting 2003.
– A groupwide service agreement for the purpose of rendering services to its members at cost concerning diverse
activities of the two entities: back-office payments, back-office treasury, credit risk management, and euro zone
management. The agreement amounted to €1.5 million in 2003.
– Service level agreement issued by CCF to HSBC Bank plc Paris Branch concerning:
–
Services related to back-office payment processing activities,
–
Services related to back-office treasury activities,
–
Some services related to information technology.
Payment for the services rendered is equal to the cost incurred by CCF in providing the services. The agreement
is valid for an indeterminate period. No invoice was made to this respect in 2003.
– Tax integration agreement between HSBC Bank plc Paris Branch, the Company at the head of the group tax
integration, and CCF: this agreement allows for the tax savings realised each year by the tax integration group,
that are not used by the member companies in deficit, to be available for CCF after deducting the amounts
already paid by HSBC Bank plc Paris Branch to other members of the Group. The net amount paid to CCF
in 2003 amounted to €66 million. This amount includes adjustments on prior years, representing a cost of
€4.5 million for CCF in 2003.
With Société Française et Suisse
The agreement entered into in 2002 by CCF and its wholly-owned subsidiary Société Française et Suisse (“SFS”)
remained in full force and effect in 2003.
Under the terms of this agreement, CCF has granted SFS a financial subsidy of €62.9 million to restore it to
financial health. The subsidy is subject to a “better fortunes” clause, which requires SFS to repay CCF a sum equal
to 50 per cent of its net profits, if any, in the financial years 2003 and 2004.
No payment was made to this respect in 2003.
Agreements entered into during the year and not previously authorised
In accordance with Article L. 225-42 of the French Commercial Code (Code du Commerce), we present our special report on these agreements.
In accordance with Article L. 225-240 of the French Commercial Code, we advise you that, following an omission, these agreements have not been previously authorised by your Board of Directors.
It is our obligation to present to you the main characteristics and provisions of the transactions of which we
have been informed, as well as the reason for which the authorization procedure has not been respected, without
commenting as to their usefulness or appropriateness. For the purpose of approving these transactions, it is your
responsibility, in accordance with Article 92 of the Decree of 23 March 1967, to assess the benefits arising from
these transactions.
With Union de Banques à Paris (UBP), Banque Hervet, and Banque de Baecque Beau
Three agreements have been entered into by CCF and its subsidiaries Union de Banques à Paris (UBP), Banque
Hervet, and Banque de Baecque Beau.
121
CCF
The agreements entered into with Banque Hervet and Banque de Baecque Beau have had a retroactive effect as at
April 1 2002.
Under the terms of the agreement, Union de Banques à Paris (UBP), Banque Hervet and Banque de Baecque
Beau undertake to direct their clients to CCF (although reserving the right to deal directly with some clients) whenever they seek advice or have a project concerning the skills of CCF in SME advisory services, or when searching
partners and counterparts in the following fields:
– mergers and acquisitions, including equity research,
– financing acquisitions, particularly LBO and MB,
– debt syndication,
– structured financial products.
Union de Banques à Paris (UBP), Banque Hervet, and Banque de Baecque Beau also undertake to give
priority to CCF when in need of a third party to prepare loan files concerning the CCF skill field defined above.
By applying these agreements,
– CCF pays respectively Union de Banques à Paris (UBP), Banque Hervet, and Banque Baecque de Beau a commission equal to 50 per cent of the fees and commissions net of tax collected for services rendered, increased by VAT.
– CCF receives respectively from Union de Banques à Paris (UBP), Banque Hervet, and Banque de Baecque
Beau a sum equal to 50 per cent of the commissions inherent to the installment of loans and 50 per cent of the
interest margin on the 12 first month of these loans, installed by Union de Banques à Paris (UBP), Banque
Hervet and Banque Baecque de Beau, and for which CCF performed the administrative work prior to their
installment.
We conducted our work in accordance with professional standards in France; those standards require that we
perform procedure to verify that the information provided to us has been accurately derived from related underlying documents.
122
KPMG Audit
CCF
Annual General Meeting of 12 May 2004 – Resolutions adopted
***
Ordinary business
First resolution
Having heard and considered the report of the
Directors, the general report of the Auditors for the
year ended 31 December 2003, and the Chairman’s
report on corporate governance and internal control,
and voting under the quorum and majority conditions
required to transact ordinary business, the shareholders
hereby approve the Company’s financial statements
for that year as presented, together with the business
operations reflected therein and summarised in the
reports.
****
The 2003 French Finance Act provides that, in certain
cases, the tax credit used in 2003 is equal to 10 per cent
of the dividend paid rather than 50 per cent.
Third resolution
Directors and the general report of the Auditors for
the year ended 31 December 2003, and voting under
the quorum and majority conditions required to transact ordinary business, the shareholders hereby approve
the consolidated financial statements for that year as
presented.
Second resolution
Voting under the quorum and majority conditions
hereby approve the following proposed distribution of
net profit for the year:
Net profit for the year . . . . . . .
Plus retained profits . . . . . . . . .
Total sum available
for distribution . . . . . . . . . . . . .
€466,637,338.33
€219,034,883.04
ddddddddd
€685,672,221.37
fffffffff
To be distributed as follows:
Dividend of €6.25 per share
to be paid to the shareholders .
Retained profits . . . . . . . . . . . .
€464,687,912.50
€220,984,308.87
The dividend will be paid on 12 May 2004, after
deduction of the interim dividend of €3 per share (plus
a tax credit of €1.50) voted by the Board of Directors
at its meeting of 25 July 2003 and paid in respect of
shares in issue as of that date.
The shareholders duly note that dividends paid in
respect of the three previous financial years were as
follows:
Year
Net dividend
per share
dddddd
€4.10
€5.60
€7.25
€6.25
Tax credit
dddddd
€2.05*
€2.80**
€3.625***
€3.125****
2000
2001
2002
2003
..............
..............
..............
..............
*
**
Fourth resolution
Having heard and considered the special report of the
Auditors on agreements governed by Article L. 225-38
of the Code of Commerce, and voting under the
quorum and majority conditions required to transact
ordinary business, the shareholders hereby approve the
agreements described therein under the conditions
referred to in Article L. 225-40 of said Code.
Fifth resolution
hereby ratify the Board’s co-option on 24 February
2004 of Mr Patrick Careil as Director to replace
Mr. Charles de Croisset, who has resigned, for the
remainder of the term of office of his predecessor.
Noting that Mr de Croisset was due to retire by rotation at the conclusion of this Annual General Meeting,
the shareholders hereby re-elect Mr. Careil for a term
of four years ending at the conclusion of Annual
General Meeting held to approve the financial statements for the year ending 31 December 2007.
Sixth resolution
hereby ratify the Board’s co-option on 24 February
2004 of Mr. Gilles Denoyel as Director to replace
Mr. Dominique Léger, who has resigned. Mr. Denoyel’s
term of office will run for the remainder of the term
of his predecessor, that is until the conclusion of the
123
CCF
Annual General Meeting of 12 May 2004 – Resolutions adopted (continued)
Seventh resolution
Twelfth resolution
hereby elect Mr. Michael Geoghegan as Director for
a term of four years ending at the conclusion of
Mr. Geoghegan replaces Mr. William Dalton, who is
retiring by rotation and not standing for re-election.
