registration document and full-year financial report

Transcription

2013
REGISTRATION
DOCUMENT
AND FULL-YEAR
FINANCIAL REPORT
Contents
1
2
PRESENTATION OF GROUPE BPCE
3
1.1 Presentation of Groupe BPCE
4
1.2 History of the Group
5
1.3 Organization of Groupe BPCE
6
1.4 Key figures 2013
9
1.5 Contacts
11
1.6 Calendar
11
5
5.1 IFRS Consolidated Financial Statements
of Groupe BPCE as at December 31, 2013
202
5.2 Statutory Auditors’ report on the consolidated
financial statements
287
of BPCE SA group as at December 31, 2013
290
366
1.7 2014-2017 strategic plan: “Growing Differently”
12
1.8 Groupe BPCE’s Businesses
14
5.5 BPCE parent company financial statements
368
5.6 Statutory Auditors’ report on the financial statements
415
CORPORATE GOVERNANCE
27
6
SOCIAL, ENVIRONMENTAL
AND SOCIETAL INFORMATION
2.1 Introduction
28
2.2 Management and Supervisory Bodies
30
2.3 Role and operating rules of governing bodies
64
2.4 Rules and principles governing the determination
of remuneration and benefits
6.1 Sustainable development strategy and cooperative
identity
418
70
6.2 Response to economic challenges
421
2.5 Potential conflicts of interest
81
6.3 Human resources information
426
6.4 Response to environmental challenges
436
6.5 Response to societal challenges
445
6.6 CSR reporting methodology
453
6.7 Report by the Statutory Auditors, designated
independent third-party bodies, on the
consolidated social, environmental and societal
information contained in the management report
456
82
2.7 Statutory Auditors’ report on the report
of the Chairman of the Supervisory Board
100
2.8 Recovery and Restructuring Plan
101
2.9 Persons responsible for auditing the financial statements 102
4
201
2.6 Chairman’s report on internal control and risk
management procedures for the year ended
December 31, 2013
3
FINANCIAL REPORT
417
RISK MANAGEMENT
107
3.1 Groupe BPCE’s main risks
109
7.1 Memorandum and articles of association
460
3.2 Pillar III
116
7.2 Share capital
462
3.3 Liquidity, interest rate and foreign exchange risks
153
7.3 Ownership structure and distribution of voting rights
464
3.4 Insurance of insurable risks
157
7.4 Material contracts
465
3.5 Legal risks
158
7.5 Significant changes
465
3.6 Technical insurance risks
163
3.7 Financial Stability Forum recommendations
concerning financial transparency
7.6 Statutory Auditors’ special report on related-party
agreements and commitments
466
169
3.8 Risks relating to the BPCE guarantee for part
of the Natixis assets managed on a run-off basis
176
3.9 Risks relating to the management of the
proprietary activities of the former Caisse Nationale
des Caisses d’Epargne (CNCE)
177
ACTIVITIES AND 2013 FINANCIAL
INFORMATIONS
179
4.1 Foreword
180
4.2 Significant events of 2013
181
4.3 Groupe BPCE financial data
183
4.4 BPCE SA group financial data
196
4.5 Investments
198
4.6 Post-balance sheet events
198
4.7 Outlook for Groupe BPCE
199
LABEL TRANSPARENCE
labeltransparence.com
This label recognizes the most transparent Registration
Documents according to the criteria of the Annual
Transparency Ranking.
7
8
9
LEGAL INFORMATION
STATEMENT BY THE PERSON
RESPONSIBLE
459
477
8.1 Statement of the person responsible
for the registration document
and for the annual financial report
478
ADDITIONAL INFORMATION
479
9.1 Documents on display
480
9.2 Cross-reference table for the registration document
481
9.3 Cross-reference table for the annual financial report
and the management report
483
9.4 Cross-reference table of main social
and environmental information requested
by the Grenelle 2 Act
484
9.5 Glossary
485
2013 Registration document
and full-year financial report
The English version of this report is a free translation from the original which was prepared in French. All possible care has
been taken to ensure that the translation is an accurate presentation of the original. However, in matters of interpretation,
views or opinion expressed in the original language version of the document in French take precedence over the translation.
Only the French version of the registration document has been submitted to the AMF. It is therefore the only version that is binding in law.
The original document was filed with the Autorité des marchés financiers (AMF – French Securities Regulator) on March 21, 2014,
in accordance with Article 212-13 of the AMF’s General Regulations. It may be used in support of a financial transaction only if
supplemented by a Transaction Note that has received approval from the AMF.
This document includes all elements of the annual financial report specified by Section I of Article L. 451-1-2 of the Code Monétaire
et Financier and Article 222-3 of the AMF’s General Regulations. A table allowing cross-referencing between the documents specified
in Article 222-3 of the AMF’s General Regulations and the corresponding sections of this document is provided on pages 481 and 482.
Registration document 2013
1
2
1
PRESENTATION
OF GROUPE BPCE
1.1 PRESENTATION OF GROUPE BPCE
4
1.5 CONTACTS
11
1.2 HISTORY OF THE GROUP
5
1.6 CALENDAR
11
1.7 2014-2017 STRATEGIC PLAN:
“GROWING DIFFERENTLY”
12
1.8 GROUPE BPCE’S BUSINESSES
14
Banque Populaire banks
5
Caisses d’Epargne
5
Groupe BPCE
5
1.3 ORGANIZATION OF GROUPE BPCE
6
1.3.1
Banque Populaire banks and Caisses d’Epargne
6
1.3.2
BPCE: the central institution of Groupe BPCE
6
1.3.3
Scopes of consolidation of Groupe BPCE
and BPCE SA group
8
1.4 KEY FIGURES 2013
Groupe BPCE
BPCE SA group
1.8.1
Commercial Banking and Insurance
14
1.8.2
Corporate Banking, Investment Management
and Financial Services
22
1.8.3
Equity Interests
25
9
9
10
3
1
Presentation of Groupe BPCE
1.1 Presentation of Groupe BPCE
Groupe BPCE is the second largest banking group in France(1), with its two
leading brands, Banque Populaire and Caisse d’Epargne. Its 115,000 employees
serve 36 million customers, 8.8 million of whom are cooperative shareholders.
The Group’s companies adapt their banking business as closely as possible to
the needs of individuals and regions.
With 19 Banque Populaire banks, 17 Caisses d’Epargne, Natixis, Crédit Foncier,
Banque Palatine and BPCE International et Outre-mer, Groupe BPCE offers its
customers an extensive range of products and services, including solutions in
savings, placement, cash management, financing, insurance and investment. In
keeping with its cooperative structure, the Group builds long-term relationships
with its customers and helps them with their projects, and as such finances
20% of the French economy.
➡
Its full-service banking model is based on a three-tier architecture:
• the two cooperative networks with the Banque Populaire banks and Caisses
d’Epargne, which are central players in their respective regions;
• BPCE, the central institution, responsible for the Group’s strategy, control
and coordination;
• the BPCE subsidiaries, including Natixis, Crédit Foncier, Banque Palatine and
BPCE International et Outre-mer.
In addition, all credit institutions affiliated with BPCE are covered by a guarantee
and solidarity mechanism.
The scope of affiliated entities is mainly comprised of the Banque Populaire and
Caisse d’Epargne networks and Natixis.
GROUPE BPCE SIMPLIFIED ORGANIZATION CHART
Groupe BPCE
8.8 million cooperative shareholders
100%
100% (1)
19 Banque Populaire
Banks
$PNNFSDJBM#BOLJOH
*OTVSBODFTVCTJEJBSJFT
17 Caisses d'Epargne
50%
50%
BPCE
Central Institution
71.96% (3)
t$SÏEJU'PODJFSEF'SBODF
t#BORVF1BMBUJOF
t#1$&*OUFSOBUJPOBM
FU0VUSFNFS
t#1$EATTuSBODFT) (2)
NATIXIS
&RVJUZ*OUFSFTUT
t/FYJUZ
()
t$PGBDF
28.04%
'SFFnPBU
(1)
Via Local Savings Companies.
With the equity interest held by the Caisses d’Epargne in BPCE Assurances,
the Group owns a 60% stake in the company.
(3)
Percentage of voting rights held by BPCE.
(4)
Via CE Holding Promotion.
(2)
Wholesale Banking, Investment Solutions
and Specialized Financial Services
(1)
No. 2 by number of branches (source: database, bank websites 2013), No. 2 by market share of customer savings and customer loans (source: Banque de France Q3-2013), No. 2 in terms of penetration rate
among professional customers and individual entrepreneurs (source: Pépites CSA 2011-2012 survey).
4
History of the Group
1.2 History of the Group
1
1878 The first Banque Populaire bank is created in Angers, by and for
entrepreneurs, the goal being to pool funds to allow them to finance
their projects themselves.
1962 The Banque Populaire banks open their services to individual customers.
1917 Having achieved cooperative status, the Banque Populaire banks rapidly
become major players in their regional economies, serving craftsmen,
small retailers and SMEs.
2008 The Group strengthens its presence in the heart of France’s regions with
the acquisition of seven regional banks from HSBC France.
1998 The acquisition of Natexis provides Groupe Banque Populaire with a
publicly listed vehicle.
Caisses d’Epargne
1818 The first Caisse d’Epargne is founded in Paris to promote, collect and
manage general public savings.
1835 The Caisses d’Epargne are recognized as “private establishments with
public utility”.
1895 The Caisses d’Epargne begin their operations of general public interest.
1950 The Caisses d’Epargne are awarded the status of not-for-profit credit
institutions.
1
1999 The Caisses d’Epargne become cooperative banks, prompting Groupe
Caisse d’Epargne to embark upon a multi-brand strategy with new
creations and acquisitions, including the takeover of Crédit Foncier in
the same year, which enables the Group to further develop its real estate
activities.
2003 With the acquisition of Banque Palatine (formerly Banque San Paolo),
the Group establishes closer ties to corporate customers.
2004 By purchasing Ixis, the Group branches out into investment banking.
1
1
1
In 2006, Groupe Banque Populaire and Groupe Caisse d’Epargne took the first step towards a business combination, with the creation of their jointly-owned
subsidiary, Natixis.
1
Groupe BPCE
2009 On July 31, 2009, the combination between Groupe Banque Populaire
and Groupe Caisse d’Epargne gives rise to Groupe BPCE.
2010 “Together”, Groupe BPCE’s strategic plan for 2010-2013, mobilizes all
Group companies with the aim of making them the preferred banking
institutions of the French and of their companies.
2013 Simplification of the Group’s organizational structure completed on
August 6, 2013 with the buyback and subsequent cancellation by
the Banque Populaire banks and Caisses d’Epargne of the cooperative
investment certificates (CICs) held by Natixis. The Banque Populaire
banks and the Caisses d’Epargne(1) are now entirely owned by their
cooperative shareholders.
Launch of the “Growing Differently” strategic plan for 2014-2017,
focused on development and transformation, centered on the goal of
constantly striving to better meet the expectations and needs of our
customers, while affirming Groupe BPCE’s difference as a cooperative
banking structure.
1
1
(1)
Via local savings companies (LSC).
5
1
1
Organization of Groupe BPCE
1.3 Organization of Groupe BPCE
1.3.1
Banque Populaire banks and Caisses d’Epargne
The Group has a distinctly cooperative character, with cooperative shareholders
owning the Banque Populaire banks and the Caisses d’Epargne, the two networks
that form the foundation of the Group’s retail banking operations.
The Banque Populaire banks and the Caisses d’Epargne are credit institutions.
Their governance comprises a Board of Directors for the Banque Populaire banks,
and Supervisory and Management Boards for the Caisses d’Epargne.
BANQUE POPULAIRE BANKS
The Banque Populaire banks were 80%-owned by their cooperative shareholders
and 20%-owned by Natixis via cooperative investment certificates (CICs)
without voting rights. Since August 6, 2013, the date of the buyback and
subsequent cancellation by the Banque Populaire banks of the CICs held
by Natixis, the Banque Populaire banks have been wholly owned by their
cooperative shareholders.
Cooperative shareholders are individuals (including Banque Populaire bank
employees) and legal entities. Cooperative shareholder customers play an
active part in the life, ambitions and development of their bank. The cooperative
shareholder base is coordinated at two levels: locally through the initiatives
of each Banque Populaire bank as well as nationally through those of the
Fédération Nationale des Banques Populaires. The Annual General Shareholders’
Meeting provides an opportunity for cooperative shareholders to contribute to
the operation of their Banque Populaire bank.
CAISSES D’EPARGNE
The capital of the Caisses d’Epargne was 80%-owned by the local savings
companies (LSCs) and 20%-owned by Natixis via CICs without voting rights.
Since August 6, 2013, the date of the buyback and subsequent cancellation by
the Caisses d’Epargne of the CICs held by Natixis, the Caisses d’Epargne have
been wholly owned by the LSCs. The LSCs are cooperative companies with
open-ended capital stock, which is wholly owned by cooperative shareholders.
Any individual or legal entity that is a customer of a Caisse d’Epargne may
acquire cooperative shares in a local savings company (LSC), thereby becoming
a cooperative shareholder. Caisses d’Epargne employees are also entitled to
become cooperative shareholders. Lastly, local and regional authorities, and
French inter-municipal cooperation institutions (Établissements publics de
coopération intercommunale) within the local savings company’s territorial
constituency are also entitled to become cooperative shareholders, but their
shareholdings, taken together, may not exceed 20% of the capital of a given
local savings company.
The local savings companies are tasked with coordinating the cooperative
shareholder base, within the framework of the general objectives defined by
the individual Caisse d’Epargne with which they are affiliated. Local savings
companies hold Annual General Shareholders’ Meetings at least once a year in
order to approve the annual financial statements, and are governed by a Board
of Directors elected by the Annual General Shareholders’ Meeting from among
the cooperative shareholders. The Board of Directors appoints a Chairman, who
is responsible for representing the local savings company at the Annual General
Shareholders’ Meeting of the Caisse d’Epargne with which it is affiliated. Local
savings companies are not authorized to carry out banking business.
The CICs are securities that do not carry voting rights, but which represent
economic rights attached to shares of capital. Until August 6, 2013, they
entitled their owner, Natixis, to receive remuneration set by the Annual General
Shareholders’ Meeting of each Banque Populaire bank and Caisse d’Epargne,
the amount of which depended on that bank’s results for the year. Natixis also
benefited from rights to net assets in proportion to its interest in the bank’s capital.
1.3.2
BPCE: the central institution of Groupe BPCE
BPCE, founded by a law dated June 18, 2009, is the central institution of Groupe
BPCE, a cooperative banking group. As such, it represents the credit institutions
that are affiliated with it.
The affiliated institutions, within the meaning of Article 511–31 of the French
Monetary and Financial Code, are:
• the 19 Banque Populaire banks and their 52 Mutual Guarantee Companies,
whose sole corporate purpose is to guarantee loans issued by the Banque
Populaire banks;
• the 17 Caisses d’Epargne et de Prévoyance (the share capital of which is held
by 230 local savings companies(1));
(1)
LSC.
6
• Natixis; six Caisses Régionales de Crédit Maritime Mutuel; Banque BCP SAS
(France); Banque de la Réunion; Banque de Tahiti; Banque de NouvelleCalédonie; Banque des Antilles Françaises; Banque Palatine; Crédit Foncier
de France; Compagnie de Financement Foncier; Locindus; Cicobail; Société
Centrale pour le Financement de l’Immobilier (SOCFIM); BPCE International et
Outre-mer; Banque de Saint Pierre et Miquelon; Batimap; Batiroc BretagnePays de Loire; Capitole Finance-Tofinso; Comptoir Financier de Garantie; Océor
Lease Nouméa; Océor Lease Réunion; Océor Lease Tahiti; Sud-Ouest Bail.
ACTIVITIES
The company’s role is to guide and promote the business and expansion of the
cooperative banking group, comprising the Caisse d’Epargne network and the
Banque Populaire network, the affiliated entities and, more generally, the other
entities under its control.
The purpose of the company is:
• to be the central institution for the Banque Populaire network and the Caisse
d’Epargne network and the affiliated entities, as provided for by the French
Monetary and Financial Code. Pursuant to Articles L. 511-31 et seq. and Article
L. 512-107 of the French Monetary and Financial Code, it is responsible for:
- defining the Group’s policy and strategic guidelines as well as those of each
of its constituent networks,
- coordinating the sales policies of each of its networks and taking all
measures necessary for the Group’s development, including acquiring or
holding strategic equity interests,
- representing the Group and each of its networks to assert its shared rights
and interests, including before the banking sector institutions, as well as
negotiating and entering into national and international agreements,
- representing the Group and each of its networks as an employer to assert
its shared rights and interests, as well as negotiating and entering into
collective industry-wide agreements,
- taking all measures necessary to guarantee the liquidity of the Group
and each of its networks, and as such to determine rules for managing
the Group’s liquidity, including by defining the principles and terms and
conditions of investment and the management of the cash flows of the
entities that constitute it and the conditions under which these entities
may carry out transactions with other credit institutions or investment
companies, carrying out securitization transactions or issuing financial
instruments, and performing any financial transaction necessary for liquidity
management purposes,
- taking all measures necessary to guarantee the solvency of the Group and
each of its networks, including implementing the appropriate Group internal
financing mechanisms and setting up a Mutual Guarantee Fund shared by
both networks, for which it determines the rules of operation, the terms and
conditions of use in addition to the funds provided for in Articles L. 51212 and L. 512-86-1, as well as the contributions of affiliates for its initial
allocation and reconstitution,
- defining the principles and conditions for organizing the internal control
system of Groupe BPCE and each of its networks, as well as controlling the
organization, management and quality of the financial position of affiliated
institutions, including through on-site checks within the scope defined in
paragraph 4 of Article L. 511-31,
- defining risk management policies and principles and the limits thereof for
the Group and each of its networks, and ensuring its permanent supervision
on a consolidated basis,
Shares
Dividend
Number of shares
TOTAL
- approving the Articles of Association of affiliated entities and local savings
companies and any changes thereto,
- approving the persons called upon, in accordance with Article L. 511-13,
to determine the effective business orientation of its affiliated entities,
- requesting the contributions required to perform its duties as a central
institution,
1
1
- ensuring that the Caisses d’Epargne duly fulfill the duties provided for in
Article L. 512-85;
• to be a credit institution, officially approved to operate as a bank. On this
basis, it exercises, both in France and other countries, the prerogatives
granted to banks by the French Monetary and Financial Code, and provides
the investment services provided for in Articles L. 321-1 and L. 321-2 of the
above-mentioned Code; it also oversees the central banking, financial and
technical organization of the network and more generally the Group;
1
• to act as an insurance intermediary, in accordance with the regulations in
force;
• to act as an intermediary for real estate transactions, in accordance with the
regulations in force;
• to acquire stakes, both in France and abroad, in any French or foreign
companies, groups or associations with similar purposes to those listed above
or with a view to the Group’s expansion, and more generally, to undertake
any transactions relating directly or indirectly to these purposes that are liable
to facilitate the achievement of the company’s purposes or its expansion.
DIVIDEND POLICY
1
1
In 2013
The Ordinary General Shareholders’ Meeting of BPCE, which met on May 24,
2013, decided that no dividends would be paid out to category A and B
shareholders in respect of fiscal year 2012.
The qualification of category A and B shares is defined on page 462 of the
registration document.
In 2012
1
The Ordinary General Shareholders’ Meeting of BPCE, which met on May 24,
2012, decided that no dividends would be paid out to category A and B
shareholders in respect of fiscal year 2011.
In 2011
The Combined Shareholders’ Meeting of BPCE on May 19, 2011 voted for and
approved the amount of the dividend payable on Category A, B and C shares. The
amount was calculated on the basis of the number of shares outstanding on the
date of the Shareholders’ Meeting. The dividend was paid as from the same date.
Category A
Caisses d’Epargne
Category B
1
Category C
SPPE
€0.01
€0.01
€40.24
15,574,232
15,574,232
2,573,653
€155,742.32
€155,742.32
€103,565,474.82
1
All category C shares were canceled after BPCE repurchased them from Société de prise de participation de l’État (SPPE) (see page 462 of the registration document).
7
1
1
1.3.3
Scopes of consolidation of Groupe BPCE and BPCE SA group
The scopes of consolidation of the two groups, built around the central
institution, are described in the following chart.
Apart from BPCE SA group, Groupe BPCE comprises the Banque Populaire banks,
the Caisses d’Epargne and their respective subsidiaries.
Cooperative shareholders
BPCE SA group includes BPCE and its subsidiaries. The main difference relates
to the fact that the parent companies do not contribute to the results of
BPCE SA group.
Cooperative shareholders
Local savings companies
and subsidiaries
Caisses d'Epargne
and subsidiaries
Groupe BPCE
BPCE
BPCE financial statements
BPCE SA group
Subsidiaries
8
Key figures 2013
1.4 Key figures 2013
1
Groupe BPCE
➡
SUMMARY INCOME STATEMENT
in millions of euros
2013
2012
2011
22,826
21,946
23,357
Gross operating income
6,691
6,011
7,476
Income before tax
4,889
3,743
4,663
Net income attributable to equity holders of the parent
2,669
2,147
2,685
Net banking income
➡
BUSINESS CONTRIBUTION TO GROUP NET BANKING INCOME(1)
IN 2013 (as a %)
Natixis' core
businesses lines: 27%
Retail Banking: 71%
66%
➡
BUSINESS CONTRIBUTION TO GROUP INCOME BEFORE TAX(1)
IN 2013 (as a %)
Natixis' core
businesses lines: 31 %
Retail Banking: 71 %
5%
6%
Specialized Financial
Services (SFS)
Services (SFS)
10%
Commercial Banking
and Insurance
➡
1
Investment Solutions
65 %
1
1
10 %
Commercial Banking
and Insurance
12%
15 %
Wholesale Banking
Wholesale Banking
7%
4%
Equity Interests
Equity Interests
1
BUSINESS
in billions of euros
12/31/2013
12/31/2012
12/31/2011
1,123.5
1,147.5
1,138.4
590.7
586.5
583.1
Balance sheet total
Customer loans (gross loan outstandings)
1
NETWORK ACTIVITY
➡
➡
BANQUE POPULAIRE BANKS (in billions of euros)
118.6
69.4
Financial savings
Financial savings
66.0
118.1
118.5
65.9
123.0
On-balance
sheet savings
226.6
On-balance
sheet savings
132.8
141.2
240.7
Customer loans
160.0
171.0
Customer loans
185.3
200.9
165.5
(1)
12/31/2012
1
251.9
154.8
12/31/2013
1
CAISSES D’EPARGNE (in billions of euros)
12/31/2011
12/31/2013
12/31/2012
12/31/2011
Excluding Workout portfolio management and Other businesses.
9
1
1
➡
Key figures 2013
➡
FINANCIAL STRUCTURE
12/31/2013
12/31/2012 12/31/2011(1)
Equity attributable to equity
holders of the parent
51.3
50.6
45.1
Core Tier-1 capital
42.0
40.9
35.4
Tier-1 capital
47.3
46.5
41.1
(1)
CAPITAL ADEQUACY RATIOS
12.5%
14.4%
11.6%
Data pro forma of the IRBA athorization of the Caisse d’Epargne network’s retail customer segment.
➡
CREDIT RATINGS AT MARCH 21, 2014
12.8%
9.1%
10.7%
11.4%
12/31/2011 (1)
12/31/2012
12/31/2013
Total capital
adequacy ratio
Tier-1 ratio
Core Tier-1 ratio
The ratings concern BPCE and also apply to Groupe BPCE.
Standard &
Poor’s
Moody’s
Long-term rating
A
A2
A
Short-term rating
A-1
P-1
F1
Negative
Stable
Stable
Outlook
12.2%
10.6%
FitchRatings
(1)
Data pro forma of the IRBA athorization of the Caisse d’Epargne network’s retail customer segment.
BPCE SA group
➡
SUMMARY INCOME STATEMENT
2013
2012
2011
Net banking income
8,425
8,084
9,110
1,829
1,637
2,516
Income before tax
2,697
1,204
1,179
1,555
659
402
➡
FINANCIAL STRUCTURE
12/31/2013
12/31/2012
12/31/2011
Equity attributable to equity holders of the parent
21.2
24.7
21.6
Tier-1 capital
19.6
26.1
22.2
Tier-1 ratio
11.9%
11.8%
9.6%
Total capital adequacy ratio
13.5%
11.7%
10.9%
10
Calendar
1.5 Contacts
1
1
www.bpce.fr “Investor relations” section
Roland Charbonnel
Director, Group Funding and Investor Relations
1
1.6 Calendar
Tuesday, May 6, 2014
After market close – Publication of the first quarter 2014 results
Friday, May 16, 2014
BPCE Annual General Shareholders’ Meeting
Thursday, July 31, 2014
After market close – Publication of the second quarter and first half 2014 results
Tuesday, November 4, 2014
After market close – Publication of the third quarter 2014 results
1
1
1
1
1
11
1
1
2014-2017 strategic plan: “Growing Differently”
1.7 2014-2017 strategic plan: “Growing Differently”
The 2010-2013 “Together” plan was focused on the recovery and construction
of the new Group. Groupe BPCE has become a major cooperative banking group,
fully dedicated to its customers in the banking and insurance activities.
The structure of the Group has been simplified and consolidated, the turnaround
of Natixis was successfully managed and Corporate and Investment Banking
migrated to a Wholesale Banking model serving the interests of economic
participants. The Group achieved revenue and cost synergies while also
strengthening its financial structure, notably by increasing its capital base,
substantially improving its capital adequacy ratio, and reducing its risk exposure.
The 2014-2017 “Growing Differently” plan is focused on development and
transformation, centered on the goal of constantly striving to better meet
the expectations and needs of our customers, while reaffirming the Group’s
cooperative dimension.
Our banking and insurance business is entering a new phase in its history,
one which requires new development models in a rapidly-changing banking
and economic environment: new regulations, new technologies, new customer
behaviors, the globalized economy and changing employee expectations. Groupe
BPCE is a decentralized, multi-brand group with the strengths to develop these
new business models.
Groupe BPCE has set itself four development priorities and will be implementing
three levers for action.
Major projects are underway to achieve the Group’s target relationship model,
namely a multi-channel approach, online technology (in-branch and remote
contract signing, new in-branch technology, mobile internet, etc.), modernization
of the physical network, process optimization, effective use of customer data
and the HR impact of transformations, etc.
Financing our customers, establishing the Group
as a major player in savings, and moving away from
a “loan-based” approach to an approach based
on “financing”
As far-reaching regulatory changes sweep the industry, savings inflows are
again becoming a key determining factor in our lending capacity. Groupe BPCE
is already an important player, with outstanding savings of €578 billion(1)
at December 31, 2013, and has ambitions to become a major player on the
different market segments:
• strong ambition to win new customers in the Banque Populaire banks and
Caisses d’Epargne, particularly in the private banking segment, with an
annual growth target for deposits and savings received from private banking
customers and a new structure for the Group’s wealth management activities,
drawing in particular on Banque Privée 1818;
• development of asset management on behalf of third parties within Natixis,
particularly in the international market;
FOUR DEVELOPMENT PRIORITIES
• strategic decision to consolidate the Caisses d’Epargnes’ life insurance new
business within Natixis as of January 1, 2016 while remaining a long-term
partner and shareholder of CNP Assurances.
Creating local banks commanding leading positions
in interpersonal and digital customer relations
This ambition goes hand-in-hand with the determination to be able to offer
our customers, in addition to credit offers, a full array of financing solutions:
For our customers, online banking and the physical network are complementary.
Both provide the basis of a new innovative relationship model that will offer
them a simple, practical and personalized experience. The banks will offer their
customers a fully connected banking relationship, with customer advisors
continuing to play an essential role, supported by all the modern and innovative
resources of a “digital enterprise”. Processes will be optimized to make them
more efficient, user-friendly, helpful and simple for the customer.
• implementation of the Originate to Distribute model in Natixis’ Wholesale
Banking division;
Customers will be able to choose how they sign contractual agreements
(electronically or on paper, with or without advisor support) and will be able
to track applications, which will require a commitment on turnaround times.
The Group plans to make the entire product range available online. Lastly, each
regional bank will adapt its network by developing different branch formats for
different customers and regions.
To enhance customer loyalty and increase resources, the retail banking network
plans to innovate and expand its day-to-day banking offer, including electronic
payment acceptance, international services, payments, value-added services, etc.
(1)
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• use of the SCF (Compagnie de Financement Foncier) by all Group companies
to provide funding for their long-term loans (loans to local authorities, longterm home loans, secured export financing facilities);
• development of securitization activities in the specialized financing businesses
pursued by Natixis and Crédit Foncier de France for home loans.
On-balance sheet savings (including centralized deposits) and financial savings in the Banque Populaire and Caisse d’Epargne networks.
2014-2017 strategic plan: “Growing Differently”
Becoming a fully-fledged bancassurance specialist
Insurance has been an integral part of Groupe BPCE’s business for several years.
In order to capture the full potential of this market, the Group is working to
consolidate its position as a fully fledged bancassurance specialist.
By 2017, the plan provides for an increase in the number of individual customers
with non-life, health, or provident insurance coverage. For professional
customers, the aim is to create a comprehensive range of insurance products
and develop a distribution model drawing first and foremost on the entire sales
force, with support from the technical sales teams. For business customers,
efforts will focus on sales of employee health insurance and company directors’
liability insurance.
The Group plans to create a single, comprehensive platform within Natixis
providing insurance products for the customers of the Banque Populaire banks
and Caisses d’Epargne, and to improve its expertise in the insurance value chain
through the following: plans for Natixis to acquire BPCE Assurances and the
strategic choice to consolidate origination of all new personal insurance policies
at Natixis as of January 1, 2016 while remaining a major partner and medium/
long-term shareholder of CNP Assurances.
Stepping up the pace of the Group’s international
expansion
In its search for new growth drivers, Groupe BPCE aims to position itself as a
global player in asset management, increase Wholesale Banking’s international
presence and further develop international retail banking.
Wholesale Banking will favor selective international expansion, with half of
its personnel working abroad by 2017. Investment Solutions will continue its
international expansion with the development of its platform in the United
States through investments in new expertise and access to new distribution
channels, and with enhanced distribution in dynamic growth regions (Asia, Latin
America, Middle East), both through organic growth and via local partnerships.
In retail banking, the Group is preparing to seize growth opportunities in the
international market, notably in sub-Saharan Africa, for limited investment
amounts, and in Europe. The Group will build its capacity to support international
customers through products and services for expatriates an offer for frontier
workers and trade finance arrangements.
The strategic plan aims to consolidate the Group’s main financial ratios, by:
• continuing to reinforce the Group’s capital in respect of capital adequacy
ratios;
• anticipating regulatory deadlines in terms of liquidity. The Group intends to
further strengthen its balance sheet structure;
• setting different profitability targets for each entity, depending on their
business model.
TO IMPLEMENT THESE FOUR DEVELOPMENT
PRIORITIES, THE GROUP WILL DRAW ON THREE
MAJOR LEVERS FOR ACTION
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Collective efficiency
The Group will continue to tap the revenue and cost synergy potential generated
under the “Together” plan. In particular, the “Growing Differently” strategic plan
includes two new flagship programs for revenue and cost synergies:
• a program of €870 million in revenue synergies between the Banque Populaire
banks, the Caisses d’Epargne and Natixis. This program capitalizes on the
success of the project entitled “Natixis at the service of network customers”
developed in the previous plan and relates to Specialized Financial Services
(consumer credit, employee benefits planning, etc.), Investment Solutions
businesses (life insurance, private banking and asset management) and
Wholesale Banking businesses (fixed-income products and loan syndication
for SMEs and the public sector);
• a €900 million cost-cutting program that will include several components
aimed at simplifying organizations and structures, the efficiency of operational
processes, and the pooling of resources. Optimization and streamlining
measures will continue for information systems, procurement and real estate.
This program will support the efforts made in each Group company to ensure
the strict management, or reduction, of their cost/income ratios, following
the example of Natixis’ Operational Efficiency Plan and Crédit Foncier plan.
The individual talents of the men and women in the
Group
The involvement of human resources in the implementation of the plan will
be strengthened by giving managers a key role to play in achieving collective
success. The second priority is to prepare the teams for future changes in the
business activities in order to facilitate the success and personal growth of
every employee (internal mobility, development of training, particularly online
training, etc.). In terms of diversity, the Group’s target is for one in every four
company directors to be a woman by 2017.
The assertion of Group BPCE’s essential difference
as a cooperative banking Group
Three major lines of action will be undertaken by the Banque Populaire banks,
Crédit Coopératif, CASDEN Banque Populaire and the Caisses d’Epargne: focusing
on local presence as a strategic differentiator, making customer advisors the
representatives of our cooperative model and showing proof of our cooperative
commitment through quality of service.
This model will be based on a three-way approach involving Group employees
(independence of advisors, strengthening of the role played by branch managers,
etc.), customers and cooperative shareholders (active involvement in quality
control groups, creation of cooperative shareholder clubs, etc.), and the
institutions themselves (actively involved in local solidarity and social change,
etc.).
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Groupe BPCE’s Businesses
1.8 Groupe BPCE’s Businesses
The economic and regulatory environment in which Groupe BPCE conducts its business is described in Chapters 3 and 4 of the registration document.
1.8.1
THE BANQUE POPULAIRE BANKS
The Banque Populaire banks are cooperative banks created by and for
entrepreneurs, working closely with local businesses and business owners.
They form the fourth largest banking network in France with 17 Banque
Populaire regional banks, CASDEN Banque Populaire, which serves the staff
of the French Ministry of Education, Research, and Culture, and Crédit
Coopératif, a major player in the social and solidarity-based economy.
allocation from the European Investment Fund (EIF), which enabled it to offer
an innovation loan with preferential terms.
• Overall, loans outstanding rose by 3.5% and on-balance sheet savings rose
by 6.3%.
• Banque Populaire launched its new web portal, ramped up the roll-out of
electronic signatures across the network and enhanced the services available
on smartphones.
Individual customers
Key figures
19 Banque Populaire banks
8.9 million customers
3,330 bank branches + 17 e-BanquePopulaire branches
Savings deposits: €207.1 billion
Loans outstanding: €165.5 billion
Net banking income: €6.4 billion
3.9 million cooperative shareholder customers
The Banque Populaire banks are wholly-owned by their cooperative shareholder
customers. The Fédération Nationale des Banques Populaires provides
deliberation, communication and representation for the Banque Populaire banks
and their cooperative shareholders.
2013 significant events
• Banque Populaire achieved record growth, attracting nearly 100,000 new
individual customers and more than 10,000 new professional customers.
• In private banking, its customer base exceeded 310,000, with 12,000 new
customers. Assets under management amounted to nearly €60 billion, an
increase of 4.2%.
• Banque Populaire is the leading bank among businesses, with 41% of business
customers(1), the leading bank for franchise holders(2), the second largest bank
among craftsmen, small retailers(3) and self-employed professionals(4). With
the Envie d’Agir pact, Banque Populaire undertook to support investment and
grant €7 billion in new loans in 2013, financing 100,000 projects. It kept its
promise: €8.7 billion in loans were granted, and the bank obtained a further
With a 3% increase of its active customers, more than 65,000 Banque Populaire
customers signed up for new products in 2013. Banque Populaire continued to
attract young customers - a target segment - with a package of banking services
that was awarded an Excellence label by Dossiers de l’Epargne, and the support
of partnerships with La Mutuelle Des Étudiants (LMDE, national student mutual
insurer). The partnership program with NRJ was enhanced with NRJ concerts
to round out the offer, which already comprises the NRJ Banque Pop’ payment
card launched in 2012, which has proved highly popular among young people.
Working closely alongside CASDEN Banque Populaire and the ACEF, initiatives
in favor of staff of the French national education department and civil servants
were reinforced. A new solution was also rolled out for employees and members
of works councils and small and medium-sized associations.
Banque Populaire signed a memorandum of understanding with Banque
Centrale Populaire du Maroc, in which Groupe BPCE has a 5% shareholding, in
order to make it easier for Moroccans living in France to hold bank accounts
in both countries.
Services
Banque Populaire launched the new Affinéa account agreement, which enables
customers to choose their own banking services.
Half of the bank’s Visa cards now allow contactless payments, and the digital
wallet V.me by Visa was also launched, providing a simple and secure way to
pay online.
Banque Populaire is rolling out single-use code authentication among its
customers to combat fraud.
Loans and credit
Outstanding loans to individual customers amounted to €94.7 billion at
December 31, 2013, a 6.4% increase on the previous year.
New home loans reached a record level, partly driven by individual customers
renegotiating their loan terms owing to low interest rates. Despite the decline
(1)
TNS SOFRES, “Les entreprises et les banques” (Businesses and their banks) survey, 2013.
(2)
10th annual franchise survey by Banque Populaire/Fédération française de la franchise/CSA, December 2013.
(3)
2012 CSA Pépites survey.
(4)
CSA survey, May 2013.
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in the consumer credit market in France, new consumer loans were stable
at close to €3 billion, notably due to the launch of the Prêt Projet loan for
home renovations or a new car, which was backed by a dynamic TV advertising
campaign. A debt consolidation solution was also launched.
Bancassurance
In line with its bancassurance strategy, the Banque Populaire banks increased
the number of customers holding insurance policies by 5% in 2013. This resulted
in the sale of over 235,000 non-life insurance policies and nearly 91,000
provident and health insurance policies, increasing the corresponding portfolios
by 14.2% and 7.6% respectively. Four new offers were launched: Protection
Juridique, a single legal insurance policy covering the whole family, which largely
outperformed its targets, ASSUR-BP Santé, a tailored health insurance policy
currently being rolled out, Junior’Expat for students abroad, and an enhanced
Sécuriplus offer.
Craftsmen, small retailers and franchise holders
Banque Populaire renewed its partnership with the European Investment Fund,
which guarantees €900 million in loans to small businesses via the smallbusiness Mutual Guarantee Companies (Socama). As the bank of one in four(2)
franchise businesses, it joined forces with the Echos de la Franchise portal to
enhance its visibility and leadership.
To help its customers in their transition to the digital era, the network rolled out
the Direct et Proche solution, which provides craftsmen and small retailers with
an online presence or store to enable them to showcase or sell their products
simply and securely. The Direct et Proche smartphone app, which was launched
alongside the full website offer, enables users to finds craftsmen and small
retailers located nearby.
Banque Populaire also developed contactless payments, which facilitate card
payments for small amounts.
Deposits and investments
Self-employed professionals
Net on-balance sheet savings inflows increased by 3.8%, taking savings
deposits to €80.3 billion. Selectio, a flexible offer based on term accounts, was
optimized to facilitate its distribution. Nearly €680 million cooperative shares
were subscribed.
Over 127,000 Banque Populaire customers are self-employed professionals. In
2013, it launched Liberal et vous, the first website dedicated to the issues facing
self-employed professionals. It also developed a savings and financing solution
to help self-employed professionals adapt their premises to the new disabled
access requirements that come into force in January 2015.
Off-balance sheet savings deposits – life insurance and UCITS – rose by 3.2%
to stand at €47.4 billion at year-end 2013. Horizeo, a multi-investment life
insurance policy intended to become the network’s flagship product, was
launched at the end of the year.
Private banking
Banque Populaire Gestion Privée supports its 310,000 customers in building,
managing and transferring their wealth. The expertise of private banking advisors
is tailored to the needs of professional customers, self-employed professionals
and business owners in the framework of a dual professional-personal banking
relationship.
The information provided to wealth management customers was revamped
in 2013. Private Banking teams organized a series of successful “Rendez-vous
patrimoniaux” meetings with private banking customers and various initiatives
with the network’s business centers.
Professional customers
Banque Populaire is the bank for small businesses, serving over a million
professional customers. As a longstanding partner of the Chambers of Trade
and Craft Industries (Chambres de métiers et de l’artisanat), and an official
partner of the French trade council (Conseil du Commerce de France), Banque
Populaire is very active among self-employed professionals and has supported
farmers for the past twenty years.
(1)
It ranks among the top three preferred banks of SMEs for the quality of its
customer relations.
At the end of 2013 outstanding loans to professional customers totaled
€42 billion, an increase of 1.5% in an unfavorable environment for investment.
Confirming its momentum and capacity for initiative, Banque Populaire launched
the Visa Platinum Business payment card - a first in Europe - and published a
free website to help its professional customers prepare for their retirement and
the transfer of their business: retraite-des-pros.banquepopulaire.fr
(1)
Group image survey 2013.
(2)
10th BP/FFF/CSA survey, December 2013.
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Farmers
The number of farmer customers increased by 2% in 2013, and now exceeds
64,300. Banque Populaire offers them a comprehensive solution including
equipment finance, seasonal loans, farming warrants, hedging of the principal
commodity prices and Direct et Bon – an online platform allowing producers to
sell their agricultural products directly to consumers.
In 2013, Banque Populaire revamped its savings offering to enable farmers
to benefit from the DPA tax deduction available on savings set aside to cover
difficult periods.
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Corporate and institutional clients
Close to 121,000 companies are Banque Populaire customers. They benefit from
access to 150 business centers and nearly 1,000 specialized staff members.
In 2013, the number of business customers that generated revenues of over
€50 million rose by 4.1%. Over 184,000 institutions and associations have also
chosen Banque Populaire as their bank. They form a key growth driver which
the network intends to leverage with a tailored range of products and services.
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Financing
Outstanding medium- and long-term loans to all business customers remained
strong, amounting to €23 billion at year-end 2013.
Banque Populaire was the first network to provide pre-financing for the
Employment Competitiveness Tax Credit (CICE).
Banque Populaire already receives European Investment Bank funding for
sustainable energy projects in various regions, and European Investment Fund
support to develop very small, small and medium-sized enterprises in the PACA
region. It obtained a further €250 million in funding from the EIF to finance
innovation, which enabled it to launch the Innov&Plus loan. This loan is available
to companies with fewer than 500 employees and can be used to finance nearly
all investments in technical, industrial, logistics, marketing or sales innovation,
for amounts between €25,000 and €7.5 million. Thanks to the support of
the EIF, Innov&Plus offers attractive rates, personal guarantees from company
directors are limited to 50% of the amount of the loans and the company can
apply for other public financing and guarantee solutions.
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Payment processing
The staff of the Banque Populaire banks have worked hard to support
customers in their migration to SEPA credit transfers and direct debits, which
replaced domestic transfers and direct debits in 33 European countries as of
February 1, 2014.
The Turbo Suite Entreprise solution and its mobile phone app have facilitated
this migration. The mobile app was the first solution enabling customers to
manage their business payment flows from a smartphone or tablet. 46,100
companies already use this multi-workstation, multi-profile, multi-company,
multi-account, multi-bank and multi-currency cash management platform
created by Banque Populaire.
THE CAISSES D’EPARGNE
Since 1818, the Caisses d’Epargne cooperative banks have combined
confidence, solidarity and modernity.
As part of the second largest retail banking network in France, the 17
regional Caisses d’Epargne are among the leading banks in their regions.
They support all economic players and are leaders in financing the public
sector, social housing and the social economy.
Key figures
International
17 Caisses d’Epargne
Banque Populaire is the second largest French bank in terms of business
customers with an international presence and 16% of its business customers(1)
conduct activities abroad. They benefit from comprehensive support: processing
of trade transactions, hedging, advice on international expansion and setting up
a business overseas, with the support of Pramex International, Groupe BPCE’s
dedicated structure.
BRED Banque Populaire, which serves a sizable customer base of international
companies, has a subsidiary dedicated to international trade, which is present
in Oceania, Djibouti, Laos and Cambodia.
Net banking income: €7.0 billion
In 2013, Banque Populaire joined the Connector network of 15 banks, covering
around thirty countries. Business customers can now benefit from simplified
account opening procedures abroad and high-quality services in each country
represented, notably in terms of cash management and payment processing.
Creating and transferring businesses
As the leading distributor of business start-up loans(2) and a partner of leading
entrepreneur assistance networks, Banque Populaire facilitates new business
start-ups and takeovers with loans not requiring personal sureties or requiring
reduced financial guarantees in association with small-business Mutual
Guarantee Companies (Socama) and the European Investment Fund.
The Banque Populaire banks are highly active in providing advice for business
transfers and they populate and share a nationwide database that centralizes
information on sellers and buyers to facilitate transactions. In 2013, they
published the first edition of Bulletin d’opportunités: the volume and broad
sector coverage of the businesses presented immediately made this publication
a benchmark for vendors, buyers and their advisors.
25.9 million customers
4,197 bank branches + 17 Monbanquierenligne branches
Savings deposits: €370.4 billion
Loans outstanding: €200.9 billion
The Caisses d’Epargne are wholly-owned by cooperative shareholder customers
through local savings companies. The Fédération Nationale des Caisses d’Epargne
is the institution providing deliberation, communication and representation for
the Caisses d’Epargne and their cooperative shareholders.
• 415,000 customers became cooperative shareholders.
• Caisse d’Epargne attracted 173,000 additional individual customers, including
young people aged between 16 and 25.
• Private Banking, which is growing fast, now has over 360,000 customers and
around €100 billion in assets under management.
• Caisse d’Epargne’s customers include over 300,000 professionals and over
40,000 companies, which means that the penetration rate has doubled in
four years.
• As the leading provider of funding for the social economy, local authorities,
the hospital sector, and the social housing sector, Caisse d’Epargne increased
its support for the French regional economy by 14%, by providing €45 billion
in financing, including €42.8 billion in loans.
• Around 1 million new non-life and provident insurance policies were sold.
• On-balance-sheet savings increased by €19.7 billion (excluding centralized
deposits) and loans outstanding by €15.6 billion.
• Caisse d’Epargne was ranked among the 10 favorite companies in France for
the second year running, and moved up a place in the ranking(3).
(1)
TNS SOFRES 2013 “businesses and banks” survey and internal analysis.
(2)
BPI France – September 2013.
(3)
Posternak/IFOP survey, November 2013. Caisse d’Epargne ranked 9th.
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Professional customers
Caisse d’Epargne, the bank for the whole family, has made nine commitments
to its individual customers, beginning with a dedicated advisor who can be
contacted via any channel, broad accessibility and bespoke solutions. The multichannel branch system was boosted via the roll-out of a new workstation in
2013. Caisse d’Epargne generalized the use of electronic signatures, both at the
branches and remotely, and continued to add to its services via fixed and mobile
internet, which make it accessible at any time.
Over 300,000 craftsmen, small retailers, self-employed professionals and small
businesses are Caisse d’Epargne professional customers; 8 out of 10 are also
private customers.
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Services and insurance
The 17 Caisses d’Epargne launched a Digital Safe that automatically gathers
and classifies invoices and statements from different issuers in a secure area.
250,000 customers have already subscribed to this innovative service.
The insurance offer was broadened through the addition of a Health Guarantee,
an enriched version of the Family Guarantee, and a rental payment insurance
for tenants in the event that they lose their job.
Loans and credit
New home loans, boosted by purchases, reached €24 billion, bringing loans
outstanding to €104 billion, an increase of 9.6%.
New personal loans amounted to €6.1 billion, an increase of 1.2% in a
contracting market.
Investment solutions
Customers prefer secure, untaxed liquid savings.
The uncertainty surrounding the economy and taxes encouraged liquid savings:
demand deposits increased by €1.3 billion. The increase in the ceilings on Livret
A and Sustainable Development passbook savings accounts was offset by a fall
in the return on these accounts in the second half. Savings deposits increased
by 1.2% to €308.5 billion.
Subscriptions for cooperative shares amounted to €1.2 billion.
Life insurance outstandings increased by 1.4% to €101 billion. Caisse
d’Epargne launched an innovative Mutual Fund in order to satisfy a demand
for performance that was revived by the trend in stock markets; the fund is
eligible for French personal equity plans (PEA), and guarantees 90% of the
capital invested with better return prospects.
Bancassurance
The Caisses d’Epargne performed remarkably well, distributing almost
1 million new policies. The portfolios included 3.8 million provident insurance,
comprehensive home and car insurance policies and healthcare guarantees at
the end of 2013.
Private banking
Private banking bases its expansion on its expertise and proximity, and has
launched an ambitious program for its customers: 650 specialized advisors are
involved in an advisory role alongside customers’ usual advisor at their branch.
Around 150 branches have set up dedicated offices, while 20 Private Banking
Areas have opened in the main cities. A dedicated newsletter and magazine
have been launched. The offer has also been broadened via the launch of the
first Duflot Real Estate Investment Trust (SCPI) on the market, and via tax
optimization solutions within the framework of the Girardin Social Housing
System.
Caisse d’Epargne and the French Association of Chartered Accountants entered
into a partnership in 2013, in order to help professionals access credit.
Electronic funds-transfer solutions confirmed their momentum, with a 17%
increase in the number of transactions, and a 14% increase in the payment
processing. Caisse d’Epargne became France’s 3rd largest issuer of Visa Business(1)
cards.
Self-employed professionals benefited from a renewed employee savings offer.
New medium and long-term loans reached €2.6 billion, an increase of 7.6%.
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Compte Excédent Pro accounts, which enable customers to invest their excess
cash in a simple and flexible manner, recorded inflows of €918 million.
Corporate customers
Caisse d’Epargne continued its strong expansion among corporate customers,
and increased its visibility through new partnerships, including the national
young entrepreneur award with La Tribune newspaper, a partnership with the
French Young Managers’ Centre (CJD), and the young people’s business award,
etc. Commercial payment processing increased by 16% to over €59.7 billion.
New loans amounted to €2.5 billion, while loans outstanding amounted to
€7.6 billion, an increase of 13.1%. Term deposits also increased, and amounted
to €7.6 billion at year-end.
Caisse d’Epargne help strengthen regional companies’ equity capital through
French Local Investment Funds (FIP), Innovation Mutual Funds (FCPI) and
Venture Capital Funds (FCPR) that are managed regionally. In 2013, two new
proprietary growth capital vehicles were set up, one by Caisse d’Epargne Picardie,
and the other by Caisse d’Epargne de Bourgogne Franche-Comté.
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Professional real estate
Caisse d’Epargne is the leading bank in the real estate professionals market,
including planners, developers and investors for all types of projects. Caisse
d’Epargne offers its customers comprehensive appraisal, advisory, audit and
marketing services in partnership with Crédit Foncier Immobilier.
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New loans increased sharply despite the depressed market, and amounted to
€1.2 billion, raising the amount of loans outstanding to €2.6 billion, an increase
of 24.6%, with solid growth in medium and long-term financing for real estate
companies and investment funds.
Social economy
Caisse d’Epargne supports over 20,000 companies in the social economy sector,
where it is the leading fund provider. It strengthened its positions with mediumsized and major corporate customers in the private education sector, and with
health, medical and social care facilities in 2013.
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New loans amounted to €622 million, a similar amount to 2012.
The results of the savings segment were also excellent, with a €1.4 billion
increase in on-balance sheet savings even though outflows were up 12% to
€19.3 billion, on-balance sheet savings inflows were positive, at more than
€1.4 billion gathered.
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The number of private banking customers increased by 6%, while assets under
management, which amounted to €97 billion, made Caisse d’Epargne one of
the market leaders.
(1)
Source: Visa.