Directors, and voting under the quorum and majority
conditions required to transact ordinary business, the
shareholders duly note the resignation of Cabinet Alain
Lainé as statutory auditors and of Mr. Jean Autissier
as alternate auditor, and hereby appoint in their place
RSM Salustro Reydel of 8, avenue Delcassé, 75008
Paris, as statutory auditors and Mr. Benoît Lebrun of
the same address as alternate auditor for the remainder of their predecessor’s term of office, that is until
the conclusion of the Annual General Meeting held
to approve the financial statements for the year ending
31 December 2005.
Eighth resolution
hereby re-elect Mr. Charles-Henri Filippi, who is retiring
by rotation, as Director for a further term of four years
ending at the conclusion of the Annual General
Meeting held to approve the financial statements for
the year ending 31 December 2007.
Ninth resolution
hereby re-elect Mr. Philippe Houzé, who is retiring by
rotation, as Director for a further term of four years
Tenth resolution
hereby re-elect Mr. Igor Landau, who is retiring by
rotation, as Director for a further term of four years
Eleventh resolution
duly note that Mr. Jean-Antoine Chabannes, who is
retiring by rotation, is not standing for re-election.
In accordance with the provisions of Article L. 225-228
of the Code de Commerce, the shareholders duly note
that Mr. Benoît Lebrun, a partner in the firm
appointed as statutory auditors, who has been nominated as alternate auditor, was responsible for verifying the following business transfers or mergers
concerning CCF or companies it controls within the
meaning of paragraphs I and II of Article L. 233-16
of the Code de Commerce over the past two years:
– In 2002:
– absorption of HSBC CCF Investment Bank
(France) by CCF;
– absorption of Webroker and Selectbourse by
CCF.
– In 2003:
– absorption of HSBC Multimanager Europe
and HSBC Multimanager Services by HSBC
Multimanager Holding;
– absorption of Banque Eurofin, Banque du
Louvre and CCF Banque Privée Internationale
by HSBC Bank France SA;
– transfer of an entire stand-alone business in the
financial management of employee savings
plans from Elysées Fonds to HSBC Asset
Management (Europe) SA;
– absorption of Elysées Fonds by Elysées
Gestion.
– Early 2004:
– absorption of HSBC Finance (France) SA and
Eurofin Gestion by Louvre Gestion.
124
Thirteenth resolution
Fourteenth resolution
Directors, and voting under the quorum and majority
conditions required to transact ordinary business, the
shareholders hereby authorise the Board of Directors
to issue bonds on one or more occasions in all markets up to a maximum amount of €20 billion or the
equivalent thereof in any other currency or composite
monetary unit, on the terms and conditions it deems
appropriate.
Directors, having been appraised of the resolution
passed on 11 May 2004 at the class meeting of holders
of participating notes issued by CCF in May 1984 and
June 1987/1988, and voting under the quorum and
majority conditions required to transact ordinary business, the shareholders hereby approve all the proposed
amendments to the issue agreement approved at said
class meeting giving CCF the option at its sole initiative to retire all the remaining outstanding participating notes issued in 1984 and 1987/1988 on 4 June each
year with effect from 4 June 2005.
The shareholders grant the Board of Directors
fullest powers to complete said issues and notably to:
– stipulate the terms of redemption, which may
include subordination clauses, redemption at a fixed
future date or no later than upon winding up of
the Company, or with a redemption price linked to
factors to be determined by the Board of Directors;
– stipulate any bond retirement clauses, more particularly early retirement or repurchase by the company;
– attach warrants to the bonds, which may be
exchanged for existing securities, used to subscribe
for new securities or conferring rights of any other
nature upon the holder, with the exception of rights
to subscribe for share capital, it being stipulated
that the par value of any bonds or debt securities
which may be issued as a result of the exercise of
such warrants shall be included in the maximum
limit referred to above;
– stipulate the attributes of the bonds to be issued
and the rights to be attached thereto, and more particularly the issue or redemption premium and
coupon rate, which may be fixed, floating or otherwise linked to any assets, financial instruments,
financial products or indices, and may include a
deferred payment clause in the absence of sums
available for distribution;
– take all measures and fulfil all formalities in respect
of the issuance and financial service of the bonds.
This authority is valid for a period of five years with
effect from the date of this meeting. It cancels and
supersedes the authority granted at the Annual General
Meeting held on 29 March 2001.
Any issues already authorised by the Board of
Directors but not yet fully completed as of the date of
this meeting shall be deducted from the unused portion of the authority granted on 29 March 2001.
The shareholders hereby approve the redemption
price for the participating notes, which will be computed as follows:
V = 105% x
∞
130% x TMOn x N
1
(1 + TZn + S)n
∑
.
Where:
– TMOn = TEC10n + 0.25% (following Euronext’s
notice dated 11 October 2001) or any other rate
which would substitute;
– N is the nominal value, i.e. €152.45 (FRF1,000);
– TZn is the zero coupon n years rate based on the
swap yield to Euribor curve, or any other rate which
would substitute;
– S is the spread representative of a perpetual note
issued by CCF at market conditions at time t;
– TZn + S is the discount rate.
The price may not be less than 105% of the nominal
value of the participating notes.
Special business
Fifteenth resolution
Having heard and considered the report of the Board
of Directors and the special report of the Auditors,
voting under the quorum and majority conditions
required to transact special business and acting pursuant to the provisions of Article L. 225-129 VII of
the Code de Commerce, the shareholders hereby authorise
the Board of Directors to increase the share capital on
one or more occasions by allotting new shares wholly
for cash to members of the Company’s employee share
ownership plan in accordance with the provisions of
Article L. 443-5 of the Code du Travail.
125
CCF
Annual General Meeting of 12 May 2004 – Resolutions adopted (continued)
The capital increase arising from such operations
may not exceed an aggregate sum of ten million euros.
The shareholders hereby expressly renounce their
pre-emption rights over the new shares to be allotted
to members of the Company’s employee share ownership plan.
This authority is valid for a period of two years
with effect from the date of this meeting.
The shareholders hereby grant the Board of
Directors fullest powers to determine all the terms and
conditions of such new share issues and notably the
price of the shares, to officially record the increase
or increases in share capital made pursuant to this
authority, to alter the Articles of Association accordingly and, more generally, to do all things necessary.
Sixteenth resolution
Having heard and considered the report of the Board
of Directors and voting under the quorum and majority conditions required to transact special business,
the shareholders hereby resolve to amend articles 12,
14 and 18 of the company’s Articles of Association,
as follows, to bring them into line with the French
Financial Security Act passed on 1 August 2003:
Article 12 – Officers of the company
The second paragraph is amended as follows:
“The Chairman organises and manages the work
of the Board of Directors, and reports thereon to the
126
shareholders. He is responsible for ensuring that the
company’s governing bodies function correctly and,
more particularly, that the Directors are capable of fulfilling their duties.”
Article 14 – Powers of the board of Directors
The third paragraph is amended as follows:
“The Board of Directors undertakes all the controls and verifications it deems necessary. The
Chairman or Managing Director of the company shall
provide the Directors with all the documents and information they require to fulfil their duties.”
Article 18 – Regulated agreements
The first paragraph is amended as follows:
“Any agreement entered into either directly or via
an intermediary between the Company and the
Managing Director, one of the Deputy Managing
Directors, one of the Directors or one of the shareholders owning more than 10% of the voting rights,
or, in the case of a corporate shareholder, the company
which controls it within the meaning of Article L. 233-3
of the Code de Commerce, must be submitted for prior
approval by the Board of Directors.”
Seventeenth resolution
The shareholders hereby confer full powers on the
bearer of an original, copy or abstract of the minutes
of this meeting for the purpose of completing any formalities required by law.
CCF
Information on CCF and its share capital
Information on the Company
Name
CCF – new name of Crédit Commercial de France
since 8 April 2002.
Date of incorporation
1894.
Registered office
103, avenue des Champs-Elysées, 75008 Paris.
Legal form
Société Anonyme incorporated under the laws of
France, governed notably by the commercial code. The
Company is a credit institution and authorised bank,
and as such is also governed by the “Code Monétaire
et Financier”.
Term
The Company’s term ends on 30 June 2043, unless previously wound up or extended.
Corporate object (Article 3 of the Articles of
Association)
The Company’s corporate object is the transaction in
all countries of any and all banking, finance, lending,
guarantee, trading, brokerage or fee-earning business
together with the provision of any and all investment
services and related services within the meaning of
Articles L. 321-1 and L. 321-2 of the Monetary and
Finance Code, and more generally, to conduct within
the limits permitted by law any and all commercial,
industrial or agricultural transactions, whether involving property or securities, and to provide any and all
services directly or indirectly connected with or which
may facilitate the achievement of the foregoing object.
fer to new or existing reserves or to retained earnings,
comprises the profit available for distribution among
the shareholders.
However, except in the event of a reduction of the
Company’s share capital, no distribution may be made
if total shareholders’ funds are or would as a result
become lower than the amount of the Company’s share
capital plus any non-distributable reserves.
By way of derogation to the provisions of this article, sums may be transferred to a special employee
profit-sharing reserve, as provided for by law.
Shareholders’ meetings
Meetings are open to all shareholders. They are convened and transact business in accordance with the
provisions of the law and regulations in force and effect
from time to time. All shareholders owning at least one
share are entitled to attend and participate in shareholders’ meetings either in person or by proxy.
Form of shares
All fully paid up shares are in registered form. They
are registered on an individual securities account under
the terms and conditions provided for by law.
Voting rights
Each fully paid up share entitles the holder to one vote.
Transfer of shares
The shares are freely transferable.
Custodian and financial service
CCF.
Information on the share capital
Trade and Companies Register and APE code
775 670 284 RCS Paris - APE 651C.
At 31 December 2003, the share capital amounted to
€371,750,330 divided into 74,350,066 fully paid up
shares, each with a nominal value of €5.
Consultation of documents concerning the Company
109, avenue des Champs-Elysées, 75008 Paris.
Authorities to increase the share capital
Financial year
From 1 January to 31 December.
Distribution of profits
A minimum of 5 per cent of the net profit for the year,
less any prior year losses, is transferred to the legal
reserve until such time as it has reached one tenth of
the Company’s share capital and at any time after that
should it fall back below the minimum requirement.
With pre-emptive rights
dddddddddddddd
Issue of shares for cash
or by capitalising reserves
– Date of authority
29 March 20011
– Expiry date
29 March 2006
– Maximum nominal amount
€120 million
ddddddddddddddddddddddddddd
1 The Extraordinary General Meeting authority of 29 March
2001 was reiterated by the Extraordinary General Meeting of 8
April 2002.
The balance, plus any retained earnings, less any
sums which the shareholders deem expedient to trans-
127
CCF
Information on CCF and its share capital (continued)
Movements in share capital
2003
2002
ddddddddddddddddddd ddddddddddddddddddd
Share
Share
Share
Share
Number
capital
premium
Number
capital
premium
of shares
in euros 2
in euros
of shares
in euros 2
in euros
dddddd dddddd dddddd dddddd dddddd dddddd
At 1 January . . . . . . . . . . . . . . . . . . . . . . . .
Issue of shares to employees . . . . . . . . . . .
Exercise of share options 1 . . . . . . . . . . . . .
Reduction of share capital by cancellation
of own shares held . . . . . . . . . . . . . . . . .
At 31 December . . . . . . . . . . . . . . . . . . . . .
74,117,066
–
233,000
370,585,330
–
1,165,000
–
–
12,818,145
75,409,701
–
229,066
377,048,505
–
1,145,330
–
–
7,700,064,02
–
74,350,066
–
371,750,330
–
–
1,521,701
74,117,066
7,608,505 247,428,582.60
370,585,330
–
dddddd dddddd dddddd dddddd dddddd dddddd
1 Of which :
3,000 shares issued at €34.00
500 shares issued at €142.50
2 The share capital was converted into euros on 17 February 1999.
128
2001
2000
1999
ddddddddddddddddddd ddddddddddddddddddd ddddddddddddddddddd
Share
Share
Share
Share
Share
Share
Number
capital
premium
Number
capital
premium
Number
capital
premium
of shares
in euros 2
in euros
of shares
in euros 2
in euros
of shares
in euros
in euros
dddddd dddddd dddddd dddddd dddddd dddddd dddddd dddddd dddddd
74,888,902
–
520,799
374,444,510
nm
–
–
2,603,995 15,943,471.73
73,868,858
–
1,017,644
369,344,290
nm
–
–
5,088,220 35,793,432.82
72,790,957
551,211
695,211
363,954,785
nm
2,756,055
35,172,774
3,476,055 19,448,247.13
–
75,409,701
–
377,048,505
–
74,888,902
–
374,444,510
168,521
73,868,858
842,605
369,344,290
–
nm
–
nm
8,600,142.33
nm
dddddd dddddd dddddd dddddd dddddd dddddd dddddd dddddd dddddd
625 shares issued at €33.69
18,000 shares issued at €25.31 (FFr166)
129
CCF
Information on CCF and its share capital (continued)
Share options
Pursuant to the authorities granted on 13 May 1992, 7 May 1997 and 29 April 1998, and the ensuing Board resolutions, share options have been granted to managers and Directors of the Company, as follows:
Year
Allocation
Exercise price
dd
dddddd dddddddddddddd
1993 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
541,000
FFr221
€33.69
1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
645,000
FFr215
€32.78
1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
675,000
FFr223
€34.00
1996 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
696,000
FFr233
€35.52
1997 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
715,000
FFr243
€37.05
1998 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
728,000
FFr482
€73.48
1999 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
909,000
FFr536
€81.71
2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
909,000
nm
€142.50
Options
outstanding
on
Expiry
31.12.2003
date
dddddd dddddd
0
2003
10,800
2004
53,130
2005
89,500
2006
282,630
2007
535,400
2008
788,200
2009
856,000
2010
The maximum number of CCF shares that may be issued pursuant to the exercise of share options is 2,615,660,
which would raise the total number of €5 nominal shares in circulation to 76,965,726.
Ownership of share capital and voting rights at 31 December 2003
HSBC Bank plc has owned 99.99 per cent of the share capital and voting rights since 31 October 2000. This percentage has not varied since then. HSBC Bank plc is a wholly-owned subsidiary of HSBC Holdings plc, a company quoted in London, Hong Kong, New York, Bermuda and Paris.
130
Changes in ownership of share capital
1999
dddddddddddd
Percentage
Percentage
of voting
of share
rights
capital
dddddd dddddd
1. Shareholders represented on the Board of Directors
and the International Consultative Committee
1.1 Shareholders owning at least 5 per cent
of the share capital or voting rights:
– Groupe Société Suisse d’Assurance Générale
sur la Vie Humaine . . . . . . . . . . . . . . . . . . . . . . . . .
– ING +BHF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Groupe KBC Bancassurance + KBL . . . . . . . . . . .
– Groupe Mutuelle du Mans Assurance . . . . . . . . . .
– Taiyo Mutual Life Insurance Cy . . . . . . . . . . . . . . .
1.2 Other French shareholders . . . . . . . . . . . . . . . . . .
1.3 Other foreign shareholders . . . . . . . . . . . . . . . . . .
2. Other shareholders closely related
to the CCF group
– CCF own shares . . . . . . . . . . . . . . . . . . . . . . . . . . .
– Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Identified French and foreign
institutional shareholders . . . . . . . . . . . . . . . . . . . .