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Protected persons
Over one in three protected persons, i.e. 300,000 persons, are Caisse d’Epargne
customers and, as such, have access to specialized advisors with dedicated
solutions. The aim is to promote the independence of protected persons
within a secure framework, and to simplify the everyday tasks of their legal
representatives, as well as to provide investment solutions that meet the requests
of guardianship judges. Savings deposits for this customer base amounted to
€6.5 billion at the end of 2013.
The Habitat en Région collective, which was created in the form of an
organization open to all social housing operators at the Caisses d’Epargne’s
initiative, encourages dialogue and synergies, while respecting its members’
independence. It enables them to share their advances and to benefit from
effective solutions, in order to optimally fulfil their public interest remit,
including real estate research, construction projects, equipment, energy audits
and energy-saving certifications.
Habitat en Région includes 28 member companies that house 423,000 people,
and had over 5,000 homes under construction at the end of 2013.
Public sector
Caisse d’Epargne is a major player in lending to local authorities, to their
organizations and to public hospitals. It arranged €3.8 billion in new financing
in 2013, some of which was arranged with Crédit Foncier. Loans outstanding
amounted to €34.6 billion, an increase of 3%.
OTHER NETWORKS IN FRANCE
Thanks to its partnership with the European Investment Bank, Caisse d’Epargne
can finance projects to combat climate change, manage urban waste water,
address the sustainable renovation of underprivileged districts, and modernize
and develop hospitals at preferential rates with its subsidiary Valoénergie. It
helps its customers take advantage of Energy Savings Certificates that can fund
up to 25% of public works projects.
As the leading company specializing in real estate financing and services in
France, Crédit Foncier works with individual customers, investors, real estate
professionals, and local authorities.
Groupe BPCE plays a very active role in financing infrastructure projects, and
was awarded six public-private partnership projects in 2013, which amounted to
almost €530 million in total. In this area, the Caisses d’Epargne are contributing
to the development of the Grenoble Innovation University, to the modernization
of the public lighting system in Cergy-Pontoise, and to building prisons.
They are also providing local authorities with products that simplify their day-today management tasks, including services and social benefit payment vouchers,
public procurement cards, and solutions for paying district services for residents
via the Internet.
Social housing
Caisse d’Epargne is the leading private bank for social housing organizations,
whose buildings have been historically financed by Livret A passbook savings
account deposits. As shareholders, the Caisses d’Epargne participate in the
governance of one-third of social housing companies and public housing offices,
and are also operators themselves.
The development in the social housing properties stalled in 2013, although
tax measures and the release of government-owned land should encourage a
recovery in new loan.
The Caisses d’Epargne committed €906 million to regulated social housing
loans in 2013, together with Crédit Foncier, including state-sponsored rental
accomodation loans (PLS), intermediate rental loans (PLI) and social leaseownerships loans (PLSA). New medium and long-term for social housing loans
amounted to €1 billion, bringing the amount of loans outstanding to €7.3
billion at the end of 2013.
Meanwhile, inflows amounted to €7.2 billion, €2.5 billion of which was
invested in Livret A passbook savings accounts, while commercial payment
processing increased by 9%. Interest in employee savings and service vouchers
remained strong.
Habitat en Région
Caisse d’Epargne is one of the leading private operators in social housing. Social
housing enterprises and the low-income housing cooperatives related to them,
like Erilia, Logirem and SIA, manage around 188,000 homes.
(1)
Source: SGFGAS.
18
Crédit Foncier
Key figures
258 branches
7,000 professional real estate partners
€11.7 billion in loans issued
€3.5 billion in new issues
Crédit Foncier recorded an excellent commercial performance in 2013, including
an increase of around 15% new home loans (€11.7 billion in 2013). Crédit
Foncier has made substantial progress in implementing the five priorities of its
2012-2017 strategic plan, including developing its core businesses, in order to
serve its national customers and customers within Groupe BPCE, accelerating
the international asset disposal program, using refinancing methods alongside
covered bonds, reducing its management costs (-6% over one year), and
increasing synergies with other Group entities. Compagnie de Financement
Foncier, a wholly-owned Crédit Foncier subsidiary, will handle part of its
refinancing activity in favor of other Groupe BPCE institutions.
Crédit Foncier helps finance access to home ownership for existing and new
housing. It is also involved in the rental investment financing and senior
financing sectors.
In a hesitant market, new home loans to individuals amounted to €7.6 billion,
an increase of 18%. Crédit Foncier reinforced its position as the leading provider
of loans for low-income families, with a 46% market share in 2013(1).
It also increased its position in interest-free loans, with a market share of 25%.
Lastly, unemployment insurance and resale guarantees, which enable customers
to secure their projects, met with great success.
1
Financing real estate investors and professionals
Banque Palatine
Crédit Foncier helps real estate investments and professionals (real estate
companies, construction companies, and investment funds, etc.) to execute
their transactions.
Dedicated to business banking and wealth management, Banque Palatine
helps its customers achieve their personal and professional goals, as part of
a long-term and bespoke relationship.
1
Crédit Foncier also makes its expertise in arranging and syndicating financing
for transactions available to these operators.
New loans amounted to €1.9 billion in 2013, a decrease of 3.9%.
Key figures
Furthermore, Crédit Foncier set up a dedicated Syndication and Coverage
department, in charge of developing co-financing activities with bank and
non-bank finance providers.
52 branches
Public infrastructure
Crédit Foncier lends to local authorities and organisations in charge of social
housing.
1
10,000 corporate customers
63,000 private banking customers
€7.3 billion in loans outstanding
€16.1 billion in savings deposits (on and off-balance-sheet)
Its teams define and support the financing of large infrastructure projects,
through complex structures like public-private partnership (PPP) agreements.
Crédit Foncier experienced high business volumes in the project and publicprivate partnership financing market, alongside the other entities in Groupe
BPCE. It specifically took part in financing new buildings for the Grenoble
Innovation University, and the Cergy-Pontoise public lighting network.
New loans were very strong in 2013, with a 23.3% increase compared with
2012.
Real estate services
The real estate services business is performed by Crédit Foncier Immobilier,
a wholly-owned subsidiary of Crédit Foncier, which offers two service areas,
namely advisory, research and appraisal services, as well as the marketing and
management of real estate assets.
Its offering is intended for institutions, investors, operators in the residential or
commercial real estate market, and large real estate owners.
Crédit Foncier Immobilier also produces studies and forward-looking research on
the property markets, which are awaited and noted with interest by professionals
in the sector, and by public institutions, as well as by the media, for which they
are a preferred source of information.
Following its third year in existence, Crédit Foncier Immobilier confirmed its
ranking as the fourth largest French real estate advisory company, with revenues
of €41 million before retrocessions, and a staff of 260 employees.
Financial transactions
The financial transaction business involves the refinancing of loans granted
by Crédit Foncier or other entities in Groupe BPCE. The refinancing is primarily
provided by Compagnie de Financement Foncier, a wholly-owned subsidiary
of Crédit Foncier, which aims to refinance the individual mortgage and public
sector lending activities through issues of covered bonds or securitization.
In addition to its traditional refinancing methods, Crédit Foncier is developing
transactions involving the securitization of real estate mortgage loans.
Compagnie de Financement Foncier issued €3.5 billion in 2013.
Banque Palatine is committed to establishing a true financial partnership with
its customers, drawing on its recognized areas of expertise and high value-added
advisory services, with solutions tailored to each customer.
Corporate customers
1
Banque Palatine continued its strong development among intermediate-sized
enterprises (ISEs) with revenues ranging from €15 million to €500 million, its
core target market.
To further its goals, it specifically became involved in the award of the ASMEPETI top prizes for family-owned companies and ISEs alongside Bpifrance,
and in the conference on the financing of SMEs and ISEs organized by Les
Echos and Capital Finance. It also awarded the “Ambitions d’Entrepreneurs”
(Entrepreneurial Ambitions) trophies in partnership with i>TELE.
Banque Palatine is very actively involved in the media, audio-visual and cinema
sector; it partners the Directors’ Fortnight in Cannes, and was also involved in
the 10th Television Creation Day event organized by the French Association of
Audio-Visual Professionals, as well as in the French Media Assembly.
It was among the very first banks to offer its corporate customers advance
financing of their Employment Competitiveness Tax Credit (CICE) in 2013.
Banque Palatine has expanded its financing solutions, and has launched a bond
offer intended for a very broad ISE target. This offer is based on the contractual
Micado France 2019 bond fund, on the Novo marketplace funds, which enable
insurance companies to fund unlisted SMEs and ISEs, and on partnerships with
investors.
Furthermore, the Bank organized a meeting in Rennes between around 15
Moroccan companies in the dairy and beef sector, and around 30 Brittany-based
companies in the same sector. This initiative was in keeping with other measures
to promote companies’ international development.
As the leading bank for real estate managers and brokers in France, Banque
Palatine has entered into a partnership with the Guy Hoquet L’Immobilier
network, focusing on the administration and management of regulated
accounts, and on making its offer dedicated to regulated professions in the
real estate sector available to members of that network.
Private banking customers
Over 40% of Banque Palatine’s ISE customers are also private banking customers.
This means that they benefit from a global wealth management approach.
1
1
1
1
The Bank rolled out its application for smartphones and tablets in 2013, and
added the Visa Business, Visa Gold Business and Visa Electron cards to its bank
card range.
19
1
1
It also launched an innovative life insurance policy that includes bespoke funeral
arrangements, and issued two structured products indexed on the Euro Stoxx
50, namely Palatine Europe Rendement 1 and Palatine Europe Actions 1.
Lastly, the signing of a partnership agreement with Natixis Luxembourg enabled
Banque Palatine to round out its private banking offer, especially in terms of
internationalization of customer assets.
Asset management
Palatine Asset Management, which is renowned for its conviction-based
management and responsiveness, was once again ranked among the top 10
asset-management companies in the Alpha League Table ranking. The company
manages over 70 UCITS, around 10 of which have been rated four or five-stars
by Morningstar for their performance over one, three and five years. The range
also includes seven SRI funds, three of which have been certified by Novethic.
In 2013, the Uni-Hoche Investment Trust, which is dedicated to French large-cap
stocks, won the Morningstar Fund Award for the fourth year running.
Meanwhile, the Micado France 2019 Fund, which invests in bonds issued by
French ISEs, is a highly innovative investment vehicle that combines consistency,
a long-term approach, and returns. The Fund consists exclusively of fixed-rate
six-year bonds with an annual coupon (with possible half yearly coupon), and
offers investors solid diversity of sectors, while enabling the issuing companies
to redeem the entire bond at maturity.
Other commercial banks in France
Other Groupe BPCE banks, often among the oldest in their region, help reinforce
the economic development of their region or have the ability to meet the needs
expressed by certain categories of customers, corporates, professional customers
or individual customers, with dedicated savings and financing solutions and
services.
Specialized bank
Crédit Maritime Mutuel
Description
A cooperative bank serving
stakeholders in coastal and port cities
Affiliate and
partner bank
Description
Banque BCP
A bank for Portuguese or Polish
individual and professional
customers in France
Regional banks
Region
Banque Chaix
Bouches-du-Rhône, Vaucluse
Banque Dupuy, de Parseval
Languedoc-Roussillon
Banque Marze
Banque de Savoie
Crédit Commercial du Sud-Ouest
Ardèche, Drôme
Rhône-Alpes
Aquitaine
OVERSEAS AND INTERNATIONAL COMMERCIAL
BANKING
Groupe BPCE is developing its commercial banking business outside mainland
France through BPCE International et Outre-mer (BPCE IOM). Several Banque
Populaire banks and Caisses d’Epargne also have cross-border activities.
Some of them operate in the French Overseas Departments, like BRED,
Caisses d’Epargne Ile-de-France(1) and Provence-Alpes-Corse(2). BRED Banque
is making international development a major growth driver via a targeted
strategy.
BPCE International et Outre-mer (BPCE IOM)
BPCE IOM has over 3,500 employees, and controls and develops a network of
10 banks in which it has a majority interest, and two specialized subsidiaries
(Pramex International and Ingépar). BPCE IOM also manages the non-controlling
interests in BNDA (Mali), BCP Maroc, Fransabank France, BCP Luxembourg,
Banca Carige (Italy) and Proparco (France).
In 2013, for the first time, all the entities in the IOM network drew up their
strategy plans based the same priorities within the same timeframe, i.e. 2017.
The BPCE IOM network added to its offering aimed at young people, and pursued
a dynamic sales policy, which resulted in an increase of over 5% in active
customers using banking services.
Banque des Antilles Françaises and Banque de la Réunion celebrated their 160th
anniversary.
Banque de Tahiti and BTK in Tunisia entered into an agreement with the
European Investment Bank aimed at financing local SMEs.
From a project standpoint, the financing of the Grand Hôtel in Cayenne, and
the Gouaro tourism resort in New Caledonia, as well as the second tranche of
the Réunionnaise des Énergies 1 solar power farm illustrate the diversity of the
Bank’s involvement.
Banque Centrale Populaire du Maroc and the Banque Populaire and Caisse
d’Epargne networks have designed a joint banking offer for their Moroccan
customers living in France.
BPCE IOM sold 51% of BCP Luxembourg to Banque Populaire Lorraine
Champagne and to Caisse d’Epargne Lorraine Champagne-Ardenne, which will
therefore be able to provide greater support to their cross-border customers,
and to expand in a neighboring region.
Ingépar and Pramex International
Ingépar arranges complex financing for assets overseas and in mainland France,
including infrastructure, transport, and industrial projects, hotels and properties.
In 2013, it was highly involved in the social housing sector, with over 1,400
homes spread between Reunion, Mayotte, French Guyana and Martinique,
representing investments of around €300 million, were financed through
structured loans issued by Ingepar.
Pramex International advises and supports the international development
of some 1,000 SMEs and ISEs every year via more than 100 consultants in
15 countries. It is a partner for Ubifrance and Bpifrance, and strengthened its
offer in the mergers & acquisitions sector for intermediate-sized transactions
(between €15 million and €80 million) both in France and abroad in 2013.
Pramex International advised on around 300 new projects over the year.
(1)
Caisse d’Epargne Ile-de-France operates in Saint-Pierre-and-Miquelon.
(2)
Caisse d’Epargne Provence-Alpes-Corse operates in Martinique, Guadeloupe and Reunion.
20
Banks in the BPCE International et Outre-mer
network
Overseas territories
BRED Banque Populaire
Equity Interest
Branches
Banque des Antilles Françaises
100%
25
Banque de la Réunion
88.9%
29
Banque de Nouvelle Calédonie
96.8%
18
Banque de Saint-Pierre-et-Miquelon
80.6%
2
Banque de Tahiti
96.4%
17
100%
13
71%
13
Africa and Indian Ocean
Banque des Mascareignes
BMOI (Madagascar)
BTK (Tunisia)
60%
24
BICEC (Cameroon)
68.5%
35
BCI (Congo-Brazzaville)
100%
18
BNDA (Mali)*
9.7%
BCP (Morocco)
4.7%
Europe
BCP Luxembourg**
29.1%
Fransabank France
40%
Banca Carige
PROPARCO
9.9%
7.9%
6
Specialized subsidiaries
Ingépar
100%
Pramex International
100%
*
**
1
Crédit Coopératif owns a 9.7% interest in BNDA.
Banque Populaire Lorraine Champagne and Caisse d’Epargne Lorraine Champagne-Ardenne also
own a 51% interest in BCP Luxembourg.
BRED’s overseas operations include a network of 76 branches in the French
Overseas Departments, as well as subsidiaries in Polynesia and New Caledonia.
Buoyed by this experience, BRED is pursuing sustained and targeted growth in
the Pacific (Vanuatu and Fiji) the Horn of Africa (Djibouti) and in South-East
Asian countries (Laos and Cambodia), where it is a pioneer among European
banks. The international and overseas operations involve a quarter of BRED’s
employees, and accounted for around 45% of net income in 2013.
1
INSURANCE
1
As a major integrated banking and insurance company on the French
market, Groupe BPCE relies on dedicated subsidiaries and partnerships with
key insurers. To become a fully-fledged banking and insurance company,
the Group has begun setting up a single business platform within Natixis
Assurances, which plans to acquire a 60% interest in BPCE Assurances
within this framework.
The year saw a large number of regulatory changes, including a gender-neutral
pricing policy, the inter-professional agreement on mandatory health insurance,
the termination of insurance policies at any time, and the designing of the new
euro growth and generation life insurance policies.
1
Life insurance
Several companies help design and manage life insurance policies distributed
by the Group networks.
CNP Assurances, France’s leading personal insurer, is a partner of the Caisses
d’Epargne, with support from Ecureuil Vie Développement. This business
generated €6.7 billion in premiums in 2013, an increase of 7% compared with
2012. The private banking policies accounted for 52% of the amounts generated.
The portfolio includes 5.8 million policies.
1
1
1
1
21
1
1
Natixis Assurances primarily distributes its policies via the Banque Populaire
network. It manages 1.4 million life insurance policies. Among other policies in
2013, it launched Horizéo, a new-generation life insurance policy that offers
innovative rates and services, and earned €3.3 billion in premiums.
The Assurances Banque Populaire Vie, Natixis Assurances Partenaires and Vitalia
subsidiaries were merged under the name of ABP Vie.
With the Assurément#2016 program, Natixis Assurances is preparing to take
over the generation of new life and provident insurance policies within the
Caisses d’Epargne network in 2016.
Prépar-Vie, which is dedicated to the BRED Banque Populaire network, manages
over 230,000 policies and generated €500 million in premiums.
Non-life, health and provident insurance
The non-life, health and provident insurance offering, which drives growth and
loyalty, is distributed via the Group’s banking networks, and is primarily intended
for individuals and professionals. This business, which has been supported by the
Ambition Banquier Assureur program since 2011, continued to record strong
growth. The target set in the 2014-2017 strategy plan is ultimately to cover
one out of every three customers.
BPCE Assurances, which is jointly owned with MACIF and MAIF, sold almost
670,000 policies via the Caisses d’Epargne, Crédit Foncier and Banque BCP.
Acquired premiums (excluding non-banking insurance) rose by 11% to
€587 million.
The Caisses d’Epargne distributed almost 930,000 new policies generated by
BPCE Assurances and CNP Assurances, the Group’s other provident insurance
partner. Internet enabled a significant number of sales to be generated,
particularly in the car insurance and comprehensive home insurance segments.
The new health insurance offer was launched in 2013, and was extremely well
received by the Caisses d’Epargne; it is currently being rolled out across the
Banque Populaire network.
Natixis Assurances, working together with MAAF, its non-life insurance partner,
benefited from the momentum created by the Banque Populaire banks, Crédit
Maritime and the regional banks(1). Its revenues in the non-life segment
increased by 9% to €272 million, with a portfolio that exceeded 1 million
policies. Natixis Assurances generated revenues of €205 million, up 4%, in the
individual provident insurance segment.
Among its new products, Natixis Assurances launched a Legal Cover product,
and added new guarantees, including identity theft, to Sécuriplus. Ecureuil
Vie Développement renewed the Family Guarantee policy, including broader
guarantees. The Tenant Provident Insurance policy, which guarantees rental
payments in the event that the policyholder loses their job or is temporarily
completely unable to work, was rolled out successfully throughout the Caisse
d’Epargne network in 2013.
Payment protection insurance and guarantees
In payment protection insurance, Natixis Assurances, the Banque Populaire
banks’ insurance subsidiary, and CNP Assurances’ partner for the Caisses
d’Epargne, earned €401 million in premiums, an increase of 20%.
Compagnie Européenne de Garanties et Cautions (CEGC), a subsidiary of Natixis
and the second largest issuer of real estate guarantees in France, generated
€320 million in premiums in 2013.
1.8.2
Corporate Banking, Investment Management and Financial Services
NATIXIS: WHOLESALE BANKING
Wholesale Banking (BCG) advises companies, institutional investors, public
sector entities, private equity funds and Groupe BPCE networks. Thanks to the
expertise of its teams, combined with recognized research, it designs innovative
bespoke financing and capital markets solutions to meet its customers’ specific
requirements. It also offers them transactional banking services.
Wholesale Banking operates in major financial centers through three
international platforms: North & South America, Asia-Pacific, and Europe, the
Middle East and Africa (EMEA).
equity market teams. The Mergers & Acquisitions Team helps customers to
prepare and perform disposal or merger, fund-raising, restructuring, or capital
defense transactions. The Financial Optimization and Ratings Advisory Team
becomes involved with customers at a very early stage, in order to help them
determine their equity capital and debt financing strategies. The Primary Equity
Market Team provides customers with bespoke advice in transactions affecting
the structure of their equity capital and their shareholder base; it has also
acquired expertise in carrying out takeover bids or public exchange offers, and in
implementing defense strategies in the event that the risk of a takeover emerges.
Structured Financing
Coverage & Advisory
Thanks to a regular and in-depth strategic dialogue with their customers, the
Coverage teams anticipate and meet their requirements by optimizing all the
products and services offered by Natixis.
Natixis has global and international advisory, arranging, underwriting and
financial engineering skills for the financing of aircraft, exports, infrastructure,
energy and commodities, strategies and acquisitions, real estate, and investment
engineering. New structured loans were very dynamic at €17.5 billion in 2013.
Coverage operates in France (Paris and the French regions) and abroad, and
primarily relies on the strategic advisory teams, including the mergers &
acquisitions, financial optimization and ratings advisory services, and primary
In the energy and commodity financing area, Natixis confirmed its ranking
with major traders and producers in the metals and fertilizer sectors in 2013,
and was awarded a bronze medal for the “Best Trade Finance Bank in the
(1)
22
Banque de Savoie, CCSO, Banque Chaix, Banque Dupuy, de Parseval, and Banque Marze.
Mining and Metals Sector(1)”. In the aircraft financing sector, Natixis plays a
key role in the EETC (Enhanced Equipment Trust Certificates) market. In the
infrastructure financing sector, Natixis won several Deal of the Year awards
for the following transactions: the R1 motorway in Slovakia, the Odebrecht
and N’Goma offshore platforms, and the Nghi Son refinery(2). The real estate
financing team expanded its international business activities in 2013 via the
signing of flagship transactions like the refinancing of the SELEC portfolio on
behalf of LBO France (€620 million). In the strategic and acquisition financing
field, Natixis was involved in major transactions in France and abroad, including
the acquisition of Smithfield Foods by Shuanghui Group (a $4 billion deal
between the United States and China).
Capital markets
Natixis offers its customers investment, financing and hedging products on the
fixed income, credit, currency, commodity and equity markets.
Despite a relatively adverse market in 2013 (fall in volumes and uncertainty
regarding the trend in monetary policies, etc.), Natixis sales momentum reflected
its Trading & Sales platform’s ability to offer solutions that were appropriate for
its customers’ requirements. It continued to expand its capabilities to distribute
loans to investors, by rolling out the Originate to Distribute model on a global
scale. As a standard-setting operator in the primary euro bond market, Natixis
ranked among the leaders for covered euro bonds for the third year running(3). It
was also in pole position on the primary euro bond market for French corporate
issuers(4), and on high-yield primary corporate euro bond issues(5). The expertise of
its financial engineering teams and the successful incorporation of the Strategic
Equity and Fund Solutions businesses enabled Natixis to continue broadening
its product offering on the equity markets.
Transaction banking business
Thanks to a close collaboration between Natixis and Groupe BPCE, the Group’s
customers benefit from an effective Global Transaction Banking offer, including
account and related cash products management, cash management, trade
finance, and correspondent banking (2,700 banks covered in 150 countries).
The Investment Solutions division offers a wide range of expertise in asset
management, which relies on a world-wide distribution platform tailored to
the various specific characteristics and regulations of the markets in which it
operates.
NATIXIS: INVESTMENT SOLUTIONS
The Investment Services division’s four businesses (Asset Management,
Insurance, Private Banking and Private Equity) develop investment solutions
tailored to the needs of Natixis and Groupe BPCE customers. These solutions
cover the investment, asset management and advisory needs of private banking
and institutional customers.
1
Asset management
Natixis Global Asset Management (NGAM) relies on around twenty affiliated
asset management companies that implement their own investment strategy
in all the main asset classes. As the 15th largest global asset management
company(6), NGAM has strong positions in the United States and Europe, and
is expanding in Asia.
Against the backdrop of a gradual economic recovery and rising financial
markets, the breadth of its offering and geographical coverage enabled it to
perform well last year, including a sharp rise in assets under management,
which amounted to €629.2 billion at the end of 2013, a year-on-year increase
of 8.7% in constant euros. Assets under management grew significantly in the
United States and Asia. Net inflows amounted to €13.4 billion in 2013, the
highest level since 2007.
NGAM benefits from the momentum of its global distribution platform, which
aims to generate inflows for its asset management companies. It is rolling out
its business activities on all five continents, by relying on offices in around 20
countries. 2013 was a record year for this centralized platform, in terms of
providing its expertise to NGAM’s asset management companies throughout the
world.
Natixis Asset Management is NGAM’s specialized European company, which had
assets under management of €291 billion at the end of 2013, i.e. nearly 46% of
NGAM’s total assets under management. It offers recognized areas of expertise in
the main asset classes and portfolio management styles. Its activity is organized
around six areas of expertise: Fixed Income, European Equities, Investment
and Client Solutions, Volatility and Structured Products, Global Emerging, and
Responsible Investment. Two new areas of expertise were created in 2013, namely
Seeyond, which specializes in volatility and structured product management, and
Mirova, an asset management company dedicated to responsible investing, which
is a leader in several SRI fields, and became a subsidiary on January 1, 2014.
Research
Natixis’ economic, credit, equity, and quantitative research helps design financial
solutions that are appropriate for customers’ requirements, and contributes to
the Bank’s financial innovation process.
1
Insurance
Natixis Assurances designs and manages a comprehensive range of life
insurance, provident and non-life insurance policies for individual, professional
and corporate customers. Its products are distributed by Groupe BPCE’s
networks, primarily via the Banque Populaire banks. Natixis Assurances operates
in Luxembourg through its Natixis Life subsidiary, and in Lebanon, via equity
interests in subsidiaries, in partnership with local private banks.
Its aggregate revenues from all business activities amounted to €4.2 billion in
2013. Natixis Assurances recorded an increase of 36% in its gross life insurance
inflows. Its life insurance outstandings increased by 4% to €39.2 billion in 2013,
while inflows invested in unit-linked policies accounted for 18% of the total.
Provident insurance increased by 14% in contribution terms, while non-life
insurance contribution increased by 9%, which was a markedly higher increase
than that of the market.
(1)
Source: Trade and Forfaiting Review - Excellence Awards 2013.
(2)
Source: Project Finance International, December 2013 (R1: “Europe - Bond Deal of the Year”, Odebrecht: “Americas - LatAm O&G Deal of the Year”, N’Goma: “Middle East & Africa - African O&G Deal of the
Year”, Nghi Son: “Asia-Pacific Petrochem Deal of the Year”).
(3)
“Best lead manager for covered euro bonds in 2012 and 2013”, and voted best merchant bank in 2011 by 200 issuers in the market, as part of a poll organized by The Cover, a EuroWeek publication that
specializes in the covered bond market.
(4)
Dealogic at 12/31/2013: Leading book-runner in terms of the number of issues, ‘‘All French High-Yield Corporate Bonds in Euros’’ ranking.
(5)
Dealogic at 12/31/2013: leading book-runner in terms of the number of issues, “All French High-Yield Corporate Bonds in Euros” ranking.
(6)
Source: NGAM, 15th global asset manager in the world, Cerrulli-July 2013 ranking in terms of assets under management at end-2012.
23
1
1
1
1
1
1
1
1
Private banking
Private banking is entirely dedicated to wealth management solutions for private
investors. It includes Banque Privée 1818 on the French market, and Natixis
Private Banking in Luxembourg. It is expanding its activities with the distribution
networks, including Groupe BPCE networks, Independent Wealth Management
Advisors (IWMAs), and direct customers.
It provides a wide range of services through its Sélection 1818 platform,
including discretionary portfolio management, the selection of UCITS, and
life insurance policies, etc. Banque Privée 1818 also relies on the expertise
of Sélection 1818, the leading banking platform in France(1), and on VEGA
Investment Managers, which won the Eurofonds 2013 award for the best
French investment management company in the 16/30 funds category in 2013.
Private banking’s assets under management amounted to €22.4 billion at the
end of 2013. Banque Privée 1818 confirmed the positive trend in its marketing
collaboration with Group BPCE’s networks in 2013.
Private equity
Private Equity covers the venture capital, growth capital and business transfer
segments, as well as a fund-of-funds and investment advisory activity. It had
€5.1 billion in assets under management at the end of 2013.
Its six asset management companies adjusted to the challenging fund-raising
conditions in 2013, by developing a range of innovative products and services
tailored to investors’ needs.
It is the joint market leader in real estate management, commercial properties
and third-party office management services, and estate agency networks,
and has issued almost 4,800 guarantees amounting to €5.7 billion in volume
terms within the framework of the Hoguet Law. It guarantees the completed
construction of 14,411 detached homes in France, i.e. 25% of the market.
CEGC also operates on the corporate market, and issued over 50,000 deeds in
2013, an increase of 16%.
Lease Financing
Natixis Lease develops and distributes a range of integrated solutions that is one
of the broadest on the market for equipment and real estate leasing, long-term
vehicle leasing, renewable energy financing, and operational IT leasing. It also
arranges and syndicates financing for its customers.
The economic environment remained tough, and new real estate leases fell by
8% to €679 million in 2013, while new equipment leases, refocused on Groupe
BPCE’s networks, remained stable at around €1.6 billion.
With new loans amounting to €234 million in 2013, Natixis Lease registered
an impressive performance in terms of renewable energy financing, where the
number of transactions arranged virtually doubled in one year.
Natixis Car Lease rolled out its new long-term vehicle leasing offering to most
of the Caisses d’Epargne and Banque Populaire banks in 2013, and booked over
4,000 orders, i.e. an increase of 14.5% compared with 2012.
Consumer Credit
NATIXIS: SPECIALIZED FINANCIAL SERVICES
Natixis Financement designs revolving credit and personal repayment loan offer
for Groupe BPCE’s banking networks.
Specialized Financial Services include two major business line categories where
the industrial approach and distribution issues are similar: Specialized Financing
(factoring, guarantees and sureties, lease financing, consumer credit, and film
and audio-visual finance), and Financial Services (payments, securities services
and Stock Market transactions, employee savings, pensions, service vouchers
and collective provident insurance).
New loans amounted to €7.9 billion (almost €1.1 billion in revolving loans,
and over €6.8 billion in personal repayment loans).
These businesses are all key to serving the expansion of Groupe BPCE’s networks,
i.e. the Banque Populaire banks and Caisses d’Epargne.
Film and audio-visual financing
Total loans outstanding amounted to €15.4 billion at December 31, 2013,
a year-on-year increase of 13%. Accordingly, the company consolidated its
ranking as the third-largest French operator in the sector(3).
Factoring
Holding market-leading positions in France and Europe, Natixis Coficiné finances
the full range of audio-visual professions.
Natixis Factor designs and manages customer receivable solutions for companies
of all sizes, including factoring and financing, loan insurance, and notification
and recovery of receivables.
New loans amounted to €285 million in 2013, down 13% following strong
growth in the 2012 fiscal year. The total amount of funds made available during
the year was €625 million, a decrease of 2% compared with 2012.
As the 4th largest factoring company(2) in the market, Natixis Factor generated
annual revenues of €29.8 billion at December 31, 2013, an increase of 5%. This
increase represents 7,500 new contracts signed with customers from Groupe
BPCE networks, Natixis and a network of brokers in 2013.
Sureties and guarantees
Compagnie Européenne de Garanties et Cautions (CEGC), an insurance company,
is Natixis’ guarantees and sureties platform.
CEGC is ranked 2nd in the French real estate sureties market for individual
customers. It guaranteed €22.3 billion in loans (+44%) in 2013, in a market
that was supported by loan renegotiations.
(1)
2014 Gestion de Fortune ranking.
(2)
14.9% market share (Source: French Asset Management Association (AFG) at December 31, 2013.
(3)
Source: annual reports, and Natixis Financement research.
24
Employee Benefits Planning
Natixis Interépargne and Natixis Intertitres are developing a full employee
benefits planning range, including employee savings, pensions, employee share
ownership plans, collective insurance and service vouchers.
Natixis Interépargne consolidated its ranking as the leading manager of
employee savings accounts in France in 2013, with over 3 million employee
accounts, i.e. a market share of 26.5%(1).
Its collective savings pension plan offer recorded very strong growth, particularly
in the corporate and institutional segments. The number of collective savings
pension plan accounts increased by 30% in one year, bringing its market share
in the account-keeping segment to 29.9%(2).
The development of the employee savings offer for SMEs and professionals,
which is distributed by the Banque Populaire and Caisses d’Epargne networks,
continued in 2013, with almost 12,850 new agreements signed.
The Chèque de Table® and CESU Domalin® service vouchers reported steady
growth, and recorded a 9.7% increase in terms of the total amounts issued,
especially for major accounts and local authorities.
In 2013, Natixis anticipated the changes in the regulations planned for the first
four months of 2014 by preparing the launch of its Apetiz meal voucher card.
Payments
It manages payment transactions (checks, mass and single transactions, and
electronic funds-transfers, etc.) via every interbank channel, and offers related
services. As Groupe BPCE’s single payment operator, it processes payment flows
for the Banque Populaire banks and the Caisses d’Epargne, and major French
banking institutions, i.e. around 100 banks and financial institutions.
1
Natixis Paiements, which is the third-largest payment operator in France with
market share of over 20% both in processing systems and electronic fundstransfers, processed around 6.7 billion mass transactions in 2013.
In the electronic funds-transfers sector, it manages over 17 million cards, and
processed almost 3.5 billion card transactions in 2013.
Securities Services
1
Natixis’ EuroTitres department provides custody services for retail and private
banking customers, and has the leading open custody platform in France.
In an environment characterized by the ongoing decline in transaction volumes,
which affected all financial savings players, Natixis manages 4 million securities
accounts.
Natixis Paiements includes the management of payment means and systems,
and Services for Individuals.
1.8.3
1
1
Equity Interests
NEXITY
As the leading integrated real estate business operator in France, Nexity supports
all aspects of its individual, corporate and local authority customers’ real estate
activities, via the broadest range of expertise, products, services and solutions,
including transactions, management, design, development, planning, and
advisory and related services.
activity(3), at the end of December. Revenues amounted to €2.7 billion, while
current operating income amounted to €192 million. Nexity enjoys from a
sound financial structure, which was reinforced by a successful €200 million
bond issue in January 2013.
MAISONS FRANCE CONFORT
Nexity is firmly committed to its customers, the environment and society,
and was awarded the Grand Prix des Pyramides d’Or by the French Real Estate
Developers Association in 2013 for the Le Quartz development in Nantes, which
stands out due its modernity, sustainability and natural fit with the town’s
historical architecture, and won the Innovation Award for Ywood Business
l’Ensoleillée in Aix-en-Provence, the first positive energy commercial complex
in France built out of solid wood.
As the leading operator in the access to home ownership sector in France(4), the
Group is working on buildings that are increasingly environmentally-friendly
(Concept MFC 2020). Its Rénovert brand is involved in the same way in the
renovation market.
The Group has launched two highly innovative offers, i.e. a service charge and
energy performance guarantee for companies, and a co-ownership service
charge guarantee for individuals.
Furthermore, Maisons France Confort also developed an offer that enables
local authorities to offer land and house packages to first-time home-buyers
at affordable prices in 2012, with the support of Groupe BPCE.
The 2013 results confirmed the soundness of Nexity’s model, its sales momentum
and the quality of its management. Despite the adverse environment, the backlog
amounted to €3.4 billion, an increase of 8%, i.e. 18 months of development
1
Maisons France Confort is the leading builder of detached homes in France(3).
The Group delivered almost 5,000 homes in 2013.
Maisons France Confort’s consolidated revenues amounted to €516 million in
2013, a decrease of 8%. This figure demonstrates the Group’s strong resilience
in a very depressed market.
1
1
1
(1)
Source: French Asset Management Association (AFG) at June 30, 2013.
(2)
Based on rolling revenues for the past 12 months.
(3)
Source: Le Moniteur, 12/13/2013.
(4)
Internal source.
25
1
1
COFACE
Coface offers credit insurance solutions around the world to protect companies
against the risk of the financial default of their customers. It also provides them
with its analysis of risks by country, sector and company throughout the world.
This analysis draws on its extensive international network.
26
Coface also manages, for and with the backing of the French government,
guarantees intended to assist, support and secure French exports financed over
the medium and long term, and French investments abroad.
It generated revenues of €1.4 billion in 2013, a decrease of 3.1% compared
with 2012, or -1.6% at constant consolidation scope and exchange rate. Credit
insurance revenues declined by 1.2% in 2013 (at constant consolidation scope
and exchange rates). The net reinsurance claims to premiums ratio was stable
at 53.8 % in 2013, compared with 53.4% in 2012.
2
CORPORATE
GOVERNANCE
2.1 INTRODUCTION
2.2 MANAGEMENT AND SUPERVISORY BODIES
28
30
2.2.1
Supervisory Board
30
2.2.2
Management Board
33
2.2.3
BPCE Management bodies
34
2.2.4
Directorships and Offices held by members
of BPCE’s Management Board in 2013
35
2.3 ROLE AND OPERATING RULES
OF GOVERNING BODIES
64
2.5 POTENTIAL CONFLICTS OF INTEREST
81
2.5.1
Members of the Supervisory Board
81
2.5.2
Members of the Management Board
81
2.6 CHAIRMAN’S REPORT ON INTERNAL
CONTROL AND RISK MANAGEMENT
PROCEDURES FOR THE YEAR ENDED
DECEMBER 31, 2013
82
2.6.1
Internal control provisions
82
2.6.2
General organization
83
2.6.3
Periodic control
85
2.6.4
Risk monitoring and measurement
87
2.3.1
Supervisory Board
64
2.6.5
Compliance
90
2.3.2
Specialized committees
66
2.6.6
Other permanent control functions
93
2.3.3
Management Board
68
2.6.7
Controls of accounting and financial reporting quality
95
2.3.4
Annual General Shareholders’ Meetings
69
2.4 RULES AND PRINCIPLES GOVERNING
THE DETERMINATION OF REMUNERATION
AND BENEFITS
2.7 STATUTORY AUDITORS’ REPORT
ON THE REPORT OF THE CHAIRMAN
OF THE SUPERVISORY BOARD
100
2.8 RECOVERY AND RESTRUCTURING PLAN
101
2.9 PERSONS RESPONSIBLE FOR AUDITING
THE FINANCIAL STATEMENTS
102
70
2.4.1
Remuneration policy
2.4.2
Remuneration, benefits in kind, loans, guarantees
and attendance fees received by BPCE company
directors
70
72
2.4.3
Stock options
78
2.4.4
Post-employment benefits: company directors
79
2.4.5
Procedure for enforcing professional standards
covered by Article 43-2 of French Banking and
Financial Regulation Committee (CRBF)
regulation 97-02 within Groupe BPCE
2.9.1
Statutory Audit system
102
2.9.2
Statutory Auditors of BPCE
102
2.9.3
Remuneration of Statutory Auditors
103
80
27
2
Introduction
2.1 Introduction
In preparing this report, BPCE referred to the Corporate Governance Code for
listed companies published in December 2008 and updated in June 2013 by the
Association Française des Entreprises Privées (AFEP – French Private Companies
Association) and the Mouvement des Entreprises de France (MEDEF – French
Business Confederation), hereinafter referred to as the AFEP-MEDEF Code,
including the October 2008 recommendations on executive pay, as set out in
Article L. 225-68 of the French Commercial Code.
Only certain provisions were not followed, given that they were regarded as
inapplicable with respect to BPCE’s operating procedures as a cooperative
company and its equal ownership by the Banque Populaire and Caisse
d’Epargne networks, which is reflected in the composition of its Board. These
provisions were as follows: terms of office and the staggered renewal of Board
member terms, Board member ownership of a material number of shares,
and the proportion of independent directors on the Supervisory Board and its
committees.
Regarding terms of office, unlike the maximum four-year term recommended in
the AFEP-MEDEF Code, the statutory term of office of BPCE Supervisory Board
members is six years, which meets the requirement that members must have
experience and a more comprehensive view of BPCE’s business and activities.
Similarly, renewals of BPCE Board members’ terms are not staggered due to the
need, given how recently BPCE was established, to provide a degree of stability
and balanced representation of both Groupe BPCE networks (Caisse d’Epargne
and Banque Populaire).
28
Groupe BPCE’s cooperative structure also explains why the Appointments and
Remuneration Committee’s proposals regarding the appointment of Board
members only concern members from outside Groupe BPCE.
Regarding a Supervisory Board member’s ownership of a material number
of shares, BPCE’s Articles of Association take into account the fact that, in
accordance with Act No. 2008-776 of August 4, 2008, Supervisory Board
members are no longer required to own shares in the company. As a result,
BPCE Supervisory Board members do not own a material number of shares
and are not shareholders in a personal capacity, but the various categories of
shareholders are represented through their appointment, which ensures that
the company’s interests are respected.
Concerning the proportion of independent directors on the Board and its
committees, BPCE is therefore in compliance with Article L. 512-106 of the
French Monetary and Financial Code concerning the majority representation
of shareholders proposed by the Chairmen of the Steering and Supervisory
Board of the Caisses d’Epargne and the Chairmen of the Board of Directors
of the Banque Populaire banks. As a result, the recommendations concerning
the proportion of independent members cannot be applied due to the equal
majority representation of the Caisses d’Epargne and Banque Populaire banks.
Finally, concerning the presence of employee directors on the Board, in 2014
BPCE will comply with the provisions of the Act of June 14, 2013 related to
employment security.
Furthermore, BPCE formally adheres to and implements the AFEP-MEDEF Code
recommendations on remuneration of company directors.
Introduction
➡
2
STATEMENT OF COMPLIANCE WITH AFEP-MEDEF CODE RECOMMENDATIONS(1)
Board of Directors: governing body
Recommendations implemented
Board of Directors and the market
Separation of the offices of Chairman of the Board of Directors and Chief
Executive Officer
N/A
Board of Directors and strategy
Board of Directors and Annual General Shareholders’ Meeting
Composition of the Board of Directors: guidelines
Employee representation
Recommendations still to be implemented
Minority shareholders
Independent directors
Recommendations partly implemented
(not followed regarding proportion of independent directors on the Board)
Evaluation of the Board of Directors
Board and Committee meetings
Access to director information
Training for directors
Directors’ terms of office
2
Recommendations not implemented
(six-year term, no staggered terms and no ownership of a material number of shares)
Board committees
Audit Committee
(not followed regarding proportion of independent directors on the committee)
Committee responsible for selection or appointments
Committee responsible for remuneration
Number of terms for company directors and directors
Director ethics and compliance
Director remuneration
Termination of employment contract for Corporate Office
Company Director remuneration
Transparency regarding Company Director remuneration
Implementation of recommendations
2
2
2
2
2
2
(1)
BPCE has implemented the provisions of the AFEP-MEDEF Code, adapting them to its Management Board/Supervisory Board governance model.
29
2
2
Management and Supervisory Bodies
2.2 Management and Supervisory Bodies
2.2.1
Supervisory Board
BPCE’s Supervisory Board members took office on 31 July 2009, for a term of
six years.
GUIDELINES
Pursuant to Article 21 of the Articles of Association, the Supervisory Board of
BPCE is made up of 10 to 18 members. At December 31, 2013, it consisted
of seven representatives of Category A shareholders (Caisses d’Epargne et de
Prévoyance), seven representatives of Category B shareholders (Banque Populaire
banks), and four independent members within the meaning of the AFEP-MEDEF
Code(1).
In accordance with Article L. 2323-62 of the French Labor law, the Articles of
Association also stipulate the presence of two non-voting representatives from
the company’s Works Council.
The Supervisory Board includes six non-voting directors acting in an advisory
capacity.
The Chairman of Fédération Nationale des Caisses d’Epargne, Michel Sorbier, and
the Chairman of Fédération Nationale des Banques Populaires, Raymond Oliger,
who cannot be members of the Supervisory Board, are non-voting directors as of
right, in accordance with Article 28.1 of BPCE’s Articles of Association, amended
by the Extraordinary Shareholders’ Meeting of July 11, 2013.
The four other non-voting directors are appointed at the Ordinary General
Shareholders’ Meeting. Per the new Article 31.9 of BPCE’s Articles of Association,
two non-voting directors are appointed from among the candidates proposed
by Category A shareholders and two non-voting directors are appointed from
among the candidates proposed by Category B shareholders.
APPOINTMENT METHOD
During the company’s life, and subject to co-opting, Supervisory Board members
are appointed by the shareholders at the Ordinary General Shareholders’
Meeting, as indicated in Article 21 of BPCE’s Articles of Association, on a motion
by Category A or B shareholders, depending on the category in question.
Independent members are proposed by the Appointments and Remuneration
Committee to the Supervisory Board, which asks the Management Board to
put their appointment to a vote at the Ordinary General Shareholders’ Meeting.
Supervisory Board members hold office for a term of six years. Supervisory Board
members’ duties end at the close of the Ordinary General Shareholders’ Meeting
convened to rule on the financial statements for the past fiscal year, held during
the year in which their term expires. The Supervisory Board of BPCE members’
duties will therefore end at the close of the Ordinary General Shareholders’
(1)
30
Meeting to be held in 2015 to rule on the financial statements for the fiscal
year ending December 31, 2014, except for members whose terms end in 2016.
Supervisory Board members may be re-elected, subject to no limitations
other than age-related limitations contained in the Articles of Association
(70 years old), in accordance with the new Article 21 of BPCE’s Articles
of Association, amended at the Extraordinary Shareholders’ Meeting of
July 11, 2013.
GENDER EQUALITY OF THE SUPERVISORY BOARD
At December 31, 2013, BPCE had five women on its Supervisory Board out of
a total of eighteen members, i.e. over 27%. BPCE is therefore in compliance
with the provisions of the Copé Zimmermann Act of January 27, 2011, on
the balanced representation of women and men on Boards of Directors and
Supervisory Boards. The composition of the Board is now compliant with the
proportion that should be reached by 2014 according to the law. A proportion
of 40% of women will have to be reached by 2017.
INDEPENDENCE
In keeping with the corporate governance guidelines and best practices as
set out in the Supervisory Board’s internal rules, adopted on July 31, 2009,
Supervisory Board members:
• take care to maintain their independence of judgement, decision and action
in all circumstances. They avoid being influenced by anything that is contrary
to the company’s interests, which it is their duty to defend;
• undertake to avoid any conflict that may exist between their moral and
material interests and those of the company. They inform the Supervisory
Board of any conflict of interest that may affect them. In such case, they
abstain from taking part in any discussions and decisions on the matters
concerned.
In addition, the Supervisory Board and each of its committees include elected
or co-opted independent members. The definition below is based on the AFEPMEDEF Code recommendations. However, BPCE does not follow the AFEPMEDEF Code recommendations concerning the proportion of independent
directors on the Supervisory Board and its committees: because of Groupe
BPCE’s cooperative structure, the proportion of directors representing the
Caisse d’Epargne and Banque Populaire networks is larger than the portion of
independent directors as defined in the AFEP-MEDEF Code (four in number).
The criteria stated below are designed to define a member’s independent
status. The guiding principle is that “members are independent if they have no
relations of any sort with the company, its group or its management, which
might compromise the free exercise of their judgement.”
A complete description of the shareholder categories is provided in paragraph 7.2.2 “Category A and B shares”.
An independent member must not:
• be an employee or corporate officer of the company or Groupe BPCE, or an
employee or director of one of the company’s shareholders, and must not
have been so during the previous five years;
• be a representative of the government, a civil servant or an employee of
Société de Prise de Participation de l’État (SPPE) or any other entity in which
the government has a direct or indirect controlling interest;
• be a corporate officer of a company in which the company directly or
indirectly holds the office of director or in which a designated employee or
a corporate officer of the company (either currently or in the last five years)
holds a directorship;
• be a client (or directly or indirectly linked to a client), supplier, investment
banker, or commercial banker, if the business relationship is such that it could
compromise the free exercise of the members’ judgement;
• have a close family link with a corporate officer of the company or its group;
• have been an auditor, accountant, or permanent or alternate Statutory
Auditor of the company or of any of Groupe BPCE’s companies during the
last five years;
• have been a corporate officer of the company for more than 12 years; or
• receive or have received any substantial additional remuneration from
the company or Groupe BPCE, excluding attendance fees and including
participation in any stock option package or any other performance-based
remuneration package.
2
of the Management Board, Chief Executive Officer or Deputy Chief Executive
Officer of the company or any of Groupe BPCE’s companies, except for members
of the Board of Directors or Supervisory Board, provided they do not collect any
form of remuneration from the company or any of Groupe BPCE’s companies,
other than the attendance fees paid by the company or their remuneration as
Chairman or Vice-Chairman of the Supervisory Board.
2
The Supervisory Board may find that one or more of its members, although
meeting the criteria above, should not be classified as independent given their
individual situation or that of the company, with regard to their shareholdings
or for any other reason.
MEMBERS
The table below lists the members of the Supervisory Board as at
December 31, 2013(1).
On December 15, 2011, the Board appointed Yves Toublanc as its Chairman and
Stève Gentili as its Vice-Chairman from January 1, 2012, for a two-year term
ending on December 31, 2013.
On December 11, 2013, the Supervisory Board appointed Stève Gentili as its
Chairman and Yves Toublanc as its Vice-Chairman from January 1, 2014, until
the Annual General Shareholders’ Meeting to be held in 2015, convened to
approve the financial statements for the 2014 fiscal year.
2
At December 31, 2013
The term “corporate officer” refers to any person who assumes, in the company
or in any of Groupe BPCE’s companies, executive management duties, i.e. any
Chairman, Chairman of the Board of Directors or Management Board, member
Office
2
2
Date of AGSM
ratifying/renewing
Term of
appointment office ends in
Business address
Chairman of the Supervisory Board
01/01/2012
2014
Yves Toublanc
Member of the Supervisory Board of BPCE
Chairman of the Steering and Supervisory Board
of Caisse d’Epargne Rhône Alpes
07/31/2009
2015
Vice-Chairman of the Supervisory Board
01/01/2012
2014
Stève Gentili
Chairman of BRED Banque Populaire
07/31/2009
2015
BRED Banque Populaire
18, quai de la Rapée – 75604 Paris cedex 12
Gérard Bellemon
Chairman of Banque Populaire Val de France
07/31/2009
2015
Banque Populaire Val de France
9, avenue Newton – 78183 Saint-Quentin-en-Yvelines
Thierry Cahn
Chairman of Banque Populaire d’Alsace
07/31/2009
2015
Banque Populaire d’Alsace – Immeuble le Concorde – 4,
quai Kléber – BP 10401 – 67001 Strasbourg cedex
Alain Condaminas
Chief Executive Officer of Banque Populaire Occitane
06/27/2012
2015
Banque Populaire Occitane
33-43, avenue Georges-Pompidou – 31130 Balma
Pierre Desvergnes
Chairman of CASDEN Banque Populaire
07/31/2009
CASDEN Banque Populaire
2015 91, cours des Roches – Noisiel – 77424 Marne-la-Vallée cedex 2
Philippe Dupont
Chairman of ISODEV SA
07/31/2009
2015
ISODEV SA
192, avenue Charles-de-Gaulle – 92200 Neuilly-sur-Seine
Catherine Halberstadt
Chief Executive Officer of Banque Populaire
du Massif Central
04/04/2012
2015
Banque Populaire du Massif Central
18, boulevard Jean-Moulin – 63000 Clermont-Ferrand
Caisse d’Epargne Rhône Alpes
42, boulevard Eugène-Déruelle – 69003 Lyon Part-Dieu
2
Banque Populaire banks representatives
(1)
The biographies of Supervisory Board members are available in paragraph 2.2.4.
31
2
2
2
2
Date of AGSM
ratifying/renewing
Term of
appointment office ends in
Office
Business address
Caisses d’Epargne representatives
07/31/2009
2015
Caisse d’Epargne Loire Drome Ardèche
Espace Fauriel – 17, rue P-et-D-Pontchardier – BP 147 –
42012 Saint-Étienne cedex 02
Alain Denizot
Chairman of the Management Board of Caisse d’Epargne
Nord France Europe
05/24/2013
2015
Caisse d’Epargne Nord France Europe
135, pont des Flandres – 59777 Euralille
Francis Henry
Chairman of the Steering and Supervisory Board of Caisse
d’Epargne Lorraine Champagne-Ardenne
07/31/2009
2015
Caisse d’Epargne Lorraine Champagne-Ardenne
2, rue Royale – BP 784 – 57012 Metz cedex 01
Pierre Mackiewicz
d’Epargne Côte d’Azur
07/31/2009
2015
Caisse d’Epargne Côte d’Azur
455, promenade des Anglais – BP 3297 – 06205 Nice cedex 03
Didier Patault
Ile-de-France
07/31/2009
2015
Caisse d’Epargne Ile-de-France
26, 28 rue Neuve Tolbiac – 75013 Paris
Pierre Valentin
d’Epargne Languedoc-Roussillon
07/31/2009
2015
Caisse d’Epargne Languedoc-Roussillon
254, rue Michel-Teule – BP 7330 – 34184 Montpellier cedex 4
Maryse Aulagnon
Chairman and Chief Executive Officer of Affine group
12/16/2010
2016
Affine
5, rue Saint-Georges – 75009 Paris
Laurence Danon(2)
Co-Chairman of the Management Board of Leonardo & Co
07/31/2009
2015
Leonardo & Co
32, rue de Lisbonne – 75008 Paris
Marwan Lahoud
Head of Strategy and Marketing
and Member of the Executive Committee of EADS
07/31/2009
2015
EADS
37, boulevard Montmorency – 75016 Paris
Marie-Christine Lombard
Chief Executive Officer of Geodis
12/16/2010
2016
Geodis
Cap West 7/9, allée de l’Europe – 92615 Clichy cedex
Raymond Oliger(3)
Chairman of Fédération Nationale des Banques Populaires
05/19/2011
2017
Fédération Nationale des Banques Populaires
76 Avenue de France, 75013 Paris
Michel Sorbier(3)
Chairman of Fédération Nationale des Caisses d’Epargne
05/19/2011
2017
Fédération Nationale des Caisses d’Epargne
5, rue Masseran – 75007 Paris
Catherine Amin-Garde
d’Epargne Loire Drôme Ardèche
(1)
Independent members
Non-Voting Directors
Yves Gevin(4)
Chief Executive Officer of Banque Populaire Rives de Paris
05/24/2013
2017
Banque Populaire Rives de Paris
Immeuble Sirius – 76-78, avenue de France
75204 Paris Cedex 13
Pierre Carli
de Midi-Pyrénées
05/19/2011
2017
Caisse d’Epargne de Midi-Pyrénées
10, avenue Maxwell – BP 22306 – 31023 Toulouse cedex 1
Alain Lacroix(5)
Provence-Alpes-Corse
05/24/2013
2017
Caisse d’Epargne Provence-Alpes-Corse
Place Estrangin-Pastré – 13254 Marseille Cedex 06
Dominique Wein
Chief Executive Officer of Banque Populaire Lorraine
Champagne
06/27/2012
2017
Banque Populaire Lorraine Champagne
3, rue François-de-Curel – 57000 Metz
(1)
(2)
(3)
(4)
(5)
At the Supervisory Board meeting on May 6, 2013, Bernard Comolet, former Chairman of the Management Board of Caisse d’Epargne Ile-de-France, who resigned, was replaced by Alain Denizot,
Chairman of the Management Board of Caisse d’Epargne Nord France Europe.
At its meeting on January 16, 2014, the Supervisory Board duly noted the resignation of Laurence Danon.
Non-Voting Director, as of right.
At the Supervisory Board meeting on February 20, 2013, Gils Berrous, appointed as a member of Natixis’ Executive Management Committee, in charge of Specialized Financial Services
(replacing Jean-Yves Forel), was replaced by Yves Gevin, Chief Executive Officer of Banque Populaire Rives de Paris.
At the Supervisory Board meeting on May 6, 2013, Alain Denizot, appointed as a member of the Supervisory Board, was replaced by Alain Lacroix, Chairman of the Management Board of Caisse d’Epargne
Provence-Alpes-Corse, as a non-voting director.
32
COMPOSITION OF BOARD COMMITTEES
Audit and Risk Committee
The Audit and Risk Committee has been chaired by Marwan Lahoud since
31 July 2009, the date on which he was appointed by the Supervisory Board
as an independent member.
The committee’s other members were also chosen for their expertise in
accounting, finance and internal control:
• Thierry Cahn, Chairman of Banque Populaire d’Alsace;
• Alain Denizot, Chairman of the Management Board of Caisse d’Epargne Nord
France Europe (since May 6, 2013, to replace Bernard Comolet, who resigned);
• Catherine Halberstadt, Chief Executive Officer of Banque Populaire du Massif
Central;
• Marie-Christine Lombard, independent member, Chief Executive Officer of
Geodis;
• Pierre Valentin, Chairman of the Steering and Supervisory Board of Caisse
d’Epargne Languedoc-Roussillon.
The biographies of Audit and Risk Committee members are available in
paragraph 2.2.4.
2.2.2
The Chairman and Vice-Chairman of the Supervisory Board systematically
receive the reports of the Audit and Risk Committee and may take part in the
Committee’s meetings if they so choose.
Appointments and Remuneration Committee
2
2
This Committee has been chaired by Laurence Danon since July 31, 2009, the
date she was appointed by the Supervisory Board as an independent member(1).
The other members of the Appointments and Remuneration Committee are also
selected on the basis of their expertise and professional experience:
• Catherine Amin-Garde, Chairman of the Steering and Supervisory Board of
Caisse d’Epargne Loire Drôme Ardèche;
• Maryse Aulagnon, independent member, Chairman and Chief Executive Officer
of Affine group;
2
• Gérard Bellemon, Chairman of the Board of Directors of Banque Populaire
Val de France;
• Pierre Desvergnes, Chairman of CASDEN Banque Populaire;
• Pierre Mackiewicz, Chairman of the Steering and Supervisory Board of Caisse
d’Epargne Côte d’Azur.
The biographies of Appointments and Remuneration Committee members are
given in paragraph 2.2.4.
2
Management Board
At its meeting on November 21, 2012, the Supervisory Board appointed François
Pérol as Chairman of the BPCE Management Board for a new four-year term
expiring in 2017 at the Annual General Shareholders’ Meeting convened to
approve the 2016 financial statements. As proposed by François Pérol, the
Board also appointed Anne Mercier-Gallay as Chief Executive Officer, member
of the Management Board in charge of Human Resources and Group Internal
Communications, effective immediately, as well as Jean-Yves Forel as Chief
Executive Officer, member of the Management Board in charge of Commercial
Banking and Insurance and Daniel Karyotis as Chief Financial Officer, member
of the Management Board in charge of Finance, Risks and Operations, both
effective as of December 1, 2012.
At its meeting on February 17, 2013, the Supervisory Board, acting on the
proposal of the Management Board, appointed Laurent Mignon as a new
member of the BPCE Management Board, with the condition precedent that
he successfully oversee the buyback and cancellation of the cooperative
investment certificates (CICs), for a term expiring at the end of the Annual
General Shareholders’ Meeting convened to approve the financial statements
for the year ending December 31, 2016. At its meeting on August 6, 2013, the
Supervisory Board, duly noting the completion of this transaction, also noted
that the appointment of Laurent Mignon as a member of the Management
Board was effective from that date and that Natixis therefore ceased to be a
non-voting director on the BPCE Supervisory Board.
As at December 31, 2013, the Management Board had five members: François
Pérol, Jean-Yves Forel, Daniel Karyotis, Anne Mercier-Gallay and Laurent Mignon.
GUIDELINES
2
2
The Management Board consists of between two and five individuals, who
may or may not be selected from among the shareholders.
The age limit for serving on the Management Board is 65. When a member
reaches the age limit, said member is deemed to have resigned as of the date of
the next meeting of the Supervisory Board, which will decide on a replacement.
The Supervisory Board appoints the Chairman of the Management Board, who
then provides it with recommendations on the other members to be appointed
to the Management Board.
2
2
(1)
At its meeting on January 16, 2014, the Supervisory Board duly noted the resignation of Laurence Danon and appointed Maryse Aulagnon, an independent member, as Chairman of the Appointments and
Remuneration Committee.
33
2
2
MEMBERS
From January 1, 2013 to August 6, 2013
François Pérol, Chairman of the Management Board
Jean-Yves Forel, member of the Management Board, Chief Executive Officer in charge of Commercial Banking and Insurance
Daniel Karyotis, member of the Management Board, Chief Executive Officer in charge of Finance, Risks and Operations
Anne Mercier-Gallay, member of the Management Board, Chief Executive Officer in charge of Human Resources and Group Internal Communications
Since August 6, 2013
Jean-Yves Forel, member of the Management Board, Chief Executive Officer in charge of Commercial Banking and Insurance
Daniel Karyotis, member of the Management Board, Chief Executive Officer in charge of Finance, Risks and Operations
Anne Mercier-Gallay, member of the Management Board, Chief Executive Officer in charge of Human Resources and Group Internal Communications
Laurent Mignon, member of the Management Board, Chief Executive Officer of Natixis
2.2.3
BPCE Management bodies
EXECUTIVE MANAGEMENT COMMITTEE
EXECUTIVE COMMITTEE
Jean-Yves Forel, Chief Executive Officer* − Commercial Banking and Insurance
In addition to the members of the Executive Management Committee,
the Executive Committee includes:
Daniel Karyotis, Chief Executive Officer* − Finance, Risks and Operations
Aline Bec, Deputy Chief Executive Officer*, Group Operations
Anne Mercier-Gallay, Chief Executive Officer* − Group Human Resources and
Group Internal Communications
Max Bézard, Head of Group Finance Control
Laurent Mignon, Chief Executive Officer of Natixis
Christiane Butte, BPCE Corporate Secretary and Head of Group Legal Affairs
Marguerite Bérard-Andrieu, Deputy Chief Executive Officer* − Strategy, Legal
Affairs, Corporate Secretariat and Compliance
Nicolas Duhamel, Advisor to the Chairman of the Management Board, in charge
of Public Affairs
Géraud Brac de la Pérrière, Head of Group Inspection générale
Olivier Irisson, Chief Financial Officer
Cédric Mignon, Head of Development for the Caisses d’Epargne
Isabelle Maury, Head of Group Risk Management
Yves Messarovitch, Head of Group Communication
Pascale Parquet, Head of Group Compliance & Security
Michel Roux, Head of Development for the Banque Populaire banks
Bruno Deletré, Chief Executive Officer of Crédit Foncier
Pierre-Yves Dréan, Chairman of the Management Board of Banque Palatine
Philippe Garsuault, Chief Executive Officer, BPCE International et Outre-mer
*
The title of Chief Executive Officer is not governed by Article L. 225-66 of the French Commercial Code.
34
2.2.4
Directorships and Offices held by members of BPCE’s Management
Board in 2013
2
2
SUPERVISORY BOARD
For the Caisse d’Epargne network
Yves TOUBLAN
Born August 10, 1946
For many years, Mr. Toublanc, a business school graduate, held senior positions in finance control and management and subsequently in subsidiary management
with Saint-Gobain group and later Poliet group. A business owner himself, he founded and runs a group of industrial companies in the Rhône Alpes region. He
is currently Chairman of the Steering and Supervisory Board of Caisse d’Epargne Rhône Alpes.
2
Offices held at December 31, 2013
Chairman of the Supervisory Board of BPCE
Chairman of the Steering and Supervisory Board of Caisse d’Epargne Rhône Alpes (CERA)
Chairman of the Board of Directors: CE Holding Promotion, SLE de Savoie
Director: FNCE
Legal Manager: Cartogram Conseil**, Bati Yenne**, Bati Yenne II**, Bati Yenne III**, Bas de Chamoux**, Batimery**
2
Terms of office expired in 2013
Offices held at December 31 in previous years
2012
Chairman of the Supervisory
Board of BPCE
Chairman of the Steering and
Supervisory Board of Caisse
d’Epargne Rhône Alpes
Chairman of the Board of
Directors: CE Holding Promotion,
SLE de Savoie
Legal Manager: Cartogram
Conseil**, Bati Yenne**, Bati Yenne
II**, Bati Yenne III**, Bas de
Chamoux**, Batimery**
2011
Vice-Chairman of the
Supervisory Board of BPCE
SLE de Savoie
Legal Manager: Cartogram
Conseil**
2010
SLE de Savoie, Caisses d’Epargne
Participations
Chairman: Chatel Participations**
Director: Satil Rem**, Procoat
ING**
Legal Manager: Chatel
Industries**, Cartogram Conseil**
2009
Board: Caisse Nationale des
Caisses d’Epargne (CNCE)
Chairman of the Board
of Directors: Caisses d’Epargne
Participations, Chatel Participations,
SLE de Savoie
Director: Satil Rem**, Procoat**
Legal Manager: Chatel
Industries**, Cartogram Conseil**
2
2
2
2
*
listed company.
**
non-group company.
SLE: société locale d’épargne (local savings company).
FNCE: Fédération Nationale des Caisses d’Epargne.
FNBP: Fédération Nationale des Banques Populaires.
35
2
2
Catherine AMIN-GARDE
Born March 8, 1955
Ms. Amin-Garde holds advanced degrees in both History and European Studies. She joined Groupe Caisse d’Epargne in 1984.
She is currently a representative of the Prefect in the Drôme region and Chairman of the Steering and Supervisory Board of Caisse d’Epargne Loire Drôme
Ardèche.
Member of the Supervisory Board and the Appointments and Remuneration Committee of BPCE
Chairman of the Steering and Supervisory Board of Caisse d’Epargne Loire Drôme Ardèche (CELDA)
Chairman of the Board of Directors: SLE Drôme Provençale Centre
Chairman: Fondation Loire Drôme Ardèche
Director: FNCE, CE Holding Promotion, Natixis Interépargne
2012
Member of the Supervisory
Board of BPCE
Directors: SLE Drôme Provençale
Centre
Chairman: Fondation Loire Drôme
Ardèche
Director: FNCE, CE Holding
Promotion, Natixis Interépargne
*
listed company.
**
non-group company.
2011
Board of BPCE
Centre
Ardèche
Promotion, Association Savoirs pour
réussir Drôme, Natixis Interépargne
36
2010
Board of BPCE
Centre
Ardèche
Promotion, Association Savoirs pour
réussir Drôme
2009
Board of BPCE
Centre
Ardèche
Board (and Member of Strategy
and Development Committee):
Caisse Nationale
des Caisses d’Epargne
Director: FNCE, Association
Savoirs pour réussir Drôme
Alain DENIZOT
Born October 1, 1960
With a degree in Agricultural Economics from the Institut d’Administration des Entreprises in Paris, as well as a postgraduate degree in accounting studies, Alain
Denizot, 52, began his career at Crédit du Nord, then moved to SG Warburg France, followed by Société Marseillaise de Crédit. In 1990, he joined Caisse
d’Epargne Ile de France-Ouest as a manager, then as Head of Financial Management. In 1995, he became the member of the Management Board in charge
of the Risk and Finance division, then in 1999 he became the member of the Management Board in charge of the network and development. In 2000, he joined
Caisse d’Epargne de Flandre as the Chief Executive Officer and member of the Management Board in charge of the network and banking development. In
2003, he became Chief Executive Officer of Ecureuil Assurance IARD. He was appointed Chairman of the Management Board of Caisse d’Epargne de Picardie
at the beginning of 2008. And in 2011, he joined Caisse d’Epargne Nord France Europe as Chairman of the Management Board. Before being appointed on
May 6, 2013 as a member of the Supervisory Board and a member of the Audit and Risk Committee of BPCE, Alain Denizot was a statutory non-voting director.
Member of the Supervisory Board and Audit and Risk Committee of BPCE
Chairman of the Management Board of Caisse d’Epargne Nord France Europe (CENFE)
Member of the Regional Advisory Committee of Banque publique d’investissement**
Chairman of the Board of Directors: Batixia
Chairman of the Supervisory Board: Immobilière Nord France Europe
Chairman: Lyderic Invest*/**
Member of the Supervisory Board: Ecureuil Crédit
Director: Natixis Factor, FNCE, CE Holding Promotion, Habitat en Région
Permanent Representative of CENFE, Chairman: CENFE Communication, Savoirs pour réussir en Nord Pas de Calais, Finorpa SCR, Finorpa Financement
Permanent Representative of CENFE, Director: Hainaut Immobilier
Permanent Representative of CENFE, Member of the Supervisory Board: IT-CE
Permanent Representative of CE Holding Promotion, Director: Habitat en Région Services
Liquidator: Université du Groupe Caisse d’Epargne
2
2
2
2
2012
Non-Voting Director on the
Chairman of the Management
Board of Caisse d’Epargne Nord
France Europe
Directors: Batixia
Board: Immobilière Nord France
Europe
Board: Ecureuil Crédit
Director: Natixis Factor, FNCE, CE
Holding Promotion
Permanent Representative of
CENFE, Chairman: CENFE
Communication, Savoirs pour
réussir en Nord Pas de Calais,
Finorpa SCR, Finorpa Financement
CENFE, Director: Hainaut
Immobilier
CENFE, Member of the
Supervisory Board: IT-CE
Permanent Representative of CE
Holding Promotion, Director:
Habitat en Région Services
Liquidator: Université du Groupe
Caisse d’Epargne
*
listed company.
**
non-group company.
2011
Board of Caisse d’Epargne Nord
France Europe
Directors: Batixia
Board: Immobilière Nord France
Europe
Board: Ecureuil Crédit
Director: Natixis Factor, FNCE, CE
Holding Promotion
CENFE, Chairman: CENFE
Communication, Savoirs pour
réussir en Nord Pas de Calais,
Finorpa SCR, Finorpa Financement
CENFE, Director: Hainaut
Immobilier
CENFE, Member of the
Supervisory Board: IT-CE
Permanent Representative of CE
Holding Promotion, Director:
Caisse d’Epargne
2010
Board of Caisse d’Epargne de
Picardie
Chairman: GCE SRD 007
Board: Ecureuil Crédit, GCE
Business Services, Foncia group
Director: Natixis Factor, Compagnie
de Financement Foncier, CE
Participations, FNCE, Université du
Groupe Caisse d’Epargne, CE
Holding Promotion
Member and Chairman of the
Executive Committee:
Cepicinvestissement, Nsavade
Caisse d’Epargne
2009
Board of Caisse d’Epargne de
Picardie
Board: Ecureuil Crédit, CNCE (from
05/28/2009 to 07/31/2009)
Director: Compagnie de
Financement Foncier, CE
Participations, FNCE, Université
du Groupe Caisse d’Epargne
Caisse d’Epargne de Picardie,
Board: GCE Business Services
Member and Chairman of the
Executive Committee:
Cepicinvestissement, Nsavade
2
2
2
2
37
2
2
Francis HENRY
Born August 7, 1946
Mr. Henry is a qualified notary with a postgraduate degree in Notarial Studies. He was a practicing notary from 1975 to 2006, and has been an honorary notary
since 2006. He joined the Board of Directors of Caisse d’Epargne de Reims in 1983, and was appointed Chairman in 1985. In 1992, following the regional
merger, he was appointed Chairman of the Steering and Supervisory Board of Caisse d’Epargne de Champagne-Ardenne.
In 2007, he oversaw the merger with Caisse d’Epargne de Lorraine and has since served as Chairman of the Steering and Supervisory Board of Caisse
d’Epargne Lorraine Champagne-Ardenne.
Chairman of the Steering and Supervisory Board of Caisse d’Epargne Lorraine Champagne-Ardenne (CELCA)
Chairman of the Supervisory Board: Banque BCP in Luxembourg
Chairman of the Board of Directors: SLE Marne
Director: Crédit Foncier, CE Holding Promotion, FNCE
2012
Board of BPCE
d’Epargne Lorraine ChampagneArdenne
Directors: SLE Marne
Director: Crédit Foncier, CE Holding
Promotion, FNCE
*
listed company.
**
non-group company.
2011
Board of BPCE
Promotion, FNCE
38
2010
Board of BPCE
Promotion, FNCE
2009
Board of BPCE
Directors: SLE Marne Nord
Director: Crédit Foncier, Caisses
d’Epargne Participations, FNCE
Board: Natixis*
Pierre MACKIEWICZ
Born June 26, 1949
An honorary hospital administrator, Mr. Mackiewicz, who has an MBA, has spent his entire career in the public hospital sector. He joined Caisse d’Epargne Côte
d’Azur as a consulting advisor in 1992. In 1999, he became a founding director of a local savings company before being appointed Chairman of its Board of
Directors and subsequently a member of its Steering and Supervisory Board and Audit Committee in 2000. He was appointed Chairman of the Audit Committee
in 2003.
He became Vice-Chairman of the Steering and Supervisory Board of Caisse d’Epargne Côte d’Azur in 2006 and was appointed Chairman in April 2009. He is
also a director of FNCE, IMF CREASOL, Fondation des Caisses d’Epargne pour la Solidarité and Natixis Financement.
2
2
2
Chairman of the Steering and Supervisory Board of Caisse d’Epargne Côte d’Azur (CECAZ)
Chairman of the Board of Directors: SLE Est Alpes Maritimes
Director: CE Holding Promotion, Natixis Financement, Natixis Consumer Finance, Association CREASOL, Fondation des Caisses d’Epargne pour la
solidarité as a qualified person.
Permanent Representative of CECAZ, Director: FNCE
2
2012
Board of BPCE
Directors: SLE Est Alpes Maritimes
Director: CE Holding Promotion,
Natixis Financement, Natixis
Consumer Finance, Association
CREASOL, Fondation des Caisses
d’épargne pour la solidarité
CECAZ, Director: FNCE
2011
Board of BPCE
CREASOL
2010
Board of BPCE
CREASOL
2009
Board of BPCE
Director: Caisses d’Epargne
Participations, Natixis Epargne
Financière, Natixis Epargne
Financière Gestion
Caisses d’Epargne (from
05/28/2009 to 07/31/2009)
2
2
2
2
*
listed company.
**
non-group company.
39
2
2
Didier PATAULT
Born February 22, 1961
Chairman of the Caisse d’Epargne Ile-de-France Management Board since 2013, Didier Patault is also a member of the BPCE Supervisory Board. A graduate
of the École Polytechnique and the École Nationale des Statistiques et de l’Administration Économique (ENSAE), Mr. Patault, after starting at Caisse des Dépôts
et Consignations, has spent his career at Groupe BPCE since 1992.
After holding several financial and sales positions at Caisse d’Epargne des Pays du Hainaut (1992-1999), in 1999 he joined Caisse Nationale des Caisses
d’Epargne as Head of Financial Activities in charge of Group development strategy in CNCE’s local markets.
In 2000, he was appointed Chairman of the Management Board of Caisse d’Epargne des Pays du Hainaut, then Chairman of the Management Board of Caisse
d’Epargne des Pays de la Loire (CEBPL, 2004-2008) and Chairman of the Management Board of Caisse d’Epargne Bretagne Pays de Loire (2008-2013).
Chairman of the Management Board of Caisse d’Epargne Ile-de-France (CEIDF)
Chairman of the Supervisory Board: Banque BCP (France)
Member of the Supervisory Board: GCE Capital
Director: Natixis*, Natixis Coficiné, CE Holding Promotion
Director as a qualified person (for CEIDF): Paris Habitat – OPH
Permanent Representative of CEIDF, Director: Habitat en Région (Association), Immobilière 3F, FNCE
Permanent Representative of CEIDF, Member of the Supervisory Board: IT-CE
Chairman of the Management Board of Caisse d’Epargne et de Prévoyance de Bretagne Pays de Loire (until 04/25/2013)
Chairman and Chief Executive Officer: SODERO (until 04/26/2013)
Chairman of the Board of Directors: SODERO Participations (until 04/26/2013), SA des Marchés de l’Ouest (SAMO) (until 04/26/2013)
Chairman of the Supervisory Board: SODERO Gestion (until 04/26/2013), BATIROC Bretagne – Pays de Loire (until 04/26/2013)
Director: Compagnie de Financement Foncier – SCF (until 05/31/2013), La Mancelle d’Habitation (until 04/26/2013)
Permanent Representative of CEBPL, Director: Pays de la Loire Développement (until 04/26/2013), SEMITAN (until 04/26/2013), Nantes Atlantique
Place Financière (NAPF) (until 04/26/2013), FNCE (until 04/25/2013)
Permanent Representative of CEBPL, Member of the Supervisory Board: IT-CE (until 04/26/2013)
2012
Member of the Supervisory Board
of BPCE
Board of Caisse d’Epargne
Bretagne Pays de Loire
Chairman and Chief Executive
Officer: SODERO
Chairman of the Supervisory Board:
SODERO Gestion, BATIROC Bretagne
Pays de Loire
Chairman of the Board of Directors:
SODERO Participations, SA des
Marchés de l’Ouest
Member of the Supervisory Board:
GCE Capital
Director: Natixis*, Natixis Coficiné,
Mancelle Habitation, Compagnie de
Financement Foncier – SCF, CE Holding
Promotion
CEBPL, Director: Pays de la Loire
Développement, SEMITAN, NAPF,
FNCE
CEBPL, Member of the Supervisory
Board: IT-CE (formerly GCE
Technologies)
*
listed company.
**
non-group company.
2011
of BPCE
Officer: SODERO
Pays de Loire
GCE Capital
Promotion
FNCE
Board: IT-CE (formerly GCE
Technologies)
40
2010
of BPCE
Officer: SODERO
Pays de Loire
GCE Capital
Promotion
FNCE
Board: GCE Technologies, GCE
Business Services
2009
of BPCE
Chairman of the Management Board
of Caisse d’Epargne Bretagne Pays
de Loire
Officer: SODERO
Pays de Loire
SODERO Participations, Mancelle
Habitation, SA des Marchés de l’Ouest
GCE Capital, Caisse Nationale
des Caisses d’Epargne (from
05/28/2009 to 07/31/2009)
Director: Natixis*, Caisses d’Epargne
Participations, Natixis Global Asset
Management, Compagnie de
Financement Foncier – SCF, FNCE
Permanent Representative
of SODERO Participations,
Grand Ouest Gestion
Board: GCE Technologies,
GCE Business Services
Développement, SEMITAN, NAPF
Pierre VALENTIN
Mr. Valentin has a degree in private law and a postgraduate degree from the Institut des Assurances d’Aix-Marseille. He is an entrepreneur and began his career
at Mutuelle d’Assurances du Bâtiment et des Travaux Publics in Lyon in 1978. In 1979, he set up Société Valentin Immobilier. Pierre Valentin quickly formed a
long-standing commitment to the Caisse d’Epargne network. In 1984, he became a consulting advisor to Caisse d’Epargne d’Alès. In 1991, he became a
consultant advisor to Caisse d’Epargne Languedoc-Roussillon. He was appointed Chairman of local savings company Vallée des Gardons in 2000. He has
been a member of the Steering and Supervisory Board of Caisse d’Epargne Languedoc-Roussillon since 2000, and was Chairman of the Audit Committee from
2003 to 2006. In 2006, he became Chairman of the Steering and Supervisory Board of Caisse d’Epargne Languedoc-Roussillon and was re-elected to the
position in 2009.
In 2008, he was appointed Vice-Chairman of Banque Palatine’s Supervisory Board, and joined the Board of Directors of Fédération Nationale des Caisses
d’Epargne. In 2010, he was appointed Chairman of the Audit Committee of Banque Palatine.
2
2
2
Chairman of the Steering and Supervisory Board of Caisse d’Epargne Languedoc-Roussillon (CELR)
Chairman of the Board of Directors: SLE Vallée des Gardons
Director: CE Holding Promotion, Clinique Bonnefon**, Pierre et Lise Immobilier**, FNCE, Natixis*
Legal Manager: SCI Les Trois Cyprès**, SCI Les Amandiers**
2
Vice-Chairman of the Supervisory Board: Banque Palatine (until February 15, 2013)
Member of the Supervisory Board: Banque Palatine (until February 15, 2013)
2012
Board of BPCE
d’Epargne LanguedocRoussillon
Directors: SLE Vallée des Gardons
Supervisory Board: Banque
Palatine
Board: Banque Palatine
Clinique Bonnefon**, Pierre et Lise
Immobilier**, FNCE
Legal Manager: SCI Les Trois
Cyprès**, SCI Les Amandiers**
2011
Board of BPCE
Palatine
Immobilier**, FNCE
Cyprès**, SCI Les Amandiers**
2010
Board of BPCE
Palatine
Immobilier**, FNCE
Cyprès**, SCI Les Amandiers*
2009
Board of BPCE
Palatine
Caisses d’Epargne (from
05/28/2009 to 07/31/2009),
Banque Palatine
Director: Caisses d’Epargne
Participations, Clinique Bonnefon**,
Pierre et Lise Immobilier**, FNCE
Cyprès**, SCI Les Amandiers**,
SCI Le Victor Hugo**
2
2
2
2
*
listed company.
**
non-group company.
41
2
2
For the Banque Populaire network
Stève GENTILI
Born June 5, 1949
Stève Gentili has been Chairman of BRED Banque Populaire since 1998. Until 2004, he was CEO of a major agribusiness company (DEROCHE SA).
He is also Chairman of the Agence des Banques Populaires de France pour la Coopération et le Développement (ABPCD – Banque Populaire Agency for
Cooperation and Development) and President of the economic organization for the summit of the Heads of State of French-speaking countries.
Vice-Chairman of the Supervisory Board of BPCE
Chairman of the Board of Directors of BRED Banque Populaire
Chairman of the Board of Directors: Banque Internationale de Commerce – BRED, BRED Gestion, COFIBRED, SPIG**, Natixis Institutions Jour, NRJ
Invest**
Director: Natixis*, Natixis Algérie, Natixis Pramex International Milan, BCI Mer Rouge, Bercy Gestion Finances +**, Bred Cofilease, Thales**, Prépar IARD,
Promepar Gestion, BICEC, BCI-Banque Commerciale Internationale, Veolia **
Member of the Supervisory Board: Prépar-Vie
Director: Banca Carige (until March 2013)
2012
Vice-Chairman the Supervisory
Board of BPCE
Directors of BRED Banque
Populaire
Directors: Banque Internationale de
Commerce – BRED, BRED Gestion,
COFIBRED, SPIG**,
Natixis Institutions Jour, NRJ Invest**
Director: Natixis*, Natixis Algérie,
Natixis Pramex International Milan,
BCI Mer Rouge, Bercy Gestion
Finances +**, Bred Cofilease,
Thales**, Prépar IARD, Promepar
Gestion, BICEC, BCI-Banque
Commerciale Internationale, Veolia
**, Banca Carige
Board: Prépar-Vie
*
listed company.
**
non-group company.
2011
Board of BPCE
Populaire
Directors: SPIG**, Natixis
Institutions Jour, Banque
Internationale de Commerce-BRED,
BRED Gestion, Cofibred, NRJ
Invest**
BCI Mer Rouge, Thales**, Bercy
Gestion Finances +**, Promépar
Gestion, BRED Cofilease, Prépar
IARD
Board: Prépar-Vie
BRED Banque Populaire,
Director: BICEC, BCI-Banque
Commerciale Internationale
42
2010
Board of BPCE
Populaire
Directors: Natixis Pramex
International, SPIG**, Natixis
Institutions Jour, BRED Gestion,
Cofibred
Board: Banque Internationale
de Commerce – BRED
Thales**, Bercy Gestion
Finances +**, Promépar Gestion,
BRED Cofilease, Prépar IARD
Board: Prépar-Vie
2009
Board of BPCE
Populaire
Directors: Natixis Pramex
International, SPIG**, Natixis
Institutions Jour, BRED Gestion,
Cofibred
Board: Banque Internationale
de Commerce – BRED
Director: Coface, Natixis*, Natixis
Algérie, Natixis Pramex International
Milan, Société Marseillaise de Crédit,
Thales**, Bercy Gestion
Finances +**, Promépar Gestion,
BRED Cofilease, Prépar IARD
Board: Prépar-Vie
Philippe DUPONT
Born April 18, 1951
With both bachelor’s and master’s degrees in management from Paris-Dauphine University, Mr. Dupont was CEO of a commodities trading firm for 12 years
and subsequently Chairman of the Board of Directors of Banque Populaire de la Région Ouest de Paris (BP ROP) (now Banque Populaire Val de France). He
was also Chairman and CEO, then Chairman, of Banque Fédérale des Banques Populaires, Groupe Banque Populaire’s central institution, from 1999 to 2009,
and Chairman of the Management Board of Natixis* from 2006 to 2009. Mr. Dupont was Chairman of Banques Populaires Participations from July 31, 2009 to
August 5, 2010 as well as Chairman of the Supervisory Board of BPCE from July 31, 2009 to January 1, 2012. He is currently Treasurer of the Fondation de
France, Legal Manager of DPH Conseil and Chairman of the Board of Directors of ISODEV SA**.
2
2
2
Chairman of the Board of Directors: ISODEV SA**
Chairman: SAS Financière ISODEV**
Treasurer: Fondation de France**
Legal Manager: SCI du 48 rue de Paris**, DPH Conseil**
2012
Board of BPCE
Directors: ISODEV SA**
Chairman: SAS Financière
ISODEV**
Treasurer: Fondation de France**
Legal Manager: SCI du 48 rue de
Paris**, DPH Conseil**
2011
Board of BPCE
Director: Fondation de France**
Paris**
2010
Board of BPCE
Paris**
2009
Board of BPCE
Directors: Banques Populaires
Participations (formerly BFBP)
Directors: Fondation d’Entreprise
Groupe Banque Populaire,
Confédération Internationale des
Banques Populaires
Banques
Populaires Participations,
Chairman: SAS Ponant 3
Paris**
2
2
2
2
2
*
listed company.
**
non-group company.
43
2
2
Gérard BELLEMON
Mr. Bellemon is a graduate of the IDRAC business school and Chairman of the Board of Directors of Banque Populaire Val de France.
He is also Chairman of two simplified joint stock companies, and a member of the Board of Directors of Natixis Assurances.
Chairman of the Board of Directors of Banque Populaire Val de France
Director: Natixis Assurances
Chairman: SAS Suard Bellemon**, SAS SOBEGEST**
Permanent Representative of Banque Populaire Val de France, Member of the Supervisory Board: Assurances Banque Populaire – IARD
(until January 3, 2013)
2012
Board of BPCE
Directors of Banque Populaire
Val de France
Director: Natixis Assurances
Chairman: SAS Suard Bellemon**,
SAS SOBEGEST*
Banque Populaire Val de France,
Board: Assurances Banque
Populaire – IARD
*
listed company.
**
non-group company.
2011
Board of BPCE
Val de France
Director: Natixis Assurances,
Fondation Banque Populaire
Chairman: Suard Bellemon**,
SOBEGEST**
Populaire – IARD
44
2010
Board of BPCE
Val de France
Fondation Banque Populaire
Chairman: Suard Bellemon**,
SOBEGEST**
Populaire – IARD
2009
Board of BPCE
Val de France
Directors: Natixis Assurances,
Natixis Lease
Director: Banques Populaires
Participations, Société Marseillaise
de Crédit, Fondation Banque
Populaire
Populaire – IARD
Thierry CAHN
Born September 25, 1956
Since 2008, Mr. Cahn has been a member of the Board of Directors of Banque Fédérale des Banques Ppulaires, Groupe Banque Populaire’s central institution,
a member of the Board of Directors of Banques Populaires Participations from July 2009 to August 2010, and then a member of the BPCE Supervisory Board.
He is an attorney at the Colmar Court of Appeals and Honorary Chairman of the Confédération Nationale des Avocats (CNA – French National Federation of
Attorneys) and a former President of the Bar. He has also been a member of the Board of Directors of Natixis since January 2013, and Chairman of the Board
of Directors of Banque Populaire d’Alsace since 2003.
2
2
Chairman of the Board of Directors of Banque Populaire d’Alsace
Member of the Board of Directors: Natixis*
2
Member of the Supervisory Board: Banque Palatine (until February 5, 2013)
2012
Board of BPCE
d’Alsace
2011
Board of BPCE
d’Alsace
2010
Board of BPCE
d’Alsace
2009
Board of BPCE
d’Alsace
Director: Banque Fédérale des
Banques Populaires
Board: Foncia group
2
2
2
2
2
*
listed company.
**
non-group company.
45
2
2
Alain CONDAMINAS
Born April 6, 1957
Alain Condaminas has a master’s degree in Economics and a postgraduate degree in Financial and Banking Techniques. He joined Goupe Banque Populaire
in 1984. In 1992, he joined Banque Populaire Toulouse-Pyrénées as Head of Origination supervising the Human Resources division and then Chief Operations
Officer. In 2001, Alain Condaminas became Chief Executive Officer of Banque Populaire Quercy-Agenais. In 2003, he oversaw a merger with Banque Populaire
du Tarn et de l’Aveyron, then a second merger in 2006 with Banque Populaire Toulouse-Pyrénées to create today’s Banque Populaire Occitane. He is currently
Chief Executive Officer of Banque Populaire Occitane.
Chief Executive Officer of Banque Populaire Occitane
Director: Natixis*, Natixis Asset Management
Chairman: Fondation d’Entreprise BP Occitane
Permanent Representative of Banque Populaire Occitane, Vice-Chairman of the Board of Directors: CELAD SA**
Permanent Representative of Banque Populaire Occitane, Director: i-BP, IRDI**
Permanent Representative of Banque Populaire Occitane, Member of the Supervisory Board: SOTEL**
Permanent Representative of Banque Populaire Occitane, Member of the Investment Committee: Multicroissance
Permanent Representative of Banque Populaire Occitane, Legal Manager: SNC Immocarso
Legal Manager: SCI de l’Hers**
2012
(until June 27, 2012)
Board of BPCE
(since June 27, 2012)
Chief Executive Officer of
Director: Natixis*, Natixis Asset
Management
Chairman: Fondation d’Entreprise
BP Occitane
Banque Populaire Occitane,
Vice-Chairman of the Board of
Directors: CELAD SA**
Director: i-BP, IRDI**
Board: SOTEL**
Member of the Investment
Committee: Multicroissance
Legal Manager: SNC Immocarso
Legal Manager: SCI de l’Hers**
*
listed company.
**
non-group company.
2011
Director: Natixis Asset
Management, Natixis Interépargne
Chairman: Fondation d’entreprise
Board: SOTEL**, ABP IARD**
46
2010
Chairman: GIE Carso Matériel
Management, Natixis Interépargne
Board: SOTEL**, ABP IARD**
2009
Chairman: GIE Carso Matériel
Management, Natixis Securities,
Société Marseillaise de Crédit
Board: SOTEL**, ABP IARD**,
Latécoère**
Pierre DESVERGNES
Born November 23, 1950
After studying literature at university, Mr. Desvergnes was appointed as an administrator at the high school in Dammarie-les-Lys (Seine-et-Marne) in 1975.
He became an administrative advisor for secondary and higher education in 1982, and was appointed as an accounting officer at Lycée Henri-Moissan high
school in Meaux. He was appointed special advisor to Michel Gelly in 1990, and subsequently Vice-Chairman under Christian Hébrard. He has been Chairman
and subsequently Chairman and Chief Executive Officer of CASDEN Banque Populaire since 2002.
He is Vice-Chairman of ESPER, and served as a director of Banque Fédérale des Banques Populaires, Groupe Banque Populaire’s central institution, from 2004
to 2009, and of Banques Populaires Participations from 31 July 2009 to August 5, 2010.
He is currently Chairman and Chief Executive Officer of CASDEN Banque Populaire.
2
2
2
Chairman and Chief Executive Officer of CASDEN Banque Populaire
Chairman of the Board of Directors: Parnasse Finance
Director: Crédit Foncier, Banque Monétaire Financière, Parnasse MAIF SA, Union Mutualiste Retraite (UMR)**
Permanent Representative of CASDEN Banque Populaire, Chairman: SAS Finance
Permanent Representative of CASDEN Banque Populaire, Director: Parnasse Services
Legal Manager: Inter Promo
2
Permanent Representative of CASDEN Banque Populaire, Chairman: SAS Parnasse Espace 1, SAS Parnasse Espace 2 (these structures were
liquidated in 2013)
2012
Board of BPCE
Officer of CASDEN Banque
Populaire
Directors: Parnasse Finance
Director: Crédit Foncier, Banque
Monétaire Financière, Parnasse
MAIF SA, Union Mutualiste Retraite
(UMR)**
CASDEN Banque Populaire,
Chairman: SAS Finance, SAS
Parnasse Espace 1, SAS Parnasse
Espace 2
Director: Parnasse Services
2011
Board of BPCE
Populaire
(UMR)**
Espace 2
2010
Board of BPCE
Populaire
(UMR)**
Espace 2
Board: SCPI Fructi Pierre
2009
Board of BPCE
Populaire
Directors: Maine Gestion, Parnasse
Finance
Chairman: SAS Parnasse
Espace 1, SAS Parnasse Espace 2
Banques Populaires Participations,
Banque Monétaire Financière,
Parnasse MAIF SA
Banques Populaires
Participations, Member of the
Supervisory Board: Foncia group
Vice-Chairman: VALORG
2
2
2
2
*
listed company.
**
non-group company.
SLE: société locale d’épargne (local savings company)
47
2
2
Catherine HALBERSTADT
Ms. Halberstadt has a postgraduate degree in accounting and another in business, administration and finance from the École Supérieure de Commerce de
Clermont-Ferrand. In 1982, she joined Banque Populaire du Massif Central, where she was Head of Human Resources, then Chief Financial Officer, Chief
Operations Officer and, as of 2000, Deputy Chief Executive Officer. In 2008, Ms. Halberstadt became Chief Executive Officer of Natixis Factor.
On September 1, 2010, Catherine Halberstadt became Chief Executive Officer of Banque Populaire du Massif Central.
Chief Executive Officer of Banque Populaire du Massif Central
Director: Natixis*, Crédit Foncier, BPI France Financement** (formerly OSEO)
Member of Audit Committee: Natixis*
Chairman of Adit Committee: BPI France Financement** (formerly OSEO)
Permanent Representative of Banque Populaire du Massif Central, Chairman: SAS Sociétariat BPMC
Permanent Representative of Banque Populaire du Massif Central, Director: i-BP, Association des Banques Populaires pour la Création d’Entreprise
Permanent Representative of Banque Populaire du Massif Central, Member: Comité des Banques d’Auvergne
Director: Compagnie Européenne de Garanties et Cautions (CEGC) (until June 14, 2013)
2012
Board of BPCE
(since April 4, 2012)
Banque Populaire du Massif
Central
Director: Natixis*, Crédit Foncier,
Compagnie Européenne de
Garanties et Cautions (CEGC),
OSEO**
Central, Chairman: SAS
Sociétariat BPMC
Central, Director: i-BP, Association
des Banques Populaires pour la
Création d’Entreprise
Central, Member: Comité des
Banques d’Auvergne
*
listed company.
**
non-group company.
2011
Central
Director: Compagnie Européenne
de Garanties et Cautions, OSEO**
Sociétariat BPMC
Central, Director: i-BP, Association
des Banques Populaires pour la
Création d’Entreprise
48
2010
Central
Chief Executive Officer:
Natixis Factor
Board: Foncia group
Director: OSEO**
Sociétariat BPMC
Central, Director: i-BP, BICEC,
Association des Banques Populaires
pour la Création d’Entreprise
2009
Natixis Factor
2
Independent members
2
Maryse AULAGNON
Born April 19, 1949
Ms. Aulagnon is a graduate of the École Nationale d’Administration and the Institut d’Études Politiques and holds a postgraduate degree in Economics. She
held various positions within the French Embassy to the United States and the Cabinet of the French Ministries for the Budget and Industry. Subsequent posts
have included Head of International Development for CGE group (now Alcatel) and CEO of Euris.
Since 1990, she has been Chairman and Chief Executive Officer of Affine, a group that she founded. She is also an Honorary Consel of the French Council of
State and a member of the Boards of Directors of Air France-KLM and Veolia Environnement.
2
Member of the Supervisory Board and member of the Appointments and Remuneration Committee of BPCE*** – Independent member
Chairman and Chief Executive Officer of Affine SA*/**
Chairman of the Management Board: MAB-Finances**
Chairman of the Board of Directors: Gesfimmo SA**,
Director: Air France KLM*/**, Veolia Environnement*/**, Holdaffine**
Permanent Representative of Affine, Chairman: Banimmo*/**, Capucine Investissements**, Les 7 collines**, Promaffine**
Permanent Representative of Affine, Legal Manager: Nevers Colbert**, ATIT**, Les Jardins des Quais**, Affine Sud** (formerly Brétigny),
Permanent Representative of Promaffine, Legal Manager: Lucé Parc-Leclerc**, Nanterre Terrasses 12**, Paris 29 Copernic**
Permanent Representative of ATIT, Liquidator: 2/4 Haussmann**
Permanent Representative of ATIT, Legal Manager: Parvis Lille**
Permanent Representative of MAB-Finances, Member of the Executive Committee: Concerto Développement**
2
Permanent Representative of Affine, Chairman: Gesfimmo SAS** (until April 22, 2013)
2012
of BPCE – Independent member
Officer of Affine SA*/**
Chairman: MAB-Finances**
Director: Air France KLM*/**, Veolia
Environnement*/**, Affiparis*/**,
Holdaffine**
Affine, Chairman: Banimmo**,
Gesfimmo SAS**, Capucine
Investissements**, Les 7 collines**,
Promaffine**
Affine, Legal Manager: Nevers
Colbert**, ATIT**, Brétigny**, Les
Jardins des Quais**
Promaffine, Legal Manager: Lucé
Parc-Leclerc**, Nanterre Terrasses
12**, Paris 29 Copernic**
Permanent Representative of ATIT,
Liquidator: 2/4 Haussmann**
Legal Manager: Parvis Lille**
MAB-Finances, Member of the
Executive Committee: Concerto
Développement**
2011
of BPCE –
Independent member
Chairman: MAB-Finances**
Director: Air France KLM*/**, Veolia
Environnement*/**, Affiparis*/**,
Holdaffine**
Affine, Chairman: Banimmo**,
Gesfimmo SAS**, Capucine
Promaffine**
Affine, Legal Manager: Nevers
Colbert**, ATIT**, Brétigny**, Les
Jardins des Quais**
Promaffine, Legal Manager:
Bourgtheroulde de l’Église**, Lucé
Legal Manager: Parvis Lille**
MAB-Finances, Member of the
Executive Committee: Concerto
Développement**
2010
of BPCE –
Independent member
Chairman: Promaffine**, MAB-Finances**
Director: Air France KLM**,
Affiparis*/**, Holdaffine**
Member of the Executive Committee:
Concerto Développement**
Legal Manager: ATIT**, Transaffine**,
Affinvestor**
Affine, Chairman: Banimmo**, Affine
Développement**, Capucine
SIPEC**
Affine, Legal Manager: Capucines
III**, Capucines IV**, Capucines V**,
Capucines VI**, Nevers Colbert**
Affine, Liquidator: Lumière**
MAB-Finances, Director: Cour des
Capucines**
2009
Chairman: Promaffine**, MABFinances**
Director: Affiparis*/**, Holdaffine**
Member of the Executive
Committee: Concerto
Développement**, Business Facility
International**
Legal Manager: ATIT**, Transaffine**,
Affinvestor**
Affine, Chairman: Banimmo**, Affine
Développement**, Capucine
SIPEC**
Affine, Legal Manager: Capucines
III**, Capucines IV**, Capucines V**,
Capucines VI**, Nevers Colbert**
Affine, Liquidator: Lumière**
MAB-Finances, Director: Cour des
Capucines**, European Asset Value Fund**
*
listed company.
**
non-group company.
***
At its January 16, 2014 meeting, the Supervisory Board duly appointed Maryse Alagnon, an independent member, as Chairman of the Appointments and Remuneration Committee.
49
2
2
2
2
2
2
Laurence DANON
Born January 6, 1956
A graduate of the École Normale Supérieure and an engineering graduate of the Corps des Mines, with post-graduate degrees in physical sciences and organic
chemistry, Ms. Danon started her career in 1984 in the Ministry of Industry as Head of the Industrial Development department of the Industry and Research
division for the Picardy region. She joined the Hydrocarbons department of the Ministry for Industry in 1987, as Head of the Exploration-Production unit. In 1989,
she joined Elf, where she held a sales position in the Polymers department. In 1991, she became Head of Elf’s Industrial Specialties division. In 1994, she
became Head of the global Functional Polymers division. In 1996, she was appointed CEO of Ato Findley Adhesives, which became Bostik after merging with
Total in 1999. Bostik is the world’s number two manufacturer of adhesives. In 2001, she was appointed Chairman and Chief Executive Officer of Printemps.
Laurence Danon was Chairman of the Management Board of Edmond de Rothschild Corporate Finance from 2007 to 2012.
She chaired the “Prospectives” Commission of MEDEF from 2005 to 2013.
She is currently Co-Chairman of the Management Board of Leonardo & Co. She is also a member of the Board of Directors of Diageo Plc, TF1 and Banque
Leonardo.
Member of the Supervisory Board of BPCE*** – Independent member
Chairman of the Appointments and Remuneration Committee of BPCE***
Co-Chairman of the Management Board: Leonardo & Co**
Director: TF1*/**, Diageo**, Banque Leonardo**
2012
Board of BPCE – Independent
member
Co-Chairman of the
Management Board: Leonardo
& Co**
Director: TF1*/**, Diageo*
2011
member
Board of Edmond de Rothschild
Corporate Finance**
Director: TF1*/**, Diageo**
2010
member
Corporate Finance**
Director: TF1*/**, Rhodia**,
Diageo**
*
listed company.
**
non-group company.
***
At its meeting on January 16, 2014, the Supervisory Board duly noted the resignation of Laurence Danon.
SLE: société locale d’épargne (local savings company)
50
2009
member
Corporate Finance**
Director: Plastic Omnium**,
Rhodia**, Diageo**, Experian Plc**
Marwan LAHOUD
Born March 6, 1966
Mr. Lahoud is a former student of the École Polytechnique and a graduate of the École Nationale Supérieure de l’Aéronautique et de l’Espace. He was Chairman
and Chief Executive Officer of MBDA and worked for Aérospatiale during its merger with Matra and on the creation of EADS. At EADS, he worked as Senior
Vice-President in charge of mergers and acquisitions.