4. Float . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19.6
19.0
16.8
–
5.3
2.9
–
14.5
19.1
18.8
–
3.6
1.8
–
–
4.0
–
3.0
19.4
13.0
dddddd
100.0
ffffff
23.6
15.6
dddddd
100.0
ffffff
Dividend and payout policy
2003
2002
dddddd dddddd
Number of shares at 31 December . . . . . . . . . . . . . 74,350,066 74,117,066
dddddd dddddd
Average number of shares outstanding
during the year . . . . . . . . . . . . . . . . . . . . . . . . . 74,129,833 74,928,199
dddddd dddddd
€8.46
€7.50
dddddd dddddd
Net dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
€6.25
€7.25
dddddd dddddd
EPS 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
€9.375
€10.875
dddddd dddddd
................................
74.10%
95.60%
dddddd dddddd
Dividend + tax credit . . . . . . . . . . . . . . . . . . . . . .
Payout 3
2001
2000
1999
dddddd dddddd dddddd
75,409,701 74,888,902 73,868,858
75,019,102 74,365,694 72,917,088
FFr42.11 FFr40.42
€6.89
€6.42 2
€6.16
€5.60
€4.10
€2.20
FFr40.34 FFr21.64
€8.40
€6.15
€3.30
74.70%
64.30%
35.70%
1 Calculated on the weighted average number of shares outstanding after deducting own shares held.
2 Based on reported figures. On a restated basis and excluding exceptional items, EPS would have been €6.65.
3 Dividend paid as a percentage of reported earnings.
At the Annual General Meeting held on 12 May 2004, the Board proposed a net dividend of €6.25 per €5
nominal share, which corresponds to a gross dividend of €9.375 including the tax credit.
Dividends which are not claimed within five years of the payment date lapse and become the property of the
French Treasury.
131
CCF
Employees, remuneration, share offering and incentive schemes
The following information is provided in compliance with the provisions of Article 1 of the decree 2002-221 of
20 February 2002, in application of Article L. 225-102-1 of the Code of Commerce inserted by the Law no. 2001-420
(the “New Economic Regulations” Act).
Employees at 31 December
Total CCF France (excluding those
seconded to branches) . . . . . . . . . . . .
Total foreign branches . . . . . . . . . . . .
Total CCF . . . . . . . . . . . . . . . . . . . . . .
Total CCF group . . . . . . . . . . . . . . . .
2003 1
dddddd
2002 1
dddddd
2001 1
dddddd
2000 1
dddddd
1999 1
dddddd
6,754
ffffff
70
ffffff
6,824
ffffff
13,577
ffffff
6,669
ffffff
82
ffffff
6,751
ffffff
13,797
ffffff
6,230
ffffff
91
ffffff
6,321
ffffff
14,071
ffffff
6,130
ffffff
227
ffffff
6,357
ffffff
13,583
ffffff
5,825
ffffff
434
ffffff
6,259
ffffff
13,429
ffffff
1 Full time equivalents.
2002/2003 employment report
The figures given below are based on actual staff numbers and are not weighted for part-time employees.
Increase in headcount for the fourth consecutive year
– 2003 headcount: 6,997, an increase of 3.3 per cent or 223 employees on 2002. The number of employees with
management status rose by 12 per cent in 2003.
– New employees: 478 new permanent employees joined the group in 2003, after three years of heavy recruitment. 219 new contract staff joined the group in 2003.
– Departures: resignations accounted for 35 per cent of total departures in 2003.
Further rise in percentage of management staff
– Increase in percentage of management staff and women managers
–
Over three years, the number of management grade employees has risen by 31 per cent and the number of
non-management grade employees has decreased by 7 per cent.
–
Women managers account for 22.4 per cent of the total workforce.
Employment conditions
The annual number of working hours is 1,592. This reduction in annual working hours has been effected partly
through a reduction in weekly working hours and partly through the grant of additional days leave.
At 31 December 2003, 656 employees worked part-time under the flexible working agreements signed by CCF.
The targeted number of departures under the early retirement plan was reached in 2003, bringing the total to
99 at the year end.
At 31 December 2003, CCF employed 201 disabled workers.
132
Employee relations and collective bargaining agreements
The following agreements were signed in 2003:
– pay agreement;
– agreement concerning the employment status applicable to former employees of Webroker, SelectBourse and
Worms transferred to CCF;
– agreement on equality between the sexes;
– amendments to CCF’s employee savings scheme and long-term savings scheme;
– amendment to the company-wide agreement on length of service bonuses;
– agreement of compensation for exceptional work.
In 2004, negotiations are taking place on employment of the disabled, support for employees during times of
organisational change, and the employee incentive scheme and profit-sharing plan.
Pay
In 2003, the pay agreement signed by CCF covered the following:
– minimum increases for the lowest paid employees;
– performance-related increases awarded on merit;
– bonuses for achieving or exceeding individual qualitative and quantitative targets.
The ratio between average management pay and average non-management pay is 2:1.
Training
In 2003, CCF provided over 186,000 hours of training for 3,400 employees, representing 4.67 per cent of total payroll costs.
A new training programme was introduced in 2002 to develop managerial skills. During 2003, all managers of
managers and some of their colleagues took part in the programme, which will continue into 2004.
In addition, a business development training programme has been established for management staff working
in the branch network. Its purpose is to familiarise them with new tools designed to develop commercial practices
and performance. In 2004, assistant branch managers, personal customer advisers, business customer advisers and
retail/business commercial assistants will take part in the programme.
Overtime, temporary staff and sub-contracting
There was a decrease in the number of hours overtime in 2003. Recourse to temporary staff decreased by almost
a half, while recourse to sub-contracting is still principally due to information systems activities.
Health and safety
CCF has established Health & Safety at Work Committees covering all its activities in France. These Committees
are endowed with resources above the minimum required by law, particularly in terms of inspections of the group’s
premises.
During 2002, a risk assessment report was drawn up and presented to CCF’s management and the staff representative bodies. It will be updated in 2004.
133
CCF
Employees, remuneration, share offering and incentive schemes (continued)
Absenteeism
Absenteeism and the reasons for it (maternity, sickness and occupational accident) remained unchanged from 2002.
Staff welfare
The total amount of funds paid to the central and local works councils increased by 11 per cent to €1,920,000.
The amount of the subsidy paid to the mutual insurance fund increased by 2.8 per cent to €807,000.
In 2003, CCF devoted more than €5,457,000 to social welfare benefits (housing, new school year allowances,
travel, child minding, Mothers’ Day, loyalty and CCF medals).
Employee share offering
Each year since 1993, CCF has made an employee share offering open to current employees of CCF, former employees
who are members of the employee share ownership plan and employees of French subsidiaries in which CCF owns
over 51 per cent.
In 2003 as in previous years, HSBC maintained the principle of making an annual employee share offering, in
the same way as CCF has done in the past. The 2003 offering ran from 5 to 24 June 2003, with payment made on
31 July 2003. The key terms and conditions were as follows:
– offering of HSBC shares open to current employees of CCF, former employees who are members of the employee
share ownership plan, and employees of French subsidiaries in which CCF owns over 51 per cent;
– an offer price of €7.8714 per share, calculated as in the previous year by applying a 20 per cent discount to the
average HSBC share price quoted during the twenty trading sessions preceding 30 May 2003, the date on which
the Remuneration Committee of HSBC Holdings plc decided to make the offering.
CCF employees with at least six months service were offered the opportunity of investing the following sums:
– their employee profit-sharing entitlement;
– their incentive scheme entitlement;
– their own personal funds up to the maximum permitted by law.