Since 2007, he has been Deputy Chief Executive Officer in charge of Corporate Strategy and Marketing and a member of the Executive Committee of EADS.
2
2
Member of the Supervisory Board of BPCE – Independent member
Chairman of the Audit and Risk Committee of BPCE
Member of the Executive Committee of EADS, Chairman of EADS France*/**
Director: Eurotradia**
2
Director: Technip*/** (independent member) (until April 25, 2013)
2012
member
Committee: EADS*/** – Head of
Corporate Strategy and Marketing
Director: Technip*/** (independent
member), Eurotradia**
2011
member
2010
member
2009
member
member)
2
2
2
2
2
*
listed company.
**
non-group company.
51
2
2
Marie-Christine LOMBARD
Born December 6, 1958
Ms. Lombard is a graduate of Essec. Before joining the transport industry, she occupied different positions in the banking sector, notably at Chemical Bank and
Paribas in New York, Paris and Lyon.
She joined the express transport industry in 1993 as Chief Financial Officer of the French company Jet Services. In 1997, she became CEO until the company
was bought out by TNT in 1999. Appointed Chairman of TNT Express France, she transformed the company into one of TNT group’s top-performing subsidiaries.
In 2004, she was appointed Chairman and CEO of the whole of TNT’s Express division. Marie-Christine Lombard was appointed Chief Executive Officer of TNT
Express when it became an independent listed company in May 2011.
She has been Chief Executive Officer of Geodis since October 24, 2012. She is also Chairman of Lyon Ville de l’Entrepreneuriat, a network that supports the
creation, acquisition and transfer of businesses in the Greater Lyon region.
Member of the Supervisory Board and Audit and Risk Committee of BPCE – Independent member
Chief Executive Officer: Geodis SA**
Member of the Supervisory Board: Groupe Keolis SAS**
Member of the Executive Committee: Fondation EMLYON Entrepreneurs pour le Monde
Director and member of the Steering Committee: TLF
2012
member
Geodis SA**
Board: Groupe Keolis SAS**
*
listed company.
**
non-group company.
2011
member
Chief Executive Officer (CEO):
TNT Express N.V.*/**
Member of the Management
Board: TNT group Amsterdam*/**
52
2010
member
TNT Express Division**
Board: TNT group Amsterdam*/**
Board: Metro AG*/**
2009
TNT Express Division**
Board: Metro AG*/**
2
Non-Voting Directors
2
Yves GEVIN
Born August 2, 1958
Non-Voting Director on the Supervisory Board of BPCE
Chief Executive Officer of Banque Populaire Rives de Paris
Chairman and Chief Executive Officer: Sud Participations
Chairman: Sociétariat Banque Populaire Rives de Paris
Member of the Supervisory Board: Naxicap Partners
Director: Compagnie Européenne de Garanties et Cautions (CEGC), Natixis Private Equity
Permanent Representative of Banque Populaire Rives de Paris, Director: i-BP
2
Director: Fédération Nationale des Banques Populaires (FNBP) (until April 2013)
2012
Officer: Sud Participations
Chairman: Sociétariat Banque
Populaire Rives de Paris
de Garanties et Cautions (CEGC),
Natixis Private Equity, Fédération
Nationale de Banques Populaires
(FNBP)
Banque Populaire Rives de Paris,
Director: i-BP
2011
Board: Foncia group
Chairman: Foncia Holding,
Cabinet Docher
Directors: Foncia Switzerland (until
January 30, 2012)
de Garanties et Cautions (CEGC)
2010
Board: Foncia group
Chairman: Foncia Holding,
Cabinet Docher
Directors: Foncia Switzerland
Natixis Bleichroeder
Foncia group, Director: Natixis
Assurances
2009
Board: Foncia group
Natixis Securities, Natixis
Bleichroeder
Foncia group, Director: Natixis
Assurances
2
2
2
2
2
*
listed company.
**
non-group company.
53
2
2
Pierre CARLI
Born August 21, 1955
Chairman of the Management Board of Caisse d’Epargne Midi-Pyrénées (CEMP)
Chairman of the Supervisory Board: Capital Finance Tofinso, Midi 2I**, Sotel**
Chairman of the Board of Directors: Midi Foncière, IDEI Association**, Midi Épargne, Ecureuil Immo
Chairman: Sorepar
Vice-Chairman of the Board of Directors: IRDI**
Vice-Chairman of the Supervisory Board: Promologis
Director: FNCE, Midi Capital, BPCE Achats, Groupe Promo Midi**, CE Holding Promotion
Member of the Supervisory Board: Ecureuil Service SAS
Permanent Representative of CEMP, Member of the Supervisory Board: CE Syndication Risque, IT-CE, Tofinso Investissement
Permanent Representative of CEMP, Member of the Board of Directors: Association EDENIS** (formerly Promo Accueil), Fondation d’Entreprise du
Toulouse Football Club**
Non-Voting Director: SEM Tourisme**, SEMECCEL**
Permanent Representative of Midi Foncière: Saint-Exupéry Montaudran**
Permanent Representative of SOREPAR, Member of the Board of Directors: SEM OPPIDEA
Director: Coface SA (until July 8, 2013)
2012
Midi-Pyrénées (CEMP)
Board: Capital Finance Tofinso, Midi
2I**, Sotel**
Directors: Midi Foncière, IDEI
Association**, Midi Épargne
Chairman: Sorepar
Directors: IRDI**
Supervisory Board: Promologis
Director: FNCE, Midi Capital, BPCE
Achats, Groupe Promo Midi**,
CE Holding Promotion, Coface SA
Board: Ecureuil Service SAS
CEMP, Member of the
Supervisory Board: CE
Syndication Risque, IT-CE, Tofinso
Investissement
of CEMP, Member: Association
Promo Accueil**, Fondation
d’Entreprise du Toulouse Football
Club**
Non-Voting Director: SEM
Tourisme*, SEMECCEL**
Midi Foncière: Saint-Exupéry
Montaudran**
*
listed company.
**
non-group company.
2011
Midi-Pyrénées
Board: Capital Finance Tofinso,
Midi 2I** Sotel**
Directors: Midi Foncière,
GIE Ecureuil Multicanal,
IDEI Association**
Chairman: Midi Épargne, Sorepar
Directors: IRDI**
Director: Coface, FNCE, Midi
Capital, BPCE Achats, Groupe
Promo Midi**, CE Holding Promotion
Board: Ecureuil Service SAS
CEMP, Member of the
Syndication Risque, GCE Business
Services, Tofinso Investissement
Tourisme**, SEMECCEL**, SMAT**
Montaudran**
Promo Accueil**
54
2010
Midi-Pyrénées
Officer: Promo Gestion
Ecureuil Service, Midi 2I**, Sotel**
Directors: Midi Foncière
Directors: IRDI**
Director: Coface, FNCE, Midi
Capital, BPCE Achats, CE Holding
Promotion, Groupe Promo Midi**,
Board: Banque Privée 1818, GCE
Car Lease
CEMP, Member of the
Services, Tofinso Investissement,
Ecureuil Lease
Montaudran**
Promo Accueil**
2009
Midi-Pyrénées
Officer: Promo Gestion
Ecureuil Service, Midi 2I**, Sotel**
Directors: Midi Foncière
Directors: IRDI**
Director: Coface, FNCE,
Garanties et Cautions, Midi Capital,
Groupe Promo Midi**, Groupe École
Supérieure de Commerce Toulouse**
Board: Banque Privée 1818,
Ecureuil Négoce, GCE Car Lease
CEMP, Member of the
Services, Tofinso Investissement,
Ecureuil Lease
Montaudran**
Promo Accueil**
Alain LACROIX
Born March 25, 1953
2
2
Chairman of the Management Board of Caisse d’Epargne Provence-Alpes-Corse (CEPAC)
Chairman of the Supervisory Board: Sogima, Logirem
Member of the Management Board: Proxipaca Finance
Director: Erilia, Natixis Global Asset Management, Natixis Asset Management, FNCE, Habitat en Région** (association), CE Holding Promotion
Full member of the Strategy Committee: Averroes**
Member of the Supervisory Board: GCE Capital
Member of the Executive Board: UPE 13
Elected member: CCIMP**
Permanent Representative of CEPAC, Chairman of the Board of Directors: BPCE Trade
Permanent Representative of CEPAC, Chairman of the Management Board: CEPAC Investissement et Développement
Permanent Representative of CEPAC, Member of the Supervisory Board: IT-CE, GCE Syndication Risque
Permanent Representative of CEPAC, Member of the Supervisory Board: Primaveris
Permanent Representative of CEPAC, Director: SAMENAR, PROENCIA
2
2
Director: Natixis Financement (until June 13, 2013), Natixis Consumer Finance (until June 13, 2013)
Permanent Representative of CEPAC, Director: Habitat Guyanais (until April 3, 2013)
2012
Provence-Alpes-Corse (CEPAC)
Board: Sogima, Logirem
Board: Proxipaca Finance
Director: Erilia, Natixis Global Asset
Management, Natixis Asset
Management, Natixis Financement,
Natixis Consumer Finance, FNCE,
Habitat en Région** (association)
Full member of the Strategy
Committee: Averroes**
GCE Capital
Member of the Executive Board:
UPE 13
CEPAC, Chairman of the Board of
Directors: BPCE Trade
CEPAC, Chairman of the
Management Board: CEPAC
Investissement et Développement
CEPAC, Member of the
Supervisory Board: IT-CE, GCE
Syndication Risque
Management Board: Primaveris
CEPAC, Director: SAMENAR,
PROENCIA, Habitat Guyanais
*
listed company.
**
non-group company.
2011
Board: Sogima, Logirem
GCE Capital
Director: Natixis Global Asset
Natixis Consumer Finance, FNCE, Erilia
UPE 13
CEPAC, Chairman of the Board of
Directors: BPCE Trade
Management Board: Viveris
Supervisory Board: GCE Business,
GCE Garanties Entreprises, GCE
Syndication Risque, IT-CE
PROENCIA
2010
Board: Sogima
Vice-Chairman of the Supervisory
Board: Logirem
GCE Capital
Natixis Consumer Finance, FNCE, Erilia
Member of the Executive Board: UPE 13
Legal Manager: Py et Rotja**
Supervisory Board: Viveris
Management
Syndication Risque
PROENCIA
2009
Director: Banque des Antilles
Françaises, Erixel, Compagnie
1818-Banquiers Privés, Natixis Global
Asset Management, Natixis Asset
Natixis Consumer Finance, FNCE
GCE Capital
UPE 13
Legal Manager: Py et Rotja**
Supervisory Board: Viveris
Management
Syndication Risque
Erixel, Director: Erilia
2
2
2
2
55
2
2
Raymond OLIGER
Born September 3, 1945
Chairman of the Board of Directors of Banque Populaire Lorraine Champagne
Chairman of the Board of Directors of Fédération Nationale des Banques Populaires (FNBP)
Member of the Supervisory Board: Banque Palatine
Director: Natixis Asset Management
Vice-Chairman: BCP Lux, Confédération Internationale des BP (CIBP)
Director: Natixis Financement (until June 10, 2013), Natixis Consumer Finance (until June 10, 2013)
2012
Lorraine Champagne
Directors of Fédération
Nationale des Banques
Populaires (FNBP)
Natixis Consumer Finance
*
listed company.
**
non-group company.
2011
Lorraine Champagne
Populaires (FNBP)
56
2010
Lorraine Champagne
Populaires (FNBP)
2009
Lorraine Champagne
Chairman: Fructifrance Immobilier
Natixis Consumer Finance, FNBP
Michel SORBIER
Born June 21, 1942
2
2
Chairman of the Steering and Supervisory Board of Caisse d’Epargne d’Auvergne et du Limousin
Chairman of the Board of Directors: SLE Limoges Ville
Chairman of Fédération Nationale des Caisses d’Epargne (FNCE)
Director: CE Holding Promotion
Non-Voting Director: Crédit Foncier
Legal Manager: SCI de la Rampe**
2
2012
d’Epargne d’Auvergne et du
Limousin
Directors: SLE Limoges Ville
Chairman of Fédération
Nationale des Caisses d’Epargne
(FNCE)
Non-Voting Director:
Crédit Foncier
2011
Limousin
(FNCE)
Crédit Foncier
2010
Limousin
(FNCE)
Director: GCE Courtage,
CE Holding Promotion
Crédit Foncier
2009
Limousin
(FNCE)
Director: Crédit Foncier, GCE
Courtage
2
2
2
2
2
*
listed company.
**
non-group company.
57
2
2
Dominique WEIN
Born May 20, 1955
Offices held until December 31, 2013
Chief Executive Officer of Banque Populaire Lorraine Champagne
Chairman of the Board of Directors: Turbo SA, Fructifrance Immobilier, Critel
Vice-Chairman: Fondation Banque Populaire
Director: BPCE International et Outre-mer, Compagnie Européenne de Garanties et Cautions, Fondation Banque Populaire, Banque des Antilles Françaises,
GIE BPCE Achats, Luxequipbail SA, Socama Lorraine, Fructifrance Immobilier, BPCE Domaines
Legal Manager: SCI François de Curel
Co-Legal Manager: Segimlor, Cofilor
Member of the Law, Economy and Management Collegium at the Université de Lorraine
Treasurer: Georgia Tech
Permanent Representative of Banque Populaire Lorraine Champagne, Chairman: Sociétariat Banque Populaire Lorraine Champagne, Euro Capital
Permanent Representative of Banque Populaire Lorraine Champagne, Legal Manager: SNC Locagare
Permanent Representative of Banque Populaire Lorraine Champagne, Director: Socama Champagne, i-BP
Permanent Representative of Banque Populaire Lorraine Champagne, Associate Member: Regional Chamber of Commerce and Industry for the
Lorraine Region
Director: Natixis Paiements (until September 2013)
Permanent Representative of Banque Populaire Lorraine Champagne, Legal Manager: SCI Espace Charlemagne (until October 15, 2013)
2012
Chief Executive Officer of Banque
Populaire Lorraine Champagne
Directors: Turbo SA, Fructifrance
Immobilier, Critel
Director: BPCE International et
Outre-mer, Compagnie Européenne
de Garanties et Cautions, Natixis
Paiements, Fondation Banque
Populaire, Banque des Antilles
Françaises, GIE BPCE Achats,
Luxequipbail, Socama Lorraine,
Fructifrance Immobilier, BPCE
Domaines
Legal Manager: SCI François de
Curel
Banque Populaire Lorraine
Champagne, Chairman: Sociétariat
Champagne, Euro Capital
Champagne, Legal Manager: SNC
Locagare, SCI Espace Charlemagne
Champagne, Director: Socama
Champagne, i-BP
*
listed company.
**
non-group company.
2011
Directors: Fructifrance Immobilier,
Critel
Paiements, Fondation Banque
Populaire, BPCE Domaines,
Luxequipbail, Socama Lorraine,
Fructifrance Immobilier
Curel
Champagne, Chairman: Sociétariat
Champagne, Euro Capital
Locagare, SCI Espace Charlemagne
Champagne, Director: Socama
Champagne, i-BP
58
2010
Directors: Fructifrance Immobilier
Paiements, Fructifrance Immobilier
Curel
Champagne
Chairman: Sociétariat Banque
Locagare
2009
NA
2
Management Board
2
François PÉROL
Born November 6, 1963
Mr. Pérol is a graduate of the HEC business school and the Institut d’Études Politiques in Paris and a former student of the École Nationale d’Administration.
He began his career in 1990 as an Inspector General in the French Finance Ministry (Inspection générale des finances). In 1994, he became Deputy Secretary
General of France’s interministerial committee on industrial restructuring (CIRI). In 1996, he was appointed to the French Treasury as Head of the Financial
Markets Office.
From 1999 to 2001, he was Secretary General of the Club de Paris responsible for International Debt Negotiations. He was Deputy Head of Corporate Financing
and Development at the Treasury in 2001 and in 2002 was appointed Deputy Head of the cabinet of Francis Mer, Minister for the Economy, Finance and
Industry, then Deputy Head of the cabinet of Nicolas Sarkozy, Minister of State and Minister for the Economy, Finance and Industry in 2004.
In 2005, he became a managing partner at Rothschild & Cie.
In May 2007, he was appointed Deputy Secretary General to the President of the French Republic.
From March 2 to July 31, 2009, François Pérol was Chairman of the Management Board of Caisse Nationale des Caisses d’Epargne and Chief Executive Officer
of Banque Fédérale des Banques Populaires.
On July 31, 2009, he became Chairman of the Management Board of BPCE. The Supervisory Board renewed his appointment at its November 21, 2012,
meeting. He is also Chairman of the Board of Directors of Natixis and Crédit Foncier.
2
2
Chairman of the BPCE Management Board
Chairman of the Board of Directors: Natixis*, Crédit Foncier
Chairman: CE Holding Promotion, Groupement Européen des Caisses d’Epargne
Vice-Chairman: Fédération Bancaire Française**
Director: CNP Assurances*, Sopassure, Natixis*, Crédit Foncier, CE Holding Promotion, Musée d’Orsay**
Permanent Representative of BPCE, Legal Manager: SCI Ponant +
Permanent Representative of BPCE Maroc, Director: Banque Centrale Populaire
2
2012
Chairman of the BPCE
Management Board
Directors: Natixis*, Crédit Foncier
Chairman: CE Holding Promotion,
Groupement Européen des Caisses
d’Epargne
Director: CNP Assurances*,
Sopassure, Natixis*, Crédit Foncier,
Musée d’Orsay**
BPCE, Legal Manager: SCI
Ponant +
BPCE Maroc, Director: Banque
Centrale Populaire
Committee: Fédération Bancaire
Française**
*
listed company.
**
non-group company.
2011
Management Board
Directors: Natixis*, BPCE
International et Outre-mer,
Crédit Foncier
Chairman: CE Holding Promotion
Directors: Crédit Immobilier et
Hôtelier (CIH)
Sopassure, Natixis*, BPCE
International et Outre-mer, Crédit
Foncier, Crédit Immobilier et Hôtelier
(CIH), Musée d’Orsay**
BPCE, Legal Manager:
SNC Bankeo, SCI Ponant +
Française**
2010
Management Board
Directors: Natixis*, BPCE
International et Outre-mer,
Crédit Foncier, Fondation des
Caisses d’Epargne pour la Solidarité
Board: Foncia group
Chairman: CE Holding Promotion
Chairman of the Executive
Française**
Directors: Crédit Immobilier et
Hôtelier (CIH)
Sopassure, Natixis*, BPCE
International et Outre-mer, Crédit
Foncier, Crédit Immobilier et Hôtelier
(CIH), Musée d’Orsay**
2009
Management Board
Board of Caisse Nationale des
Caisses d’Epargne (CNCE)
(until July 31, 2009)
Directors: Natixis*, Financière
Océor
Board: Foncia group
Vice-Chairman of the Executive
Française**
Chief Executive Officer: Banque
Fédérale des Banques Populaires
(BFBP) (until July 31, 2009),
Banques Populaires Participations,
Caisses d’Epargne Participations
Director: Banques Populaires
Participations, Caisses d’Epargne
Participations, CNP Assurances*,
Sopassure, Natixis*, Financière
Océor, Crédit Foncier,
Crédit Immobilier et Hôtelier (CIH)
2
2
2
59
2
2
Jean-Yves FOREL
Born May 17, 1961
Mr. Forel is a graduate of the Institut d’Études Politiques de Grenoble and holds a bachelor’s degree in economics. He began his career in 1983 at Banque
Populaire des Alpes. In 1992, after his work at the branch, he was appointed Chief Operations Officer and then, in 1995, Director. In 1997, he joined Banque
Populaire Atlantique as Director. He was responsible for Development as well as subsidiaries dedicated to Group business lines. In 2000, he was appointed
Head of Development for Banque Fédérale des Banques Populaires, and become a member of the Executive Management Committee in 2001. In 2003, he
joined Natexis Banques Populaires, where he was a member of the Executive Management Committee and Head of the Banking, Financial and Technological
Services department. In 2005, he became Head of Specialized Financial Services. In November 2006, he became a member of the Executive Management
Committee and Head of Specialized Financial Services at Natixis (providing Wholesale Banking, Investment Solutions and Specialized Financial Services for
Groupe BPCE).
At its November 21, 2012, meeting, BPCE’s Supervisory Board appointed Jean-Yves Forel Chief Executive Officer*** and member of the BPCE Management
Board in charge of Commercial Banking and Insurance, effective December 1, 2012.
Member of the Management Board of BPCE, Chief Executive Officer – Commercial Banking and Insurance
Chairman and Chief Executive Officer: Sopassure
Chairman of the Supervisory Board: Banque Palatine
Chairman of the Board of Directors: BPCE International et Outre-mer
Director: Crédit Foncier, CNP Assurances*, Sopassure
Permanent Representative of BPCE, Director: Ecureuil Vie Développement
Offices currently held under Natixis:
Chairman and Chief Executive Officer: Natixis Algérie
Director: Natixis Coficiné, Média Consulting & Investment, Partecis
Director: CACEIS (until 12/31/2012), CONECS (until 06/12/2013), Algiers Business Centers (until 06/11/2013)
Vice-Chairman of the Board: Association Française des Sociétés Financières (ASF) (until 01/15/2013)
Permanent Representative of Natixis, Director: SICOVAM Holding (until 12/31/2012)
2012
Board of BPCE, Chief Executive
Officer – Commercial Banking
and Insurance
Directors: BPCE International et
Outre-mer
Sopassure, Crédit Foncier
BPCE, Director: Ecureuil Vie
Développement
Offices currently held under
Natixis:
Director: Natixis Algérie, Natixis
Coficiné, Média Consulting
& Investment, CACEIS, Partecis,
Algiers Business Centers, CONECS
Vice-Chairman of the Board:
Association Française des Sociétés
Financières (ASF)
Natixis, Director: SICOVAM
Holding
2011
Directors: Natixis Financement,
Garanties et Cautions, Natixis
Factor, Natixis Interépargne, Natixis
Lease, Natixis Consumer Finance,
Natixis Paiements, Novacrédit
Chairman: Natixis Consumer
Finance IT
Directors: Titres Cadeaux SAS
Director: Natixis Algérie, Natixis
Coficiné, Média Consulting
& Investment, CACEIS, Partecis,
Algiers Business Centers, Albiant-IT
Natixis, Director: Natixis Altaïr IT
Shared Services, SICOVAM Holding
2010
Directors: Natixis Paiements,
Natixis Financement, Compagnie
Européenne de Garanties et
Cautions, Natixis Interépargne,
Natixis Lease, Natixis Factor, Natixis
Consumer Finance, Novacrédit
Director: CACEIS, Partecis Algiers
Business Centers, Natixis Coficiné
Média Consulting & Investment
*
listed company.
**
non-group company.
***
60
2009
Directors: Novacrédit
Director: CACEIS, Partecis, Natixis
Assurances
Daniel KARYOTIS
Mr. Karyotis is a graduate of the Institut d’Études Politiques and the Centre de perfectionnement à l’analyse financière, with an advanced degree in financial and
economic analysis. He is also a member of the Société française des analystes financiers (SFAF – French Society of Financial Analysts). After beginning his
career in the financial markets with Société Générale, he joined Standard & Poor’s where he covered the banking sector. He then joined Caisse d’Epargne
Champagne-Ardenne (CECA), where he held various management positions from 1992 to 1997. He was Chief Executive Officer of Caisse d’Epargne du Pasde-Calais, as well as a member of its Management Board, from 1998 to 2001. In January 2002, he was appointed Chairman of the Management Board of
CECA. At Groupe Caisse d’Epargne, he was appointed Director and Vice-Chairman of La Compagnie 1818, as well as Director of Banque Palatine and GCE
Immobilier. He was appointed Chairman of the Banque Palatine Management Board in February 2007.
At its November 21, 2012, meeting, BPCE’s Supervisory Board appointed Daniel Karyotis Chief Financial Officer*** and member of the BPCE Management
Board in charge of Finance, Risks and Operations, effective December 1, 2012.
Member of the Management Board of BPCE, Chief Executive Officer – Finance, Risks and Operations
Deputy Chief Executive Officer: CE Holding Promotion
Member of the Board of Directors: Nexity*
Permanent Representative of BPCE, Director: Natixis*, Crédit Foncier, CE Holding Promotion
2
2
2
2
Director: Coface SA (until 02/05/2013)
2012
Board of BPCE, Chief Executive
Officer – Finance, Risks and
Operations
Director: Coface SA
BPCE, Director: Crédit Foncier
2011
Board of Banque Palatine
Board: Palatine Asset Management
Director: Coface, Acxior Corporate
Finance
Banque Palatine, Member of the
Supervisory Board: GCE Capital
Banque Palatine, Director:
OCBF**, Palatine Etoile 9
2010
Directors: Eurosic*
Director: Coface
OCBF**
2009
Chairman: Trade Exploitation
Directors: Eurosic*
Director: Coface, Natixis Epargne
Financière, Natixis Epargne
Financière Services
OCBF**
2
2
2
*
listed company.
**
non-group company.
***
2
61
2
2
Anne MERCIER-GALLAY
Anne Mercier-Gallay is a graduate of the Institut d’Études Politiques in Paris and the Institut d’Administration des Entreprises in Paris and holds a postgraduate
degree in Corporate Management and a degree in Law. She joined the Crédit Mutuel-CIC group in 1987, where she was responsible for occupation and skills
forecasting, before joining the HSBC Crédit Commercial de France group as Head of Human Resources in 1999. In 2001, she joined Groupe Caisse d’Epargne
as Head of Senior Management Recruitment and Development, before moving to SNCF in 2005 as Head of Senior Executives and the group’s corporate
university. In January 2008, Anne Mercier-Gallay became Head of Human Resources, Communication and Sustainable Development at Monoprix, as well as a
member of its Executive Committee.
On September 19, 2011, she was appointed Chief Executive Officer***, member of the Management Board in charge of Human Resources and Group Internal
Communications
At its November 21, 2012, meeting, the Supervisory Board of BPCE renewed her term and appointed her Chief Executive Officer*** and member of BPCE
Management Board in charge of Group Human Resources and Internal Communication.
Member of the Management Board of BPCE – Group Human Resources and Internal Communication
Director: Crédit Foncier, Caisse Générale de Prévoyance (CGP)
Permanent Representative of BPCE, Director: Natixis Interépargne
2012
Board of BPCE – Group Human
Resources and Internal
Communication
Director: Crédit Foncier
BPCE, Director: Natixis
Interépargne
2011
Board of BPCE – Group Human
Resources
BPCE, Director: Natixis
Interépargne
2010
Chairman: Centre de Formation
Cézanne** (Groupe Monoprix)
*
listed company.
**
non-group company.
***
62
2009
Chairman: Centre de Formation
Cézanne** (Groupe Monoprix)
Laurent MIGNON
Born December 28, 1963
Laurent Mignon has been CEO of Natixis since May 14, 2009.
A graduate of the HEC (grande école for management and business studies) and of the Standford Executive Program, Laurent Mignon worked in several
divisions of Banque Indosuez over more than ten years, including positions on the trading floor and in investment banking. In 1996, he joined Schroeders in
London before moving to AGF in 1997 as Chief Financial Officer, where he was appointed a member of the Executive Committee in 1998. In 2002 he was
successively appointed Head of Investment, Banque AGF, AGF Asset Management and AGF Immobilier, and in 2003 he was given responsibility for the Life
Insurance and Financial Services division and for Credit Insurance. Between September 2007 and May 2009, he was managing partner of Oddo et Cie
alongside Philippe Oddo.
2
2
2
Member of the Management Board of BPCE
Chief Executive Officer of Natixis*
Chairman of the Board of Directors: Natixis Global Asset Management, Coface SA (Formerly SAS Coface Holding)
Director: Arkema*/**, Lazard Ltd*/**
Permanent Representative of Natixis, Non-Voting Director as of right on the Supervisory Board of BPCE (until July 11, 2013)
Director: Sequana*/** (until 2013)
2
2012
Natixis, Non-Voting Director as
of right on the Supervisory Board
of BPCE
Chief Executive Officer
of Natixis*
Directors: Natixis Global Asset
Management
Chairman: SAS Coface Holding
Director: Sequana*/**, Arkema*/**,
Lazard Ltd*/**
2011
of BPCE
of Natixis*
Management
Lazard Ltd*/**
Natixis, Director: Coface
2010
of BPCE
of Natixis*
Management
Lazard Ltd*/**
Natixis, Director: Coface
2009
of BPCE
of Natixis*
Management, Sequana*/**,
Arkema*/**, Coface, Lazard Ltd*/**
2
2
2
2
*
listed company.
**
non-group company.
63
2
2
Role and operating rules of governing bodies
2.3 Role and operating rules of governing bodies
2.3.1
Supervisory Board
DUTIES AND POWERS
The Supervisory Board performs the duties attributed to it by law. In this respect,
at all times of year, the Supervisory Board performs the checks and controls
it deems appropriate, and may have sent to it any documents it regards as
expedient in fulfilling its mission.
• decide to move the registered office within the same département or to an
adjacent département, subject to that decision being ratified at the next
Ordinary General Shareholders’ Meeting.
Decisions subject to a simple majority vote:
The Supervisory Board:
• approve the policy and strategic guidelines of Groupe BPCE and each of the
networks;
• receives a report from the Management Board on the company’s business
activities once per quarter;
• authorize acquisitions and sales of equity interests in the networks for an
amount greater than €100 million;
• checks and controls the parent company and consolidated financial
statements prepared by the same Management Board and presented by that
Board within three months from the end of the accounting period, along
with a written report on the company’s and its subsidiaries’ position and their
activity during the past year;
• authorize any proposed transaction(1) by BPCE that is part of the BPCE
strategic plan and is carried out by BPCE or its subsidiaries for an amount
greater than €100 million;
• authorize any proposed transaction(2) by BPCE that is not part of the BPCE
strategic plan, regardless of the transaction amount;
• presents its comments on the Management Board’s report and the year’s
financial statements at the Ordinary General Shareholders’ Meeting.
• approve the company’s annual budget and determine the rules for calculating
contributions due from affiliated institutions;
In accordance with the law, the following transactions cannot be performed by
the Management Board without prior authorization from the Supervisory Board,
acting by simple majority of its present or represented members:
• approve disposals of securities;
• authorize regulated agreements pursuant to the French Commercial Code;
• disposal of buildings by type and total or partial disposals of equity interests
(it being specified that the Board set the annual amount for disposals
of buildings by type at €100 million and the amount for total or partial
disposals of equity interests at €100 million; the Board’s authorization for
these transactions is not required if the previous limits were not exceeded);
• the provision of company property as collateral.
In addition to these powers, the Supervisory Board has powers to do the
following:
Own powers:
• appoint the Chairman of the Management Board;
• appoint the other members of the Management Board, based on proposals
by the Chairman of the Management Board;
• set the method and amount of remuneration paid to each Management
Board member;
• grant the status of Chief Executive Officer to one or more members of the
Management Board on the proposal of the Chairman of the Management
Board, and withdraw that status from such members;
• propose the appointment of the Statutory Auditors at the Annual General
Shareholders’ Meeting;
• approve Groupe BPCE’s internal solidarity mechanisms;
• approve the national and international agreements involving each of the
networks and Groupe BPCE as a whole;
• approve the general criteria that must be met by the directors of Groupe
BPCE’s affiliated institutions, including age limits, which cannot exceed:
- 65 for Chief Executive Officers or members of the Management Board, or
- 70 for Chairmen of Boards of Directors and Steering and Supervisory
Boards, bearing in mind that no one may be appointed Chairman of a
Board of Directors or a Steering and Supervisory Board if he cannot, on
the date of first appointment, complete at least half the term as Chairman
before reaching this age limit; however, the age limit remains 68 for offices
currently held on the date of the Supervisory Board meeting that approved
the age limit set in this paragraph;
• authorize the directors of affiliated institutions or remove authorizations from
directors of affiliated institutions and carry out other dismissals as set out in
Article L. 512-108 of the French Monetary and Financial Code;
• approve the creation or elimination of a Banque Populaire bank or Caisse
d’Epargne, including through the merger of two or more Banque Populaire
banks or two or more Caisses d’Epargne;
• examine and approve the main risk limits relating to Groupe BPCE and each
network, as defined by the Management Board; perform regular examinations
and checks on Groupe BPCE’s risks, developments in said risks and the systems
(1)
Refers to any proposed investment or divestment, any proposed contribution, merger, spin-off, or restructuring, any joint venture or any proposed partnership by the company or its subsidiaries, and the negotiation
or signing of any national or international agreements on behalf of the Caisses d’Epargne, the Banque Populaire banks and related entities and, in any of these cases, any banking transactions and transactions
connected thereto.
(2)
Same as above.
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and procedures used to control them; examine the activity and results of
internal control, and the main conclusions of audits performed by the Group’s
Inspection générale division;
• appoint BPCE’s representatives to the Natixis Board of Directors; of these
representatives, those from the Caisses d’Epargne and those from the Banque
Populaire banks will be of identical number and will hold at least the majority
of seats together;
• specifying the duties of the various committees, for which they serve as the
internal rules;
• specifying the obligation of professional secrecy and the obligation of
confidentiality binding the members of the Supervisory Board and its
committees;
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2
• defining penalties applicable in the event that members of the Supervisory
Board or of a committee fail to comply with any of their obligations.
• adopt the Board’s internal rules as set out in Chapters 2.2 to 2.5.
Decisions subject to a qualified majority vote
(12 of 18 members):
• any decision to subscribe for or acquire (or to enter into any agreement
binding the company for the purpose of subscribing for or acquiring), by any
means (including by transfer of assets to the company), securities or rights
of any type whatsoever, be they issued by a company or any other entity,
and representing an investment or asset transfer value, directly or indirectly,
of greater than €1 billion;
• any decision to transfer (or to enter into any agreement binding the company
for the purpose of a transfer), by any means, securities or rights of any type
whatsoever held by the company and representing for the company a
divestment of greater than €1 billion;
• any decision by the company to issue capital securities or securities giving
immediate or eventual access to the company’s capital, with the shareholders’
preemptive rights waived;
• any decision to propose to the Annual General Shareholders’ Meeting
any changes to the Articles of Association with regard to the company that
change the terms of governance;
• any merger, demerger, spin-off, or related decision involving the company;
• any decision to appoint the Chairman or remove the Chairman of the
company’s Management Board from office;
• any decision relating to the listing of the shares of the company or one of its
main direct or indirect subsidiaries for trading on a regulated market.
SUPERVISORY BOARD’S INTERNAL RULES
The internal rules of the Supervisory Board, adopted at the Board’s meeting
on 31 July 2009, form the Supervisory Board’s governance charter, which sets
its internal operating procedures, specifically intending to ensure efficient
interaction and the smooth running of governing bodies.
The internal rules enhance the work done by Supervisory Board members, by
promoting the application of corporate governance principles and best practices
in the interests of ethics and efficiency.
Their purpose is also to supplement the Articles of Association, mainly by:
• specifying the procedures for convening meetings of the Supervisory Board
and Supervisory Board committees, as well as the rules under which they
are to deliberate;
• recalling the cases requiring the Board’s prior approval, as specified by law,
which appear in Article 27.1 of the company’s Articles of Association;
• recalling the decisions requiring the Board’s prior approval for significant
transactions (“Important Decisions” and “Key Decisions”), which appear in
Articles 27.3 and 27.4 of the company’s Articles of Association;
• recalling the Board’s reporting rules;
ACTIVITIES OF THE SUPERVISORY BOARD
In accordance with Article 25.1 of the Articles of Association, the Supervisory
Board meets as often as the company’s interests, laws and regulations require
and at least once every quarter in order to examine the Management Board’s
quarterly report. Board meetings may be convened by its Chairman, its ViceChairman or by one half of its members, and take place in the registered offices
or in any other place stated in the notice of meeting.
In accordance with Article L. 823-17 of the French Commercial Code, the
Statutory Auditors have been invited to Board meetings examining full-year
and half-year financial statements.
The BPCE Supervisory Board met eight times between January 1 and
December 31, 2013. In 2013, the average attendance rate for Supervisory
Board members was 90.27%. In addition to issues routinely discussed (quarterly
Management Board reports, regulated agreements, approvals of company
directors and various items presented for information purposes) the main issues
dealt with at Supervisory Board Meetings were as follows:
2
2
2
Governance – Internal operating procedures
of the Board
• approval of the Chairman of the Supervisory Board’s report;
• determination of Management Board members’ pay (fixed and variable
components);
• monitoring of remuneration policy guidelines for persons belonging to
the “regulated population” within BPCE as well as Groupe BPCE’s credit
institutions, pursuant to Article 38-4 of regulation 97-02 of the French
Banking and Financial Regulation Committee (CRBF);
• acknowledgment of Gils Berrous’ resignation as Non-Voting Director on the
Supervisory Board and appointment of Yves Gevin, Chief Executive Officer of
Banque Populaire Rives de Paris;
• acknowledgment of the resignation of Bernard Comolet, Chairman of the
Management Board of Caisse d’Epargne Ile-de-France, as member of the
Supervisory Board and appointment of Alain Denizot, Chairman of the
Management Board of Caisse d’Epargne Nord France Europe, as a member
of the Supervisory Board;
• acknowledgment of the resignation of Alain Denizot, Chairman of the
Management Board of Caisse d’Epargne Nord France Europe, as Non-Voting
Director on the Supervisory Board and appointment of Alain Lacroix, Chairman
of the Management Board of Caisse d’Epargne Provence-Alpes-Corse, as a
Non-Voting Director on the Supervisory Board;
• monitoring of actions carried out as part of the Board’s evaluation by an
outside firm;
• monitoring of the policy on employment and wage equity.
2
2
2
Strategic operations
• adoption of the new “Growing Differently” 2014-2017 strategic plan, prepared
by the BPCE Management Board in collaboration with the Group’s institutions.
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2
2
Finance
• presentation of BPCE’s annual financial statements for the year ended
December 31, 2012;
• presentation of BPCE’s 2013 quarterly and first half-year financial statements;
• approval of the 2014 budget;
• review of impacts relating to Basel III;
• review and monitoring of European stress tests;
• review and monitoring of Groupe BPCE’s solvency and liquidity ratios;
• approval of Caisses d’Epargne and the Banque Populaire banks’ buyback and
cancellation of cooperative investment certificates held by Natixis within
these institutions;
• authorization for BPCE to subscribe for the capital increase of BPCE SFH for
up to €200 million;
• approval of project to consolidate Groupe BPCE’s insurance activities within
Natixis.
Audit – Compliance – Risks
• risk monitoring: monitoring of consolidated risks, review of the European
situation’s impact on the Group, forward-looking approach to risk, monitoring
of the Group’s market and credit limits;
• approval of the Chairman of the Supervisory Board’s report on internal control;
• review of the reports on the operation of internal control prepared pursuant to
Article 42 of CRBF regulation 97-02, and on the measurement and monitoring
of risks, prepared pursuant to Article 43 of CRBF regulation 97-02: work of
the Inspection générale division, annual compliance report, annual report of
the investment services compliance officer (RCSI), report of the annual check
control program, report on credit risks, update on accounting risks;
• approval of amendment to the Memorandum of Understanding concerning
Groupe BPCE’s solvency contribution mechanism, entered into by the Banque
Populaire banks, the Caisses d’Epargne and BPCE;
• management of the independence and fees of Statutory Auditors;
• adoption of the Group’s Recovery and Restructuring Plan.
• Depending on the type of matters submitted to the Supervisory Board,
discussions were held and decisions made on the basis of reports presented
by the relevant Board committees.
• monitoring of Autorité de contrôle prudentiel et de résolution (ACPR – the
French Prudential Supervisory Authority) reports and enquiries;
2.3.2
Specialized committees
The Supervisory Board has instituted three specialized committees in charge
of preparing its decisions and making recommendations to it. Their duties,
resources and make-up are set out in the Supervisory Board’s internal rules.
As far as possible, and depending on applicable circumstances, any discussion
by the Supervisory Board that falls within the remit of a committee created by it
is preceded by the referral of the matter to said committee, and a decision may
only be made after that committee has issued its recommendations or motions.
The purpose of such consultation with committees is not to delegate to them
powers that are allocated to the Supervisory Board by law or the Articles of
Association, nor is it to reduce or limit the Management Board’s powers.
Whenever it is necessary to consult with a committee, the Chairman of that
committee receives from the Management Board, within a reasonable time
frame (given the circumstances), all of the items and documents that enable the
committee to carry out its work and formulate its opinions, recommendations
and proposals relating to the Supervisory Board’s planned discussion.
Committee members are chosen by the Supervisory Board based on a proposal
made by the Chairman of the Board from among its members. They may be
dismissed by the Supervisory Board.
The term of office of committee members coincides with their term of office
as Supervisory Board members. The renewal of both terms of office may take
place concomitantly.
Each committee consists of at least three and at most seven members.
The Supervisory Board may also appoint a person from outside Groupe BPCE or
a non-voting director to any of these committees.
On each of the committees, a Chairman is in charge of organizing the work. The
Chairman of each committee is appointed by the Supervisory Board.
AUDIT AND RISK COMMITTEE
Duties
The Audit and Risk Committee assists the Supervisory Board in its role of
verifying and reviewing the financial statements and the Management Board’s
report on the company’s business.
In this capacity, it monitors the quality of information provided to shareholders,
and more generally fulfills duties set out in the French Commercial Code, as
amended by ministerial order 2008-1278 of December 8, 2008 and CRBF
regulation 97-02 of February 21, 1997, as amended, relating to the internal
control of credit institutions and investment companies.
The Audit and Risk Committee monitors:
The process of preparing financial information
In this respect, its duties include:
• reviewing quarterly, half-year and annual consolidated financial statements
of the company and Groupe BPCE, as well as the parent company financial
statements, which are presented to it by the Management Board prior to their
review by the Supervisory Board;
• verifying that the information provided is clear;
• reviewing the scope of consolidated companies and supporting evidence
thereof;
• assessing the appropriateness of accounting methods adopted for preparing
the company’s individual financial statements and the consolidated financial
statements of the company and Groupe BPCE;
• reviewing the draft of the Supervisory Board Chairman’s report on internal
control and risk management procedures as regards preparing and processing
accounting and financial information;
• reviewing the prudential and accounting impacts of any significant acquisition
by the company or Groupe BPCE.
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2
The efficacy of internal control and risk management systems.
Activities
The Audit and Risk Committee met seven times between January 1 and
December 31, 2013. The average attendance rate at these meetings was 80.95%.
2
• assessing the quality of the internal controls performed by the company and
Groupe BPCE, including the consistency and completeness of systems for
measuring risk monitoring and management; proposing additional action in
this area as required; examining annual reports relating to the measurement
and supervision of risk, and the conditions in which internal controls are
performed within Groupe BPCE;
• reviewing the total risk exposure of the company’s and Groupe BPCE’s
activities, based on relevant reports;
• formulating opinions on Groupe BPCE’s broad policies in terms of risk and
compliance, specifically on the risk limits reflecting risk tolerance as presented
to the Board;
• proposing to the Board the materiality criteria and thresholds mentioned in
Article 17 ter of CRBF regulation 97-02, which are used to identify incidents
that must be brought to the Board’s attention;
• ensuring that the remuneration policy is in line with risk management targets;
• ensuring that Groupe BPCE’s Inspection générale division is independent, and
authorized to receive from Groupe BPCE’s institutions, or to itself access, all
items, systems, or information required for the successful performance of
its duties;
• reviewing the annual schedule of the Group’s Inspection générale division;
• ensuring that the findings of audits performed by the ACPR and the Group’s
Inspection générale division, whose summaries regarding the company and
Groupe BPCE’s entities are disclosed to it, are addressed;
• reviewing the follow-up letters sent by the ACPR and issuing an opinion on
the draft replies to these letters.
The statutory audit of the annual and consolidated financial
statements, as well as the Statutory Auditors’ independence
• ensuring that the “Framework for Statutory Auditor Assignments at Groupe
BPCE”, approved by BPCE’s Supervisory Board on June 27, 2012 and which
defines the rules and principles aimed at guaranteeing Statutory Auditor
independence in Groupe BPCE companies, is respected and updated;
• issuing recommendations on the Statutory Auditor selection procedure, and
on the Statutory Auditors proposed for appointment at the Annual General
Shareholders’ Meeting;
• ensuring that the Statutory Auditors are independent, specifically by reviewing
fees that are paid to them by Group companies as well as to any network to
which they might belong and, by monitoring, on a quarterly basis, any services
that do not fall within the strict framework of the statutory audit, when the
cumulative amount paid to a single Statutory Auditor’s network for service to
a single Group company reaches or exceeds €50,000 during the fiscal year;
• reviewing the Statutory Auditors’ work schedule, the results of their audits
and recommendations, and any follow-up action.
The main issues that it addressed were as follows:
Finance
• presentation of BPCE’s annual financial statements for the year ended
December 31, 2012 and review of 2014 Budget;
• presentation of BPCE’s 2013 quarterly and first half-year financial statements;
• monitoring of European stress tests;
• review and monitoring of Groupe BPCE’s solvency and liquidity ratios;
• monitoring of management of the intra-group capital adequacy ratio
requirements;
• review of the impacts of Basel III;
• consideration of the terms for BPCE to subscribe for the capital increase of
BPCE SFH for up to €200 million;
• review and monitoring of the buyback and cancellation of cooperative
investment certificates held by Natixis within the Caisses d’Epargne and
Banque Populaire banks;
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2
• review and monitoring of the plan to consolidate Groupe BPCE’s insurance
activities within Natixis.
Audit – Compliance – Risks:
• monitoring of ACPR reports and enquiries;
• review and monitoring of the Chairman of the Supervisory Board’s report on
internal control;
• review of the reports on the operation of internal control prepared pursuant to
Article 42 of CRBF regulation 97-02, and on the measurement and monitoring
of risks, prepared pursuant to Article 43 of CRBF regulation 97-02: work of
the Inspection générale division, annual compliance report, annual report of
the investment services compliance officer (RCSI), report of the annual check
control program, report on credit risks, update on accounting risks;
• updates on the work of the Compliance and Security division;
• updates on the work of the Group’s Inspection générale division;
• updates on the work of the Group Risk Management division, particularly the
review of Group risk supervision mechanisms (monitoring of consolidated
risks, review of the European situation’s impact on the Group, forward-looking
approach to risk, monitoring of the Group’s market and credit limits);
• monitoring of the Group and BPCE business continuity plan;
• monitoring of the work performed by the Statutory Auditors, and review of
their independence and fees;
• regular reporting on assets managed in run-off of Natixis and “Triton”;
• regular reporting on Crédit Foncier’s business;
2
2
2
• review of the threshold criteria on asset-liability management risks (Art. 17 ter
of CRBF regulation 97-02);
• review of Statutory Auditor’s appointment;
• review of the Statutory Auditors’ fees;
2
• update on the anti-money laundering system;
• review of the Group’s Recovery and Restructuring Plan.
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2
2
APPOINTMENTS AND REMUNERATION COMMITTEE
Its duties also include:
Duties
• making proposals to the Board for the appointment of the Chairman of the
company’s Management Board;
The Appointments and Remuneration Committee assists the Supervisory Board
on the following matters:
Remuneration
The Appointments and Remuneration Committee is in charge of formulating
proposals to the Supervisory Board concerning:
• the remuneration levels and methods applied to members of the company’s
Management Board, including benefits in kind, provident insurance and
retirement plans;
• the allocation of attendance fees among members of the Supervisory Board
and committees, and the total amount of attendance fees submitted for
approval at the company’s Annual General Shareholders’ Meeting.
Furthermore, the Appointments and Remuneration Committee:
• gives its opinion to the Board on the policy for granting stock options or similar
securities, and on the list of recipients;
• is informed of Groupe BPCE’s remuneration policy, particularly the policy
regarding the main company directors of affiliated institutions;
• coordinating the Supervisory Board’s evaluation process, which is performed
either by itself or under any other appropriate internal or external procedure.
In this respect, it proposes any necessary updates to the company’s corporate
governance (the Board’s internal rules). An external evaluation procedure was
conducted in 2011;
• examining the draft of the Chairman’s corporate governance report.
Activities
The Appointments and Remuneration Committee met four times between
January 1 and December 31, 2013. The average attendance rate at these
meetings was 95.83%.
The main issues addressed by the Appointments and Remuneration Committee
in 2013 were as follows:
• levels and terms of fixed and variable pay for Management Board members
(review of solvency and liquidity criteria, definition of terms for deferred
portions, definition of qualitative and qualitative criteria);
• reviews and issues opinions on the insurance policies taken out by the
company covering the liability of company directors;
• remuneration policy for persons belonging to the “regulated population”
within BPCE and Groupe BPCE’s credit institutions, pursuant to Article 38-4
of CRBF regulation 97-02;
• gives an opinion to the Board about the section of the annual report
addressing these issues.
• review of changes to fixed pay for the Management Board and of the variable
pay system for 2014;
Selection
The committee makes proposals and recommendations to the Supervisory Board
on:
• the choice of members of the Supervisory Board and non-voting directors,
who come from outside Groupe BPCE, it being stipulated that Supervisory
Board members from inside Groupe BPCE are proposed to the Board in keeping
with the company’s Articles of Association and Article L. 512-106 of the
French Monetary and Financial Code.
2.3.3
• review and monitoring of the Chairman of the Supervisory Board’s report on
internal control;
• monitoring of actions taken following the Board evaluation process by an
outside firm;
• update on remuneration of the Chairman and the Vice-Chairman of the
Supervisory Board.
Management Board
In accordance with Article 18 of BPCE’s Articles of Association, the Management
Board has the broadest powers to act under all circumstances in the company’s
name, within the corporate purpose and subject to decisions requiring prior
authorization, in accordance with the law or these Articles of Association, of
the Supervisory Board and Annual General Shareholders’ Meetings.
In particular, the Management Board shall:
• perform duties as the company’s central institution as specified by law, and,
if applicable, after receiving prior authorization from the Supervisory Board,
as specified by these Articles of Association;
• exercise all banking, financial, administrative and technical powers;
• approve the appointment of executive management within the company’s
main direct and indirect subsidiaries;
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• review of the report on credit institutions’ internal control of 2012 policy
and practices related to remuneration of members of the executive body and
persons whose professional activities have a material impact on the corporate
risk profile, pursuant to Article 43-1 of CRBF regulation 97-02;
• appoint the person or persons tasked with provisional management or
control functions in relation to an affiliated institution in the event that the
Supervisory Board decides to dismiss persons mentioned in Article L. 512-108
of the French Monetary and Financial Code;
• decide, in an emergency, to suspend one or more company directors
responsible for an affiliated credit institution as a protective measure;
• use the Group’s internal solidarity mechanisms, including by calling on the
guarantee and solidarity funds of the Networks and the Group;
• approve the Articles of Association of affiliated institutions and local savings
companies and any changes thereto;
• determine the rules relating to the remuneration paid to company directors
responsible for affiliated credit institutions including any contingent
remuneration and benefits granted to such individuals on or after termination
of employment;
• issue general internal directives to affiliated institutions, to ensure the
purposes defined in Article L. 511-31 of the French Monetary and Financial
Code.
The Management Board is required to comply with the limitations on powers
pursuant to Articles 27.1, 27.2, 27.3 and 27.4 of BPCE’s Articles of Association,
which set out the duties of the Supervisory Board.