Employees took up, by way of the H Fund, a total of 4,039,937 HSBC shares, representing a total capital
amount of €31.8 million. The H Fund is a mutual fund forming part of the group or company employee share
ownership plan, invested in HSBC shares since HSBC’s takeover of CCF in 2000.
Incentive schemes
Profit-sharing and incentive plan agreements
Two profit-sharing and incentive plan agreements were signed on 27 June 2001 for a term of three years covering
2001, 2002 and 2003. Under the agreements, the profit-sharing entitlement and incentive awards are combined:
the profit-sharing component is calculated as a function of CCF France’s restated operating profit before provisions
and the incentive component by reference to growth in CCF France’s restated operating profit before provisions1.
1 Restated operating profit before provisions is restated to deduct items which do not directly concern CCF France’s activities:
– capital gains or losses on asset disposals and changes in provisions against available-for-sale securities, equity investments and investments in consolidated subsidiaries other than those involved in capital markets activities, and excluding income from sales of money
market funds;
– results of foreign branches;
– dividends received from consolidated companies and their cost of financing.
134
Profit-sharing agreement
The profit-sharing entitlement is calculated using an alternative method to the standard method applicable under
ordinary law. It is equal to 8 per cent of the contribution made by CCF’s activities in France, determined as restated
operating profit before provisions less various provisions and a theoretical tax charge. Under the alternative method,
the profit-sharing entitlement may not exceed 5 per cent of CCF France’s reported net profit.
Incentive agreement
The incentive payment is based on a pre-defined scale, which is a function of the growth rate of CCF France’s
restated operating profit before provisions. 50 per cent is allocated equally among eligible employees, pro rata to
the duration of their employment with the Company during the year and, in the case of part-time employees, pro
rata to their working hours. 50 per cent is allocated among the employees in proportion to their annual gross salary
during the year, up to a maximum of three times the Social Security ceiling.
Change from 1999 to 2003
(in € millions)
Incentive scheme . . . . . . . . . . . . . . . . .
Profit-sharing . . . . . . . . . . . . . . . . . . .
of which standard method . . . . . . .
of which alternative method . . . . . .
Total amount paid . . . . . . . . . . . . . . .
2003
dddddd
7.62
15.59
–
15.59
————
23.21
ffffff
2002
dddddd
5.34
14.28
–
14.28
————
19.62
ffffff
2001
dddddd
4.57
12.49
1.46
11.03
————
17.06
ffffff
2000
1999
dddddd dddddd
4.57
8.38
12.78
11.88
1.33
–
11.44
11.88
————
————
17.35
20.26
ffffff ffffff
Share option policy
Pursuant to the authority granted by the shareholders at the Annual General Meeting of 22 July 1987, renewed at
the Annual General Meetings of 13 May 1992 and 7 May 1997, the Board of Directors established a policy of
awarding share options each year to the executive Directors and senior managers of CCF. At the proposal of the
Nomination and Remuneration Committee, the Board gradually extended the share option policy with a view to
retaining key employees and encouraging value creation. In 2000, the number of beneficiaries was 502 compared
with 331 in 1999.
Since 2001, following CCF’s integration into the HSBC Group, CCF no longer awards CCF share options as
employees can now participate in the share option plan offered by the HSBC Group (part B) in the form of a
French sub-plan which complies with the legal and fiscal regulations applicable in France. 1,026 employees were
awarded HSBC share options in 2001, and 1,498 in 2003.
135
CCF
Options awarded:
dddddddddddddddddddddddddddddddddddddddddddddddddd
Date of Annual General Meeting authority . . . . . . . . . . 13.5.1992
13.5.1992
13.5.1992
13.5.1992
Date of Board meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5.1993
23.6.1994
22.6.1995
9.5.1996
Total number of options awarded . . . . . . . . . . . . . . . . . . . . . .
541,000
645,000
675,000
696,000
of which : number of options awarded to members of
the Management Committee . . . . . . . . . . . . . . . . . . . . . . . . .
214,000
263,000
261,000
297,000
Total number of beneficiaries . . . . . . . . . . . . . . . . . . . . .
93
116
114
125
Number of Management Committee beneficiaries . . . . .
24
26
28
29
First exercise date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5.1995
23.6.1996
22.6.1997
9.5.1998
Expiry date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5.2003
23.6.2004
22.6.2005
9.5.2006
Exercise price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FFr221
FFr215
FFr223
FFr233
.....................................
(€33.69)
(€32.78)
(€34.00)
(€35.52)
Discount to average quoted share price . . . . . . . . . . . . . .
5%
5%
5%
5%
Number of options exercised at 31.12.2003 . . . . . . . . . .
513,200
612,800
597,870
594,500
Number of options lapsed . . . . . . . . . . . . . . . . . . . . . . . .
27,800
21,400
24,000
12,000
Number of options outstanding . . . . . . . . . . . . . . . . . . .
0
10,800
53,130
89,500
* Executive Committee.
** Discount to HSBC offer price of €150 per share.
136
7.5.1997
7.5.1997
7.5.1997
7.5.1997
7.5.1997
29.4.1998
7.4.1999
12.4.2000
715,000
728,000
909,000
909,000
305,000
321,000
312,000
161,000*
127
199
331
502
29
31
29
10*
7.6.2000
7.6.2000
7.6.2000
1.1.2002
7.5.2007
29.4.2008
7.4.2009
12.4.2010
FFr243
FFr482
(€37.05)
(€73.48)
€81.71
€142.50**
5%
5%
5%
5%
412,370
175,100
108,800
4,500
20,000
17,500
12,000
48,500
282,630
535,400
788,200
856,000
137
CCF
Key regulations governing share option plans
The regulations governing all share option plans still in force and effect were approved by the Board of Directors
at its meeting of 7 May 1997.
However, under these regulations, option holders were entitled to exercise all their outstanding share options
during the period of HSBC’s public offer for CCF in 2000, with the exception of those awarded in 2000, which
were not exercisable before the close of the Offer. In view of the adverse tax effects – for both beneficiaries and
CCF – that would have resulted from a breach of the lock-up period required under Article 163 bis C of the French
General Tax Code, HSBC offered option holders the benefit of a liquidity contract in the CCF shares issued upon
exercise of their options during the Offer period, subject to two undertakings:
– not to sell the CCF shares issued upon exercise of their options on terms likely to incur a tax or social security
cost to CCF;
– to sell to or exchange with HSBC all CCF shares issued upon exercise of their options at the end of the lockup period.
The liquidity contract set out the terms and conditions on which CCF employees undertook to sell or exchange
their CCF shares, depending on the year in which the options were awarded.
– Options awarded before 1996 and from 1997 to 2000: upon expiry of the lock-up period or upon exercise of
the options if later, beneficiaries will exchange all the CCF shares issued pursuant to the exercise of their options
for a number of ordinary HSBC shares determined using the ratio applicable to the Offer, adjusted for any
changes in the share capital of either HSBC or CCF.
– Options granted in 1996: beneficiaries irrevocably committed to one or other of the following two options:
–
upon expiry of the lock-up period or upon exercise of the options if later, to exchange all the CCF shares
issued pursuant to the exercise of their options for a number of ordinary HSBC shares determined using the
ratio applicable to the Offer, being 13 HSBC shares for one CCF share, adjusted for any changes in the share
capital of either HSBC or CCF;
–
on 28 September 2001, to sell to HSBC all CCF shares issued pursuant to the exercise of their options for a
price consistent with the Offer price and determined according to a formula which takes account of CCF’s
average operating profit in the eight consecutive calendar quarters ending in June 2001.
Special report
Information required under the “New Economic Regulations” Act on share options awarded in 2003
Since its integration into the HSBC Group in July 2000, CCF has ceased to award options to employees and
executive Directors of the CCF group.
CCF
Options
exercised
ddddd
Exercise
price € per
share
ddddd
Date
of award
ddddd
Expiry
date
ddddd
Options exercised by an Executive Director in 2003
D. Léger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,000
37.05
07.05.1997
07.05.2007
Total options exercised by 10 employees . . . . . . . . . . . .
63,500
57.99
07.05.1997
and
29.04.1998
7.05.2007
and
29.04.1998
138
Options granted by subsidiaries to their employees
Several of CCF’s French subsidiaries have established their own share option plans. However, in order to comply
with the regulations governing HSBC, CCF decided to cease this practice in 2001, with the exception of two subsidiaries which were granted special dispensation. These were therefore the only two subsidiaries to have awarded
share options during 2001. In 2002, only Banque Eurofin awarded options under the special dispensation granted
by CCF. In 2003, no subsidiary awarded share options.
No executive Director of CCF or member of CCF’s Executive Committee holds options in the CCF group’s
subsidiaries.
Following the merger between HSBC Bank France, Banque Eurofin, Banque du Louvre and CCF Banque Privée
Internationale on 1 October 2003, options over Banque Eurofin, Banque du Louvre and CCF Banque Privée
Internationale shares have been exchanged for options over shares in the merged entity at a parity determined at
the time of the merger.
In addition, a liquidity contract has been granted to beneficiaries of HSBC Private Bank France options, which
sets out the terms and conditions for their exchange against ordinary HSBC Holdings shares on the basis of a
parity of 1.83, fixed on 1 October 2003.
No Executive Directors of HSBC Private Bank France exercised any HSBC Private Bank France options between
1 October 2003 and 31 December 2003.
Total options exercised by 1 employee . . . . . . . . . . . .
Options
exercised
ddddd
1,125
Exercise
price € per
share
ddddd
20.80
Date of
award
ddddd
15.05.2001
Expiry
date
ddddd
15.05.2011
Options
exercised
ddddd
Exercise
price € per
share
ddddd
Date of
award
ddddd
Expiry
date
ddddd
450
500
2,150
94.52
–
–
10.07.1998
–
–
10.10.2003
–
–
6,900
–
–
–
Banque Chaix
Options exercised by Executive Directors in 2003 :
A. Chaumard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
J. P. Mannini . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
J. Perez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total options exercised by eight employees
or former employees . . . . . . . . . . . . . . . . . . . . . . . .
139
CCF
Banque Dupuy, de Parseval
Options exercised by Executive Directors in 2003:
A. Gros . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ph. Dupuis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
H. Dupuis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total options exercised by five employees . . . . . . . . . .
Options
exercised
ddddd
Exercise
price € per
share
ddddd
Date of
award
ddddd
Expiry
date
ddddd
1,400
800
800
2,000
31.71
–
–
–
01.07.1998
–
–
–
01.10.2003
–
–
–
Options
exercised
ddddd
5,625
7,500
Exercise
price € per
share
ddddd
85.68
90.25
Date of
award
ddddd
07.11.1997
08.07.1998
Expiry
date
ddddd
07.11.2003
08.01.2004
Options
exercised
ddddd
Exercise
price € per
share
ddddd
Date of
award
ddddd
Expiry
date
ddddd
11,200
8.61
18.03.1998
18.09.2003
83,200
–
–
–
Crédit Commercial du Sud-Ouest (CCSO)
No Executive Directors of CCSO exercised any CCSO options during 2003.
Total options exercised by five employees . . . . . . . . .
and former executive directors of CCSO . . . . . . . .
Sinopia
Options exercised by an Executive Director in 2003:
P. Goimard . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total options exercised by seven employees
and former employees or executive directors . . . . .
140
CCF
Recent developments
As announced in January, on 24 February 2004 the Board appointed Charles-Henri Filippi to succeed
Charles de Croisset as Chairman and Chief Executive Officer of CCF, with effect from 1 March. Mr. Filippi
will also be responsible for co-ordinating HSBC’s strategy in the Eurozone.
Dominique Léger also stepped down as Director and Deputy Chief Executive of CCF on 1 March 2004.
At the proposal of Mr. Filippi, the Board appointed Gilles Denoyel and Patrick Careil as Deputy Chief
Executive Officers and also co-opted them onto the Board as Executive Directors. Mr. Denoyel will be responsible
for central support functions and Mr. Careil for the retail banking networks.
Outlook
CCF’s challenge for 2004 is to gain market share in target customer groups and improve productivity by drawing
on leverage from its strategic positioning and membership of one of the world’s leading banking and financial
services groups. These goals and growth targets form part of HSBC’s new Group strategic plan for 2004-2008,
Managing For Growth.
The goal in retail banking is to increase CCF’s penetration rate among target customer groups, i.e. high net
worth individuals and top Commercial Banking’s, by emphasising its highly differentiated offering compared with
other domestic banks. Twenty to thirty new branches will also be opened during 2004 to extend CCF’s commercial
reach.
The product range will be enriched by drawing on international synergies within the HSBC Group. This includes
opening an HSBC Premier branch on the Champs-Élysées, the first in continental Europe, and stepping up marketing
to international customers by promoting HSBC Premier International Services and the new Visa Multinational
business card.
Another key priority is to continue developing the multi-channel banking strategy, by increasing call
centre capacity, enriching the regional banking subsidiaries’ e-banking services, opening up Elys PC to
companies with turnover of less than €15 million and promoting Elys Certification in response to the need
for secure e-banking transactions.
The goal in corporate, investment banking and markets is to increase market share among target customer
groups by drawing on the strength and reputation of the HSBC Group.
This involves consolidating CCF’s leading positions in the fixed-interest and forex markets, broadening the
customer base and offering a growing number of Eurozone clients services in areas where the group already has
strong expertise, such as cash management and trade services.
More generally, CCF plans to broaden the client base by strengthening its position in the top Commercial
Banking segment, supported by the retail banking networks. Lastly, the investment banking business will continue
to develop as part of the HSBC Group’s growth strategy in this area.
In asset management, CCF has extended its presence in continental Europe by opening a representative office
in Switzerland and strengthening its Spanish operation. As a result of France’s new “Fillon” law, 2004 will also
see further developments in employee savings. CCF will combine its insurance and asset management expertise
with the distribution capability of its retail banking networks to launch new products tailored to customer needs.
HSBC Asset Management Europe also intends to simplify and rationalise its range of funds and to develop
partnerships with well-known national distributors in continental Europe.
141
CCF
Recent developments and outlook (continued)
Following the merger between CCF’s four private banking units on 1 October 2003 to form HSBC Private Bank
France, the main goal for 2004 is to complete their operational integration and combine all the teams in a single
location. HSBC Private Bank France will develop a single product and service offering for its strategic client
groups, by combining the complementary expertise of the four original private banking units. Further synergies will
be achieved through the merger of asset management companies Eurofin Gestion and HSBC Finances with Louvre
Gestion. Louvre Gestion will then become HSBC Private Bank France’s dedicated asset management and
multi-manager fund specialist.
This growth strategy aims to make CCF a major French bank in its target customer groups and a leader in
international banking services, by drawing on leverage from its strategic positioning and membership of one of
the world’s biggest banking and financial services groups.
142
CCF
Persons responsible for the reference document and for auditing the financial
statements
Persons responsible for the reference document
– Chairman and Chief Executive Officer
– Statutory Auditors
Declaration of persons responsible for the reference document
To the best of our knowledge, the information provided in this document is true and accurate, and contains all the
facts required for investors to form a judgement on the Company’s assets, operations, financial position, earnings
and prospects, and contains no omissions of a material nature liable to impair its significance.