The Chairman of the Management Board represents the company in its dealings
with third parties.
On the recommendation of the Chairman of the Management Board, the
Supervisory Board may grant the same power of representation to one or more
Management Board members, who shall then bear the title of Chief Executive
Officer. The Chairman of the Management Board and the Chief Executive Officer
2.3.4
or Officers, if any, are authorized to appoint any special representative and to
deputize them in respect of part of their powers.
With the authorization of the Supervisory Board, the members of
the Management Board may, on the recommendation of the Chairman of
the Management Board, divide management tasks between them. However,
in no event may this division have the effect of removing the Management
Board’s capacity as a collegial management body.
Once every three months, the Management Board shall present a written report
to the Supervisory Board on the company’s performance. Within three months
of the end of each accounting period, the Management Board shall complete
the parent company financial statements and present them to the Supervisory
Board for verification and control. The Board will also submit the consolidated
financial statements within this same period.
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2
Annual General Shareholders’ Meetings
Details concerning the participation of shareholders at the Annual General
Shareholders’ Meeting (Article 30 of BPCE’s Articles of Association):
1° Annual General Shareholders’ meetings are called and convened in
accordance with regulations in force.
Annual General Shareholders’ Meetings take place in the registered offices
or in any other place specified in the notice of the meeting.
The Ordinary General Shareholders’ Meeting called to approve the annual
financial statements of the previous fiscal year convenes within five months
of the end of the fiscal year.
2° Only the Category A shareholders, the Category B shareholders and the
owners of ordinary shares are entitled to take part in the Annual General
Shareholders’ Meetings.
Their participation is subject to the registration in the name of the
Shareholder by the third business day preceding the Annual General
Shareholders’ Meeting at twelve midnight, Paris time, in the registered share
accounts maintained by the company.
3° The shareholder, if he cannot personally attend the Annual General
Shareholders’ Meeting, may select one of the following three options:
- to grant a proxy to another shareholder or, if the shareholder is a natural
person, to his spouse; or
- to vote by absentee ballot; or
- to send a power of attorney to the company without designating a
representative.
4° Annual General Shareholders’ meetings are chaired by the Chairman of the
Supervisory Board or, in his absence, by the Vice-Chairman. In the absence
of both, Annual General Shareholders’ Meetings are chaired by a member of
the Supervisory Board specially appointed for this purpose by the Supervisory
Board. Failing this, the Annual General Shareholders’ Meeting itself elects
its Chairman.
2
The Annual General Shareholders’ Meeting appoints its officers.
The duties of scrutineer are performed by two consenting shareholders
representing, themselves or as proxies, the greatest number of Shares. The
officers of the Annual General Shareholders’ Meeting appoint a Secretary
who may be selected outside the shareholders’ ranks.
A register of attendance is kept in accordance with regulations in force.
5° The Ordinary General Shareholders’ Meeting convened on first notice
may validly transact business if the shareholders present or represented
own at least one-fifth of shares with voting rights. The Ordinary General
Shareholders’ Meeting convened on second notice may validly transact
business regardless of the number of shareholders present or represented.
Resolutions of the Ordinary General Shareholders’ Meeting are carried by
majority vote of the shareholders present or represented, including the
shareholders who have voted by absentee ballot.
6° The Extraordinary Shareholders’ Meeting convened on first notice may validly
transact business only if the shareholders present or represented own at least
one-fourth of shares with voting rights.
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2
The Extraordinary Shareholders’ Meeting, convened on second notice, may
validly transact business only if the shareholders present or represented own
at least one-fifth of shares with voting rights.
The resolutions of the Extraordinary Shareholders’ Meeting are carried by a
two-thirds majority of the votes of the shareholders present or represented,
including the shareholders who have voted by absentee ballot.
7° Copies or extracts of the minutes of the Annual General Shareholders’
Meeting are validly certified by the Chairman of the Supervisory Board, by
the Vice Chairman, a member of the Management Board, or by the Secretary
of the Annual General Shareholders’ Meeting.
8° Ordinary and Extraordinary Shareholders’ Meetings exercise their respective
powers in accordance with regulations in force.
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2
2
2
2
Rules and principles governing the determination of remuneration and benefits
2.4 Rules and principles governing the
determination of remuneration and benefits
2.4.1
Remuneration policy (1)
MEMBERS OF THE SUPERVISORY BOARD
At the 31 July 2009 Combined General Meeting, the total amount of attendance
fees payable by BPCE was set at €600,000. This remuneration is detailed in
section 2.4.2 “Remuneration, benefits in kind, loans, guarantees and attendance
fees received by BPCE company directors.”
Aside from the Chairman, who receives annual fixed pay, Supervisory Board
members are paid via attendance fees.
Remuneration of Yves Toublanc, Chairman
of the Supervisory Board until December 31, 2013
• annual fixed pay: €400,000;
• attendance fees: €0.
Remuneration of Stève Gentili, Chairman
of the Supervisory Board as of January 1, 2014
• annual fixed pay: €120,000(2);
• attendance fees: €0.
Attendance fees paid to Supervisory Board members
Steve Gentili, Vice-Chairman of the Supervisory Board until December 31, 2013:
• fixed annual attendance fees: €80,000;
• attendance fees paid for each meeting attended, up to a limit of nine meetings
during the fiscal year: €1,500.
Yves Toublanc, Vice-Chairman of the Supervisory Board as of January 1, 2014:
Other Supervisory Board members:
Additional Remuneration of Supervisory Board
members
Marwan Lahoud, Chairman of the Audit and Risk Committee:
• attendance fees paid for each meeting attended, up to a limit of seven
meetings during the fiscal year: €500.
Other members of the Audit and Risk Committee:
Laurence Danon, Chairman of the Appointments and Remuneration Committee:
Other members of the Appointments and Remuneration Committee:
Remuneration of Non-Voting Directors
Pursuant to Article 28.3 of the Articles of Association, the Supervisory Board
has decided to compensate Non-Voting Directors by making a deduction from
the attendance fees allocated to Supervisory Board members at the Annual
General Shareholders’ Meeting.
Non-Voting Directors receive:
MEMBERS OF THE MANAGEMENT BOARD
In accordance with Article 19 of BPCE’s Articles of Association and on the
recommendation of the Appointments and Remuneration Committee, the
Supervisory Board approved the remuneration of the Chairman and Members
of the Management Board, as well as the criteria used to determine the amount
of variable pay granted to Management Board members in respect of 2013, at
its February 17, 2013 meeting.
(1)
(2)
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The figures presented in this chapter are gross amounts.
Stève Gentili sought to reduce the remuneration of the Chairman of the Supervisory Board from €400,000 to €120,000.
Remuneration paid to the Chairman and Members of the Management Board
was as follows:
François Pérol:
• fixed pay: €550,000;
• variable pay: target at 150%, with a maximum of 200%;
• annual housing allowance: €60,000 (for information purposes: François Pérol
has waived this allowance).
Anne Mercier-Gallay:
• fixed pay: €500,000;
• variable pay: target at 80%, with a maximum of 100%.
Daniel Karyotis:
• fixed pay: €500,000 (this fixed portion includes a housing allowance);
Jean-Yves Forel:
• fixed pay: €500,000;
Laurent Mignon:
Laurent Mignon does not receive remuneration for his duties as a member of
the BPCE Management Board. Remuneration that he receives is for his duties
as Chief Executive Officer of Natixis.
The following criteria were used for determining variable pay:
• the criterion for triggering variable pay is to continuously keep the Group’s
Basel 2.5 Core Tier-1 ratio at 9% or higher in 2013. No variable portion is
paid if this criterion is not met;
• quantitative criteria account for 60% of variable pay. These quantitative
criteria are defined as follows:
With regard to the terms of payment for the variable pay in respect of 2010:
• deferred for a fraction representing 70%, in 2012, 2013 and 2014 (23.33%
each year), for François Pérol;
• the deferred portion, calculated after neutralizing the impact of the revaluation
of own debt, is indexed to the change in net income attributable to equity
holders of the parent, assessed as a rolling average over the last three calendar
years preceding the allocation year and the payment year, without taking into
account calendar years prior to 2010;
• the deferred portion shall not apply in the event of retirement or death, or in
special situations assessed by the Board (the variable portion would then be
paid at the same time as the event);
• payment of the deferred portion is contingent upon attaining a Group Return
on Equity (ROE) at least equal to 4% during the fiscal year before payment
falls due.
• deferred for a fraction representing 60%, in 2013, 2014 and 2015 (20% each
year), for François Pérol;
years preceding the allocation year and the payment year, without taking into
account calendar years prior to 2010;
falls due.
- the Group’s cost/income ratio, calculated with neutralization of the impact
of revaluation of own debt, accounts for 20% of variable pay. If the target
for this criterion as set by the Supervisory Board is reached, Management
Board members would be entitled to receive the entire 20%(1),
years preceding the allocation year and the payment year;
- the Group’s net banking income, calculated after neutralizing the impact of
the revaluation of own debt, accounts for 10% of variable pay. If the target
for this criterion as set by the Supervisory Board is reached, Management
Board members would be entitled to receive the entire 10%(1);
- human resources (manager succession, presence of women, innovation,
inter-network mobility),
- scarce resources (liquidity and solvency),
- governance (strategic plan and Groupe BPCE governance).
each year), for Anne Mercier-Gallay;
falls due.
2
2
2
2
With regard to the terms of payment that will be applied to the variable pay
in respect of 2013:
each year), for Daniel Karyotis, Jean-Yves Forel and Anne Mercier-Gallay;
(1)
2
- commercial development (monitored through market share and innovation),
2
- net income attributable to equity holders of the parent, calculated after
neutralizing the impact of the revaluation of own debt, accounts for 30%
of variable pay. If the target for this criterion as set by the Supervisory Board
is reached, Management Board members would be entitled to receive the
entire 30%(1),
• qualitative criteria account for 40% of variable pay. These criteria are
comprised of the following duties:
2
The Supervisory Board has specified the precise levels expected for these quantitative objectives. They have not been made public for confidentiality reasons.
71
2
2
2
years preceding the allocation year and the payment year;
falls due.
The terms of payment for the variable pay in respect of 2013 were approved by
the Supervisory Board on February 19, 2014.
In accordance with the new Article L. 511-41-1 B of the French Monetary
and Financial Code, the BPCE Annual General Shareholders’ Meeting will be
2.4.2
consulted in 2014 on the budget for all types of remuneration paid during
the previous fiscal year to members of the Management Board and to other
BPCE employees whose professional activities have a material impact on the
company’s or the Group’s risk profile.
In accordance with the AFEP-MEDEF recommendations amended in June 2013,
the BPCE Annual General Shareholders’ Meeting will be consulted in 2014 on
the components of remuneration due or granted for the fiscal year ended to
each Company Director.
In accordance with directive 2013/36 of June 26, 2013, the approval of the
BPCE Annual General Shareholders’ Meeting will be required in 2014 in order
to implement variable pay for the Chairman of the Management Board that
may, in 2014, exceed 100% of the fixed pay component.
Remuneration, benefits in kind, loans, guarantees
and attendance fees received by BPCE company directors
The figures shown below comply with the rules and guidelines for determining remuneration and benefits adopted by the BPCE Supervisory Board and detailed in
section 2.4.1, “Remuneration Policy”.
STATEMENT OF REMUNERATION, STOCK OPTIONS AND SHARES GRANTED TO EACH COMPANY DIRECTOR
FROM JANUARY 1 TO DECEMBER 31, 2013 (TABLE 1)
Total remuneration due in respect
of the period (fixed and variable)
(Table 2)
François Pérol
Daniel Karyotis
Total remuneration
paid in respect of the
period (fixed and
variable) (Table 2)
Valuation of
multi-year variable Value of stock options
remuneration paid
allocated during the
during the year(1)
year (Table 4)
Valuation of
performance shares
granted during the
year (Table 6)
2012
€1,117,825.00
€993,782.00
€0
€0
€0
2013
€1,446,286.00
€1,065,282.00
€0
€0
€0
2012
€81,770.00
€58,667.00
€0
€0
€0
2013
€934,618.00
€542,724.00
€0
€0
€0
2012
€64,770.00
€41,667.00
€0
€0
€0
Jean-Yves Forel
2013
€934,896.00
€526,002.00
€0
€0
€0
2012
€772,761.00
€573,797.00
€0
€0
€0
Anne Mercier-Gallay
2013
€931,997.00
€636,380.00
€0
€0
€0
Laurent Mignon
(from August 6, 2013)
2012
NA
NA
€0
€0
€0
2013(2)
€1,766,120.00
€1,759,599.00
€0
€0
€0
(1)
(2)
No multi-year variable pay or bonus share plan during the 2013 fiscal year.
Laurent Mignon does not receive remuneration for his duties as a member of the BPCE Management Board, but he does receive remuneration from Natixis, a company controlled by BPCE, within the meaning of
Article 233–16 of the French Commercial Code, for his duties as Chief Executive Officer of Natixis.
STATEMENT OF REMUNERATION OF BPCE COMPANY
DIRECTORS (TABLE 2)
Amounts due in respect of 2013(1): all remuneration granted on a pro rata
basis in respect of duties performed in 2013, regardless of the date of payment.
Amounts due in respect of 2012(1): all remuneration granted on a pro rata
basis in respect of duties performed in 2012, regardless of the date of payment.
Amounts paid in 2013(2): all remuneration actually paid and received in 2013
(due in 2010 and paid in 2013 + due in 2011 and paid in 2013 + due in 2012
and paid in 2013 + due in 2013 and paid in 2013) in respect of duties performed
during the period.
Amounts paid in 2012(2): all remuneration actually paid and received in 2012
(due in 2010 and paid in 2012 + due in 2011 and paid in 2012 + due in 2012
and paid in 2012) in respect of duties performed during the period.
72
➡
REMUNERATION STATEMENT: MR FRANÇOIS PÉROL
Fiscal year 2012
Amount due(1)
Base pay
Fiscal year 2013
Amount paid(2)
Amount due(1)
Amount paid(2)
-
-
-
-
€550,000.00
€550,000.00
€550,000.00
€550,000.00
€562,569.00(a)
€438,526.00(b)
€890,994.00(c)
€509,990.00(d)
Multi-year variable pay
€0
€0
€0
€0
Exceptional pay
€0
€0
€0
€0
€5,256.00
€5,256.00
€5,292.00
€5,292.00
€0
€0
€0
€0
-
-
-
-
€1,117,825.00
€993,782.00
€1,446,286.00
€1,065,282.00
Corporate Office
Variable pay
(f)
Benefits in kind (company car, housing(e) and other benefits)
Attendance fees
Other remuneration
TOTAL
(a)
(b)
(c)
(d)
(e)
(f)
➡
Variable remuneration in respect of 2012, of which €225,028 (40%) paid in 2013 and the balance deferred (60%) over three years in equal shares of €112,514. For 2014, the final amount paid will be
€102,950 (after application of the indexing factor).
Amount paid in 2012 for variable remuneration in respect of 2011 (€213,675) and for the deferred portion in respect of 2010 (€224,851).
Variable remuneration in respect of 2013, of which €356,398 (40%) paid in 2014 and the balance deferred (60%) over three years in equal shares of €178,199.
Amount paid in 2013 for variable remuneration in respect of 2012 (€225,028), for the deferred portion of variable remuneration in respect of 2011 (€92,746) and for the deferred portion of variable
remuneration in respect of 2010 (€192,217).
François Pérol has waived his annual housing allowance since 2010.
2
2
2
REMUNERATION STATEMENT: MR. DANIEL KARYOTIS
Member of the Management Board, Chief Executive Officer – Finance, Risks
and Operations
Base pay
Fiscal year 2012
(1)
Amount due
Fiscal year 2013
(2)
Amount due(1)
Amount paid
Amount paid(2)
-
-
-
-
€41,667.00
€41,667.00
€500,000.00(a)
€500,000.00(a)
€23,103.00(b)
€0
€431,997.00(c)
€23,103.00(d)
Multi-year variable pay(e)
€0
€0
€0
€0
Exceptional pay
€0
€0
€0
€0
Benefits in kind (company car, housing, and other benefits)
€0
€0
€2,621.00
€2,621.00
€17,000.00
€17,000.00
€0
€17,000.00
-
-
-
-
€81,770.00
€58,667.00
€934,618.00
€542,724.00
Corporate Office
Variable pay
Attendance fees
Other remuneration
TOTAL
(a)
(b)
(c)
(d)
(e)
2
2
2
The housing allowance (€64,959.16 for 2013) is included in fixed pay received as a corporate officer.
Variable portion in respect of 2012 calculated on a pro rata basis and paid in full in 2013.
Amount paid in 2013 for variable remuneration in respect of 2012 (€23,103).
2
2
73
2
2
➡
REMUNERATION STATEMENT: MR JEAN-YVES FOREL
Member of the Management Board, Chief Executive Officer – Commercial
Banking and Insuranc
Base pay
Corporate Office
Variable pay
(d)
Fiscal year 2012
Amount due(1)
Fiscal year 2013
Amount paid(2)
Amount due(1)
Amount paid(2)
-
-
-
-
€41,667.00
€41,667.00
€500,000.00
€500,000.00
€23,103.00(a)
€0
€431,997.00(b)
€23,103.00(c)
€0
€0
€0
€0
Exceptional pay
€0
€0
€0
€0
€0
€0
€2,899.00
€2,899.00
Attendance fees
€0
€0
€0
€0
Other remuneration
TOTAL
(a)
(b)
(c)
(d)
-
-
-
-
€64,770.00
€41,667.00
€934,896.00
€526,002.00
Variable portion in respect of 2012 calculated on a pro rata basis and paid in full in 2013.
No multi-year variable pay or bonus share plan during the 2013 fiscal year
➡
REMUNERATION STATEMENT: MS. ANNE MERCIER-GALLAY
Member of the Management Board, Chief Executive Officer – Group Human
Resources and Internal Communications
Base pay
Fiscal year 2012
Amount due(1)
Fiscal year 2013
Amount paid(2)
Amount due(1)
Amount paid(2)
-
-
-
-
€500,000.00
€500,000.00
€500,000.00
€500,000.00
€272,761.00(a)
€73,797.00(b)
€431,997.00(c)
€136,380.00(d)
€0
€0
€0
€0
Exceptional pay
€0
€0
€0
€0
€0
€0
€0
€0
Attendance fees
€0
€0
€0
€0
Corporate Office
Variable pay
(e)
Other remuneration
TOTAL
(a)
(b)
(c)
(d)
(e)
-
-
-
-
€772,761.00
€573,797.00
€931,997.00
€636,380.00
Variable remuneration in respect of 2012, of which €136,380 (50%) paid in 2013 and the balance deferred (50%) over three years in equal shares of €45,460. For 2014, the final amount paid will be €41,596
after application of the indexing factor).
➡
REMUNERATION STATEMENT: MR. LAURENT MIGNON(a)
Member of the Management Board – Chief Executive Officer of Natixis
(from August 6, 2013)
Fiscal year 2012
Fiscal year 2013
Amount due(1)
Amount paid(2)
Amount due(1)
Amount paid(2)
-
-
€0
€0
Corporate Office
NA
NA
€0
€0
Variable pay
NA
NA
€0
€0
Multi-year variable pay(b)
NA
NA
€0
€0
Exceptional pay
NA
NA
€0
€0
NA
NA
€0
€0
Base pay
Attendance fees
NA
NA
€0
€0
Other remuneration(c)
NA
NA
€1,766,120.00
€1,759,599.00
TOTAL(C)
NA
NA
€1,766,120.00
€1,759,599.00
(a)
(b)
(c)
Laurent Mignon does not receive remuneration for his duties as a member of the BPCE Management Board.
Laurent Mignon receives remuneration from Natixis, a company controlled by BPCE, within the meaning of Article 233-16 of the French Commercial Code, for his duties as Chief Executive Officer of Natixis.
74
STATEMENT OF ATTENDANCE FEES AND OTHER
REMUNERATION RECEIVED BY BPCE NONEXECUTIVE DIRECTORS FROM JANUARY 1 TO
DECEMBER 31, 2013 (TABLE 3)
Rules for the awarding of attendance fees:
Article 6 of the Finance Act for 2013 changed the methods for assessing income
tax and social security charges on attendance fees received on or after January 1,
2013 by directors and members of the Supervisory Boards of French limited
liability companies (sociétés anonymes).
Attendance fees received on or after January 1, 2013 remain subject to the
progressive income tax scale as before, but must now include:
• a mandatory flat-rate withholding tax, serving as income tax, at a rate of
21%. This deduction gives entitlement to a tax credit applicable to the income
tax calculated using the progressive scale for the year the attendance fees
were received;
• social security charges withheld at source, at rates applicable on the date of
the levy (15.5% on January 1, 2013, including a CSG (contribution sociale
généralisée – general social security tax) of 5.1% deductible from taxable
income for the year of the payment).
2
2
The amounts presented here do not include these withholding taxes.
Other remuneration
Other remuneration consists of total attendance fees received by each NonExecutive Director in respect of his duties on the Boards of Group companies
during the period in question.
2
Each attendance fee payment relates to the Non-Executive Director’s presence
at Board meetings, and is calculated on the basis of the total budget set by each
company’s Annual General Shareholders’ Meeting.
2
2
2
2
2
75
2
2
Fiscal year 2012
(1)
Fiscal year 2013
(2)
Amount due(3)
Amount paid(4)
€400,000
€400,000
€400,000
€400,000
NA
€7,500
NA
NA
€1,200
€1,200
€3,000
€3,000
Amount due
Amount paid
Mr. Yves Toublanc
(Chairman of the Supervisory Board until December 31, 2013)
Annual fixed pay
BPCE director attendance fees
Other remuneration
Stève Gentili
(Vice-Chairman of the Supervisory Board until December 31, 2013)
€95,000
€100,000
€90,500.04
€92,000.04
Other remuneration
€20,000
€22,591.63
€20,000
€24,287
€24,000
€24,500
€22,000
€23,000
€5,100
€4,200
€4,800
€7,500
€29,000
€29,500
€11,500
€25,500
Other remuneration
€26,595
€42,595
NA
NA
€10,000
€11,000
€20,666.67
€12,166.67
€2,400
€4,200
€4,200
€4,200
€19,000
€20,000
€18,000
€19,000
€9,000
€10,500
€10,800
€12,300
€24,000
€24,500
€22,000
€23,000
€6,900
€6,900
€7,500
€12,000
CAISSES D’EPARGNE REPRESENTATIVES
Ms. Catherine Amin-Garde
Other remuneration
Mr. Bernard Comolet (until May 6, 2013)
Alain Denizot
(Non-Voting Director who became a Board member on May 6, 2013)
Other remuneration
Mr. Francis Henry
Other remuneration
Mr. Pierre Mackiewicz
Other remuneration
Mr. Didier Patault
€20,000
€20,000
€18,000
€19,000
€28,626.80
€28,176.80
€32,200
€35,650
€29,000
€29,500
€26,500
€27,000
Other remuneration
€24,100
€24,100
€29,625
€53,125
€24,000
€24,500
€22,000
€23,000
€3,600
€3,600
€6,300
€9,900
€29,000
€30,500
€25,500
€27,000
€9,500
€8,500
€20,000
€29,500
€20,500
€15,500
€18,000
€19,000
Other remuneration
€27,700
€21,500
€34,552
€50,004
€11,500
€25,500
NA
NA
Other remuneration
€24,000
€30,700
NA
NA
€24,000
€22,000
€21,000
€22,000
€6,000
€7,500
€6,000
€6,000
Other remuneration
Mr. Pierre Valentin
BANQUE POPULAIRE BANKS REPRESENTATIVES
Mr. Gérard Bellemon
Other remuneration
Mr. Thierry Cahn
Other remuneration
Mr. Alain Condaminas
Mr. Jean Criton (until April 4, 2012)
Mr. Pierre Desvergnes
Other remuneration
76
Fiscal year 2012
(1)
Fiscal year 2013
(2)
Amount due(3)
Amount paid(4)
€19,000
€10,000
€17,000
€18,000
€0
€0
€0
€0
€25,000
€12,000
€26,500
€27,000
Other remuneration
€34,400
€23,000
€36,600
€46,500
€10,000
€20,000
NA
NA
Other remuneration
€21,000
€24,000
NA
NA
€23,500
€24,000
€19,500
€23,000
€35,000
€38,500
€33,000
€33,000
€52,000
€55,500
€47,000
€48,000
€24,500
€26,000
€21,000
€21,000
€9,500
€9,500
€5,834
€9,500
€0
€0
€0
€0
€9,500
€9,500
€9,000
€9,500
Other remuneration
€6,000
€7,500
€6,000
€7,500
Amount due
Amount paid
Mr. Philippe Dupont
Other remuneration
2
2
Ms. Catherine Halberstadt
Mr. Bernard Jeannin (until June 27, 2012)
2
INDEPENDENT MEMBERS
Ms. Maryse Aulagnon
Ms. Laurence Danon
Mr. Marwan Lahoud
2
Ms. Marie-Christine Lombard
NON-VOTING DIRECTORS
Natixis represented by Laurent Mignon (until Jly 11, 2013)
Other remuneration
Mr. Michel Sorbier (FNCE)
2
Mr. Pierre Carli
€9,000
€9,500
€7,500
€9,000
Other remuneration
€4,100
€26,600
€3,300
€16,960
NA
NA
€4,500
€0
Other remuneration
NA
NA
€24,359.29
€39,442.58
NA
NA
€9,000
€0
Other remuneration
NA
NA
€3,300
€5,700
Mr. Alain Lacroix (since May 6, 2013)
2
Mr. Yves Gevin (since February 17, 2013)
Mr. Raymond Oliger (FNBP)
€9,000
€9,500
€8,000
€9,000
Other remuneration
€9,300
€9,900
€11,414
€22,466
2
Mr. Dominique Wein
€8,000
€3,000
€9,000
€9,500
Other remuneration
€1,650
€12,100
€1,500
€13,600
€9,000
€11,000
€0
€4,000
Mr. Gils Berrous (until February 17, 2013)
Other remuneration
TOTAL REMUNERATION
(1)
(2)
(3)
(4)
NA
€2,400
€4,200
NA
€3,779.53
€1,275,571.80
€1,346,063.43
€1,197,950.96
€1,355,580.78
2
Amounts due in respect of 2012: all amounts owed in respect of 2012, regardless of the date of payment.
Amounts paid in 2012: all remuneration paid and received in 2012 (due in 2011 and paid in 2012 and due in 2012 and paid in 2012).
Amounts due in respect of 2013: all amounts owed in respect of 2013, regardless of the date of payment.
Amounts paid in 2013: all remuneration paid in 2013 (due in 2012 and paid in 2013 and due in 2013 and paid in 2013) excluding withholding taxes (amounts actually received by members include withholding
taxes).
Not applicable.
77
2
2
2.4.3
Stock options
(Table 4)
Stock options allocated to company directors during the 2013 fiscal year
Name of Company Director
Grant date
Value of
options
Type of option
Number of
options
granted
Strike
price Exercise period
No stock options were granted during the 2013 fiscal year.
(Table 5)
Stock options exercised by company directors during the 2013 fiscal year
Number and
date of plan
Number of options
exercised
during the year
Strike
price
No stock options were exercised during the 2013 fiscal year.
(Table 6)
Performance shares allocated to company directors during the 2013 fiscal year
(bonus shares associated with performance criteria)
Number and
Number of
date of plan shares granted Value of shares
Vesting date
End of lock-up
period
Performance
conditions
No performance shares were awarded to company directors during the 2013 fiscal year.
(Table 7)
Performance shares available for vesting by company directors during the 2013 fiscal year
(bonus shares associated with performance criteria)
No. and date
of plan
Number of
shares vested
Vesting
conditions
No performance shares were available for vesting by company directors during the 2013 fiscal year (no award of this type of share).
(Table 8)
Past grants of stock options and bonus shares during the 2013 fiscal year
Grant date
Type of option
Number of
options
granted
Strike price after Start of option
adjustment exercise period
Expiry date
No stock options or bonus shares were granted during the 2013 fiscal year.
(Table 9)
Stock options exercised by the 10 non-executive director employees who exercised the most options during the 2013 fiscal year.
Name of non-executive director employee
No stock options were granted to or exercised by BPCE employees during the 2013 fiscal year.
78
Number of options
granted and exercised
during the 2013
Number and
fiscal year
date of plan
Weighted
average price
2
(Table 10)
Past bonus share allocation to employees during the 2013 fiscal year
Name of Company
Director
Date of the
Shareholders’
Meeting
Share
acquisition Date of end of
date custody period
Date of Total number of
bonus shares
Management
granted
Board meeting
Total number of
shares
cancelled or
Number of
lapsed
shares
Bonus shares
allocated
remaining at
period end
closing
2
No bonus shares were granted in the 2013 fiscal year.
2.4.4
2
Post-employment benefits: company directors
(Table 11)
Start
(or reappointment)
End
Employment
contract
Supplementary
pension plan
Remuneration or benefits
due or potentially due as a
result of the termination of
or a change in duties
11/21/2012
2017
No
CGP, IPRICAS
Yes
No
2017
CGP, IPRICAS,
supplementary
defined benefit
pension plan
No
Yes
No
CGP, IPRICAS,
Natixis pension
guarantee
Yes
No
Term of office
François Pérol
Daniel Karyotis
Member of the Management Board:
Chief Executive Officer –
Finance, Risks and Operations
12/01/2012
Compensation
related to a
non-compete
clause
Jean-Yves Forel
Chief Executive Officer – Commercial
Banking and Insurance
12/01/2012
2017
Anne Mercier-Gallay
Chief Executive Officer –
Group Human Resources and Internal
Communication
11/21/2012
2017
No
CGP, IPRICAS
Yes
No
Laurent Mignon(2)
Chief Executive Officer of Natixis
08/06/2013
2017
No
NA
No
No
(1)
(2)
(1)
Yes
Pre-existing employment contract with Natixis when the term of office began, which was suspended for the duration of the term.
As a member of the BPCE Management Board, Laurent Mignon does not have post-employment benefits for company directors.
COMMENTS ON THE SUPPLEMENTARY PENSION
PLANS
To benefit from this plan, beneficiaries must meet all of the criteria below on
the day of their departure:
CGP: Supplementary defined-contribution pension plan for all BPCE employees
and by extension applicable to company directors.
• they must end their career within Groupe Caisse d’Epargne. This condition is
met when beneficiaries are Group employees on the date of their departure
or retirement;
IPRICAS: Supplementary defined-contribution pension plan for all BPCE
employees and by extension applicable to company directors.
Supplementary defined benefit pension plan: pension plan governed by Article
L. 137-11 of the French Social Security Code.
Chairmen of the Management Board of Caisses d’Epargne, Members of the
Management Board of the former CNCE, the Chief Executive Officer of Crédit
Foncier, the Chairman of the Management Board of Banque Palatine and the
Chief Executive Officer of BPCE IOM may, pursuant to an agreement dated
July 18, 2005, benefit from a supplementary defined benefit pension plan
entitling them to additional retirement income based on their salary. Potential
beneficiaries retain their membership in this plan in the event they are promoted
or transferred within Groupe BPCE.
• they must have served for at least 10 years as members of CNCE’s Management
Board at the date of their departure or retirement. Any person having served,
at the date of his departure or retirement, at least 10 years as Chairman of
a Caisse d’Epargne Management Board or as Chairman of the Management
Board or Chief Executive Officer of a subsidiary (CFF, BPCE IOM, Banque
Palatine), each position therein being limited to a period of five years, may
also benefit from the plan;
• they must have paid up their basic Social Security and compulsory ARRCO
and AGIRC supplementary contributions.
Beneficiaries shall be entitled to an annual annuity equal to 10% of their
average gross remuneration in the three best full calendar years during their
time with Groupe Caisse d’Epargne on the date of the termination of their
employment contract or at the end of their corporate office.
79
2
2
2
2
2
2
2
Once it has been liquidated, this supplementary pension plan, which has no
cap on its annuity, may be paid to an employee’s spouse or former spouse from
whom they are divorced providing they have not remarried, at a rate of 60%.
Jean-Yves Forel retained his membership in this plan when he was appointed
to BPCE’s Management Board.
This plan, which is funded entirely by the Group, is covered by an insurance
policy taken out with Allianz.
SUPPLEMENTS
“Natixis pension guarantee”: Defined-benefit pension plan governed by Article
L. 137-11 of the French Social Security Code for some Natixis employees.
Supplementary pension plans governed by Article L. 137-11 of the French Social
Security Code are managed pursuant to section 23.2.6 of the AFEP-MEDEF Code
in the revised version it published in June 2013. They are compliant with the
principles set out governing the capacity of beneficiaries, the overall setting of
base pay, the seniority conditions, the progressive increase in potential rights,
the reference period recognized for calculating benefits, and the prevention of
artificially inflated remuneration.
This plan is an extension of the “Banque Populaire pension guarantee”, following
the creation of Natixis, which has the following characteristics:
Banque Populaire Chief Executive Officers may receive a “pension guarantee”.
This pension guarantee is a supplementary pension plan, and the vesting of
rights under the plan is subject to the employee finishing his career with the
company (Article L. 137-11 of the French Social Security Code). Subscribers to
the plan are persons who are or have been Chief Executive Officers of Banque
Populaire banks.
Participants, if they fell within the aforementioned category for at least
seven years and ended their career with the Banque Populaire network in
order to receive a full state pension by age 65 at the latest, shall receive a
supplementary pension (pension guarantee) which is equal to the difference
between:
• 50% of their reference remuneration which is equal to average gross
remuneration including benefits in kind in the two calendar years before
stopping work and is capped at an amount set by the BPCE, which is currently
€370,000. During retirement, this amount is adjusted in the same way as
AGIRC points; and
• any pension income from other sources (statutory and supplementary group
pensions), along with any remuneration paid by the Group if the person
resumes work after retirement.
This supplementary pension, once liquidated, may be paid to the person’s
spouse or former spouse from whom they are divorced providing they have not
remarried, at a rate of 60%.
This plan, which is funded entirely by the Group, is covered by an insurance
policy taken out with Quatrem.
The 50% rate applies to those persons who have qualified as plan members
since July 1, 2004. The rate for other plan members is 70%, falling to 60% from
their 70th birthday.
REMUNERATION OR BENEFITS DUE OR POTENTIALLY
DUE AS A RESULT OF THE TERMINATION OF OR A
CHANGE IN DUTIES
Members of BPCE’s Management Board may receive:
• compensation for involuntary termination of their term of office: under
certain conditions, in the event their term of office is involuntarily terminated
for reasons other than serious misconduct, change of position within the
Group or retirement, members of the Management Board may be paid
compensation equal to no less than 12 months of remuneration (fixed and
variable pay) and no more than 24 months, awarded to those with 12 years
of seniority within the Group;
• retirement bonuses: under certain conditions, members of BPCE’s
Management Board may receive, based on a Supervisory Board decision,
compensation equal to no less than six months’ pay and no more than
12 months’ (awarded to those with 10 years of seniority), with no minimum
requirement for seniority within the Group;
• compensation in the event the term of office is not renewed: payment
is not automatic. However, the Supervisory Board may decide, based on the
recommendation of the Appointments and Remuneration Committee, to pay
compensation bearing in mind the circumstances of the non-renewal of the
term of office and the former Director’s career within the Group. No such
compensation will be paid if the term of office is not renewed because of
retirement or a transfer within Groupe BPCE. Such non-renewal shall not be
followed by retirement or by a transfer within Groupe BPCE.
The “Natixis pension guarantee” uses the same pension calculation method as
the “Banque Populaire pension guarantee”, with the exception of the reference
remuneration which is currently €389,700 and indexed to AGIRC points.
2.4.5
Procedure for enforcing professional standards covered by Article 43-2
of French Banking and Financial Regulation Committee (CRBF)
regulation 97-02 within Groupe BPCE
Information on the policies and practices related to remuneration of members
of the executive body and persons whose professional activities have a material
impact on the corporate risk profile will be the subject of a report published
80
on the BPCE web site prior to the Annual General Shareholders’ Meeting in
accordance with the same terms applicable to the registration document.
Potential conflicts of interest
2.5 Potential conflicts of interest
2.5.1
2
Members of the Supervisory Board
INTEGRITY OF MEMBERS
In accordance with the internal rules of BPCE’s Supervisory Board, Supervisory
Board members must perform their duties with honesty and professionalism.
They must not take any initiatives intended to damage the company’s interests,
and they must act in good faith in all circumstances.
Furthermore, all members of the Supervisory Board and its committees, as well as
anyone who may be invited to attend their meetings, are held to an obligation of
professional secrecy, as provided for in Article L. 511-33 of the French Monetary
and Financial Code, and to an obligation of discretion regarding their discussions,
as well as regarding any confidential information or information presented as
confidential by the Chairman of the Meeting, as provided for in Article L. 225-92
of the French Commercial Code.
The Chairman of the Board reiterates that the proceedings of a Meeting are
confidential whenever regulations or the interests of the company or Groupe
BPCE may require it. The Chairmen of each Board committee proceed in the
same fashion.
The Chairman of the Board or one of its committees shall take the measures
necessary to ensure the confidentiality of discussions and may require all persons
taking part in a meeting to sign a confidentiality agreement.
If a member of the Board or one of its committees fails to comply with an
obligation, in particular the obligation of confidentiality, the Chairman of the
Supervisory Board shall refer the matter to the Board in order to issue a warning
to said member, independently of any measures taken under the applicable legal,
regulatory or statutory provisions. Said member shall be given advance notice
of the penalties being considered, and shall be able to present observations to
the Supervisory Board.
Finally, Supervisory Board members:
• shall stay informed about the company’s business lines, activities, issues and
values;
• shall endeavor to maintain the level of knowledge they need to fulfill their
duties;
• must request and make every effort to obtain, within an appropriate time,
the information which they consider they need to be able to hold informed
discussions at Supervisory Board meetings.
To the company’s knowledge:
• there are no potential conflicts of interest between the duties of the
Supervisory Board members with regard to the issuer and other private duties
or interests. If required, the Supervisory Board’s internal rules govern the
conflicts of interest of any member of the Supervisory Board;
• there is no arrangement or agreement with an individual shareholder, client,
supplier, or other, under which any of the Supervisory Board’s members has
been selected;
• there are no family ties between the Supervisory Board members;
• no restriction, other than legal, is accepted by any of the Supervisory Board
members regarding the disposal of their equity interest in the company.
Members of the Management Board may hold other offices subject to laws and
regulations in force. A Management Board member may not perform duties
similar to those of Chief Executive Officer or Deputy Chief Executive Officer
within a Caisse d’Epargne or a Banque Populaire bank.
CONFLICTS OF INTEREST
To the company’s knowledge:
• there are no conflicts of interest between any duties of Management Board
members with respect to the issuing entity and their private interests or
other duties;
2
2
DECLARATION OF NON-CONVICTION
To the company’s knowledge, to date, no member of the Supervisory Board
of BPCE has been convicted of fraud in the last five years. To the company’s
knowledge, to date, no member of BPCE’s Supervisory Board has been declared
bankrupt or in liquidation, or had assets put in receivership, in the last five years.
2
2
Members of the Management Board
INDEPENDENCE AND INTEGRITY
2
CONFLICTS OF INTEREST
• undertake to devote the necessary time and attention to their duties;
• must attend all of the meetings of the Supervisory Board and the committees
of which they are members, unless this is impossible;
2.5.2
2
At the filing date of this document, no member of the Management Board
was linked to BPCE or any of its subsidiaries by a service contract providing
for benefits.
DECLARATION OF NON-CONVICTION
To the company’s knowledge, to date, no member of the Management Board
has, for at least the previous five years, been convicted of fraud, associated with
bankruptcies, receiverships or liquidations, convicted of a crime or subject to
an official public sanction handed down by statutory or regulatory authorities,
or disqualified by a court from acting as a member of the administrative,
management or supervisory bodies of an issuer or from participating in the
management or conduct of the affairs of any issuer.
• there are no family ties between Management Board members.
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2
2
2
Chairman’s report on internal control and risk management procedures for the year ended December 31, 2013
2.6 Chairman’s report on internal control and risk
management procedures for the year ended
December 31, 2013
Dear Shareholders,
In addition to the management report and in accordance with Article L. 225-68
of the French Commercial Code, this report contains information on:
• the composition of the Board and implementation of the principle of balanced
representation of women and men, the conditions governing the preparation
and organization of the Supervisory Board’s work during the year ended
December 31, 2013, and the principles and rules governing the determination
of all types of remuneration and benefits granted to company directors, which
are discussed in Chapters 2.1, 2.2, 2.3 and 2.4 of this document;
• internal control and risk management procedures adopted by BPCE;
• internal control procedures for the preparation and processing of accounting
and financial information.
This report was completed under my authority on the basis of available
documentation about internal control and risk management within Groupe BPCE.
The section covering internal control and risk management was presented to
the Audit Committee on February 14, 2014; and the governance section was
presented to the Appointments and Remuneration Committee on February 18,
2014 and subsequently approved by the Supervisory Board during its meeting
on February 19, 2014.
The external Statutory Auditors will issue a specific report, appended to their
report on the annual financial statements, containing their observations on
internal control and risk management procedures relating to the preparation
and processing of accounting and financial information, and attesting to the
2.6.1
provision of other information as required under Article L. 225-235 of the French
Commercial Code.
INTRODUCTION
Since August 4, 2009, when BPCE became operational, the governance of
the internal control system has rested with the Management Board and the
Supervisory Board.
The Management Board defines and implements the organization and resources
to ensure the proper assessment and management of risks in a comprehensive
and optimal manner. Its control framework is appropriate to the financial
position and strategy of BPCE and Groupe BPCE. It is responsible for risk
management and reports to the Supervisory Board on these activities. It regularly
monitors the implementation of policies and strategies defined for all kinds of
risks. Together with the heads of the Group’s control functions, it keeps the
Audit and Risk Committee and Supervisory Board regularly informed of the
main items and main conclusions drawn from the analysis and monitoring of
risks associated with the activities and results of Groupe BPCE.
The Supervisory Board oversees the management of the principal risks incurred,
approves the main risk limits and appraises the internal control system in
accordance with the regulatory framework. To this end, the Board is supported
by an Audit and Risk Committee in charge of preparing its decisions and
formulating recommendations. The duties, resources, make-up and activity of
this Committee in 2013 are detailed in the section of this report on corporate
governance.
Internal control provisions
Groupe BPCE’s internal control system is structured in accordance with the
legal and regulatory requirements of all texts governing the Group and its
activities (particularly the French Monetary and Financial Code and amended
CRBF regulation 97-02), and with the governance framework and principles
(charters and standards) established within the Group.
Groupe BPCE’s internal control structure is based on four principles:
Comprehensiveness of the control scope
The internal control system covers all risks and all Group businesses and
activities, including those that are outsourced. It is continually adapted in the
event that new businesses are consolidated or the types of risks incurred change.
Suitability of controls to the types of risk incurred
and auditability of controls
Suitability of controls implies:
• systems, methods and tools for measuring and monitoring risks that result
in substantial investment;
• resources, particularly Human Resources, that are appropriate and sufficient
in terms of both quantity and quality.
Auditability implies:
• the existence of organizational charts, job descriptions and clear delegation
of authority;
• the existence of complete, specific operating procedures that cover all
activities, describe control types and responsibilities in detail, and are readily
available;
• the definition of reporting lines, alert mechanisms and accountability.
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Independence of controls and separation of
functions between those that incur risk and those
that monitor it
At all levels and for all activities carried out by Groupe BPCE’s businesses, the
offices involved in performing internal control are organized under terms that
guarantee:
• the distinction between front-office and back-office functions;
• the existence of two levels of permanent controls;
• the distinction between periodic and permanent controls.
Although Level One controls are primarily the responsibility of the operating
divisions and support functions, Level Two permanent controls and internal audit
are provided by independent central functional divisions, whose managers, as
defined by Articles 7 and 11 of amended CRBF regulation 97-02, report to the
executive body as defined by Article 4 of the same regulation.
Consistency of the internal control system –
function-based organization
Standards are laid down by BPCE in accordance with its legal responsibilities
and requirements for supervision on a consolidated basis set by amended
CRBF regulation 97-02, and are intended to ensure a consistent, consolidated
approach to risks. Process-based operations contribute to this as well: the
permanent and control duties located within the Banque Populaire banks,
Caisses d’Epargne, subsidiaries and other affiliates, subject to the banking
supervision regulatory framework, have a strong functional link, as part of the
consolidated control processes, to the relevant BPCE central control divisions:
the Group Risk Management division, Group Compliance and Security division
and Group Inspection générale division. This functional link is described in the
various control function charters.
2
2
This type of organization is duplicated in the Group’s businesses, which
themselves are parent companies.
The other central functions that contribute to permanent control (Accounting
Review, IT System Security and, to a certain extent, Human Resources and Legal
Affairs) are also organized by function.
2.6.2
2
2
General organization
AT THE GROUP LEVEL
Like the central institution, the Group control system relies on three levels
of controls, in accordance with banking regulations and sound management
practices: two levels of permanent controls and one level of periodic control,
as well as the establishment of consolidated control processes in accordance
with provisions approved by BPCE’s Management Board.
PARTICIPANTS IN THE CONTROL SYSTEM
Other central functions contribute to the permanent control system: the Group
Finance division, responsible for accounting control, the Legal Affairs division,
the Operations business line responsible for information system security, and
the Group Human Resources division responsible for issues affecting the
remuneration policy.
Periodic control (Level Three)
Periodic control within the meaning of Article 6-b of CRBF regulation 97-02
is performed by the Group’s Inspection générale division implemented by the
audit function across all entities and activities, including permanent control.
Permanent hierarchical control (Level One)
Permanent hierarchical control (level one) is the first link in internal control
and is performed by the operating or support functions under the supervision
of their line management.
These departments’ responsibilities include:
• checking compliance with risk limits, as well as transaction processing
procedures and their compliance;
• reporting operational risk incidents observed and establishing the business
indicators necessary for the evaluation of operational risks;
• supporting account balances arising from activity in the accounts concerned
by transactions initiated in these departments.
Depending on the situations and activities, these level-one controls are
performed, jointly if applicable, by a special middle-office type control unit
or accounting control entity, or otherwise by the operational staff themselves.
Level-one controls are reported formally to the relevant permanent control
divisions or functions.
Permanent control by dedicated entities (Level Two)
Permanent level-two controls within the meaning of Article 6-a of CRBF
regulation 97-02 are performed by entities dedicated exclusively to this
function, such as the Group Compliance and Security division and the Group
Risk Management division.
2
FUNCTIONS
Integrated permanent and periodic control processes have been implemented
within Groupe BPCE. Three permanent and periodic control divisions are
established within the central institution, which manages these functions:
the Group Risk Management division and the Group Compliance and Security
division for permanent controls, and the Group Inspection générale division
for periodic controls. The permanent and periodic control functions, which are
located at affiliates and subsidiaries subject to banking supervision, have a
strong functional link to BPCE’s corresponding central control divisions and a
hierarchical link to their entity’s executive body (see audit function). This link
includes approval of the appointment and dismissal of managers in charge of
permanent or periodic control functions at affiliates and direct subsidiaries;
reporting, disclosure and alert obligations; standards implemented by the central
institution and laid down in a body of standards; and the definition or approval
of control plans. These links have been formally defined in charters covering
each function. The entire system was approved by the Management Board on
December 7, 2009 and presented to the Audit Committee on December 16, 2009.
It has also been presented to the Supervisory Board of BPCE.
2
2
2
As mentioned above, the system also includes the Accounting Review, IT System
Security and, to a certain extent, the Human Resources and Legal Affairs
functions.
83
2
2
ORGANIZATION OF GROUPE BPCE’S INTERNAL CONTROL SYSTEM
➡
ORGANIZATION OF GROUPE BPCE’S INTERNAL CONTROL SYSTEM
BPCE
Businesses
Internal audit
Risk
Compliance
Audit
IT
Systems security
HR
Charters
Institution: Control System
Governing body
Responsible for
the quality of
the internal
control system
Audit and Risk Committee
Executive body
Remuneration committee
Internal Control Coordination Committee
Audit function – Inspection générale
Periodic control
Level-two
permanent
controls
Compliance
function
Non-Compliance
risks
Level-one
permanent
controls
Risk function
Operational
risks
Credit risks
Other control functions
Financial risks
Finance
Review
IT system security
/ BCP
Outsourced activities
Risk Management Umbrella Committee and/or committees specific to each function
Self-checking by operational departments under line management supervision,
or controls by functional or line management authority
Subsidiary / Affiliate
Internal Control Coordination Committee
The Chairman of the central institution’s Management Board is responsible for
ensuring the consistency and effectiveness of permanent controls.
A Group Internal Control Coordination Committee (CCCIG), chaired by the
Chairman of the Management Board or his representative, meets periodically.
This committee has responsibility for dealing with all issues relating to the
consistency and effectiveness of the Group internal control system, as well as
the results of risk management and internal control work and follow-up work.
Its responsibilities include:
• keeping executive management regularly updated about developments in
the Group control framework;
• highlighting areas of emerging or recurring risk, arising from developments
in business, changes in the operating environment or the state of the control
systems;
• reporting significant failures to executive management;
84
• examining the methods for implementing the principal regulatory changes
and their potential implications on the control framework and tools;
• ensuring that findings from controls are properly taken into account,
reviewing remedial measures decided, prioritizing them and monitoring their
implementation;
• deciding measures to be implemented to reinforce the level of security for
the Group, and coordinating, where necessary, initiatives developed by the
permanent control functions of the central institution.
Committee members include the Management Board member in charge of
Finance, Risks and Operations, Heads of periodic control (the Group’s Inspection
générale division) and permanent control functions (Group Risk Management
division, Group Compliance and Security division), the Group Head of IT System
Security (RSSI), and the person responsible within the Group Finance division
for overseeing the accounting review process. The member of the Management
Board in charge of Commercial Banking and Insurance is a standing member. If
applicable, this committee may hear reports from operational managers about
measures taken by them to apply recommendations made by internal and
external control bodies.
Group Risk Management Committee: Umbrella
Committee
Its scope covers the entire Group (central institution, networks and all
subsidiaries).
It sets the broad risk policy, decides on the global ceilings and limits for
Groupe BPCE and for each institution, validates the delegation limits of other
committees, examines the principal risk areas for Groupe BPCE and for each
institution, reviews consolidated risk reports, and approves risk action plans for
the measurement, supervision and management of risk, as well as Groupe BPCE’s
principal risk standards and procedures. It monitors limits (CRBF regulation 9702, Art. 35), particularly when global limits are likely to be reached (CRBF
regulation 97-02, Art. 36).
Global risk limits are reviewed at least once a year and presented to the Audit
and Risk Committee (regulation 97-02, Art. 33). The Group Risk Management
Committee proposes criteria and thresholds to the Audit and Risk Committee for
identifying incidents to be brought to the attention of the governing body (CRBF
regulation 97-02, Art. 38-1 and 17 ter). It notifies the Audit and Risk Committee
twice a year of the conditions under which the limits set were observed (CRBF
regulation 97-02, Art. 39).
At the same time, several committees are intended either to define shared
methodological standards for measurement, control, reporting and consolidation
for all risks within the Group, or to make decisions about risk projects with an
IT component.
2.6.3
Committees specific to each function
Credit Risk/Commitment committees
Several kinds of committees were established to manage credit risk for the full
Group scope, meeting at varying frequencies depending on their roles (ex-post
or decision-making analysis) and their scope of authority.
The Group has also established decision-making and supervisory committees
for both market and ALM risk. The frequency of their meetings is tailored to
institutional and Group needs.
Furthermore, these Financial committees are more specifically dedicated to
standardizing the body of accounting and financial information within the
Group and to controlling this information, as well as defining the Group’s
communication strategy with regard to the financial community, along with the
methods to be implemented to promote the Group’s reputation in the markets.
This committee meets quarterly and includes Groupe BPCE’s various business
lines, which contribute to the consolidated risk map (Compliance, Risk, IT System
Security, Business Continuity Planning and Accounting Review). Its purpose
is to approve the operational risk mapping and action plans throughout the
Group, and to perform consolidated monitoring of the level of losses, incidents,
and alerts, including reports made to the ACPR under Article 17 ter for
operational risks.
Duties
The Group’s Inspection générale division reports to the Chairman of the
Management Board, and performs its work independently of the operational
and permanent control divisions.
• the quality of the financial position;
• the actual level of risk incurred;
• the quality of organization and management;
• the consistency, suitability and effectiveness of risk measurement and
management systems;
• the reliability and integrity of accounting and management information;
• compliance with laws, regulations and rules applicable to Groupe BPCE or
each company;
2
2
• the effective implementation of recommendations made following previous
audits and by regulators.
Its main objectives are to evaluate and report to the executive and governing
bodies of Groupe BPCE and entities on:
2
Operational Risk Committee
STRUCTURE AND ROLE OF THE GROUP’S
INSPECTION GÉNÉRALE DIVISION
In this capacity, it ensures the quality, effectiveness, consistency and proper
operation of their permanent control framework and the management of their
risks. The scope of the Group’s Inspection générale division covers all risks,
institutions and activities, including those that are outsourced.
2
Financial Risk committees
Periodic control
In accordance with the central institution’s responsibilities and because of
collective solidarity rules, the Group’s Inspection générale division has the task
of periodically checking that all Group institutions are operating correctly, and
it provides company directors with reasonable assurance as to their financial
strength.
2
Representation in governance bodies and Group
Risk Management Committees
2
To fulfil its role and effectively contribute to promoting a control culture, the
Group’s Head of internal audit participates as a non-voting director on the
central institution’s key committees involved in risk management.
The Head of internal audit is a member of the Group Internal Control
Coordination Committee and is a standing member of BPCE’s Audit and Risk
Committee, the Natixis Audit Committee, and the Audit Committees of Groupe
BPCE’s main subsidiaries (BPCE IOM, Crédit Foncier, Banque Palatine).
2
Scope of activity
To fulfil its role, the Group’s Inspection générale division establishes and
maintains an up-to-date Group audit scope inventory, which is defined in
coordination with the internal audit teams of the Group’s institutions.
It ensures that all institutions, activities and related risks are covered by full
audits, performed with a frequency defined according to the overall risk level
of each institution or activity, and in no event less than once every four years
for banking activities.
85
2
2
2
In this regard, the Group’s Inspection générale division takes into account not
only its own audits, but also those performed by the supervisory authorities and
the internal audit divisions.
The annual audit program for the Group’s Inspection générale division is
approved by the Chairman of the Management Board. It is also examined by
the Group Audit and Risk Committee. This Committee ensures that the audit
program provides satisfactory coverage of the Group’s audit scope over several
years and may recommend any measures to this effect. It reports on its work
to the Supervisory Board of BPCE.
Reporting
The assignments completed by the Group’s Inspection générale division result in
the formulation of recommendations prioritized by order of importance. These
are monitored on a regular basis, at least every six months.
The Group’s Inspection générale division reports its findings to the company
directors of the audited entities and to their deliberating body. It also reports
to the Chairman of the Management Board of BPCE, to BPCE’s Audit and Risk
Committee and to the Supervisory Board of BPCE. It provides these bodies
with reports on the implementation of its main recommendations and those
of the ACPR. It ensures that remedial measures decided as part of the internal
control system, in accordance with Article 9-1.b of CRBF regulation 97-02, are
executed within a reasonable timeframe, and can refer matters to the Audit
and Risk Committee if measures are not executed.
It coordinates the timetable for drafting regulatory reports.
Relationship with the central institution’s permanent
control divisions
The Group’s Head of internal audit maintains regular discussions within the
central institution and exchanges information with unit heads within his or
her audit scope and, more specifically, with divisions responsible for Level Two
control.
use of resources – are set out in a charter approved by BPCE’s Management
Board on December 7, 2009.
The objective of this organization is to ensure coverage of all Group operational
or functional units within the shortest possible timeframe, as well as to achieve
effective coordination with entities’ internal audit divisions.
The internal audit divisions of affiliates and directly-owned subsidiaries have
a strong functional link to the Group’s Inspection générale division and a
hierarchical link to their entity’s executive body.
This strong functional link is established through the following rules:
• the appointment or dismissal of internal audit directors of the affiliates or
direct subsidiaries are subject to the prior approval of the Group Head of
internal audit;
• the existence of a single Group Audit Charter within Groupe BPCE. It sets out
the purpose, powers, responsibilities and general organization of the internal
audit function in the overall internal control system and is applied to all Group
companies monitored on a consolidated basis; this charter is broken down
into thematic standards (audit resources, audit of the sales network, audits,
follow-up of recommendations, etc.);
• the Group’s Inspection générale division ensures that the entities’ internal
audit divisions have the necessary resources to perform their duties; the
budget and staff levels of these departments are set by the executive body
of the affiliates and subsidiaries, in conjunction with the Group’s Inspection
générale division;
• the entities’ internal audit departments use audit methods defined by the
Group’s Inspection générale division that are drawn up in consultation with
them;
• multi-year and annual programs followed by the internal audit divisions of
Groupe BPCE institutions are determined in conjunction with and consolidated
by the Group’s Inspection générale division. The Group’s Inspection générale
division is kept regularly informed of progress with these programs and any
changes in their scope;
The division heads must expediently notify the Head of internal audit of any
failure or major incident brought to their attention. The Head of internal audit,
along with Head of Group Risk Management, and Head of Group Compliance
and Security, must expediently inform each other of any audit or disciplinary
procedure initiated by the supervisory authorities, or more generally of any
external audit brought to their attention.
• the institutions’ internal audit reports are transmitted to the Group’s
Inspection générale division as and when they are issued;
Activities in 2013
• the Group’s Inspection générale division is notified as soon as possible of the
start of audits performed by regulators on entities and subsidiaries, as well
as any proceedings against them;
The Inspection générale division completed its audit plan as scheduled for the
most part. Some additional audits were added to replace audits considered to
be of lower priority.
It also conducted weekly monitoring of the implementation of its own
recommendations and those of the ACPR, which are intended to promote, if
necessary, the escalation of alerts to the Audit and Risk Committee, pursuant
to Article 9–1.b of CRBF regulation 97-02.
AUDIT FUNCTION
Organization of the Audit function
Groupe BPCE’s Inspection générale division oversees all audit processes. Its
operating procedures – aimed at achieving consolidated supervision and optimal
86
• audit reports from regulatory authorities relating to entities, related follow-up
letters and answers to those letters, and sanction procedures are transmitted
to the Group’s Inspection générale division when they are received or issued,
if sent directly to the institution;
• the annual reports of the entities prepared pursuant to Articles 42 and 43 of
CRBF regulation 97-02 are sent to the Group’s Inspection générale division,
which forwards them to the supervisory authorities.
This type of organization is duplicated in the subsidiaries and affiliates which
themselves are parent companies.
The rules governing how the internal inspection business line is managed
between Natixis and the central institution are part of Groupe BPCE’s audit
function.
Given the scope and nature of the activities of the audit function, the Group’s
Inspection générale division and Natixis’ Inspection générale share coverage of
the audit scope. They each conduct audits. A Coordination Committee meets
regularly and involves both Inspection générale divisions. It is responsible for all
issues related to the operation of internal audit between the central institution
and Natixis group.
2
the preparation and updating of audit guides, initiated in 2010, was continued to
provide a body of uniform guidelines covering the most commonly audited areas.
Complemented by appendices and a set of documents, these audit guidelines
are accessible mainly through the Group’s audit function and/or the Group
Inspection générale shared server, which are each regularly updated.
2
Activities in 2013
BPCE Inspection générale continued its in-depth revision of audit standards and
methodology based on best practices, started in August 2009. In particular, it
updated the “recommendations” standard, mainly to incorporate additional
expectations from the ACPR on the subject. A quality review procedure is
currently being finalized and will be tested in 2014, with the aim of defining
uniform rules for assessing the organization and work of the audit departments
in the various Groupe BPCE entities.
At the same time, the operational implementation of the shared recommendation
follow-up tool (“Reco!”) was virtually complete as of the end of 2013 after its
rollout in the Banque Populaire network and at the Natixis entities. In addition,
2.6.4
The alignment of Natixis’ Internal Audit department methods with those of
Groupe BPCE’s Inspection générale division has been finalized, both in terms
of harmonizing ratings and assessing recommendation follow-up as well as
synchronizing respective annual macro-timetables within a shared scope of
auditable units, while relying on a consistent risk assessment approach, joint
preparation of audit plans, and the joint establishment of fields of investigation/
audit standards.
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Risk monitoring and measurement
GROUPE BPCE RISK MANAGEMENT DIVISION
The Groupe BPCE Risk Management division measures, monitors and
manages risk, excluding compliance risks, in accordance with amended CRBF
regulation 97-02, as well as the proper implementation of the provisions of
the decree of February 20, 2007. It ensures that the risk management system is
efficient, complete and consistent, and that the level of risk taken is consistent
with the guidelines of the activity (particularly goals and resources), of the
Group and its institutions.
As part of its functions, the Risk Management division:
• helps draw up risk policy on a consolidated basis, examines overall risk limits,
takes part in discussions for capital allocation, and ensures that portfolios are
managed in accordance with these limits and allocations;
• helps the Management Board identify emerging risks, concentrations and
other adverse developments, and devise strategy; performs stress tests with
the goal of identifying areas of risk and the Group’s resilience under various
predetermined shock scenarios;
• defines and implements standards and methods for consolidated risk
measurement, risk mapping, risk-taking approval, risk control and reporting,
and compliance with laws and regulations;
• assesses and controls the level of risk on a Group scale;
• is responsible for permanent supervision, including detecting and resolving
limit breaches, and centralized forward-looking risk reporting on a
consolidated basis;
• is responsible for Level Two control of certain processes for preparing financial
information and implements a Group system of Level Two permanent risk
control that covers subjects related to governance, organization, the work of
Risk functions and rollout of standards;
• manages risk information systems in close coordination with IT departments,
while defining the standards to be applied for the measurement, control,
reporting and management of risks. The Risk Management division is
responsible for permanent Level Two controls of the reliability of risk
information systems;
• maintains strong functional links with the Risk Management network, by
participating in the work of local risk management committees or receiving
the results of their work, coordinating the function and providing support to
all new company directors or Heads of Risk Management.
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Risk Management function and corporate “risk”
culture
The Groupe BPCE Risk Management division oversees the Group’s risk
management functions dedicated to credit, financial and operational risks. It
ensures that the risk policies of the affiliates and subsidiaries comply with those
of Groupe BPCE.
Risk Management departments of the parent company affiliates have a strong
functional link with Groupe BPCE’s Risk Management division. This strong
functional link is enhanced for subsidiaries subject to the banking supervision
regulatory framework. The subsidiaries in question include Natixis, Crédit
Foncier (CFF), Banque Palatine and BPCE IOM. Risk Management departments
of subsidiaries not subject to the banking supervision regulatory framework
have a functional reporting link with Groupe BPCE’s Risk Management division.
Group institutions are responsible for defining, monitoring and managing their
risk levels, as well as producing reports and data to be sent to the central
institution’s Risk Management division, while ensuring the quality, reliability
and completeness of the data used to control and monitor risks at the company
level and on a consolidated basis, in line with Group risk standard and policies.
To carry out their various projects, the Group’s institutions rely on the Group
Risk Management Charter, which was updated in 2013 in order to account for
regulatory changes in CRBF regulation 97-02 and in the European regulatory
environment. The charter specifies that the governing body and the executive
body of each Institution promote the risk management culture at all levels of
their organization, and that the Risk Management function coordinate the
promotion of the risk management culture to all employees, in partnership with
all of the other functions.
2
2
2
2
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2
2
More specifically, to coordinate cross-business projects, the Groupe BPCE Risk
Management division relies on its permanent control and Risk coordination
department, whose purpose is to provide permanent control of risks incurred
by the Group’s institutions, independent of the compliance risks that fall within
the scope of the Group Compliance & Security division. The division also handles
day-to-day coordination of the entire system, which relies on a strong functional
link between the institutions’ risk management divisions and Groupe BPCE’s Risk
Management division. The Risk Management division contributes to the effective
coordination of the risk management function and manages the Group’s overall
risk monitoring by:
and Caisse d’Epargne networks. In conjunction with the consolidated risk
management department, the risk monitoring team ensures portfolio analysis
to help identify main concentrations of risk.
• monitoring and updating risk function reference documents such as charters
and standards;
Activities in 2013
• monitoring work by the Risk Management Committees of parent company
affiliates and subsidiaries;
• coordinating the Risk function through several national risk days and monthly
audio-conferences bringing together the heads of Risk Management of
networks and subsidiaries. The system is also complemented by weekly
information;
• dedicated support for heads of Risk Management (at least 18 months of
monitoring, establishment of a supervisor, etc.);
• more generally, the promotion of the risk management culture and sharing
best practices within the Group.
MAIN TYPES OF RISK
Credit risk
Organization
Risk measurement relies on rating systems adapted to each category of customer
and transaction, of which the Groupe BPCE Risk Management division is
responsible for defining and controlling performance.
Decisions are made at Groupe BPCE – subject to regulatory ceilings, a system
of internal ceilings and limits, relating to major groups (a company composed
of its subsidiaries) – on a consolidated basis, and a principle of counter-analysis
involving the Risk Management function, with a right of appeal that may
result in submission to the higher-level Credit Committee. Decision-making
in each Groupe BPCE entity is carried out within the framework of delegation
procedures.
The Risk Management division measures and monitors compliance with
regulatory ceilings at the Group level for the BPCE Group Risk Management
Committee, in accordance with regulation No. 93-05 of December 21, 1993
relating to the control of large risk exposures. Monitoring of compliance with
internal ceilings and limits is regularly checked by the Group Risk Management
Committee and the Group Audit and Risk Committee.
The different levels of control within Groupe BPCE operate under the supervision
of the Risk Management division, which is also responsible for consolidated
summary reporting to the various decision-making bodies.
Sensitive matters (cases on the watchlist) and the provisioning policy for the
main risks shared by several entities (including Natixis) – are regularly examined
by the Group Watchlist and Provisions Committee.
Within the framework of the Group Credit Committee, the Groupe BPCE Risk
Management division renewed the Group’s limits for the major counterparties
in the banking, corporate, regional public authority and investment sectors, as
well as for real estate professionals and commodities traders.
In order to supplement its credit risk monitoring system, Groupe BPCE
implemented several risk management policies in the Group’s major defining
segments: a home loan policy, consumer loan policy and real estate professionals
policy.
The existing sector policy system (automobile and transport) which is intended
to define recommendations on sectors to which the Group’s institutions have
the most sensitive exposure, was further expanded, with application to the
construction and public works sector.
The Group’s watchlist monitoring process was also expanded to include banking
and sovereign asset classes alongside existing asset classes in order to ensure
consistency in provisioning for the main non-performing loans shared by several
entities, as well as closer supervision of loans on the performing loan watchlist.
Finally, the control of the review of major risks incurred by networks was
strengthened as part of the ex-post system. In addition, subsidiaries Crédit
Foncier, Banque Palatine and BPCE IOM’s delegations were reviewed.
Market risks
Organization
The Market Risk Management team of the Financial Risk Management
department works in the areas of risk measurement, definition and monitoring
of limits, and supervision of market risks:
• risk measurement:
- determining the principles of market risk measurement, which are then
validated by the various appropriate Risk Management committees,
- implementing the tools needed to measure risk on a consolidated basis,
- producing risk measurements, including those corresponding to market
operational limits, or ensuring that they are produced as part of the risk
process,
Within Groupe BPCE, an internal rating methodology shared by both networks
(specific to each customer segment) is applied for individual and professional
retail customers, as well as for the corporate, banking and sovereign customer
segments.
- determining policies for adjusting values or delegating them to the Risk
Management divisions of the institutions involved, and centralizing the
information,
Risk monitoring within Groupe BPCE focuses on the quality of information,
which is necessary for proper risk assessment, on the one hand, and the level
of and trend in risks taken on the other. Compliance with the application of
standards and quality of data is managed through monitoring established in all
asset classes for which applications are shared by both the Banque Populaire
• defining and monitoring limits:
- examining the limit framework and setting limits (global limits and,
where necessary, operational limits) adopted by the various appropriate
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- ensuring Level Two validation of management results and cash valuation
methods;
Risk Management committees, as part of the comprehensive risk analysis
process,
The Risk Management division examines requests for ALM limits defined by
the ALM Committee.
- examining the list of authorized products within the institutions involved,
and the conditions to be complied with, and submitting them for approval
to the appropriate Market Risk Committee,
The Group Risk Standards and Methods Committee validates controls to be
carried out by the ALM Risk Management function.
- examining requests for investments in financial products, in new capital
market products or activities, by the banking institutions involved via the
New Market Product Committee,
• compliance of indicators calculated in accordance with the standards
established by the ALM Committee;
- harmonizing processes for managing the trading book compartments
and medium- to long-term portfolios of the Banque Populaire and Caisse
d’Epargne networks (monitoring indicators, definition of indicator limits,
monitoring and control process, and reporting standards);
• Market Risk Supervision:
- consolidating Group risk mapping,
- carrying out or overseeing daily supervision of positions and risks with
respect to allocated limits (overall and operational limits), organizing the
decision-making framework for limit breaches and ensuring or overseeing
the permanent supervision of limit breaches and their resolution,
- preparing the consolidated scorecard for the various decision-making
bodies.
Activities in 2013
In 2013, the Group VaR calculation system was improved, notably by adding
new risk factors and bi-curve modelling.
Moreover, the supervisory framework for investments made in private equity
vehicles was updated at the beginning of 2013 in order to monitor risk more
effectively.
Building on work completed in 2012 the Market Risk Management team of the
Risk Management division was involved in monitoring the workout management
policy for the Crédit Foncier securitization portfolio in 2013.
Meanwhile, the banking portfolio framework initiated in June 2012 was
enhanced in January 2013 with the production of a monthly stress measurement
for each sector (sovereign, financial, corporate) transmitted to the Group’s
institutions. Calibration of shocks is based on a mixed conservative methodology
(maximum between historical shocks and hypothetical shocks).
Interest rate, liquidity and foreign exchange risk
Organization
The Groupe BPCE Risk Management division forms part of the system for
managing structural balance sheet risks (liquidity, interest rate, and foreign
exchange risks). The ALM Risk Management department is responsible for leveltwo controls.
2
More precisely, the ALM Risk department controls:
• observation of limits on the basis of the required information reported;
• implementation of action plans to reduce risks in order to bring them back
within operational limits.
All of these duties are the responsibility of each entity’s risk management
function for its own scope and the Groupe BPCE Risk Management division
on a consolidated level. Each entity documents controls in a Level Two control
report that includes:
• the quality of the risk supervision system;
• observation of limits and monitoring of corrective action plans in the event
of limit breaches;
• and analysis of changes in balance sheet and risk indicators.
Activities in 2013
2
2
As part of its management and monitoring system for structural balance sheet
risks, the ALM Risk team contributed to the updating of Group ALM and Group
ALM risk standards.
The team also continued to extend its Level Two controls to BPCE SFH (covered
bond-issuing entity), with the implementation of a permanent control plan.
More generally, the department continued to define and implement controls
related to collateral provided as a guarantee in refinancing systems.
In addition, through a number of liquidity projects, the department continued
to participate in the validation of Group internal methodology standards and
functional specifications, as well as the calculation of Basel III ratios, i.e. the LCR
(Liquidity Coverage Ratio) and the NSFR (Net Stable Funding Ratio) 1-month
and 1-year liquidity ratios. Detailed controls are carried out at each reporting
date, especially with regard to liquidity reserves.
The department carried out a critical review of the run-off distributions for
major non scheduled products. These distributions are used for both liquidity
risk and interest rate risk.
2
2
The Banque Populaire and Caisse d’Epargne networks began using the new Group
ALM tool, which offers expanded control capabilities for the Risk Management
function and automatically updates its automated reporting system.
Finally, initiatives aimed at strengthening controls for collateral serving as a
guarantee for various refinancing systems was begun in collaboration with
several Group institutions.
In particular, the following points are subject to controls or critical reviews:
• the list of identified risk factors and on- and off-balance-sheet risk mapping;
• the parameters of the prepayment model;
2
2
Operational risks
Organization
• run-off distribution agreements;
• definition of instruments authorized to cover balance sheet risks;
The Groupe BPCE Risk Management division contributes to the operational risk
management policy. To this end, it:
• monitoring indicators (in particular, stress tests and regulatory indicators),
rules and frequency of reporting to the ALM Committee;
• defines and updates operational risk standards applicable to all Group
institutions;
2
• control standards relating to the reliability of assessment systems, procedures
for setting limits and managing limit breaches, monitoring of action plans.
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2
2
• carries out and updates risk mapping based on uniform evaluation standards
across the entire Group;
In 2013, the Group Insurance Risk function’s level-two permanent control
system was enhanced through the implementation of:
• rolls out and controls the implementation of the operational risk monitoring
and management system;
• quarterly bilateral Risk Monitoring Committee meetings with each of the
insurance institutions;
• manages the operational risk, incidents and losses data collection tool, and
assists institutions with the approval and use of the tool;
• quarterly scorecards by companies, covering their major risks;
• an annual program focused on themes (solvency, reinsurance, etc.);
• ensures the escalation of significant incidents (particularly Article 17 ter) to
the Group’s management bodies;
• a cross-business Insurance Risk report, presented half-yearly to the Group
Risk Management Committee;
• issues recommendations and monitors remedial action plans relevant to major
incidents;
• a Group Risk Management Committee review of an insurance institution’s
activities and risks.
• contributes to permanent risk supervision by preparing consolidated summary
reports for submission to various bodies;
• coordinates the Operational Risk function through national operational risk
days and theme-based working groups.
Activities in 2013
2013 saw the finalized roll-out of the operational risk management tool, which
now covers Group institutions including IT suppliers and subsidiaries (Crédit
Foncier, Banque Palatine and BPCE IOM).
Several projects were carried out to formally define risk standards related
to information systems, to improve the combination of operational risk
management data with accounting data, and to roll out Group predictive
indicators
Finally, coordination of the Operational Risk function largely continued in 2013
through the organization of several national risk days dedicated to the function,
as well as discussions with institutions on sharing best practices. The training
program for operational risk heads and officers was also reinforced during the
year.
Underwriting risks related to insurance activities
CROSS-BUSINESS RISK ANALYSIS
Relying on the risk management departments, the Groupe BPCE Risk
Management division implements cross-business monitoring of consolidated
risks for the Group and coordinates cross-business risk analyses at the Group
level and, if needed, for the entities, as well as prospective risk analyses. It has
increased the use of risk measurements or indicators in cross-business subjects
such as external and internal stress tests, generational analyses, etc., requiring
modelling techniques applied to consolidated exposures.
More specifically, as part of its consolidated risk monitoring system, the Risk
Management division produces a scorecard on a quarterly basis. The purpose of
the scorecard is to provide a written map of the Group’s risk profile by category
(map of risk-weighted assets, credit risks, market risks, structural ALM risk and
operational risks). This system is supplemented by prospective risk analyses
intended to identify risk factors and their potential impact for the Group and
in-depth reviews of the Group’s major credit portfolios or, more generally, multirisk issues. The various analyses are presented to the Group Risk Management
Committee, the Group Audit and Risk Committee and the Supervisory Board
(projections and consolidated risk scorecard).
The Groupe BPCE Risk Management division, in collaboration with the Commercial
Banking and Insurance division, ensures the effective implementation and
operation of the insurance risk monitoring processes (including underwriting
risk) within Groupe BPCE’s principal insurance companies, particularly Natixis
Assurances, Compagnie Européenne de Garanties et de Cautions (CEGC), BPCE
Assurances, Prépar Vie and Coface.
Risk supervision is also enhanced through specific internal and regulatory
reports for supervisory purposes, which are summarized at dedicated committee
meetings.
In this context, the principle of subsidiarity applies, with controls carried out first
by the insurance companies, then at the level of the Risk divisions of the direct
parent companies (Natixis and BRED Banque Populaire), and then by Groupe
BPCE’s Risk Management division.
Finally, it implements the new Basel III requirements (excluding the liquidity
framework) both in terms of the risk-weighted asset calculation framework and
the production of regulatory COREP credit statements.
2.6.5
Compliance
The Compliance function takes part in Groupe BPCE’s permanent control
activities. It comprises all compliance functions, as defined in Groupe BPCE’s
Compliance Charter, that exist within Group companies and that have dedicated
resources.
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Global and specific stress tests on credit portfolios, intended to measure the
Group’s sensitivity to a set of risk factors are performed in order to round out
this monitoring system (see Chapter 3.2.12 – Stress tests).
These companies include all the BPCE affiliates, the direct and indirect
subsidiaries of these affiliates, EIGs, direct and indirect subsidiaries of BPCE
and BPCE itself. Subsidiaries are all companies over which affiliates or BPCE
directly or indirectly have sole or joint control, and which as a result form part
of the scope of consolidation.
GROUP COMPLIANCE OBJECTIVES
AND ORGANIZATION
institutions, including through on-site checks within the scope of intervention
defined in paragraph 4 of Article L. 511-31;” (source: Article 512-107 of the
French Monetary and Financial Code).
Objectives of the function
Given the scope of Groupe BPCE, several levels of intervention and responsibility
have been identified in the area of compliance, in line with the Group’s
organizational structure:
The Compliance function conducts permanent Level Two controls which, in
accordance with Article 5a of CRBF regulation 97-02 as amended, include
ensuring that the operations and internal procedures of Group companies
comply with laws, regulations, professional standards and internal standards
applicable to banking, financial and insurance activities, in order to:
• prevent the risk of non-compliance as defined in Article 4-p of CRBF
regulation 97-02 as amended, as “the risk of legal, administrative or
disciplinary sanction, material financial loss or reputational damage arising
from non-compliance with provisions applicable to banking or finance
activities, whether these are of a legislative or regulatory nature, or they relate
to professional standards and ethics or instructions from the executive body
taken in particular pursuant to guidelines established by the governing body”;
• safeguard Groupe BPCE’s image and reputation with its customers, employees
and partners;
• represent Groupe BPCE before the regulatory authorities and national and
international professional organizations in all its areas of expertise.
As part of this effort, the Compliance function performs all tasks that support
the compliance of transactions carried out by Groupe BPCE companies, affiliates
(including the Caisse d’Epargne and Banque Populaire parent companies) and
subsidiaries, ensuring that the interests of its customers, employees and partners
are respected at all times.
The Compliance function is responsible for ensuring the consistency of all
compliance controls, with each operational or control function retaining
responsibility for the compliance of its activities and operations.
Group Compliance: organizational principles
To ensure its independence, the Compliance function, which is separate from the
other internal control functions, must be independent of all functions performing
commercial, financial and accounting transactions.
Dedicated compliance teams form a Compliance division, which reports
hierarchically to the Chairman of the Management Board or to the Chief
Executive Officer of each Groupe BPCE institution. Where the Compliance
Officer does not report to the Chairman of the Management Board or the
Chief Executive Officer, he reports to the Head of Risk Management. The Head
of Risk Management and Compliance reports hierarchically to the Chairman of
the Management Board or the Chief Executive Officer.
For Group entities with the status of credit institution or investment company
under French law, the Compliance Officer’s name is given to the Office of the
Secretary General of the ACPR by BPCE, and the supervisory body, Board of
Directors or Supervisory Board is informed of his identity.
Role assigned to BPCE by the Act of June 18, 2009
Article 1 of the Act that established BPCE gave the central institution
responsibility for organizing internal control. The article states that the central
institution is in charge of:
“7) defining the principles and conditions for organizing the internal control
system of Groupe BPCE and each of its networks, as well as controlling the
organization, management and quality of the financial position of affiliated
• BPCE as a central institution for its activities;
• its affiliates, including the Caisse d’Epargne and Banque Populaire parent
companies;
• its subsidiaries, including Natixis.
Organizational principles at the BPCE level (as a company and
central institution)
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2
2
The organization of the Group Compliance and Security division (DCSG) complies
with the principles set by CRBF regulation 97-02 as amended, the general
regulations of the Autorité des marchés financiers (AMF – French financial
markets authority), and by the Act that established BPCE.
DCSG performs its duties independently from operational divisions as well as
from other internal control divisions, though it does work with them. DCSG
includes five divisions with Compliance activities:
2
• ethical compliance, including BPCE’s investment services compliance officers
(RCSIs) and compliance of BPCE as a company;
• financial security, including BPCE’s Tracfin officers;
• insurance compliance;
• banking compliance;
• coordination of the function and permanent control.
The head of DCSG is the head of permanent non-compliance risk controls within
the meaning of Article 11 of CRBF regulation 97-02, at the level of both the
central institution and Groupe BPCE.
DCSG oversees all compliance and security processes. To this end, it helps guide
and motivate the Compliance Officers of the affiliates and subsidiaries, including
Natixis. The Compliance Officers appointed by the various affiliates, including the
Caisse d’Epargne and Banque Populaire parent companies, and direct subsidiaries
covered by the regulatory system of banking and financial supervision, have a
strong functional link with DCSG.
2
2
DCSG conducts any necessary initiatives to strengthen compliance throughout
Groupe BPCE, including within the BPCE company. As such, it sets out standards,
shares best practices and coordinates working groups consisting of division
representatives.
Promoting a culture of risk management and taking into account the legitimate
interests of customers is also achieved through employee training.
As a result, DCSG:
2
• puts together the training materials used by the Compliance function and
manages interaction with the Group Human Resources division (DRHG);
• trains Compliance staff, mainly through specialized annual seminars (financial
security, ethics and compliance, banking compliance, and coordination of
permanent compliance controls);
• trains Compliance Officers through appropriate courses.
Within the BPCE company, compliance is handled by a dedicated team in the
Ethics and Compliance division.
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2
Company-level organizational principles
Among affiliates, particularly the Caisse d’Epargne and Banque Populaire parent
companies, and among direct subsidiaries like Natixis, the Compliance Officer
reports hierarchically to the Chairman of the Management Board, the Chief
Executive Officer or the Head of Risk Management and Compliance.
The standard organization of a division or entity in charge of Compliance
includes at least two units specializing in each area (see below “Main duties in
each business area”) relating to:
• ethical compliance, with the investment services compliance officer (RCSI);
• financial security, with the Tracfin (French anti-money laundering unit which
reports to the French Ministry of the Economy, Finance and Industry) officer(s)
and reporting officer(s).
The division or entity in charge of Compliance also designates one or more
employees to be DCSG’s intermediary in the following areas:
• banking compliance;
• insurance compliance;
• permanent compliance control.
Each Group entity has its own systematic prior approval process for new
products and material changes to existing products within the meaning of
Article 11-1 of CRBF regulation 97-02 as amended.
Products marketed by a single company fall within the scope of this approval
process. As required, for the launch of all new products, the company’s
Compliance function meets with DCSG if necessary.
With regard to employee training, the division or entity in charge of compliance:
• contributes to training initiatives undertaken by BPCE;
• signs up employees for BPCE seminars;
FINANCIAL SECURITY
This includes the prevention and monitoring of financial crimes, including
the prevention of money laundering, the prevention of terrorism financing,
compliance with embargoes and the prevention of internal and external fraud.
It also encompasses the operating procedures of Tracfin officers.
INSURANCE COMPLIANCE
This covers compliance with all legislative and regulatory areas concerning
insurance brokers in their capacity as distributors of insurance products. In this
regard, it includes disseminating standards and transposing them in information
systems, implementing approval processes for new products distributed in the
Group, monitoring sales processes and professional ethics, creating and updating
training modules, as well as approving content, advertisements, and documents
intended for the networks and training activities.
BANKING COMPLIANCE
This covers compliance with all other laws and regulations in the banking and
financial field, and includes the coordination of regulatory watch activities
across all Group companies, the dissemination of standards, the implementation
of processes for approving new products distributed in the Group and the
content of compliance training.
COORDINATION OF THE COMPLIANCE AND PERMANENT CONTROL FUNCTION
This covers the preparation of reporting documents for regulators and internal
reporting documents, preparation for committees coordinated by or involving
Compliance, and Compliance management meetings. Non-compliance risks are
incorporated in the risk mapping coordinated by the Group Risk Management
division. In coordination with the risk management function, permanent control
covers the implementation of non-compliance risk management, and oversight
of the results of permanent controls that cover non-compliance risks including
the management of risks related to outsourcing essential services.
• supplements training provided by Compliance on a local basis.
• As stated in Groupe BPCE’s Internal Control Charter, the other functions
in charge of permanent control (Accounting Review, Information System
Security Officer, BCP Officer) may be placed under the functional supervision
of a permanent control officer, such as the Head of Compliance.
Compliance is also the main contact for the AMF, the AMF-ACPR marketing
control coordination department, the Commission Nationale de l’Informatique
et des Libertés (CNIL, France’s commission on personal data protection), the
Directorate-General for Anti-Trust Policy, Consumer Affairs and Fraud Control
(DGCCRF), and equivalent foreign authorities. The Compliance function interacts
with the ACPR and equivalent foreign authorities on matters within its remit.
MAIN AREAS OF NON-COMPLIANCE RISK
As a Level Two permanent compliance control function, the Compliance function
maintains close relations with all functions involved in performing internal
controls within Groupe BPCE: the Inspection générale division, Risk Management
division, IT System Security division and Accounting Review division.
Main duties in each business area
The main duties of Groupe BPCE’s Compliance function lie in the following areas:
DCSG ensures permanent compliance control of BPCE IOM, as delegated by
BPCE IOM.
With regard to Compliance
With regard to other permanent control areas
FINANCIAL MARKET ETHICS AND COMPLIANCE WITH PROFESSIONAL
STANDARDS
SECURITY AND BUSINESS CONTINUITY
This includes the ethical aspect of financial activities, as defined by the AMF
general regulations and, more broadly, the prevention of conflicts of interest,
ensuring the primacy of customer interests, compliance with market rules and
professional standards in the banking and financial sectors, and regulations and
internal standards regarding business ethics. It includes oversight of investment
departments and the operating procedures of investment services compliance
officers (RCSIs).
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The Group Security and Business Continuity division is part of BPCE’s Compliance
and Security division, and performs its tasks independently of operational
divisions. These tasks involve:
• security of staff and property:
- overseeing the security of Groupe BPCE’s staff and property, and
coordinating the function,
- overseeing compliance with legal and regulatory provisions relating to the
security of staff and property,
A procedure for preventing and handling internal fraud was approved, and a
request for related data processing authorization was submitted to the CNIL.
- participating in Groupe BPCE’s internal and external bodies;
The program for updating and spreading banking compliance standards
continued, and the DCSG contributed to various projects to implement the new
regulations (French banking law, the ACPR recommendation on the marketing
of term accounts, controls of banking transaction and payment services
intermediaries (IOBSP), the Foreign Account Tax Compliance Act (FATCA), etc.).
• business continuity:
- coordinating Group business continuity and the Group business continuity
function,
- implementing the BPCE business continuity plan and coordinating Group
crisis management,
- coordinating the implementation of the Group Business Continuity Plan,
and keeping it operational,
- ensuring compliance with regulatory provisions governing business
continuity,
- participating in Groupe BPCE’s internal and external bodies,
- managing information security within Groupe BPCE.
Activities in 2013
The DCSG rolled out its positions (AMF and ACPR recommendations) in the
Groupe BPCE normative framework (KYC, evaluation of the suitability of
proposed products and services according to customers’ situations, provisions
related to remuneration associated with the distribution of financial products).
The system for marketing cooperative shares and the conflicts of interest
prevention system were both updated.
In terms of anti-money laundering, work was completed on the convergence
of tools and vigilance rules between the Caisses d’Epargne and the Banque
Populaire banks. The incorporation of effective beneficiaries of business relations
in the information systems is under way.
2.6.6
Coordination of projects to reduce non-compliance risks continued, in terms
of documentation of KYC and regulated savings. Initiatives were also launched
with a view to harmonizing methods for implementing regulations on access
to banking services and the annual percentage rate.
In terms of life insurance, changes to advisory notices and/or warnings continued
to be incorporated into the networks’ information systems. The implementation
of the process for analyzing equivalent guarantees in relation to the Lagarde
Act (disassociation of real estate loans from payment protection insurance).
The project aimed at converging the Group’s permanent control monitoring
tool, Pilcop, continued for the Banque Populaire banks, and the various existing
permanent control standards were updated and enhanced. Institutions scored
their non-compliance risks based on a single set of standards.
Significant work was carried out to account for new regulations governing
cash transit.
The permanent control of the business continuity plan was strengthened in
2013 by implementing a structure to review the documentation of companies’
business continuity plans. These training initiatives on this issue continued,
particularly through creating an e-learning module to raise awareness among
all of the Group’s employees.
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Other permanent control functions
MANAGEMENT OF LEGAL RISK
Duties
The Corporate Secretariat – Legal Affairs division (SGDJ) is responsible for the
prevention and management of legal risks and Group-level legal risks. It is
also involved in the prevention of reputational risks. In this regard it helps to
manage the legal risks arising from the activities of the central institution and
Group entities.
Organization
SGDJ is in continuous contact with the Legal Affairs divisions of Group
institutions on all matters relating to the aforementioned duties. It ensures
ongoing dialogue and interaction between the Group’s legal officers, and
maintains up-to-date documentation for their benefit. SGDJ coordinates
the Group’s legal and litigation policy. In this regard, it oversees all legal risk
management processes.
To this end it provides legal and regulatory oversight, information, assistance
and advice for the benefit of all Group institutions.
It ensures that the various Group affiliates or subsidiaries involved in banking,
finance, insurance or real-estate activities have access to a legal function suited
to their recurring business needs.
Together with the Compliance and Security division, it is also involved in
ensuring the consistency and effectiveness of controls on non-compliance
risks relating to laws and regulations specific to banking and finance activities.
With the exception of the special case of Natixis, for which there is a direct
functional link, the Legal function operates mainly through coordination
between the central institution and the various affiliates or subsidiaries.
Finally, SGDJ represents Groupe BPCE with respect to the regulatory authorities
as well as national and international organizations in all its fields of expertise.
Activities in 2013
SGDJ exercises its role independently of the Operational divisions.
Work carried out in 2013 focused mainly on:
• participating in the Caisses d’Epargne and the Banque Populaire banks’
buyback of CICs held by Natixis within these institutions;
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• participating in BPCE securities issues;
• contributing to the Sales Process Validation Committee (CVPC) and to the
Review and Validation Committee for New Groupe BPCE Products (CEVANOP);
The “Governance and Company Life” division first and foremost handles
the operation of BPCE’s bodies in accordance with the highest standards of
governance, as well as ensuring that the Group applies these standards. Its
duties also cover the area of corporation law. It also handles the institutional
management of the Group’s organizations and institutions (including the
Caisse d’Epargne and Banque Populaire networks), thereby covering oversight,
disclosure, support and advice in matters of institutional and company life
(including plans to establish and restructure entities).
• regulations applicable to cooperative shares;
• monitoring and studying the impacts on governance from the French law on
the separation and regulation of banking activities of July 26, 2013;
The “Information Systems – Legal Documentation and Support” division provides
applications and helpful documents to the Group, monitors important texts and
distributes them within the Group.
• monitoring and studying the impacts of CRD IV and CRR IV;
• monitoring and studying the impacts of the “Social and solidarity-based
economy” law.
IT SYSTEM SECURITY
Organization details
Duties
In May 2010, the Corporate Secretariat and the legal function were merged
into a single division, thereby entrusting to one and the same person the
responsibility for providing secretariat services for BPCE’s bodies and the Group
Legal Affairs division.
The Group IT System Security (SSI) division (DSSI-G) defines, implements and
develops Group IT system policies. It provides continuous and consolidated
monitoring of information system security, along with technical and regulatory
monitoring. It initiates and coordinates Group projects aimed at reducing risks
in its field.
• coordinating the rollout of a common IT tool for legal and financial monitoring
of Groupe BPCE subsidiaries and affiliates;
• participating in projects related to Banque Populaire and Caisse d’Epargne
governance;
The Corporate Secretariat – Legal Affairs division is organized around five
departments: the purpose of this organization is to have a legal function capable
of fulfilling its duty to provide legal advice to BPCE as an entity, and to act as
a Legal Affairs division for the Group in its various components, with the aim
of ensuring maximum security.
The duties of the “Commercial Banking and Insurance law” division include
a regulatory watch and participation in industry working groups (Fédération
Bancaire Française (FBF – French Banking Federation), etc.) charged with
preparing, negotiating and explaining (rolling out) all new texts applicable to the
profession with regard to their implementation within the Group. This division
is also responsible for defining and drafting legal standards applicable to the
Group’s banks and products sold, in response to changes in these texts. Likewise,
it provides legal advice and assistance to the Group in the fields of banking law
and insurance law. Lastly, it manages strategic disputes for the Group, handles
criminal cases and coordinates litigation on a national level.
The duties of the “banking regulation” division cover the handling of banking
regulations, i.e. activities related to the analysis, disclosure and application to the
Group’s institutions of regulatory texts (European directives, Basel Committee
or European Banking Authority (EBA) recommendations, texts issued by French
regulators). This division is also responsible for handling ACPR matters and
relationships with authorities, and for monitoring texts relating to key banking
ratios and controls of credit institution policies. Lastly, this division is responsible
for providing advice with regard to banking regulation.
The duties of the “Corporate” division consist in handling complex financing and
acquisitions (in particular, mergers/acquisitions and similar transactions): it is
the legal advisor to BPCE and the Group regarding strategic partnerships with
outside entities and financial engineering, including the creation of financial
products intended to be sold to the public. It is in charge of matters relating to
antitrust law, community law, relationships with international regulators, and
real estate. Lastly, it handles monitoring and protection of brands, licenses and
development matters.
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Within its remit, DSSI-G represents Groupe BPCE with respect to banking
industry groups and to public authorities.
For the purposes of permanent control, the DSSI-G has regular contact with the
Risk Management, Compliance and Inspection divisions of the central institution.
The central institution’s Head of IT System Security is a member of the Group
IT System Security division and, as such, ensures the security of the central
institution’s information system (SI Fédéral) and of BPCE’s information system.
Organization
Groupe BPCE has established a groupwide information system security function.
It includes the Head of IT System Security (RSSI), who coordinates the function,
and the Heads of IT System Security for all of the institutions.
The heads of IT System Security for parent company affiliates, direct subsidiaries
and EIGs are functionally linked to the Group’s Head of IT System Security. This
functional link is achieved through coordinated actions. This functional link
means that:
• the Group’s Head of IT System Security is notified of the appointment of any
heads of IT system security;
• the Group’s IT system security policy is applied within the institutions, and
each IT system security policy must be transmitted to the Group’s Head of IT
System Security prior to approval by Executive Management, the Board of
Directors, or the Management Board;
• a report on the institutions’ compliance with the Group’s IT system security
policy, ongoing control, risk level, primary incidents, and actions is submitted
to the Group Head of IT System Security.
Activities in 2013
The BPCE Group’s IT system security policy (PSSI-G) incorporates the Group’s
security requirements. It is comprised of the Information System Security
Charter, 424 rules categorized into 19 subject areas, and an organizational
instruction document(1). It is revised annually according to an ongoing
process of improvement. In December 2013, seven rules in six subject areas
were reviewed(2); 10 were added and one was removed; four organizational
instructions were added(3) These documents were submitted for approval by
the BPCE Management Board at the beginning of 2014. They were then be
distributed.
In 2011, through assessment of the compliance level of the Group’s institutions
with each of the PSSI-G rules, the Group obtained its first overview of its level
of information system security at a consolidated level. To improve the Group’s
knowledge of IT risks, a methodology coordinating the IT and information
system security approaches with that of the business lines, with regard to risk
mapping, was defined. It was applied to the “check” process in 2011, then
to the “consumer credit” process in 2013. Its application to other “payment
instruments” processes (“funds”, “cash”, “international payment instruments”,
“credit transfers and direct debits”, “notes”) was also begun in 2013 and will
continue in 2014 for other sensitive processes.
At the same time, Group information system security permanent control
standards were rolled out in 2013 through the Pilcop tool, at 16 Group
institutions (BPCE, i-BP, IT-CE, T2S Africa, T2S Outre-mer, T2S Pacifique, Banque
des Mascareignes, Banque Malgache de l’Océan Indien (BMOI), Banque TunisoKoweitienne (BTK), BRED Banque Populaire, CASDEN Banque Populaire, Crédit
Coopératif, Crédit Foncier, Banque Palatine, Natixis and S-money). These form
the minimum basis for Level 2 information system security permanent controls
applicable by each of the institutions, replacing the previous “SMC” system,
limited solely to the Caisses d’Epargne. In 2014, this rollout will be extended
to the entire Group. It includes 57 control points organized into 12 security
2.6.7
themes. Its content will be revised annually according to an ongoing process
of improvement.
DSSI-G also contributed its security expertise to several Group projects so that
security would be taken into account earlier (new Group network, tablet and
smartphone security, etc.).
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A common resource for the entire Group to raise employees’ awareness of ISS
was established and provided to Group institutions.
Finally, the Group’s IT System Security Committee, the Group’s IT System Security
supervisory body chaired by the Group’s Head of IT System Security, met six
times during 2013. The Committee now meets every two months.
In the scope of BPCE, several projects designed to raise and control the security
level of its information systems were continued in 2013.
The massive user authorization project defined in 2010 was continued. This
project will ultimately provide BPCE with a database of the rights granted to
users, helping to better manage and trace authorizations and to control their
reliability. Work on the “user rights revision” section began in December 2013
for pilot applications. Work on the “authorization management” section is
currently underway.
DSSI-G coordinated the security assessments of several sensitive applications
before they were rolled out, including: Directory of company directors, Remote
smartphone security, Pilcop V2 (permanent control tool), Group decision-making
portal.
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DSSI-G raised employees awareness of security for the new CAMELEA
workstation.
Lastly, in accordance with the Group Information System Security Charter,
BPCE’s IT System Security Committee met four times during the year.
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Controls of accounting and financial reporting quality
ROLES AND RESPONSIBILITIES IN PREPARING
AND PROCESSING ACCOUNTING AND FINANCIAL
INFORMATION
Within Groupe BPCE, the preparation and processing of financial and accounting
information falls under the responsibility of the Finance function. In the central
institution, this function is coordinated by the Group Finance division, consisting
of the Finance function, Group Finance Control, Group Accounting division and
the Group Tax department.
The main rules that govern the Finance function within Groupe BPCE are defined
by the “Finance function Framework,” approved by BPCE’s Management Board
on November 2, 2010 and essentially relate to:
• rules for preparing and processing accounting and financial information;
• organizational rules for the Finance function within the Group and for
the Group Finance division within the central institution;
• the principles and terms of relationships established between the Group
Finance division and the Finance functions of Group institutions as well
as other outside parties (other functions within BPCE, AMF, Statutory
Auditors, etc.).
General principles of responsibility
within Groupe BPCE
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The production of accounting and financial information, and controls to ensure
its reliability, are performed by the Finance functions of accounting entities
included in the Group’s scope of consolidation.
Each entity has the resources to ensure the quality of accounting and financial
data, including by ensuring compliance with standards applicable to Groupe
BPCE, ensuring consistency with the individual financial statements prepared by
its decision-making body, and reconciling accounting figures with management
figures.
2
Each entity prepares, on a monthly or quarterly basis, financial statements
and regulatory information required at the local level, along with reporting
documents for the Group Finance division.
The Group Finance division is responsible for preparing and reporting accounting
and financial data at the Group level. It collects all accounting and financial
(1)
Operating procedures of the Groupe BPCE IT System Security function.
(2)
Internet access security; electronic messaging security; workstation security; management of back-ups, archives and removable media; wireless network security; confidential digital information security.
(3)
Mapping of SS risks; ISS permanent control; ISS incident management; classification of sensitive IS assets.
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information produced by accounting entities within Groupe BPCE’s scope of
consolidation. It also consolidates and checks these data, to enable their use
for the purposes of Group management and communication to third parties
(control bodies, investors, etc.).
and contributes to preserving single and community financial standards both
for all functions of the Group Finance division and for shareholder institutions;
In addition to consolidating accounting and financial information, the Group
Finance division has broad control duties:
• providing accounting services and the production of BPCE’s regulatory
statements;
• it coordinates asset-liability management, by defining the Group’s ALM rules
and standards, and ensuring they are properly applied;
• managing BPCE’s procedures and budget planning;
• handling accounts receivable and the payment of BPCE invoices and those
of certain subsidiaries whose accounts are kept by the central institution;
• it manages and controls Groupe BPCE’s balance sheet ratios and structural
risks;
• it defines accounting standards and principles applicable to Groupe BPCE,
and ensures they are properly applied;
• it monitors the financial planning of Group entities and capital transactions;
• it ensures the reliability of accounting and financial information disseminated
outside Groupe BPCE.
Primary functions contributing to the preparation and
communication of accounting and financial data
and their responsibilities
The main functions involved in preparing and publishing accounting and
financial information are Accounting, Finance Control, Investor Relations and
the Group Risk Management division for calculating the capital adequacy ratio.
ACCOUNTING
The Accounting function is in charge of preparing parent company and
consolidated financial statements.
Within Groupe BPCE, each entity’s accounting function has responsibility,
with respect to Groupe BPCE and the supervisory authorities, for its individual
financial statements, any consolidated financial statements, and regulatory
reports.
Within BPCE, accounting duties for the consolidated financial statements are
performed by the Group Accounting division, the head of which reports to
the Chief Executive Officer in charge of Finance, Risks and Operations. For
parent company financial statements, accounting duties are performed by the
Accounting and Banking activities department, which reports to the Head of
Group Finance Control. In this area, the main duties are:
For the Group Accounting division:
• preparing the consolidated financial statements of Groupe BPCE and BPCE,
ensuring the Group’s compliance with regulatory ratios;
• coordinating the accounting function within the Group;
• providing a regulatory watch as regards French and IFRS accounting standards
applied by Groupe BPCE in coordination with shareholder institutions, BPCE
subsidiaries and the Statutory Auditors;
• acting as the interface between the regulatory authorities (the Banque de
France and the ACPR) and affiliated institutions, in accordance with Article
L. 512-107 of the French Monetary and Financial Code, and ensuring that
the affiliated institutions comply with regulatory standards and management
ratios;
• representing the Group with respect to industry bodies (Conseil national de
la comptabilité, European Banking Federation, etc.).