Charles-Henri Filippi, Chairman and Chief Executive Officer
Dear Shareholder,
As the statutory auditors of CCF and pursuant to Regulation no. 98-01 of the Commission des Opérations de
Bourse, we have verified the information relating to the financial statements included in this reference document
in accordance with the professional standards applied in France.
This reference document is the responsibility of the Chairman of the Board of Directors. Our role is to express
an opinion on the fairness of the financial information contained therein.
We conducted the procedures we considered necessary, in accordance with the professional standards applied
in France, to assess the fairness of the information related to the financial statements included in the reference
document and to verify its consistency with the financial statements audited by us. We also verified all other
information contained in the reference document in order to identify any material inconsistencies with the information
relating to the financial statements and to report any apparent material misstatement of information that
we may have uncovered based on the knowledge we have gained of the Company during the course of our
engagement. The reference document does not include any forward-looking information for which there is a
specific procedure in place.
The parent company and consolidated financial statements for the year ended 31 December 2001, approved by
the Board of Directors, were audited by KPMG Audit and Barbier Frinault et Autres in accordance with the
professional standards applied in France. They expressed an unqualified opinion on those financial statements.
Their report contained an emphasis of matter paragraph relative to changes in the presentation of annual and
consolidated financial statements for banks, and to the amount and nature of consolidated exceptional items.
The parent company and consolidated financial statements for the year ended 31 December 2002, approved
by the Board of Directors, were audited by us in accordance with the professional standards applied in France.
We expressed an unqualified opinion on the financial statements with no emphasis of matter paragraphs.
The parent company and consolidated financial statements for the year ended 31 December 2003, approved by
the Board of Directors, were audited by us in accordance with the professional standards applied in France.
We expressed an unqualified opinion on those financial statements. Our report contained an emphasis of matter
paragraph relative to changes in accounting methods pursuant to regulation CRC 2002-03 on accounting for credit
risk and regulation CRC 2002-10 on depreciation and impairment of assets.
The provisions of Article L. 225-235 of the French Commercial Code, which apply for the first time to the 2003
financial year, require us to substantiate our opinion. Our reports on the parent company and consolidated financial
statements for the year ended 31 December 2003 therefore draw your attention to the following matters.
143
CCF
Persons responsible for the reference document and for auditing the financial
statements (continued)
As indicated in the notes to the parent company and consolidated financial statements, the Company takes
provisions to cover the credit risk connected with its business activities. We examined the process established by
management to identify and evaluate those risks and to determine the requisite provisioning levels.
As indicated in the notes to the Parent company and consolidated financial statements, the Company books
and values its financial instruments in accordance with generally accepted accounting principles using internal
models for certain instruments. We examined the processes put in place by management to ensure that these
accounting principles are properly applied. We also reviewed the system for control over the parameters used by the
internal models.
On this basis, we assessed whether the relevant accounting principles and methods were properly applied and
the estimates used reasonable.
Our assessment of these matters formed an integral part of our audit of the consolidated financial statements
as a whole, and therefore contributed to our unqualified opinion as expressed in the first part of this report.
Based on our investigations, we have no comments to make as to the fairness of the financial information
presented in this reference document.
Paris La Défense and Paris, 13 May 2004
Partner
144
KPMG Audit
Department of KPMG S.A.
Partner
Names and addresses of Statutory Auditors
Date first
Date
Date
appointed reappointed
term ends
Incumbents
Cabinet Alain Lainé 1
2, rue du Colonel Moll
75017 Paris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2002
–
2006
KPMG
1, cours Valmy
92923 Paris La Défense Cedex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2001
–
2006
Alternates
Jean Autissier 1
2, rue du Colonel Moll
75017 Paris . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2002
–
2006
Gérard Gaultry
1, cours Valmy
92923 Paris La Défense Cedex . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2001
–
2006
1 Further to the resignation of Cabinet Alain Lainé from its function of incumbent Statutory Auditor and of Mr. Jean Autissier from its
function of alternate Statutory Auditor, the General Meeting held on 12 May 2004 appointed :
– RSM Salustro Reydel, incumbent Statutory Auditor,
– Mr. Benoît Lebrun, alternate Statutory Auditor,
for the remainder of the term of their predecessors.
145
CCF
Cross-reference table between Autorités des Marchés Financiers
requirements and pages in the CCF Annual Report and Accounts
AMF REQUIREMENTS
Declarations of persons responsible
– Declaration of persons responsible for the reference document
– Declaration of statutory auditors
Page in the CCF
Annual report
and Accounts
143 to 145
115 to 122
Statutory information
Issuer
Share capital
– Authorised unissued share capital
– Potential share capital
– Movements in share capital over five years
127
127
127
128 to 129
Share performance
– Dividends
131
Share capital and voting rights
– Ownership of share capital and voting rights
– Changes in ownership structure
130
131
Business operations
– Group organisation (parent company/subsidiary relations, information on subsidiaries)
– Key consolidated figures
– Segmental and geographical analysis of operations
– Markets and competitive positioning
– Investment policy
Risk management
– Risk factors
– Insurance and risk coverage
Assets, financial position and earnings
– Consolidated financial statements and notes
– Contingent commitments and liabilities
– Statutory auditors’ fees
– Pro forma financial information
– Regulatory prudential ratios (banking, insurance, brokerage)
– Parent company financial statements and notes
Corporate governance
– Composition and operation of governing bodies
(Board of Directors, Supervisory Board, etc.)