In addition, the Group Accounting division assists the business lines of the
Group Finance division in managing financial information systems projects,
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For the Accounting and Banking Activities department (Group Finance Control
division):
• providing back-office accounting treatment with respect to cash management,
securities issues, investments and for the financial management of BPCE and
its issuing subsidiaries.
FINANCE CONTROL
The Group Finance Control division is in charge of preparing management
information.
Within Groupe BPCE, each entity’s Finance Control function is in charge of
operational coordination, and has responsibility for producing management
information within the entity and for the central institution.
Within BPCE, the function is performed by the Group Finance Control division,
the head of which reports to the Chief Executive Officer responsible for Finance,
Risk and Operations. Its main duties are as follows:
• coordinating the financial planning, budget and multi-year rolling forecast
process;
• analyzing the performance of Groupe BPCE, its business lines and accounting
entities, especially during the publication of each quarterly results;
• coordinating the Finance Control function within Groupe BPCE;
• coordinating cost analysis procedures based on the Activity Based Costing
(ABC) procedure;
• monitoring BPCE subsidiaries financially and administratively;
• coordinating capital management, allocating Group shareholders’ equity and
liquidity;
• helping prepare the Group strategic and financial plans.
INVESTOR RELATIONS
The Investor Relations function is responsible for information published through
presentations to financial analysts and institutional investors on the BPCE
website, and for registration documents and their updates filed with the AMF
and also available on the BPCE website.
Within BPCE, the function is performed by the Issues and Investor Relations
division (Group Finance division), the head of which reports to the Executive
Chief Financial Officer. Its duties in this area are as follows:
• coordinating and preparing presentations of Groupe BPCE’s quarterly results,
financial structure and business development, to enable third parties to form
an opinion on its financial strength, profitability and outlook;
• coordinating and preparing the presentation of regulated financial information
(registration document and its quarterly updates) filed with the AMF while
including contributions from other BPCE offices;
• organizing relations with rating agencies by coordinating with the other rated
entities of Groupe BPCE;
The organization of the consolidation system is based on a combined solution
for the Group’s business lines:
• organizing and maintaining relationships with credit investors likely to hold
and/or acquire debt instruments (short, medium or long term) issued by BPCE
or Natixis.
• in Commercial Banking and Insurance, information is communicated on an
individual basis to ensure a more detailed view of the contribution of the
accounting entities to Groupe BPCE’s results. Preparation of consolidated
financial statements is based on monitoring of the individual accounting
data of Group institutions under IFRS. The system is based on a single
consolidation tool specific to these entities, and for all sub-consolidation
work. This ensures internal consistency as regards scopes, charts of accounts,
accounting treatment and analysis;
PRODUCTION PROCESSES FOR CONSOLIDATED
ACCOUNTING AND FINANCIAL DATA
General system
The central institution prepares the consolidated financial statements of Groupe
BPCE and its individual company financial statements.
For this purpose, BPCE’s Group Finance division has prepared consolidation
standards designed to guarantee the reliability of the process. This set of
standards is based on the following core principles:
• defining and disseminating accounting policies for Groupe BPCE, including
analyzing and interpreting new texts issued during the period, both for French
GAAP and international (IFRS) accounting standards;
• regular training of accounting teams within the consolidated entities to
promote the use of best practices throughout Groupe BPCE.
In addition, within Groupe BPCE, the institutions publishing financial statements
on a consolidated basis under IFRS are:
• among the network banks: all of the Banque Populaire banks and six Caisses
d’Epargne (Aquitaine Poitou-Charentes, Auvergne et Limousin, Bourgogne
Franche-Comté, Bretagne Pays de Loire, Ile-de-France and Midi-Pyrénées);
• its principal subsidiaries are: Natixis, Crédit Foncier, Banque Palatine, BPCE
IOM and Nexity.
In 2013, the Finance division continued its efforts on accounting treatment and
standardization, with a view to streamlining the working resources and methods
for teams in charge of producing consolidated accounting and financial data,
while adapting them to organic and regulatory changes, in particular:
• implementation of a project to secure the reporting process and reduce
reporting times (TEMPO project). This project, coordinated by the Group
Accounting division in partnership with the Group Risk Management and
IT divisions, is intended to secure reporting and step up the production of
regulatory statements amid a fundamentally changed regulatory environment.
The project covers the production of consolidated financial statements, ratio
estimates for financial communications and regulatory statements;
• the development of a comprehensive training program, leading to a certificate
(after testing) of a certificate awarded by BPCE and the École Supérieure de
Commerce de Paris Europe (ESCP Europe). This program, implemented by the
Group Accounting division in partnership with the Group Human Resources
division, is open to the entire Finance function and to Control functions, in
order to harmonize the Group’s banking and insurance accounting practices.
Preparation process for consolidated accounting
and financial data
Data consolidation takes place quarterly based on the financial statements of
each Group entity. Data from the entities are entered into a central database
where consolidation adjustments are then carried out.
• in Wholesale Banking, Investment Solutions and Specialized Financial Services:
Natixis has a consolidation tool that produces an IFRS consolidation package,
ensuring the consistency of data from the banking and insurance scopes and
giving a transparent overview of its subsidiaries. For the production of Group
financial statements, Natixis submits a consolidation package that represents
its consolidated financial statements;
• for Equity Interests (Nexity in particular) the accounting entities are for
the most part consolidated on the basis of packages that represent their
The system as a whole feeds into a central consolidation tool, which has
archiving and security procedures including daily back-up of the consolidation
database. System restoration tests are regularly carried out.
CONTROL PROCESS FOR ACCOUNTING
AND FINANCIAL DATA
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General system
Groupe BPCE’s internal control system contributes to the management of all
types of risk and enhances the quality of accounting information.
It is organized in accordance with legal and regulatory requirements, including
those arising from the French Monetary and Financial Code, CRBF regulation 9702 as amended, and texts governing BPCE. It concerns all Group companies,
which are monitored on a consolidated basis.
The system is governed by the Group Internal Control Charter, approved
on April 7, 2010 by the BPCE Management Board. This charter sets out the
principles, defines the scope of application, details the participants and their
role in ensuring that the internal control system of each company and Groupe
BPCE works properly.
The Group’s Internal Control Charter, which sets the general principles, has been
supplemented by charters organizing the periodic control of subsidiaries (internal
audit) and permanent control: risk, compliance, IT system security and finance
in the accounting and financial reporting quality control system.
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Application of the control framework with regard
to accounting and financial data
Within the institutions
Reflecting the decentralized nature of Groupe BPCE, internal control procedures
are tailored to the organization of each consolidated entity. In all cases, these
procedures include several levels of controls:
• a basic level, i.e. “Level One controls” (control), relating to operational
departments and integrated into accounting treatment procedures;
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• an intermediate level, i.e. “Level Two controls” (review), organized and
executed under the responsibility of a specialist audit function within the
Finance divisions dedicated to carrying out accounting and regulatory reviews.
This function performs independent controls on accounting treatment
procedures to ensure the reliability and completeness of financial statements
in conjunction with permanent controls functions;
• an upper level, i.e. “Level Three controls” (audit), involving periodic controls
organized under the authority of the local internal audit division or the Group’s
Inspection générale division, or controls performed by parties external to
Groupe BPCE (particularly Statutory Auditors and the Autorité de contrôle
prudentiel et de résolution).
Within the central institution
COORDINATION OF THE “ACCOUNTING AND REGULATORY REVIEW” PROCESS
Within the central institution, the Finance division coordinates the permanent
system for accounting and regulatory reviews and regulatory reports, as part of
an accounting and regulatory review function, the rules of which are specified
in the Accounting and Regulatory Review Charter. Within the Group Finance
division, this function is coordinated by the Financial Review division. Reporting
to the head of Group Accounting, the division head has been granted normative
powers over the function and is a standing member of the Group Internal Control
Coordination Committee.
In conjunction with the shareholder institutions and Group subsidiaries, the
Financial Review division maintains a strong functional link between the
function within the Group institutions and that of the central institution. This
is to guarantee the quality of the Group’s accounting and regulatory reporting.
Its main duties are to:
• facilitate sharing of best practices within a special-purpose committee
(Auditors’ Committee) and working groups;
• organize the drafting and distribution of the set of standards and documents
for the function;
• coordinate the reporting system for the function with the central institution;
• work closely with the Group’s Statutory Auditors on the statutory system within
Groupe BPCE, while ensuring, on behalf of the Audit and Risk Committee,
the independence of the Statutory Auditors (monitoring compliance with the
selection procedure, review of the fees paid by Groupe BPCE and the type of
duties performed by the Statutory Auditors within Groupe BPCE, etc.).
The Financial Review division’s other duties are as follows:
• Level Two control of the accounting work and in particular financial and
regulatory statements published under the responsibility of the Group Finance
division;
• controlling the data produced by other business lines and coordinating the
internal control actions within the Group Finance division in conjunction with
other permanent control entities.
In 2013, the Accounting and Regulatory Review function continued to
implement its procedures in line with the other permanent control functions,
in particular:
• structuring the body of standards and its validation process by the appropriate
bodies, which is essentially based on the Accounting and Regulatory Review
Charter (the “Charter”), which forms the basis for the body of standards, Group
Review Standards (NRG), adaptations of the “Charter” for the operational
divisions, and finally the Group Audit Guidelines (GRG), intended to provide
operational and/or methodological clarifications to implement the “Charter”
or the standards;
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• clarifying and strengthening statutory audit checks and rules within Groupe
BPCE by implementing a qualitative survey on services provided by Acting
Statutory Auditors, to assess them according to several criteria (interpersonal
relations, involvement, understanding and technical expertise, communication,
organization, audit budget and mission statement, added value). The results
of this survey complement the analysis of services and audit fees for the
Group Audit and Risk Committee as part of the control of Statutory Auditors’
independence;
• continuing the roll-out to Group entities of the Group auditing and control
tool (Comptabase). As it has already been rolled out in the Caisse d’Epargne
network and in Banque Populaire banks that are part of the i-BP IT community,
its roll-out to other Group entities represents the convergence of tools and
harmonization of methods in this area;
• continuing departmental training as part of a permanent training system.
In addition to the self-checking and external control procedures performed
in the entities responsible for preparing individual or consolidated financial
statements, the quality of accounting controls is verified by:
• the Group Accounting division, which coordinates the system for checking the
quality of accounting and financial information. For this purpose:
- in its responsibility for standardizing accounting practices at the Group
level it produces parent company and consolidated financial statements
under French GAAP and IFRS,
- it regularly examines the regulatory statements of the Banque Populaire
banks, the Caisses d’Epargne and the Caisses de Crédit Maritime before
they are transmitted to the ACPR (consistency checks and analyses carried
out by a dedicated team),
- for consolidated financial statements, this team validates and verifies
that the scope of consolidation is compliant with accounting principles
in force, and performs various controls on data received on a quarterly
basis, through consolidation packages. These controls are supplemented
by analytical reviews and consistency controls of the main aggregates in
the financial statements, as well as an analysis of changes in equity and
deferred tax assets and liabilities during the period through individual and
consolidated tax reconciliations;
• the Group’s Statutory Auditors, which work on a panel basis and base their
opinions partly on the conclusions of each consolidated entity’s Statutory
Auditors, particularly regarding compliance with the Group’s standards as
laid down by BPCE, and partly on the effectiveness of local internal control
procedures. To make the certification process as efficient as possible, the
“Framework for Statutory Auditor Assignments at Groupe BPCE” requires
that each entity in the scope of consolidation has at least one representative
of the Group’s Statutory Auditors on its panel;
• Groupe BPCE’s Inspection générale division as part of its assignments at Group
institutions.
Finally, under CRBF regulation 97-02, as amended, relating to the prudential
monitoring of credit institutions, Groupe BPCE’s Inspection générale division
presents to the Audit and Risk Committee and the Supervisory Board an annual
report summarizing Group internal control, in coordination with the Group Risk
Management divisions and the Group Compliance and Security division. On the
basis of detailed questionnaires, this report assesses internal control procedures,
particularly in the accounting and financial fields.
ROLE OF SUPERVISORY BODIES IN ACCOUNTING
AND FINANCIAL DISCLOSURE
Once per quarter, the BPCE Management Board finalizes the consolidated
financial statements and presents them to the Supervisory Board for verification
and control purposes.
Individual financial statements are prepared once per year, in accordance with
regulations in force.
The Supervisory Board of BPCE checks and controls the individual and
consolidated financial statements prepared by the BPCE Management Board
and presents its observations about the financial statements for the fiscal year
at the Ordinary General Shareholders’ Meeting. For this purpose, the Supervisory
Board has set up a specialist committee in charge of preparing its decisions and
formulating recommendations: the Audit and Risk Committee.
function (Finance Control, Accounting, Cash Management, Asset-Liability
Management, Accounting and Regulatory Review, and Taxation);
• temporary bodies that manage and coordinate time-limited projects;
• permanent bodies.
In order to ensure the transparency and security of the system, these bodies
are formally governed by regulations that define the operation, organization,
composition, and role of each committee, along with the rules for reporting
on the discussions held by these committees. The Group Finance function’s
committees always involve representatives from the shareholder institutions
and, if applicable, Groupe BPCE’s subsidiaries.
The Group Management and Accounting Standards and Methods and Oversight
Committee is chaired by the Chief Financial Officer, in charge of Finance, Risks
and Operations. Its main duties are to validate:
Details on this committee’s duties, including monitoring the process for preparing
financial information, the statutory audit of the annual and consolidated
financial statements, as well as the Statutory Auditors’ independence, are defined
in paragraph 2.3.2 “Conditions governing the preparation and organization
of the Supervisory Board’s work”.
• the regulatory framework and management standards needed for Group
oversight;
The Finance Committee consists of executives of both networks and aims to
address the most important issues. In addition, BPCE’s Management Board
assigns the Group Finance division the task of organizing the process of
coordinating, disclosing, and forming a decision on the financial and accounting
information through the Finance function’s supervisory bodies, organized around
three types of bodies:
• working standards on accounting and regulatory review (Group Review
Standards), as part of the internal control system for accounting and
regulatory reporting.
• strategic accounting guidelines and Groupe BPCE’s framework of accounting
standards, including Groupe BPCE’s choices, where options are given by the
texts;
2
2
2
2
2
• coordination and reporting bodies: these comprise key managers from the
Finance function or key managers from each business line within the Finance
2
2
2
99
2
2
Statutory Auditors’ report on the report of the Chairman of the Supervisory Board
2.7 Statutory Auditors’ report on the report
of the Chairman of the Supervisory Board
This is a free translation into English of a report issued in French and it is provided solely for the convenience of English speaking users. This report should be read in
conjunction with, and construed in accordance with, French law and professional standards applicable in France. Statutory Auditors’ report, prepared in accordance
with Article L. 225-235 of the French Commercial Code (Code de commerce), on the report prepared by the Chairman of the Supervisory Board of BPCE.
Fiscal year ended December 31, 2013
BPCE
50, avenue Pierre Mendès-France
75013 Paris
To the Shareholders,
In our capacity as Statutory Auditors of BPCE and in accordance with Article L. 225-235 of the French Commercial Code (Code de commerce), we hereby report
to you on the report prepared by the Chairman of your company in accordance with Article L. 225-68 of the French Commercial Code for the fiscal year ended
December 31, 2013.
It is the Chairman’s responsibility to prepare, and submit to the Supervisory Board for approval, a report describing the internal control and risk management
procedures implemented by the company and containing the other disclosures required by Article L. 225-68 of the French Commercial Code, relating in particular
to corporate governance.
It is our responsibility:
• to report to you on the information contained in the Chairman’s report on internal control and risk management procedures relating to the preparation and
processing of accounting and financial information;
• to attest that the report includes the other information required by Article L. 225-68 of the French Commercial Code, it being specified that we are not responsible
for verifying the authenticity of this information.
We conducted our work in accordance with professional standards applicable in France.
Information concerning internal control and risk management procedures relating to the preparation
and processing of accounting and financial information
The professional standards require that we perform procedures to assess the authenticity of the information on internal control and risk management procedures
relating to the preparation and processing of accounting and financial information set out in the Chairman’s report. These procedures mainly consisted in:
• obtaining an understanding of the internal control and risk management procedures relating to the preparation and processing of the financial and accounting
information on which the information presented in the Chairman’s report is based and of the existing documentation;
• familiarizing ourselves with work done to prepare this information and with existing documentation;
• determining whether any material weakness in internal control relating to the preparation and processing of accounting and financial information noted during
our audit are properly reported in the Chairman’s report.
On the basis of this work, we have nothing to report on the information concerning the company’s internal control and risk management procedures relating to
the preparation and processing of accounting and financial information contained in the report prepared by the Chairman of the Supervisory Board in accordance
with Article L. 225-68 of the French Commercial Code.
Other information
We confirm that the report of the Chairman of the Supervisory Board sets out the other information required by Article L. 225-68 of the French Commercial Code.
Paris La Défense and Neuilly-sur-Seine, March 21, 2014
The Statutory Auditors
KPMG Audit
PricewaterhouseCoopers Audit
Mazars
Anik Chaumartin
Michel Barbet-Massin
Division of KPMG SA
Jean-François Dandé
Marie-Christine Jolys
100
Jean Latorzeff
Recovery and Restructuring Plan
2.8 Recovery and Restructuring Plan
2
On August 6, 2013, BPCE’s Supervisory Board approved the Group’s Recovery
and Restructuring Plan for 2013.
• identification of the options that will have a significant impact on the recovery
of the Group’s financial situation,
This plan takes into account the measures considered by the Financial Stability
Board for systemically important financial institutions and the draft European
directive on the recovery and resolution of banks and investment firms, which
is currently under discussion, and by the French law on the separation and
regulation of banking activities.
• preventative monitoring of leading indicators on the financial and economic
situation;
The objective of the Recovery and Restructuring Plan is to identify measures to
restore the Group’s financial solidity in the event it deteriorates significantly.
The plan presents the options available to the Group to establish a crisis
management system. It assesses the relevance of the different options in various
crisis scenarios and identifies the difficulties to be taken into account when
implementing each option.
The Recovery and Restructuring Plan is mainly based on:
• the Group’s organization and the specific implications of its cooperative
status;
• identification of the Group’s critical functions;
• capital and liquidity management systems;
2
• establishment of the organizational structures needed to implement the
recovery.
The plan will be kept up to date and approved by the Supervisory Board.
This system is monitored and coordinated by a permanent function at BPCE.
This function reports to the Strategy division in coordination with the Group
Finance division, the Risk Management division and the Legal Affairs division.
It operates in close cooperation with the Group Audit and Risk Committee.
2
The Recovery and Restructuring Plan is updated annually.
Natixis’ presence in the US led the Group to provide US authorities with a plan
to resolve its activities in the US. The plan presents various resolution scenarios
that may be applied under US regulations. The plan includes a public section
that may be accessed on the Federal Deposit Insurance Corporation website at:
http://www.fdic.gov/regulations/reform/resplans/.
• analysis of financial crisis scenarios;
• mapping of the main entities and an analysis of their contribution in terms
of solvency, liquidity and profitability;
2
2
2
2
2
101
2
2
Persons responsible for auditing the financial statements
2.9 Persons responsible for auditing the financial
statements
2.9.1
Statutory Audit system
Within the Group, the main rules that govern Statutory Audit system and aim
to guarantee Statutory Auditor independence in Groupe BPCE companies are
defined in the “Framework for Statutory Auditor Assignments at Groupe BPCE,”
approved by BPCE’s Supervisory Board on June 27, 2012.
Applicable to all Group businesses this framework primarily defines:
• the rules governing the selection of Statutory Auditors for the Group and
its entities;
• the rules governing the services that may be provided by Statutory Auditors
(or their networks);
• the role of Audit Committees with respect to monitoring the system.
On the choice of Statutory Auditors, in order to harmonize and ensure the
consistency of the Statutory Audit system, the BPCE Management Board
designated, based on the recommendation of the Group Audit and Risk
Committee, a list of “Statutory Auditor networks approved by the central
institution”. This list includes four networks, including the three networks of
which the central institution’s Statutory Auditors are members.
2.9.2
In terms of control, the Group Audit and Risk Committee ensures that Groupe
BPCE complies with the above-mentioned framework and reviews all services
provided by Statutory Auditors to Group businesses. This role primarily involves:
• an annual review of fees and the types of services rendered. The central
institution is notified of services rendered by the Statutory Auditors, which
appear on the income statement of each company;
• quarterly supervision of services not related to the audit. The central institution
is notified of the amount of commitments for these services whenever they
are greater than or equal to €50,000.
To this end, the Group Audit and Risk Committee relies on the work of the
Accounting and Regulatory Revision function. A Group review standard on
the control of the independence of Statutory Auditors specifies the role of
this function in this area and the main procedures it must implement. The
work carried out within this framework is presented to each company’s Audit
Committee and, on a consolidated basis, to the Group Audit and Risk Committee.
Statutory Auditors of BPCE
The Statutory Auditors are responsible for auditing the individual financial statements of BPCE and the consolidated financial statements of Groupe BPCE and
BPCE SA group. At December 31, 2013, the Statutory Auditors were:
PricewaterhouseCoopers Audit
KPMG Audit
Mazars
63, rue de Villiers
92208 Neuilly-sur-Seine Cedex
Division of KPMG SA
1, cours Valmy
92923 Paris-La Défense Cedex
61, rue Henri-Regnault
92075 Paris-La Défense Cedex
PricewaterhouseCoopers Audit (672006483 RCS Nanterre), KPMG Audit
(775726417 RCS Nanterre) and Mazars (784824153 RCS Nanterre) are
registered as Statutory Auditors, members of the Compagnie Régionale des
Commissaires aux Comptes de Versailles and under the authority of the Haut
Conseil du Commissariat aux Comptes.
Alternate: Étienne Boris, residing at 63, rue de Villiers, 92208 Neuilly-sur-Seine
Cedex, for a period of six fiscal years, i.e. until the Ordinary General Shareholders’
Meeting to be held in 2015, convened to approve the financial statements for
the year ending December 31, 2014.
KPMG AUDIT
PRICEWATERHOUSECOOPERS AUDIT
The Annual General Shareholders’ Meeting of CEBP (whose name was changed
to BPCE following its Combined General Meeting of July 9, 2009) of July 2, 2009,
voting under the conditions of quorum and majority applicable to an Ordinary
General Shareholders’ Meeting, decided to appoint PricewaterhouseCoopers
Audit for a period of six fiscal years, i.e. until the Ordinary General Shareholders’
PricewaterhouseCoopers Audit is represented by Ms. Anik Chaumartin.
102
The Annual General Shareholders’ Meeting of CEBP (whose name was changed
to BPCE following its Combined General Meeting of July 9, 2009) of July 2, 2009,
voting under the conditions of quorum and majority applicable to an Ordinary
General Shareholders’ Meeting, decided to appoint KPMG Audit, a division
of KPMG SA, for a period of six fiscal years, i.e. until the Ordinary General
Shareholders’ Meeting to be held in 2015, convened to approve the financial
statements for the year ending December 31, 2014.
KPMG Audit is represented by Ms. Marie-Christine Jolys and Mr. Jean-François
Dandé.
Alternate: Isabelle Goalec, residing at 1, cours Valmy, 92923 Paris La Défense
Cedex, for a period of six fiscal years, i.e. until the Ordinary General Shareholders’
MAZARS
The Annual General Shareholders’ Meeting of BPCE of May 24, 2013, voting
under the conditions of quorum and majority applicable to an Ordinary General
2.9.3
Shareholders’ Meeting, decided to appoint Mazars for a period of six fiscal years,
i.e. until the Ordinary General Shareholders’ Meeting to be held in 2019, convened
to approve the financial statements for the year ending December 31, 2018.
Mazars is represented by Mr. Michel Barbet-Massin and Mr. Jean Latorzeff.
2
Alternate: Anne Veaute, residing at 61, rue Henri-Regnault, 92075 ParisLa Défense Cedex, for a period of six fiscal years, i.e. until the Ordinary General
Shareholders’ Meeting to be held in 2019, convened to approve the financial
statements for the year ending December 31, 2018.
2
Remuneration of Statutory Auditors
As part of its duties defined by the “Framework for Statutory Auditor Assignments
at Groupe BPCE” approved by the Supervisory Board on June 27, 2012, the Group
Audit and Risk Committee ensures that the Statutory Auditors are independent,
specifically by carrying out a detailed review of fees paid by the Group to them
and the network to which they belong.
2
Furthermore, in accordance with AMF instruction 2006-10, Statutory Auditors’
fees are published in the registration document, specifying the following:
• fees paid to the Statutory Auditors of BPCE SA group;
• fees paid to the Statutory Auditors of Groupe BPCE.
2
2
2
2
2
103
2
2
FEES PAID TO THE STATUTORY AUDITORS OF BPCE SA GROUP
The following fees were paid to the Statutory Auditors responsible for auditing BPCE’s financial statements, together with their networks, in respect of the 2012
and 2013 fiscal years:
Total
amounts in
thousands
of euros(1)
2013
PwC
2012
2013
% Amount
Mazars
2012
% Amount
2013
% Amount
KPMG
2012
% Amount
2013
% Amount
2012
Amount
% Amount
% Amount
17,447
73% 17,994
1,664
1,927
563
736
552
611
549
580
– Subsidiaries
15,783
16,067
5,522
5,558
3,716
3,846
6,545
6,663
Other due
diligence
procedures
and services
directly linked
to the
Statutory
Auditors’
duties(3)
3,365
– Issuer
2,207
%
AUDIT
Statutory audit,
review of
parent
company and
consolidated
financial
statements(2)
– Issuer
– Subsidiaries
Subtota
14%
Change (%)
11%
1,366
1,158
20,812
2,656
78%
1,002
63%
6,294
10%
743
653
1,290
87% 20,650
6,085
7,087
1%
9%
274
349
89%
73%
7,037
1,032
79%
4,457
19%
697
640
469
73%
4,268
5,300
1%
13%
308
392
82%
83%
5,154
1,331
82%
7,243
15%
1,216
914
389
98%
7,094
8,425
8%
784
417
96%
83%
432
97%
3%
8,459
92%
-
Services
provided by the
network to fully
consolidated
subsidiaries
– Legal, tax,
payroll
1,990
1,234
1,719
622
113
36
158
– Other
1,025
1,316
882
913
14
182
129
Subtotal(4)
TOTAL
Change (%)
3,015
23,827
13%
576
221
2,550
11%
2,601
27%
1,515
18%
127
2%
218
4%
287
3%
797
8%
100% 23,200
100%
9,688
100%
8,572
100%
5,427
100%
5,372
100%
8,712
100%
9,256
100%
3%
13%
1%
(6)%
Comments:
(1) Amounts relating to services provided appear on the income statement for the reporting year, notably including unrecoverable VAT and, where applicable, before being deducted from equity.
(2) Includes services provided by independent experts or members of the Statutory Auditor’s network upon whom the Statutory Auditor may call in the course of certifying the financial statements.
(3) Other due diligence procedures and services directly linked to the Statutory Auditors’ duties and carried out upon the Group’s request, including due diligence carried out as part of financial transactions as well
as analyses and controls prior to evaluation by the European Central Bank (ECB) of the risks and quality of banking assets (Asset Quality Review).
(4) Other services essentially involve duties carried out upon the request of Natixis SA and its subsidiaries and mainly concern the provision of services and/or advising on tax-related matters, due diligence reviews
related to financial transactions and performing reviews of internal control system.
104
2
Fees in respect of duties carried out by the Statutory Auditors for the whole of Groupe BPCE (including Statutory Auditors not belonging to the same network as
those responsible for auditing BPCE’s financial statements) in respect of the 2012 and 2013 fiscal years were as follows:
2
FEES PAID TO THE STATUTORY AUDITORS OF GROUPE BPCE
Statutory Auditors (and their networks) responsible
for auditing BPCE’s financial statements(4)
amounts in
thousands
of euros(1)
Total
2013
BPCE SA group
2012
2013
Other Groupe BPCE Entities
2012
2013
Other Statutory Auditor networks
2012
2013
2012
Amount
% Amount
% Amount
% Amount
% Amount
% Amount
% Amount
% Amount
%
41,572
79% 42,465
82% 17,447
73% 17,994
78% 12,684
96% 12,584
97% 11,442
73% 11,887
77%
AUDIT
Statutory
audit,
examination
of individual
and
consolidated
financial
statements
Other due
diligence
procedures
and services
directly linked
to the
Statutory
Auditors’
duties(2)
Subtotal
2
5,709
47,281
Change (%)
11%
3,975
90% 46,440
8%
3,365
90% 20,812
2%
14%
2,656
87% 20,650
11%
475
89% 13,159
1%
4%
307
100% 12,891
2%
1,869
99% 13,311
2%
12%
1,012
7%
85% 12,899
84%
3%
Services
provided by
the network
to fully
consolidated
subsidiaries
– Legal, tax,
payroll
2,889
2,059
1,990
1,234
– Other
2,394
3,025
1,025
1,316
Subtotal(3)
5,283
TOTAL
Change (%)
2
10%
5,084
10%
3,015
13%
2,550
6
11%
6
-
40
893
785
27
1,369
1,682
67
1%
2,262
15%
2,467
16%
52,564 100% 51,523 100% 23,827 100% 23,200 100% 13,165 100% 12,958 100% 15,573 100% 15,366 100%
2%
3%
2%
2
2
1%
Comments:
(1) Amounts relating to services provided appear on the income statement for the reporting year, notably including unrecoverable VAT and, where applicable, before being deducted from equity.
(2) Other due diligence procedures and services directly linked to the Statutory Auditors’ duties and carried out upon the Group’s request, including due diligence carried out as part of financial transactions as well as
analyses and controls prior to evaluation by the European Central Bank (ECB) of the risks and quality of banking assets (Asset Quality Review).
(3) Other services essentially involve duties carried out upon the request of Natixis SA and its subsidiaries and mainly concern the provision of services and/or advising on tax-related matters, due diligence reviews
related to financial transactions and performing reviews of internal control system.
(4) PwC, Mazars and KPMG.
2
2
105
2
106
3
RISK MANAGEMENT
3.1 GROUPE BPCE’S MAIN RISKS
109
3.5 LEGAL RISKS
158
3.1.1
Main risks for 2013
109
3.5.1
Legal and regulatory issues and constraints
3.1.2
Risk factors
110
3.5.2
Legal and arbitration proceedings – BPCE
158
3.5.3
Legal and arbitration proceedings – Natixis
160
3.5.4
Situation of dependency
162
3.2 PILLAR III
116
3.2.1
Regulatory framework
116
3.2.2
Scope
116
3.2.3
Composition of regulatory capital
118
3.2.4
Regulatory capital requirements and risk-weighted
assets
122
3.2.5
Capital adequacy ratios at December 31, 2013
123
3.2.6
Groupe BPCE Risk Management division
125
3.2.7
Credit and counterparty risk
125
3.2.8
Securitization transactions
140
3.2.9
Risk related to equities for the banking book
145
3.2.10 Market risk
146
3.2.11 Operational risk
151
3.2.12 Stress tests
152
3.3 LIQUIDITY, INTEREST RATE AND FOREIGN
EXCHANGE RISKS
153
3.3.1
Liquidity and funding risk
153
3.3.2
Structural interest rate risk
155
3.3.3
Structural exchange rate risk
156
3.4 INSURANCE OF INSURABLE RISKS
157
3.6 TECHNICAL INSURANCE RISKS
158
163
3.6.1
BPCE Assurances
163
3.6.2
Natixis Assurances
164
3.6.3
Coface
165
3.6.4
CEGC
167
3.7 FINANCIAL STABILITY FORUM
RECOMMENDATIONS CONCERNING
FINANCIAL TRANSPARENCY
3.7.1
3.7.2
169
Sensitive exposures (excluding Natixis)
at December 31, 2013
169
Natixis’ exposure as at December 31, 2013
172
3.8 RISKS RELATING TO THE BPCE
GUARANTEE FOR PART OF THE NATIXIS
ASSETS MANAGED ON A RUN-OFF BASIS
176
3.9 RISKS RELATING TO THE MANAGEMENT
OF THE PROPRIETARY ACTIVITIES OF THE
FORMER CAISSE NATIONALE DES CAISSES
D’EPARGNE (CNCE)
177
107
3
RISK MANAGEMENT
This “Risk Management” chapter presents the types of risk factors to which
Groupe BPCE may be exposed, their scale and the impact that these risks could
have on the results and assets of Groupe BPCE, as well as the measures in place
to protect against them.
Also presented are the risks relating to BPCE’s guarantee of part of Natixis’
workout portfolio assets as well as the risks associated with the management of
the former Caisse Nationale des Caisses d’Epargne’s (CNCE) proprietary trading
activity.
In addition to the risks related in particular to the macroeconomic environment
or the structure of Groupe BPCE, the following risks are discussed: credit and
counterparty risks, market risks, operational risks and structural asset-liability
management risks (overall interest rate risk, liquidity and risk foreign exchange
risk).
The purpose of the Pillar III report included in this chapter is to present detailed
information regarding Groupe BPCE’s capital and risk management as well as
quantitative information relating to the calculation of capital adequacy ratios
under Pillar I.
This chapter details the main insurance policies taken out by Groupe BPCE,
the legal proceedings currently in progress and the risks related to insurance
activities.
In accordance with the Financial Stability Board recommendations, Groupe
BPCE’s sensitive exposures are described in detail in section 3.7 of this chapter.
108
This Chapter also complies with the Capital Requirements Directive (CRD), which
was transposed into French law by the Ministerial Decree of February 20, 2007
relating to capital requirements for credit institutions and investment firms.
Certain information presented in this chapter is mandatory under IFRS 7 and
is thus covered by the opinions of the Statutory Auditors on the consolidated
financial statements. This information is flagged by the statement “Information
provided in respect of IFRS 7”.
RISK MANAGEMENT
Groupe BPCE’s main risks
3.1 Groupe BPCE’s main risks
3.1.1
➡
3
3
Main risks for 2013
BREAKDOWN OF RISK-WEIGHTED ASSETS AT DECEMBER 31, 2013
85%
Credit risk
27 %
67 %
5%
Market risks
Commercial Banking
and Insurance
3
Natixis (excl. GAPC)
1%
GAPC
10%
5%
Operational risk
Other
The majority of Groupe BPCE’s risks are related to credit risk, with market risk
limited to 5% of the Group’s risk-weighted assets.
The risks are mainly borne by Commercial Banking and Insurance (67%) and
Natixis’ core businesses (27%).
Credit concentration risk: Groupe BPCE’s credit concentration risk is mainly
measured by monitoring major risks arising from individual concentrations and
by monitoring internal Group ceilings. No counterparty exceeds these regulatory
ceilings and no counterparty concentration risk exceeds the Group’s internal
ceilings which are much lower than the regulatory ceilings.
Sector risks are monitored at the Group level for the most sensitive sectors.
Their monitoring is subject to recommendations issued to the Group’s entities
in question by the Group Risk Management division.
Most of Groupe BPCE’s country risk is concentrated in its domestic market,
France and, to a lesser extent, the European Union. The Group is particularly
vigilant regarding risks associated with peripheral European countries and
geopolitical risks borne by certain countries. Once identified, these regions are
subject to specific analysis which is distributed to the relevant committees,
including in particular sovereign risks (see Chapter 3.2.7 “Credit and counterparty
risk”).
Market risk: the monitoring and analysis of market risk indicators are carried
out at various position aggregation levels, which provides an overview of
total exposure and risk consumption by risk factor. VaR and stress indicators
remained at very low levels during 2013 (VaR of €7.4 million at end-2013) (see
Chapter 3.2.10 “Market risks”).
Operational risk: considering the complexity of Groupe BPCE’s business lines,
failures due to errors in procedure management, external and customer fraud,
and products and commercial practices are the three main categories that
trigger operating losses (see Chapter 3.2.11 “Operational risk”).
Stress tests: BPCE carries out stress tests throughout the year (see Chapter 3.2.12
“Stress tests”) in various risk areas (credit, market, liquidity, country, etc.). They
are used to manage a specific risk (in particular for market or interest rate risks)
or annually as part of overall stress tests to measure the Group’s resilience to
adverse macroeconomic scenarios. The results are presented to the Group Risk
Management Committee.
Liquidity, interest rate and foreign exchange risks: during 2013, Groupe BPCE
continued to improve its liquidity position based on three key levers. The Group
continued to reduce the liquidity consumption of its activities, which it started
in 2011, relying in particular on a standardized system of liquidity budgets
allocated to each business line. The Group raised considerable medium- and
long-term funds on the market, allowing it to stabilize its medium- and longterm funding outstandings. This funding program was accompanied by increased
diversification of funding sources. Finally, a share of surplus liquidity was used
to increase deposits with central banks and portfolios of central bank-eligible
available assets, particularly in anticipation of the entry into force of the new
regulatory liquidity ratios (see Chapter 3.3 “Liquidity, interest rate and foreign
exchange risks”).
3
3
3
3
3
109
3
3
RISK MANAGEMENT
3.1.2
Risk factors
The banking and financial environment in which Groupe BPCE operates is
exposed to numerous risks which obliges it to implement an increasingly
demanding and strict policy to control and manage these risks.
Some of the risks to which Groupe BPCE is exposed are set out below. This is
not a comprehensive list of all of the risks faced by Groupe BPCE while carrying
out its business or considering the environment in which it operates. The risks
presented below, as well as other risks which are not currently known or not
considered significant by Groupe BPCE, could have a material adverse impact
on its business, financial position and/or results.
RISKS RELATING TO MACROECONOMIC
CONDITIONS, THE FINANCIAL CRISIS AND
STRICTER REGULATORY REQUIREMENTS
Unfavorable market or economic conditions and
stricter regulatory requirements may negatively
impact Groupe BPCE’s net banking income,
profitability and financial position
Groupe BPCE’s activities can be affected by changes in the financial markets
and, in general, by the economic environment in France, Europe and the rest
of the world.
liquidity on the financial markets and in the broader economy. Such changes
could have a negative impact on the environment in which financial institutions
operate and, as a result, have an unfavorable impact on Groupe BPCE’s financial
position and results.
In response to the financial crisis, governments (including the countries in which
Groupe BPCE’s entities operate) have adopted or are currently submitting to
Parliament a certain number of regulatory measures which constitute major
changes to the current framework (e.g. Basel III (CRD IV/CRR), Solvency II, DoddFrank Wall Street Reform and Consumer Protection Act, Foreign Account Tax
Compliance Act, European market infrastructures (EMIR), MiFID II, French
banking reforms, European banking union). An analysis and interpretation of
these measures, from a number of sources, could trigger new requirements for
Groupe BPCE to ensure compliance with all of these texts.
Implementing and complying with these measures could trigger:
• an increase in capital and liquidity requirements;
• a structural increase in funding costs;
• an increase in certain costs for Groupe BPCE (e.g. compliance, restructuring).
The scale of these measures (in particular those which are still being considered
or are not yet finalized) and their impact on the position of the financial markets
in general, and on Groupe BPCE in particular, are currently still difficult to
measure precisely.
During 2013, the economic environment in which Groupe BPCE operates was
marked by a persistently fragile economy in the euro zone and as-yet modest
rebound in global growth during the second half of the year. Despite a few signs
of improvement, major risks continued to weigh on global growth, mainly due to
the lack of a true recovery in global trade, which could lead to major disruptions
both in terms of credit and market volatility. Furthermore, the possible return
of systemic risk could also impact the bank’s refinancing conditions and the
liquidity of its financial assets.
Moreover, a certain number of extraordinary measures introduced by
governments (support measures), central banks (reduction in key interest
rates, unlimited LTROs and the OMT program), and regulators to address the
financial crisis, stabilize the financial markets and support financial institutions
have recently been, or may soon be, suspended or stopped altogether, which
in a context of uncertain growth may have an adverse impact on the business
conditions of financial institutions.
In addition to this still-uncertain economic context, the financial and banking
markets were also adversely affected by other significant events, often of a
political nature, such as the budget crisis which triggered the US shutdown and
the US public debt ceiling crisis which lasted close to three weeks in October,
the downgrading of France’s credit rating, the formation of a new government
in Italy, the crisis in Cyprus and political tensions in the Middle East and North
Africa, and fears of an economic slowdown in China.
RISKS RELATING TO THE STRUCTURE
OF GROUPE BPCE
The global economic outlook remains uncertain in the short and medium terms,
and an economic deterioration in Europe and particularly in France could also
have a knock-on effect for Groupe BPCE in terms of cost of risk and deteriorating
solvency.
In the event of a strong global economic recovery and excessive inflation or a
particular political event, the central banks might decide, at any time, with or
without prior consultation, to adapt their monetary policies and adjust their
liquidity access policies, which could trigger a potentially sharp reversal in
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On November 13, 2013, Groupe BPCE unveiled its strategic plan for 2014-2017,
which includes a certain number of initiatives, in particular four investment
priorities: (i) creating a new innovative model aimed at ensuring the best offline
and online customer relations; (ii) changing the Group’s financing models with
the aim of making the Group a major savings player to finance our customers;
(iii) becoming a fully-fledged bancassurance specialist, and (iv) stepping up
the pace of the Group’s international expansion. As part of the strategic plan,
Groupe BPCE has announced a number of financial targets, which are based
on assumptions but which in no way constitute a projection or forecast of
expected earnings. Groupe BPCE’s actual earnings are likely to vary (and may
vary considerably) from these targets for a number of reasons, including the
occurrence of one or more of the risk factors described in this chapter.
RISK MANAGEMENT
BPCE is subject to certain risks relating
to the guarantee extended to Natixis
BPCE has put in place a guarantee system shielding Natixis against the risk of
future losses and earnings volatility relating to Natixis’ isolated workout portfolio
of strategic and non-strategic assets. This guarantee system, comprising Total
Return Swaps and a financial guarantee, aims to reduce the impact of future
value adjustments and provisions for these assets on Natixis’ financial results.
See paragraph 3.8 of the report on the risk management procedures for a more
detailed description of the guarantee system.
This guarantee transfers the vast majority of the risk of future value adjustments
associated with these assets. As Natixis is a fully-consolidated subsidiary of
Groupe BPCE, the guarantee does not have an impact on Groupe BPCE’s
consolidated net banking income, operating income or cost of risk. However, it
does have an impact on the share attributable to non-controlling interests and
consequently on the net income attributable to the equity holders of the parent
and on shareholders’ equity. As a result, provisions and material future value
adjustments associated with this asset portfolio may have an adverse effect on
Groupe BPCE’s results and financial position.
Natixis, a subsidiary of BPCE, may not be able to
completely and efficiently close certain positions
affected by the financial crisis.
Natixis is currently focused on gradually closing out certain activities that
were negatively affected by the financial crisis, in particular those subject to
proprietary risk such as exposure to structured products and complex derivatives.
This gradual winding-down phase concerned and will continue to concern the
disposal of assets affected by the crisis, to the extent permitted by market
conditions.
RISK FACTORS RELATING TO THE BANKING SECTOR
AND GROUPE BPCE ACTIVITIES
Groupe BPCE is exposed to numerous risk
categories associated with banking activities
The four main risk categories associated with Groupe BPCE’s activities are
presented below. The following risk factors refer to or provide detailed examples
of these various types of risk (including the impact of the most recent financial
crisis) and describes certain additional risks to which Groupe BPCE is exposed.
• Credit risk. Credit risk is the risk of financial losses that may result in a
counterparty being unable to honor its contractual obligations. The
counterparty may be a bank, a financial institution, an industrial group or a
commercial company, a government and its various entities, an investment
fund or an individual. Credit risk arises from lending activities as well as from
other activities in which Groupe BPCE is exposed to the risk of counterparty
default (trading activities, capital market activities, derivatives trading and
settlement). Credit risk may also arise from Groupe BPCE’s factoring activities,
even though this risk is associated with the credit of the counterparty’s
customer and not with the counterparty itself. See paragraph 3.2.7 of this
chapter.
• Market and liquidity risk. Market risk is the risk of losses due mainly to
unfavorable changes in market variables. These variables include, but are
not limited to, exchange rates, bond prices and interest rates, security and
commodity prices, derivative prices, financial instrument credit spreads and
the prices of other types of assets, such as real estate assets for example.
Liquidity is also a key component of determining market risk. If a listed
instrument or a transferable asset is not very liquid or not liquid at all it can
no longer be marketed at its estimated value (as was the case recently for
certain assets classes due to market disruptions). Insufficient liquidity may
be due to restricted access to financial markets, unexpected cash or capital
requirements or regulatory restrictions.
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Market risk may affect trading books and long-term investment securities.
For long-term investment securities, this risk includes:
- risk relating to Asset and Liability Management, i.e. the risk of losses due to
asset-liability mismatch in banking portfolios or insurance activities; this
risk is mainly determined by the interest rate risk;
- the risk relating to investment activities, which is directly related to changes
in the value of assets invested in security portfolios, and which may be
recorded in the income statement or directly in equity; and
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- the risk from other activities, such as real estate, which is indirectly affected
by changes in the value of marketable assets which are held as part of
ordinary activities.
See paragraphs 3.2.10 and 3.3 of this chapter.
• Operational risk. Operational risk is the risk of losses due to inadequacies or
weaknesses in internal procedures, or external incidents, whether deliberate,
inadvertent or of a natural cause. Internal processes include, but are not
limited to, human resources and information systems, risk management
and internal control mechanisms (including fraud prevention). External
incidents include floods, fire, storms, earthquakes and terrorist acts. See
paragraph 3.2.11 of this chapter.
• Insurance risk. Insurance risk is the risk to profits of any difference between
expected and actual claims. Depending on the insurance products involved,
risk varies based on changes in macroeconomic factors, customer behavior,
public health policy, pandemics, accidents and natural disasters (such as
earthquakes, storms, industrial accidents, terrorist acts or acts of war). See
paragraph 3.6 of this chapter.
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BPCE and its subsidiary, Natixis, must maintain high
credit ratings in order not to affect their profitability
Credit ratings are important in terms of the liquidity of BPCE and its affiliates
which are active in the financial markets, in particular Natixis Wholesale Banking.
A ratings downgrade may affect the liquidity and competitive position of BPCE
or Natixis, increase funding costs, limit access to capital markets and trigger
clauses in some bilateral contracts for trading, derivatives and collateralized
funding transactions. BPCE and Natixis’ non-securitized long-term funding cost
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RISK MANAGEMENT
is directly linked to their respective credit spreads (the rate differential beyond
government-issued securities rates with the same maturity that is paid to bond
investors), which in turn are heavily dependent on their ratings. An increase in
credit spreads may materially raise BPCE and Natixis’ funding cost. Shifts in
credit spreads are permanent, correlated to the market and sometimes subject to
unforeseen and highly volatile changes. Credit spreads are also the result of the
markets’ perception of the issuer’s solvency. Moreover, credit spreads may be the
result of changes in the cost of purchasing credit default swaps on some BPCE
or Natixis bonds. This cost may also depend on the credit quality of these bonds
and a number of other factors over which BPCE and Natixis have no control.
Any increase in provisions or any losses beyond the
level of provisions that have already been booked
may have an adverse effect on Groupe BPCE’s
results or financial position
With respect to their lending loan activities, Groupe BPCE entities record
provisions for doubtful receivables, which are booked in its income statement
under “cost of risk”. The overall level of provisions is decided based on historical
losses, the volume and types of loans granted, market practices, loan arrears,
economic conditions or other factors that reflect the recovery rate of various
loans. Although Groupe BPCE entities aim to record sufficient provisions, their
lending activities may lead them to increase these provisions for losses on
loans in the event of an increase in non-performing assets, a deterioration in
economic conditions which may trigger an increase in counterparty defaults
and bankruptcy, or for any other reason. Any significant increase in provisions
for losses or a significant change in Groupe BPCE’s risk of loss estimates for
its unimpaired loan portfolio, or any change in accounting standards, or any
losses in excess of provisions recorded for the loans in question, may have an
unfavorable impact on Groupe BPCE’s results and financial position.
Groupe BPCE’s ability to attract and retain skilled
employees is paramount to the success of its
business and failing to do so may materially affect its
performance
Groupe BPCE’s employees are one of its most important resources and
competition to attract qualified personnel is fierce in many sectors of the
financial services industry. Groupe BPCE’s results depend on its ability to attract
new employees and retain and motivate existing employees. Changes to the
economic environment (in particular tax and other measures aimed at limiting
the pay of banking sector employees) may compel the Group to transfer its
employees from one unit to another, or reduce the workforce of its entities;
these transfers may cause temporary disruption due to the time required for
employees to adapt to their new functions and prevent Groupe BPCE from
benefiting from growth opportunities or potential efficiency gains.
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European regulatory and legislative initiatives
governing pay may have a significant impact on
Groupe BPCE’s Wholesale Banking activities
Regulatory and legislative initiatives currently under review in Europe may
materially change the pay structure and amounts paid to certain employees. If
they are adopted in their current form, these initiatives would ban the payment
of cash bonuses exceeding the fixed pay of the employees in question (or
exceeding twice the amount of employees’ pay, subject to shareholder approval),
and limit share bonuses. The potential impact of these initiatives is difficult to
foresee. They could lead to a significant increase in the fixed pay expectations of
qualified employees, in which case Groupe BPCE’s cost base would become a lot
less flexible. This would reduce net income during phases of market correction
compared to the net income that could be achieved with a pay structure with
a higher variable component. Moreover, due to these initiatives, it may become
even harder to attract qualified employees in these activities.
Future events may vary compared to Management
assumptions, on which the financial statements of
Groupe BPCE entities are based, which in the future
may expose it to unexpected losses
According to current IFRS standards and interpretations, Groupe BPCE entities
must base their financial statements on certain estimates, in particular
accounting estimates relating to the determination of provisions for doubtful
loans and receivables, provisions for potential claims and litigation, and the fair
value of certain assets and liabilities. If the values used for these estimates prove
to be materially inaccurate, in particular in the event of sharp or unexpected
shifts in the markets, or if the methods used to calculate these values are
modified due to future changes in IFRS standards or interpretations, Groupe
BPCE may be exposed to unexpected losses.
Market fluctuations and volatility expose Groupe
BPCE, in particular its subsidiary Natixis, to material
losses on its trading and investment activities
With respect to its trading and investment activities, Natixis takes positions
in the bond, currency, commodity and equity markets, as well as in unlisted
securities, real estate assets and other kinds of assets (this is also true of other
Groupe BPCE entities, but to a lesser extent). Volatility on these markets and
other market segments (i.e. the scale of fluctuations in price over a set period
on a specific market, regardless of the levels of these markets) may have an
unfavorable impact on its market positions. Volatility may also trigger losses on
trading and hedging products used by Natixis, including swaps, futures, options
and structured products, if these are lower or higher than Natixis’ estimates.
As Natixis holds assets or has net long positions on these markets, any market
correction would lead to losses due to a decrease in the value of these positions.
RISK MANAGEMENT
Conversely, as Natixis has disposed of assets which it does not own or on which
it held net short positions on these markets, any rebound on the latter may
expose it to losses due to measures taken to hedge these positions by buying
on a rising market. Natixis may, on occasion, implement a trading strategy
involving a long position in one asset and a short position in another, from which
it intends to generate gains on the change in the relative value of both assets.
However, if the relative value of both assets change in the same direction, or to
an extent not anticipated by Natixis, or for which no hedging transaction had
been set up, the company could record a loss on its arbitrage positions. These
losses, if material, could have a negative impact on Natixis’ and Groupe BPCE’s
results and financial position.