– Composition and operation of special committees
– Executive directors (emoluments, share options granted and exercised, share warrants)
– Top ten employees excluding executive directors (share options granted and exercised)
– Regulated related-party agreements
– Recent developments
– Outlook
146
104 to 109
44 to 47
3 to 6
3 to 6
110 to 112
34 to 40
40
48 to 89
77 to 79
20
47, 61, 82
38 to 39
90 to 103
10 to 18, 21 to 22
23 to 24
19 to 20, 138
138
114
141
141 to 142
CCF
Network of offices
RETAIL BANK AND DISTRIBUTION
FRANCE
CCF
218 branches
103, avenue des Champs-Élysées
75419 Paris Cedex 08
Telephone: 33 1 40 70 70 40
Facsimile: 33 1 40 70 70 09
Web: www.ccf.com
Banque Chaix
66 branches
Pierre-Marie Bonaccorsi
43, cours Jean-Jaurès
84000 Avignon
Telephone: 33 4 90 27 27 27
Facsimile: 33 4 90 27 27 01
Banque Dupuy, de Parseval
46 branches
Alain Gros
10, rue du Général de Gaulle
34200 Sète
Telephone: 33 4 67 46 29 30
Facsimile: 33 4 67 74 36 54
Banque Hervet
85 branches
François Morlat
184, avenue Frédéric et Irène Joliot Curie
TSA 50003
92729 Nanterre Cedex
Telephone: 33 1 57 66 50 00
Facsimile: 33 1 57 66 53 39
Banque de Baecque Beau
(Subsidiary Banque Hervet)
1 branch
Olivier Motte
3, rue des Mathurins
75440 Paris Cedex 9
Telephone: 33 1 44 94 42 42
Facsimile: 33 1 44 94 42 00
Banque de Savoie
HSBC Asset Management (Europe) SA
55 branches
Luc Hermet
6, boulevard du Théâtre
73000 Chambéry
Telephone: 33 4 79 33 93 10
Facsimile: 33 4 79 33 91 04
Christophe de Backer
Immeuble Ile-de-France
4, place de la Pyramide - La Défense 9
Telephone: 33 1 41 02 40 00
Facsimile: 33 1 41 02 46 86
Crédit Commercial du Sud-Ouest
54 branches
Bernard Francisoud
17, allée James Watt
33700 Mérignac
Telephone: 33 5 56 13 72 72
Facsimile: 33 5 56 34 47 91
Vernet Valor
Société Marseillaise de Crédit
HSBC CCF Epargne Entreprise
157 branches
Joseph Perez
75, rue Paradis
13006 Marseille
Telephone: 33 4 91 13 33 33
Facsimile: 33 4 91 13 33 16
Guy-Hervé Coffin
93, rue des Trois Fontanot
92000 Nanterre
Telephone: 01 41 02 48 73
Facsimile: 01 41 02 67 34
Luc Roux
Telephone: 33 1 41 02 41 49
Facsimile: 33 1 41 02 69 58
Site Internet : www.hsbc2e.com
Union de Banques à Paris
55 branches
Pierre Jammes
184, avenue Frédéric et Irène Joliot Curie
TSA 50003
Telephone: 33 1 57 66 60 00
Facsimile: 33 1 57 66 64 60
Sinopia Asset Management
CCF Change
Erisa
Number of offices: 12
Bertrand de la Comble
60, rue Saint André des Arts
75006 Paris
Telephone: 33 1 56 81 11 20
Facsimile: 33 1 56 81 11 22
Elysées Factor
Gilles Bucheton
103, avenue des Champs-Elysées
75008 Paris
Telephone: 33 1 41 11 84 84
Facsimile: 33 1 41 11 84 85
Philippe Goimard
66, rue de la Chaussée d’Antin
75009 Paris
Telephone: 33 1 53 32 52 00
Facsimile: 33 1 53 32 52 00
Joëlle Durieux
15, rue Vernet
Telephone: 33 1 41 02 40 40
Facsimile: 33 1 41 02 49 84
Erisa Iard
Gilles Jobert
92000 Nanterre
Telephone: 33 1 41 02 87 97
Facsimile: 33 1 58 13 17 40
Netvalor
Banque Marze
10 branches
Jean-Louis Chave
Avenue de Roqua - BP 76
07205 Aubenas Cedex
Telephone: 33 4 75 87 49 10
Facsimile: 33 4 91 13 33 16
Olivier Costa de Beauregard
64, rue Galilée
75008 Paris
Telephone: 33 1 56 56 21 50
Facsimile: 33 1 56 56 21 56
INVESTMENT BANKING AND MARKETS
PRIVATE BANKING
Gérard de Bartillat
20, place Vendôme
75001 Paris
Telephone: 33 1 44 86 18 61
Facsimile: 33 1 42 60 05 62
HSBC CCF Securities (France) SA
Banque Pelletier
11 branches
Jean-François Lorin
Cours Julia Augusta
40100 Dax
Telephone: 33 5 58 56 88 70
Facsimile: 33 5 58 56 88 80
Samir Assaf
103, avenue des Champs-Élysées
Telephone: 33 1 40 70 33 49
Facsimile: 33 1 40 70 35 54
e-mail: hsbc-ccfsecurities@ccf.fr
ASSET MANAGEMENT AND INSURANCE
Banque de Picardie
16 branches
Benoît d’Audiffret
3, rue de la Sous-Préfecture
60200 Compiègne
Telephone: 33 3 44 38 73 00
Facsimile: 33 3 44 38 73 21
HSBC CCF Asset Management Holding
Christophe de Backer
4, place de la Pyramide - La Défense 9
Telephone: 33 1 41 02 40 00
Facsimile: 33 1 41 02 46 86
OTHER HSBC GROUP OFFICES IN FRANCE
HSBC Bank plc
Nicolas Fourré
15, rue Vernet
Telephone: 33 1 40 70 70 40
Facsimile: 33 1 58 13 96 48
HSBC Multimanager (Europe)
La Défense 9
Telephone: 33 1 58 13 98 50
Facsimile: 33 1 58 13 98 51
147
CCF
Network of offices (continued)
OTHER EUROPEAN OFFICES
BELGIUM
CCF
Bernard de Bellefroid
avenue de Tervueren 270
1150 Brussels
Telephone: 32 2 227 88 11
Facsimile: 32 2 513 05 16
HSBC Bank plc
Daniel Olave
Avenue de Tervueren 270
1150 Brussels
Telephone: 32 2 227 88 11
Facsimile: 32 2 227 88 99
HSBC Dewaay S.A.
Bernard de Bellefroid
Avenue de Tervueren 270
1150 Brussels
Telephone: 32 2 227 88 11
Facsimile: 32 2 227 88 99
ITALY
NETHERLANDS
HSBC Bank plc
HSBC Bank plc
Alessandro Baroni
Piazzetta Bossi 1
20121 Milan
Telephone: 39 02 72 43 71
Facsimile: 39 02 72 43 78 00
Andy Hipwell
Karspeldreef 6 H
1101 CJ Amsterdam
Telephone: 31 20 565 0060
Facsimile: 31 20 565 0065
HSBC Asset Management (Europe) SA
UNITED KINGDOM
Piazzetta Bossi 1
20121 Milan
Telephone: 39 02 72 43 74 91
Facsimile: 39 02 72 43 74 90
Framlington Group Ltd
LUXEMBOURG
HSBC Dewaay S.A.
Richard Schneider
18, boulevard Royal
BP 843
L-2449 Luxembourg
Telephone: 352 22 93 91
Facsimile: 352 22 13 04
LGI
HSBC Dewaay S.A.
Christophe Keusters
Maarschalk Gerard Straat n° 19
B 2000 - Anvers - 1
Telephone: 32 3 231 39 07
Facsimile 32 3 225 10 40
SPAIN
HSBC Bank plc
Peter Atkins
Torre Picasso – 33e étage
Plaza Pablo Ruiz Picasso, 1
28020 – Madrid
Telephone: 349 1 456 61 00
Facsimile: 349 1 456 6200
148
Subsidiary – HSBC Private Bank France
Christian Guilloux
17, boulevard Roosevelt
L - 2450 Luxembourg
Telephone: 352 22 38 331
Facsimile: 352 22 38 34
Subsidiary – Asset Management
Peter Chambers
155 Bishopsgate
London EC2M 3XJ
Telephone: 44 20 7374 4100
Facsimile: 44 20 7330 6644
Sinopia International Ltd
Lee Chautin
25 Bruton street
London W1X7 DB
Telephone: 44 20 73 55 53 05
Facsimile: 44 20 73 55 53 09
e-mail : lchautin@sinopia.co.uk
GREECE
CCF
Hervé Grange
109/111 Messoghion avenue
11526 Athens
Telephone: 30 210 699 9852
Facsimile: 30 210 692 0541
© Copyright CCF S.A. 2004
All rights reserved
No part of this publication may be reproduced, stored
in a retrieval system, or transmitted, in any form or by
any means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior written
permission of CCF.
Published by Corporate Communications, CCF, Paris.
Designed by Group Public Affairs, The Hongkong and
Shanghai Banking Corporation Limited, Hong Kong.
Printed by Franklin Partners, Paris, on Magno Satin
paper. Made in Sweden, this paper is 100% virgin
fibers.
Photography credits:
All photos by Philippe Schaff
except Charles-Henri Filippi et Jean Beunardeau,
by Pascal Pinson.
CCF
103, avenue des Champs-Elysées
France
Telephone: (33 1) 40 70 70 40
Facsimile: (33 1) 40 70 70 09
Web: www.ccf.com

The world`s local bank Annual Report and Accounts CCF

Transcription

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