Groupe BPCE’s revenues from brokerage activities
and other activities that generate fee and
commission income may decrease in the event of
market downturns
A market downturn is liable to result in a drop in the volume of trades that
Groupe BPCE carries out on behalf of its customers and, as a result, in a decline
in net banking income from these activities. Moreover, asset management fees
that Groupe BPCE invoices to its customers are generally calculated based on
the value or performance of the portfolios. Thus a downturn in the markets
that results in a decline in the value of these portfolios or which increases the
amount of outflows would lead to a decrease in income from asset management
and private banking activities.
Irrespective of market fluctuations, the underperformance of Groupe BPCE’s
asset management activity could lead to a decrease in assets under management
(in particular the acquisition of mutual funds) and other fees, premiums or other
management income received by Groupe BPCE.
A prolonged decline in the markets may reduce the
liquidity of assets and make their disposal more
difficult. Such a situation may lead to material losses
In some of Groupe BPCE’s activities, a prolonged decline in asset prices may bring
down the level of activity or reduce liquidity on the market in question. Such a
situation would expose Groupe BPCE to material losses if it is unable to rapidly
close out its potentially loss-making positions. This is particularly true of assets
that are intrinsically illiquid. Certain assets which are not traded on exchanges
or regulated markets, such as interbank derivatives, are usually marked-to-model
rather than marked-to-market. Given the challenge of monitoring the change
in the price of these assets, Groupe BPCE may incur unexpected losses.
Changes in interest rates may have an unfavorable
impact on Groupe BPCE’s net banking income and
results
Revenues net of interest earned by Groupe BPCE during a given period have a
material influence on the net banking income and profitability for this period.
Moreover, significant changes in credit spreads, such as the widening of spreads
recently observed, may have an impact on Groupe BPCE’s operating income.
Interest rates are highly sensitive to various factors that may be outside the
control of Groupe BPCE entities. Changes in market interest rates may have an
impact on the interest rate applied to interest-bearing assets, contrary to those
of interest rates paid on interest-bearing liabilities. Any unfavorable trends in the
yield curves may trigger a decline in net interest income from lending activities.
Moreover, rises in interest rates at which short-term financing is available and
maturity mismatches may have a negative impact on Groupe BPCE’s profitability.
An increase in high interest rates and credit spreads, particularly if these changes
are rapid, may contribute to a less favorable environment for certain banking
services.
Changes in exchange rates may have a material
impact on Groupe BPCE’s results
Groupe BPCE entities carry out a large share of their activities in currencies other
than the euro, in particular the US dollar, and changes in the exchange rate may
affect their net banking income and results. The fact that Groupe BPCE records
costs in currencies other than the euro only partly offsets the impact of changes
in the exchange rate on net banking income. Natixis is particularly exposed to
fluctuations between the euro and US dollar, as a major share of its net banking
income and operating income is generated in the United States. As part of its
risk management policy, BPCE and its subsidiaries enter into transactions to
hedge their exposure to exchange rate risk. However, these transactions may not
fully offset the unfavorable impact of exchange rate fluctuations on operating
income or even, under certain assumptions, may amplify their effect.
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Any interruption or failure of the information systems
belonging to Groupe BPCE or a third party may
trigger a shortfall and lead to losses
As is the case for the majority of its competitors, Groupe BPCE is highly
dependent on communication and information systems, as a large number of
increasingly complex transactions are processed in the course of its activities.
Any failure, interruption or malfunction in these systems may cause errors or
interruptions in the systems used to manage the customer accounts, general
accounts, deposits, transactions and/or to process loans. For example, if Groupe
BPCE’s information systems were to malfunction, even for a short period, it
would be unable to meet its customers’ needs in time and could thus lose
transaction opportunities. A temporary failure in Groupe BPCE’s information
systems despite back-up systems and contingency plans could also generate
substantial information recovery and verification costs, or even a shortfall in
its proprietary activities if, for example, such a failure were to occur during the
implementation of a hedging transaction. The inability of Groupe BPCE’s systems
to adapt to an increasing number of transactions may also limit its ability to
develop its activities.
Groupe BPCE is also exposed to the risk of disruption or operational failure of one
of its clearing agents, foreign exchange markets, clearing houses, depositories or
other financial intermediaries or external service providers that it uses to carry
out or simplify its securities transactions. As interconnectivity with its customers
continues to grow, Groupe BPCE may also become increasingly exposed to
the risk of the operational malfunction of its customers’ information systems.
Groupe BPCE cannot guarantee that such failures or interruptions in its own
systems or in third party systems will not occur or that, if they do occur, they
will be adequately resolved.
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Unforeseen events may cause an interruption in
BPCE’s activities and trigger material losses and
additional costs
Unforeseen events, such as a serious natural disaster, a pandemic, attacks or
any other emergency situation, may cause an abrupt interruption in activities
at Groupe BPCE entities and trigger material losses, if the Group is not covered,
or not sufficiently covered, by an insurance policy. These losses could relate to
material assets, financial assets, market positions or key personnel. Moreover,
such events may also disrupt the infrastructure of Groupe BPCE or that of a third
party with which Groupe BPCE carries out its activities and may also trigger
additional costs (relating in particular to the cost of relocating the affected
personnel) and increase Groupe BPCE’s costs (especially insurance premiums).
Following such an event, Groupe BPCE may be unable to insure certain risks,
which would lead to an increase in Groupe BPCE’s overall risk.
Groupe BPCE may be vulnerable to political,
macroeconomic and financial environments or to
specific circumstances in countries in which it
operates
Certain Groupe BPCE entities are exposed to country risk, which is the risk
that economic, financial, political or social conditions in a foreign country
may affect their financial interests. Natixis, in particular, operates worldwide,
including in parts of the world that are developing, commonly referred to as
emerging markets. In the past, many countries classified as emerging markets
have experienced serious economic and financial instability, in particular
devaluations of their local currencies, currency exchange and capital controls,
and weak or negative economic growth. Groupe BPCE’s activities and income
from transactions and trades outside the European Union and the United States,
despite being limited, are exposed to risk of loss due to unfavorable political,
economic and legal developments, in particular currency fluctuations, social
instability, changes in government or central-bank policies, expropriation,
nationalization, asset confiscation and changes to the law governing property
rights.
The failure or inadequacies of Groupe BPCE’s
policies, procedures and risk management strategies
may expose it to unidentified or unexpected risks
which may trigger material losses
Groupe BPCE’s risk management policies and procedures may not be effective
enough to limit its exposure to all types of market environments or all kinds
of risks, including risks that Groupe BPCE was unable to identify or anticipate.
Furthermore, the risk management techniques and strategies adopted by Groupe
BPCE do not guarantee an actual lowering of risk in all market environments.
These techniques and strategies may prove ineffective against certain types of
risk, in particular risks that Groupe BPCE had not already identified or anticipated.
Some of the indicators and quantitative tools used by Groupe BPCE to manage
risk are based on the observation of past market performance. To measure risk
exposure, Groupe BPCE’s heads of risk management carry out an analysis, in
particular a statistical analysis, of these observations. There is no guarantee that
these tools or indicators are capable of foreseeing future exposure to risk. For
example, this exposure to risk may be due to factors that Groupe BPCE may
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not have sufficiently anticipated or correctly assessed in its statistical models or
due to unexpected or unprecedented shifts in the market. This would decrease
Groupe BPCE’s ability to manage its risks. As a result, losses to which Groupe
BPCE is subject may be higher than those anticipated based on the historical
average. Moreover, Groupe BPCE’s quantitative models cannot factor in all risks.
Some risks are subject to a more qualitative analysis that may be insufficient and
thus expose Groupe BPCE to material unexpected losses. In addition, while no
material issue has been identified to date, the Group’s risk management systems
are subject to the risk of operational failure, including fraud.
Groupe BPCE’s hedging strategies do not eliminate
all risk of loss
Groupe BPCE may incur losses if any of the various hedging instruments or
strategies that it uses to hedge various kinds of risks to which it is exposed
proves ineffective. Many of these strategies are based on the observation of past
market performance and the analysis of historical correlations. For example, if
Groupe BPCE holds a long position in an asset, it may hedge the risk by taking
a short position in another asset whose past performance offsets the change
in the long position. However, it is possible that this hedge is only partial, that
the strategies do not hedge all future risks or do not effectively decrease risk in
all market environments. Any unexpected swings in the market, such as those
seen on the international financial markets since the second half of 2007,
may also decrease the effectiveness of these hedging strategies. Moreover, the
accounting recognition of gains and losses from ineffective hedges may increase
the volatility of results published by Groupe BPCE.
Groupe BPCE may encounter difficulties in
identifying, implementing and incorporating its policy
governing acquisitions or joint ventures
Although acquisitions are not a major part of Groupe BPCE’s current strategy,
the Group may nonetheless consider acquisition or partnership opportunities
in the future. Although Groupe BPCE carries out an in-depth analysis of any
companies which it may acquire or joint ventures into which it may enter,
in general it is impossible to carry out an exhaustive appraisal. As a result,
Groupe BPCE may have to assume initially unforeseen commitments. Similarly,
the results of the acquired company or joint venture may prove disappointing
and the expected synergies may not be realized in whole or in part, or the
transaction may even give rise to higher-than-expected costs. Groupe BPCE may
also encounter difficulties with the consolidation of a new entity. The failure of
an announced acquisition or failure to consolidate a new entity or joint venture
may place a material strain on Groupe BPCE’s profitability. This situation may
also lead to the departure of key personnel. In the event that Groupe BPCE is
obliged to offer financial incentives to its employees in order to retain them,
this situation may also lead to an increase in costs and a decline in profitability.
Joint ventures expose Groupe BPCE to additional risks and uncertainties in that
it may depend on systems, controls and persons that are outside its control
and may, in this respect, see its liability incurred, suffer losses or damage to its
reputation. Moreover, conflicts or disagreements between Groupe BPCE and
its joint venture partners may have a negative impact on the targeted benefits
of the joint venture.
RISK MANAGEMENT
Increased competition both in France (where the
majority of Groupe BPCE’s entities are based) and
abroad may weigh on net banking income and
profitability
Groupe BPCE’s main business lines operate in a highly competitive environment
both in France and other parts of the world where it is present. Groupe BPCE is
in competition with other entities based on a number of factors including the
execution of transactions, product and service offerings, innovation, reputation
and price. Groupe BPCE is also subject to heightened competition due to sector
consolidation and the arrival of new entrants on the market. Consolidation has
created a certain number of companies, in particular in the European financial
services sector which, like Groupe BPCE, can offer a wide range of products and
services ranging from insurance, loans and deposits to brokerage, investment
banking and asset management. If Groupe BPCE is unable to adjust to the
competitive conditions in France or in its other major markets by offering a
range of attractive and profitable products and services, it may lose market
share in certain key business lines or incur losses in some or all of its activities.
Moreover, a slowdown in the global economy or the economic environment
of Groupe BPCE’s main markets is likely to enhance competitive pressure, in
particular through greater pricing pressure and a slowdown in business volume
for Groupe BPCE and its competitors. New and more competitive players, which
are subject to separate or more flexible regulations or to other requirements
in terms of capital adequacy ratios, may also enter the market. These new
entrants may also be able to offer more competitive products and services.
Technological advances and the growth of e-commerce have made it possible
for non-custodians to offer products and services that were traditionally banking
products, and for financial institutions and other companies to provide electronic
and internet-based financial solutions, including electronic securities trading.
These new entrants may put downward pressure on the price of Groupe BPCE’s
products and services or affect Groupe BPCE’s market share.
The financial solidity and performance of other
financial institutions and market players may have
an unfavorable impact on Groupe BPCE
Groupe BPCE’s ability to execute transactions may be affected by the financial
solidity of other financial institutions and market players. Financial institutions
are closely interconnected as a result, notably, of their trading, clearing,
counterparty and financing operations. A default by a sector player, or even mere
rumors or concerns regarding one or more financial institutions or the financial
industry in general, has already led to a general contraction in market liquidity
in the past and may lead to losses or further defaults in the future. Groupe
BPCE is exposed to several financial counterparties, which in turn exposes it to
a potential insolvency risk if a set of counterparties or Groupe BPCE customers
were to default on their commitments. This risk would be exacerbated if the
assets held as collateral by Groupe BPCE could not be sold, or if their selling price
would not cover all of Groupe BPCE’s exposure to loans or derivatives in default.
Moreover, fraud or malicious acts committed by financial sector participants
may have a material adverse effect on financial institutions due in particular
to the interconnection of institutions which operate on the financial markets.
Losses that may arise from the above-mentioned risks could significantly impact
Groupe BPCE’s results.
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Pillar III
3.2 Pillar III
3.2.1
Regulatory monitoring of credit institutions’ capital is based on regulations
defined by the Basel Committee. Credit institutions must comply with
recommendations, known as Basel II, which are based on three pillars that
form an indivisible whole:
PILLAR I
Pillar I sets minimum requirements for capital. It aims to ensure that banking
institutions hold sufficient capital to provide a minimum level of coverage for
their credit risk, market risk, and operational risk. The bank can use standardized
or advanced methods to calculate its capital requirement.
PILLAR II
This establishes a process of prudential monitoring that complements and
strengthens Pillar I.
It consists of:
• analysis by the bank of all of its risks, including those already covered by
Pillar I;
• calculation by the bank of the amount of economic capital it needs to cover
these risks;
PILLAR III
Pillar III is concerned with establishing market discipline through a series of
reporting requirements. These requirements – both qualitative and quantitative
– are intended to improve financial transparency in the assessment of risk
exposure, risk assessment procedures and capital adequacy.
These recommendations are set out at the European level in the EU Capital
Requirements Directive (CRD), which was transposed into French law by the
Ministerial Decree of February 20, 2007 relating to capital requirements for
credit institutions and investment firms.
Credit institutions covered by the CRD are thus required to respect a capital
adequacy ratio of at least 8% at all times. This capital adequacy ratio is equal
to the ratio of total capital to the sum of:
• risk-weighted assets for credit and dilution risk;
• capital requirements for the prudential monitoring of market risk and
operational risk, multiplied by 12.5.
New recommendations, known as Basel 2.5, were issued by the Basel Committee
in 2009. These recommendations were reflected in the EU directive (CRD III)
in July 2010 and transposed by the decree of February 20, 2007, which was
amended on November 23, 2011.
• comparison by the banking supervisor of its own analysis of the bank’s
risk profile with the analysis conducted by the bank, to inform its choice
of prudential measures, which may take the form of capital requirements
exceeding the minimum requirements or any other appropriate technique.
3.2.2
Scope
PRUDENTIAL SCOPE
Groupe BPCE is subject to a consolidated regulatory reporting requirement from
the Autorité de contrôle prudentiel et de résolution (ACPR – French Prudential
Supervisory Authority). Pillar III is therefore prepared on a consolidated basis.
The prudential scope of consolidation is established based on the statutory
scope of consolidation. The main difference between these two scopes lies in
the consolidation method for insurance companies, which are accounted for
under the equity method within the prudential scope, regardless of the statutory
consolidation method.
The following insurance companies are accounted for under the equity method
within the prudential scope of consolidation:
• CNP Assurances;
• BPCE Assurances;
• Surassur;
• Muracef;
• Coface;
• Natixis Assurances;
• Compagnie Européenne de Garanties et de Cautions;
• Prépar-Vie;
• Prépar IARD;
• Caisse Garantie Immobilière du Bâtiment.
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3
TRANSITION FROM ACCOUNTING BALANCE SHEET TO PRUDENTIAL BALANCE SHEET
The table below shows the transition from an accounting balance sheet to a prudential balance sheet for Groupe BPCE at December 31, 2013.
Assets at December 31, 2013
Cash and amounts due from central banks
BPCE statutory scope
Insurance
restatements
BPCE prudential
scope
60,410
(21)
60,389
206,072
(9,128)
196,944
– o/w securities portfolio
78,551
(9,305)
– o/w loan book
10,178
– o/w repurchase agreements
61,911
256
62,167
– o/w derivative financial instruments
55,432
(79)
55,353
Financial assets at fair value through profit or loss
Hedging derivatives
Available-for-sale financial assets
69,246
10,178
6,643
6,643
79,374
(37,361)
42,013
Loans and receivables due from credit institutions
108,038
(782)
107,256
Loans and receivables due from customers
578,419
(394)
578,025
Revaluation difference on interest rate risk-hedged portfolio
Held-to-maturity financial assets
Current tax assets, deferred tax assets
Accrued income and other assets
5,060
(3,955)
6,622
(71)
6,551
46,675
(8,122)
38,553
7,612
6,426
2,629
3,797
Investment property
2,022
(1,269)
753
Property, plant and equipment
4,539
(89)
4,450
Intangible assets
1,282
(233)
1,049
Goodwill
4,168
(463)
3,705
1,123,520
(58,091)
1,065,429
BPCE statutory scope
Insurance
restatements
BPCE prudential
scope
179,832
(8)
179,824
Liabilities at December 31, 2013
3
5,060
11,567
Investments in associates
TOTAL
3
3
3
Amount due to central banks
Financial liabilities at fair value through profit or loss
– o/w trading securities portfolio
– ow loans and repurchase agreements
41,289
41,289
1,828
1,828
– o/w portfolio measured under the market value option
79,492
(6)
79,486
– o/w derivative financial instruments
57,223
(2)
57,221
(2,208)
86,606
Hedging derivatives
Amounts due to credit institutions
6,185
88,814
6,185
Amounts due to customers
458,189
(222)
457,967
Debt securities
214,654
3,958
218,612
Current tax liabilities, deferred tax liabilities
Accrued expenses and other liabilities
3
1,238
1,238
543
(207)
336
48,693
(7,670)
41,023
51,573
(51,489)
84
5,251
(126)
5,125
3
Liabilities associated with non-current assets held for sale
Insurance companies’ technical reserves
Provisions
Subordinated debt
10,376
10,376
51,339
51,339
Share capital and additional paid-in capital
20,011
20,011
Retained earnings
28,419
28,419
Unrealized or deferred gains and losses
Net income for the period
Non-controlling interests (minority interests)
TOTAL
240
240
2,669
2,669
6,833
(119)
6,714
1,123,520
(58,091)
1,065,429
117
3
3
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RISK MANAGEMENT
Pillar III
3.2.3
Composition of regulatory capital
Regulatory capital is determined in accordance with CRBF regulation 90-02 of
February 23, 1990 relating to capital.
It is divided into three categories: Tier-1 capital, Tier-2 capital and Tier-3 capital.
Deductions are made from these categories.
These categories are broken down according to decreasing degrees of solidity
and stability, duration and degree of subordination.
REGULATORY CAPITAL
12/31/2013
12/31/2012
20,011
27,871
Retained earnings
28,419
20,863
2,669
2,147
Income
Gains and losses recognized directly in equity
Consolidated equity
240
(327)
51,339
50,554
Perpetual deeply subordinated notes classified as equity(1)
(4,531)
(4,591)
Consolidated equity excluding perpetual deeply subordinated notes classified as equity
46,808
45,963
Non-controlling interests (minority interests)(2)
5,656
2,565
Deductions from Tier-1 capital
(5,188)
(5,315)
– Goodwill(3)
(4,339)
(4,427)
(849)
(888)
– Other intangible assets
Prudential filters(4)
(3,518)
(764)
Core Tier-1 capital before deductions
43,758
42,448
Basel II deductions(5)
(1,805)
(1,588)
Core Tier-1 capital
41,953
40,860
Deeply subordinated notes(6)
Tier-1 capital (A)
5,336
5,647
47,289
46,507
Upper Tier-2 capital
537
512
Lower Tier-2 capital
7,174
7,143
Tier-2 capital before deductions
7,712
7,655
Basel II deductions
(1,805)
(1,588)
Tier-2 capital (B)
5,906
6,067
0
(4,871)
53,195
47,703
(5)
Equity investments in insurance companies (C)
TOTAL REGULATORY CAPITAL (A)+(B)+(C)
(1)
(2)
(3)
(4)
(5)
(6)
Equity instruments issued by BPCE are recorded under shareholders’ equity in the financial statements.
Non-controlling interests within the prudential meaning.
Including goodwill in associates.
The variation is mainly attributable to the change in the regulatory treatment of insurance companies as from January 1, 2013.
50% of Basel II deductions are taken from Tier-1 capital and 50% from Tier-2 capital.
In addition to the equity instruments issued by BPCE (see (1)), deeply subordinated notes include the equity instruments issued by Natixis and subscribed for by third parties.
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CORE TIER-1 CAPITAL
• unrealized capital gains or losses recognized directly in equity due to a cash
flow hedge are eliminated;
Core capital and deductions
• for other financial instruments, including debt instruments or loans and
receivables, unrealized capital gains or losses are also eliminated;
Tier-1 capital consists of the following:
• share capital;
• reserves, including revaluation differences and gains or losses recognized
directly in equity;
• issue or merger premiums;
• retained earnings;
• net income attributable to equity holders of the parent.
Unrealized capital gains or losses on available-for-sale financial assets are
recorded in equity and restated as follows:
3
• impairment losses on any available-for-sale assets recognized in the income
statement are not restated.
The following deductions are made:
• treasury shares held and stated at their carrying value;
• intangible assets, including set-up costs and goodwill.
Other items
Non-controlling interests (minority interests): these include shares of noncontrolling interests in Equity interests held by Groupe BPCE.
• for capital instruments, net unrealized capital gains are deducted from Tier1 capital net of the amount of tax already deducted. Up to 45% of these
pre-tax gains are included in Tier-2 capital. Net unrealized capital losses are
not restated;
3
3
Changes in Core Tier-1 capital after deductions
3
Core Tier-1 capital
12/31/2012
40,860
Capital increase
1,801
Net income on prospective pay-out
2,164
Natixis extraordinary dividend payout
(563)
Foreign exchange effect
(274)
Change in method:
(2,089)
– IAS 19 revised
3
(81)
– Treatment of insurance companies
(2,008)
Change in deducted securitizations
180
Other items
(126)
12/31/2013
41,953
3
3
3
119
3
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TIER-1 CAPITAL
Tier-1 capital corresponds to Core Tier-1 capital plus the following items:
Hybrid securities (deeply subordinated)
These comprise innovative or non-innovative equity instruments, with progressive remuneration for innovative equity instruments. They are subject to limits relative
to Tier-1 capital. The same applies to the total represented by non-controlling interests and hybrid securities.
Hybrid securities: deeply subordinated notes issued at December 31, 2013
Issuer
Issue date
Currency
Amount in millions
(original currency)
Amount in millions of
euros at 12/31/2013
BPCE
11/26/2003
EUR
471
471
BPCE
07/30/2004
USD
200
142
BPCE
10/06/2004
EUR
368
369
BPCE
10/12/2004
EUR
80
80
NATIXIS
01/25/2005
EUR
156
156
BPCE
01/27/2006
USD
300
214
BPCE
02/01/2006
EUR
350
350
NATIXIS
10/18/2007
EUR
364
364
BPCE
10/30/2007
EUR
509
509
NATIXIS
03/31/2008
EUR
150
150
NATIXIS
04/30/2008
USD
186
135
BPCE
08/06/2009
EUR
52
52
BPCE
08/06/2009
EUR
374
374
BPCE
08/06/2009
USD
134
93
BPCE
08/06/2009
USD
444
309
BPCE
10/22/2009
EUR
750
750
BPCE
03/17/2010
EUR
818
TOTAL
818
5,336
Equity instruments issued by BPCE, whose outstandings totaled €4,531 million at December 31, 2013, are recorded under shareholders’ equity in the financial
statements. Equity instruments issued by Natixis and subscribed for by third parties, whose outstandings totaled €805 million at December 31, 2013, are recorded
under non-controlling interests in the financial statements.
TIER-2 CAPITAL
Tier-2 capital is as follows:
• capital from the issues of subordinated notes or loans (perpetual subordinated
notes);
• equity instruments: 45% of pre-tax net unrealized capital gains recognized
as Tier-2 capital;
• positive difference between expected losses calculated using internal ratings
approaches and the sum of value adjustments and portfolio-assessed
impairment relating to the exposures concerned.
• capital meeting the conditions of Article 4-d of regulation 90-02 (redeemable
subordinated notes). For term subordinated notes, a prudential discount
of 20% per year is applied as of the fourth year prior to maturity;
Changes in Tier-2 capital
12/31/2012
Redemption of subordinated notes
Prudential discount on issues relating to Article 4d
New subordinated notes issues
Other items
7,655
(670)
(1,387)
2,088
26
12/31/2013
120
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TIER-3 CAPITAL
Tier-3 capital includes a wider variety of long-term subordinated debt (over
five years) used only to hedge market risk.
of the share capital of a credit institution or investment firm, as well as
subordinated loans and any other capital component.
50% are taken from Tier-1 capital and 50% from Tier-2 capital:
Groupe BPCE does not hold any Tier-3 capital.
• carrying amount of credit or financial institutions’ securities consolidated
using the equity method;
DEDUCTIONS
• expected losses calculated on the equity exposure class;
• negative difference between provisions and expected losses within the scope
of exposures using the internal ratings based approach;
Deductions are defined in Articles 6, 6-II and 6-IV of regulation 90-02 applicable
to capital. Deductions include Equity interests representing more than 10%
• securitization positions weighted at 1,250%.
12/31/2013
12/31/2012
Non-consolidated investments in credit or financial institutions > 10%
804
728
Carrying amount of financial securities accounted for by the equity method
278
256
Subordinated loans to credit institutions > 10%
204
159
Expected losses on equity exposure class
197
131
Negative difference between provisions and expected losses
Securitization transactions weighted at 1,250%
TOTAL BASEL II DEDUCTIONS
– of which deductions from Tier-1 capital (50%)
– of which deductions from Tier-2 capital (50%)
1,245
663
882
1,241
3,610
3,177
1,805
1,805
1,588
1,588
Main non-consolidated investments exceeding 10% of share capital in credit and financial institutions
3
3
Breakdown of Basel II deductions
3
12/31/2013
12/31/2012
CACEIS
434
415
– Investments in associates
344
325
Crédit Logement
299
285
– Investments in associates
224
216
3
3
3
3
3
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3.2.4
Regulatory capital requirements and risk-weighted assets
In accordance with the decree of February 20, 2007 credit risk exposure can be
measured using two approaches:
• the “standardized” approach, based on external credit ratings and specific risk
weightings according to Basel categories of exposure;
• the “internal ratings based” (IRB) approach, based on the financial institution’s
internal ratings system;
- the Advanced IRB approach, for which banks use all their internal
component estimates: probability of default, loss given default, exposure
at default and maturity.
The methodology applied for internal ratings approaches is described in greater
detail in paragraph 3.2.7 “Credit and counterparty risk”.
• the IRB approach consists of two categories:
- the Foundation IRB approach, for which banks use only their probability
of default estimates,
REGULATORY CAPITAL REQUIREMENTS AND RISK-WEIGHTED ASSETS
Regulatory capital requirements for credit risk
12/31/2013
Risk-weighted assets
(RWA)
12/31/2012
Capital Risk-weighted assets
requirements
(RWA)
Capital
requirements
Credit risk: standardized approach
Central governments and central banks
806
64
686
55
Institutions
15,631
1,251
16,645
1,332
Corporates
79,474
6,358
77,848
6,228
Retail customers
24,496
1,960
25,057
2,005
Equities
1,573
126
2,558
205
Securitization positions
9,710
777
9,852
788
Other assets not involving credit obligations
Subtotal: standardized approach
6,634
531
7,038
563
138,324
11,066
139,683
11,175
Credit risk: IRB approach
550
44
317
25
Institutions
Central governments and central banks
9,725
778
11,825
946
Corporates
69,651
5,572
76,746
6,140
Retail customers
52,247
4,180
59,199
4,736
Equities
35,144
2,812
24,432
1,955
Securitization positions
2,778
222
3,337
267
Other assets not involving credit obligations
6,444
515
7,771
622
176,537
14,123
183,627
14,690
314,861
25,189
323,310
25,865
Subtotal: IRB approach
TOTAL RISK-WEIGHTED ASSETS AND CAPITAL
REQUIREMENTS FOR CREDIT RISK
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3
Regulatory capital requirements for market risks
12/31/2013
12/31/2012
requirements
(RWA)
Capital
requirements
(RWA)
Interest rate risk
4,259
341
8,687
Equity risk
1,132
91
742
59
Exchange rate risk
1,471
118
1,376
110
Key commodity risk
1,500
120
909
73
Market risk using the standardized approach
8,362
669
11,714
937
Market risk using the IRB approach
7,876
630
7,321
586
16,238
1,299
19,035
1,523
REQUIREMENTS FOR MARKET RISKS
3
695
3
Regulatory capital requirements for operational risk
12/31/2013
Operational risk: standardized approach
REQUIREMENTS FOR OPERATIONAL RISK
3.2.5
(RWA)
12/31/2012
requirements
(RWA)
Capital
requirements
37,871
3,030
38,601
3,088
37,871
3,030
38,601
3,088
3
3
Capital adequacy ratios at December 31, 2013
Groupe BPCE is subject to the decree of February 20, 2007 and must therefore respect a minimum capital adequacy ratio of 8%. The methods used by Groupe BPCE
to calculate risk-weighted assets are described in paragraph 3.2.4, “Regulatory capital requirements and risk-weighted assets”.
REGULATORY CAPITAL AND BASEL II CAPITAL ADEQUACY RATIOS
12/31/2013
12/31/2012
Core Tier-1 capital
41,953
40,860
Tier-1 capital
47,289
46,507
REGULATORY CAPITAL
53,195
47,703
Credit risk-weighted assets
314,861
323,310
Settlement/delivery risk-weighted assets
7
5
Market risk-weighted assets
16,238
19,035
Operational risk-weighted assets
37,871
38,601
368,977
380,950
Core Tier-1 ratio
11.4%
10.7%
Tier-1 ratio
12.8%
12.2%
Total capital adequacy ratio
14.4%
12.5%
TOTAL BASEL II RISK-WEIGHTED ASSETS
3
3
Capital adequacy ratios
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MANAGEMENT OF CAPITAL ADEQUACY
Changes in Groupe BPCE’s capital adequacy under
Basel 2.5 since 2009
Groupe BPCE has considerably improved its capital adequacy since its creation.
Its Core Tier-1 ratio increased from 5.6% at end-June 2009 (excluding temporary
State capital contributions) to 11.4% at December 31, 2013, an improvement
of some 580 basis points.
This improvement in Group capital adequacy since end-June 2009 is due:
• firstly, to the strengthening of Core Tier-1 capital thanks in large part to
retained earnings (+ 250 basis points at December 31, 2013);
• secondly, to solid management of risk-weighted assets (+ 130 basis points
at December 31, 2013) and of the Group’s risk profile. Risk-weighted
assets over the period decreased by €45 billion (€369 billion at endDecember 2013 versus €414 billion at end-June 2009). This drop can be
attributed to optimization measures taken by the Group (deleveraging, IRBA
standardization), which offset the increase generated by the activity;
• finally cooperative share inflows on the Banque Populaire and Caisse
d’Epargne networks (+ 200 basis points at December 31, 2013).
Changes in Groupe BPCE’s capital adequacy under
Basel 2.5 during 2013
Groupe BPCE’s financial structure was strengthened in 2013: its Core Tier-1
ratio came to 11.4% at December 31, 2013, up 138 basis points from the 10.0%
Core Tier-1 ratio at December 31, 2012, restated for the regulatory treatment
of investments in insurance companies at January 1, 2013 (versus a Core Tier-1
ratio of 10.7% reported at December 31, 2012).
The minimum Core Tier-1 capital set by the European Banking Authority
following the 2011 stress test (i.e. the amount of Core Tier-1 capital at June 30,
2012 which hedged 9% of risk-weighted assets and the sovereign buffer) was
largely respected.
Finally, at December 31, 2013, the Group’s total capital adequacy ratio stood
at 14.4%, up 190 basis points over the fiscal year.
This improvement in the Core Tier-1 and Tier-1 ratios and the total capital
adequacy ratio in 2013 is due to:
• strong growth in Core Tier-1 capital of €1.1 billion, mainly driven by retained
earnings and cooperative share inflows. The program to simplify the Group’s
structure only had a marginal impact on the Core Tier-1 ratio through the
extraordinary dividend distributed to minority shareholders;
• management of risk-weighted assets and the Group’s risk profile (business
line activities, disposals, etc.);
• an increase in Tier-2 capital aimed at strengthening Groupe BPCE’s stock of
subordinated debt ahead of the 2016 bail-in scheme. Two issues were carried
out in 2013 (for €1 billion in July and $1.5 billion in October 2013).
(1)
Without transitional measures (after restating for deferred tax assets).
(2)
Taking into account the $1.5 billion issue carried out on 1/13/2014.
124
The Core Tier-1 ratio was also affected by the change in regulatory treatment
of investments in insurance companies at January 1, 2013 (approximately -80
basis points).
Strengthening of networks and subsidiaries’ capital base
In order to guarantee the solvency of its networks and its subsidiaries, the Group
implemented specific action plans in 2013 for CASDEN Banque Populaire and
BPCE IOM.
Following the buyback of cooperative investment certificates (CICs) and in
preparation for Basel III, BPCE granted a €275 million redeemable subordinated
loan to CASDEN Banque Populaire on December 17, 2013.
BPCE IOM reorganized its capital structure in preparation for Basel III by
redeeming a deeply subordinated note of €100 million and three subordinated
loans of €140 million.
Cooperative share inflows
In order to strengthen the Group’s capital, both networks regularly issue
cooperative shares to cooperative shareholders. The Banque Populaire banks
and the Caisses d’Epargne thus helped strengthen capital by €1.8 billion during
2013.
OUTLOOK
In 2014, the Group will remain focused on strengthening its financial position
and will be ready to meet the forthcoming regulatory deadlines and the targets
set out in its 2014-2017 “Growing Differently” strategic plan, which was
presented in November 2013 (Common Equity Tier-1 ratio of at least 12% in
2017 and total capital adequacy ratio of at least 15% by 2017 at the latest).
With a Basel III pro forma Common Equity Tier-1 ratio(1)of 10.4% at
December 31, 2013, the Group is confident in its ability to meet the new
prudential requirements as soon as they are introduced and to have a Common
Equity Tier-1 above the threshold set by the European Banking Authority.
Furthermore, at end-2013, the pro forma Basel III (1)(2) overall capital adequacy
ratio was 13.4%, representing a major step forward toward the abovementioned target of ≥ 15% by 2017 at the latest, with the aim of creating a
substantial safety buffer for senior unsecured investors in the event the bail-in
provisions are introduced into European banking regulations.
In terms of internal management, oversight of capital adequacy is being
implemented through the creation of a balanced mechanism of contribution
to the Group’s prudential capital on the basis of a bonus/compensation scheme,
in order to prompt all affiliated institutions to participate in the attainment of
the Group’s target.
RISK MANAGEMENT
Pillar III
3.2.6
Groupe BPCE Risk Management division
The Groupe BPCE Risk Management division measures, monitors and
manages risk, excluding compliance risks, in accordance with amended CRBF
regulation 97-02, as well as the proper implementation of the provisions of
the decree of February 20, 2007. It ensures that the risk management system is
efficient, complete and consistent, and that the level of risk taken is consistent
with the guidelines of the activity (particularly goals and resources), the Group
and its entities (see Chapter 2.6.4 “Risk monitoring and measurement”).
from the risk function within the Group’s entities; promotes a culture of risk
management and the application of shared risk management standards; and
the guarantee of independent, objective and comprehensive information for
management of the Group’s risk status and any possible deterioration.
The Head of Group Risk Management, who is a member of BPCE’s Executive
Board, has a strong functional link with the Group’s entities Heads of Risk
Management. This strategic positioning enables in particular risk controls to
be performed objectively due to the independence of all operational functions
The risk culture is a constant that is part, in particular, of local training courses
and is a key factor in the Group Risk charter (see Chapter 2.6.4 “Risk monitoring
and measurement”).
3.2.7
Groupe BPCE places a strong focus on an efficient organization aimed at
managing risk at the Group’s entities, which is applied to all business lines,
financing, customer segments, markets and regions where it operates.
Credit and counterparty risk
ORGANIZATION OF CREDIT AND COUNTERPARTY
RISK MANAGEMENT
Risk measurement relies on rating systems adapted to each category of customer
and transaction, for which the Group Risk Management division is responsible
for defining and controlling performance.
Ratings policy
The Risk Management division’s aim is to bring all of the Group’s entities into
line with a shared rating system, as ratings are one of the fundamentals used
to assess risk.
Risk monitoring
The different tiers of control within Group BPCE operate under the supervision of
the Group Risk Management division, which is also responsible for consolidated
summary reporting to the various authorities, in particular the Group Watchlist
and Provisions Committee.
Risk monitoring is based on the quality of data and exposure. It is managed
using indicators for each asset class.
Ceilings and limits
The Risk Management division measures and monitors compliance with these
regulatory ceilings for the Group Risk Management Committee. The system
of internal ceilings, which are a level below the regulatory ceilings, is applied
to all Group entities. A Group limits system has also been established for the
major asset classes and for the main counterparty groups in each asset class.
The internal ceilings and Group limits systems are subject to regular reporting
to the authorities.
Finally, sector-based risk monitoring is carried out through mechanisms which
are based on recommendations for Group entities, in certain sensitive sectors.
3
3
3
3
RISK MEASUREMENT AND INTERNAL RATINGS
Risk modeling
The Risk Management division sets out principles for estimating Basel II
credit parameters, based on historical data on recognized defaults and losses.
The Validation division is responsible for reviewing internal rating models
independently.
Internal credit models are used to measure risks, expressed as a Probability
of Default (PD) within one year, as a percentage of Loss Given Default (LGD)
and as Credit Conversion Factors (CCF) depending on the characteristics of the
transactions. The models are generally built and validated based on internal
historical data from as far back as possible, and meet representativeness
(affected portfolios and economic conditions) and prudence constraints.
These risk parameters are then used to calculate capital requirements, once they
have been validated by the regulator in compliance with Basel II.
All three credit risk parameters are subject to backtesting each year in order to
monitor the performance of the mechanism. Backtesting consists of comparing
the estimated parameters with their implementation; as well as checking that
the performance of rating methods remains high. These measures are aimed
at checking the discriminating power of the mechanism and the predictive
and prudent nature of the parameters. To this end, actual recovery rates are
compared with estimated recovery rates and actual default rates compared
with estimated default rates for each rating. When a deterioration in predictive
power for a specific model is identified, the model is recalibrated or redeveloped
where necessary.
3
3
3
The internal governance of models is centered on the development, validation,
monitoring and decisions to alter internal models. The internal validation
procedure for new models, changes to existing models or backtesting is broken
down into two steps:
• validation by the Group Modeling Committee, made up of statisticians
(modeling and validation specialists) and business line specialists, which is
tasked with providing a technical validation for the model (methodology,
assumptions, performance);
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RISK MANAGEMENT
Pillar III
• validation by the Group Standards and Methods Committee for Risks of the
implementation of the required changes, in particular within procedures and
the operational breakdown. These changes are submitted, where applicable,
for prior approval by the ACPR within the framework of Instruction 20111-10 governing the monitoring of internal models used to calculate capital
requirements.
Standardized approach
Moody’s, Standard & Poor’s and FitchRatings rating agencies provide credit
ratings used in regulatory calculations of capital requirements.
If there is no external credit rating directly applicable to a given exposure, but
one exists for the issuer or for a specific issue program, the procedures used
to determine the weighting are applied in accordance with Article 37-2 of the
French ministerial order on regulatory capital requirements applicable to credit
institutions and investment firms.
Concerning fixed-income securities (bonds), short-term external ratings of the
specific issue take precedence over external ratings of the issuer. If there are
no external ratings for the issue, the issuer’s long-term external rating is taken
into account for senior debt only, except in the specific case of exposure to
institutions for which the weighting is deduced from the credit quality rating
of the government of the country in which it is established.
Internal Rating Approaches
Groupe BPCE has complete systems for rating its customers using either the
standardized, Foundation IRB or Advanced IRB approaches depending on the
network and the customer segment.
For retail customers, uniform internal rating methods and the application of
dedicated central ratings allow credit risks to be measured within the Banque
Populaire and Caisse d’Epargne networks. This measurement is based on
a Probability of Default (PD) of a counterparty within one year (drawing in
particular on account movements) the Loss Given Default rate (LGD) and the
Credit Conversion Factor (CCF) associated with each counterparty contract.
Using statistical techniques, these parameters are automatically attributed, in
compliance with the principles of the Basel II agreement.
The rating mechanism for the corporates and large corporates segments relies on
two aspects. The first aspect is based on quantitative and qualitative assessments
of the counterparty’s creditworthiness which help the sales teams award the
rating, which is then always validated by risk managers. The second aspect is
a system which automatically assigns LGD and CCF parameters according to
the characteristics of the transactions, with adjustments based on statistical
approaches.
CURRENT BASEL II SITUATION
Banque Populaire
network
Caisse d’Epargne
network
CFF/Banque
Palatine/BPCE IOM
subsidiaries
Natixis
BPCE (formerly
BFBP/formerly
CNCE)
Corporates (rev.(1) > €3 m)
IRBF
Standardized
Standardized
IRBA
IRBF/
Standardized
Retail customers
IRBA
IRBA
Standardized
IRBA(2)
IRBF/
Standardized
Institutions
IRBF
Standardized
Standardized
IRBA
IRBF/
Standardized
Sovereigns
IRBF
Standardized
Standardized
IRBA
IRBF/
Standardized
Customer segment
(1)
(2)
Rev.: revenues.
Standardized approach partially used for individual retail customers.
Groupe BPCE is continuing its work to certify internal models (Basel II) by relying on the Group Risk division in charge of coordinating and monitoring all of the
Group’s projects in this respect.
Internal rating scale
The table below presents the Group’s internal rating scale and the equivalent ratings of the three main rating agencies.
Internal counterparty rating
1
FitchRatings rating
Moody’s rating
Standard & Poor’s rating
AAA to AA-
AAA to Aa3
AAA to AA-
2
A+ to A-
A1 to A3
A+ to A-
3
BBB+ to BBB-
Baa1 to Baa3
BBB+ to BBB-
4
BB+ to BB-
Ba1 to Ba3
BB+ to BB-
5
B+ to B-
B1 to B3
B+ to B-
6
CCC+ and lower
Caa1 and lower
CCC+ and lower
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3
QUANTITATIVE DISCLOSURES
3
Breakdown of the loan portfolio by gross exposure categories
Information provided in respect of IFRS 7.
12/31/2013
12/31/2012
Total
Average over 4 quarters
Total
RWA
Average
exposure
Average EAD
Exposure
EAD
Exposure
EAD
Sovereigns
200,340
199,147
1,355
200,633
199,227
195,901
194,632
1,003
Institutions
126,027
119,734
25,356
137,164
130,387
139,254
131,993
28,470
Corporates
274,981
231,042
149,125
279,352
230,130
286,027
230,620
154,594
Retail customers
RWA
366,647
347,600
76,743
360,417
340,908
350,405
330,472
84,256
Securitization
21,941
21,815
12,488
25,653
25,539
31,366
31,369
13,189
Equities
14,222
14,220
36,717
14,783
14,783
11,726
11,696
26,990
Other assets
13,077
13,077
13,077
13,577
13,577
14,809
14,809
14,809
1,017,235
946,635
314,861
1,031,579
954,551
1,029,487
945,590
323,310
TOTAL
Groupe BPCE’s total gross exposures at December 31, 2013 amounted to
€1,017 billion, down just 1% over the fiscal year, due in particular to the
securitization segment which saw a drop in outstandings of close to €10 billion.
The main risks continue to relate to corporate and retail customers, accounting
for 63% of gross exposure and 72% of risk-weighted assets. Institutions account
for 12.4% of gross exposure and just 8% of risk-weighted assets.
Breakdown of the loan portfolio by approach
12/31/2013
Standardized
Exposure
EAD
IRB
RWA
Exposure
EAD
RWA
TOTAL
Sovereigns
122,256
121,099
806
78,084
78,048
550
200,340
Institutions
79,751
75,916
15,631
46,276
43,818
9,725
126,027
Corporates
105,588
92,640
79,474
169,394
138,401
69,651
274,981
Retail customers
77,919
64,797
24,496
288,728
282,803
52,247
366,647
Securitization
13,271
13,146
9,710
8,669
8,669
2,778
21,941
Equities
2,988
2,983
1,573
11,234
11,237
35,144
14,222
Other assets
6,634
6,634
6,634
6,444
6,444
6,444
13,077
408,406
377,214
138,324
608,828
569,421
176,537
1,017,235
TOTAL
3
3
3
3
3
3
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3
3
RISK MANAGEMENT
Pillar III
Breakdown of gross exposure by category and approach with distinction between credit and counterparty risk
(excluding other assets)
12/31/2013
Standardized
IRB
Counterparty
Credit risk
risk
12/31/2012
Total
Counterparty
Credit risk
risk
Total
Counterparty
Credit risk
risk
Total
Exposure
Counterparty
Credit risk
risk
Exposure
Sovereigns
122,086
170
73,797
4,288
195,883
4,457
200,340
191,517
4,383
195,901
Institutions
77,874
1,877
20,253
26,023
98,127
27,900
126,027
108,194
31,061
139,254
Corporates
104,143
1,444
157,123
12,271
261,266
13,715
274,981
272,932
13,095
286,027
Retail customers
77,884
35
288,724
3
366,609
38
366,647
350,330
74
350,405
Securitization
13,271
7,125
1,544
20,397
1,544
21,941
28,571
2,795
31,366
14,222
14,222
11,726
11,726
44,129
956,504
47,654 1,004,157
963,270
51,409 1,014,678
Equities
2,988
TOTAL
398,248
11,234
3,525
558,256
The percentage of counterparty risk on total gross exposure remains relatively low (4.8%). A large majority of counterparty risk is carried by the Institutions segment
(58.6%).
Breakdown by region (gross exposure)
12/31/2013
France
Europe (excl.
France)
North & South
America
Sovereigns
124,815
37,334
Institutions
80,031
28,232
Corporates
189,936
394,782
TOTAL
12/31/2012
Asia/Oceania
Africa and the
Middle East
Total
Total
35,458
386
2,346
200,340
195,901
10,896
5,641
1,227
126,027
139,254
41,535
26,541
8,881
8,088
274,981
286,027
107,101
72,896
14,908
11,661
601,348
621,182
The Group’s gross risk exposure is mainly in Europe (83.5%), including a significant concentration in France (65.6%), a historical market for the Group. This trend
applies to all three asset classes.
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3
Breakdown by sector (gross exposure)
3
Groupe BPCE – Corporates and Professional customers
12/31/2013
Real estate rental
12/31/2012
Corporates
Professionals
Total
Corporates
Professionals
Total
37,646
24,731
62,378
33,624
23,855
57,479
Finance insurance
38,234
889
39,123
56,165
851
57,016
Real estate
24,523
2,397
26,920
24,221
2,492
26,714
Energy
20,862
376
21,238
19,212
368
19,580
Holding companies and diversified
18,581
1,714
20,295
21,286
1,800
23,085
Services
11,355
7,177
18,532
12,690
7,064
19,754
Construction
11,693
6,071
17,764
11,743
6,127
17,870
Retailing
11,951
3,020
14,972
11,875
3,070
14,944
Pharma – Health
7,039
6,845
13,884
7,551
6,409
13,960
Food
8,662
4,851
13,513
7,736
4,701
12,437
11,025
2,004
13,030
11,036
1,992
13,028
Consumer goods
7,601
4,090
11,691
7,385
4,128
11,513
Electrical and mechanical construction
9,301
1,674
10,974
9,799
1,707
11,507
Tourism – Hotels – Catering
4,620
4,955
9,575
4,438
4,965
9,403
International commodities trade
9,362
1
9,363
8,696
50
8,746
Staple industries
7,644
713
8,357
8,372
744
9,116
Transportation
Media
6,239
515
6,753
6,708
498
7,206
Utilities
4,892
145
5,037
3,702
154
3,857
Technology
4,088
160
4,248
4,577
172
4,749
Administration
1,322
15
1,337
559
10
569
18,342
2,049
20,391
14,653
2,360
17,013
274,981
74,392
349,373
286,027
73,519
359,546
Other
TOTAL
3
3
3
Concentration by borrower (excluding sovereigns)
3
12/31/2013
12/31/2012
Breakdown (gross amounts Weighting relative to capital
relative to total large risks)
(gross amounts / capital)
Breakdown (gross amounts Weighting relative to capital
relative to total large risks)
(gross amounts/ capital)
Largest borrower
2.6%
5.6%
2.8%
7.4%
Top 10 borrowers
18.2%
39.1%
17.7%
47.0%
Top 50 borrowers
57.1%
122.5%
55.3%
146.7%
Top 100 borrowers
83.4%
178.9%
80.3%
212.9%
3
The weighting of the 100 largest borrowers, excluding sovereigns, does not show any particular concentration.
3
129
3
3
RISK MANAGEMENT
Pillar III
Exposures by credit quality using the standardized
and IRB approach
The mapping of this scale is as follows:
The scale of credit quality for the Sovereign, Institution, Corporate and Retail
Customer categories is broken down in the table below.
• standardized approach: based on a weighting rate, exposure category, and the
notion of payment in arrears (a payment in arrears is systematically classified
as rating 6), following the application of guarantees;
• IRB: on the basis of mapping conducted on the rating (final) based on a
rating scale.
12/31/2013
12/31/2012
Standardized
SOVEREIGNS
Gross
exposure
EAD
Gross
exposure
EAD
Gross
exposure
EAD
AAA to AA-
117,530
116,400
73,936
73,934
117,509
116,339
73,015
72,989
38
A+ to A-
3,353
3,353
3,151
3,151
773
772
38
BBB+ to BBB-
457
457
523
523
3,384
3,358
0
0
BB+ to BB-
806
790
316
316
465
437
373
372
B+ to B-
57
57
64
31
169
164
0
0
CCC+ and lower
0
0
42
42
71
69
14
14
122,203
121,058
78,033
77,997
122,371
121,140
73,440
73,413
53
41
51
51
36
24
54
54
41,311
39,232
3,830
3,776
67,214
63,850
9,928
8,924
AAA to AAA+ to A-
4,452
4,381
32,637
31,250
3,983
3,905
32,699
32,158
BBB+ to BBB-
7,467
7,105
6,576
6,060
6,068
5,757
6,054
5,693
BB+ to BB-
14,526
13,771
1,827
1,530
8,676
7,752
2,329
1,859
B+ to B-
11,544
11,042
262
140
817
786
226
108
CCC+ and lower
373
346
735
652
32
30
734
703
79,673
75,876
45,867
43,409
86,790
82,079
51,970
49,446
Total excl.
non-performing
Non-performing
AAA to AA-
40
409
409
58
34
436
434
6,837
13,812
8,659
11,203
10,336
30,544
12,396
A+ to A-
6,323
5,916
38,227
29,441
10,732
9,880
30,411
21,754
16,210
13,959
50,535
40,546
16,899
15,312
48,066
37,486
BB+ to BB-
42,719
37,035
44,941
39,966
53,206
47,196
50,261
45,519
B+ to B-
26,565
24,578
14,395
12,581
5,480
5,011
16,810
15,279
CCC+ and lower
1,423
1,352
517
499
1,265
1,045
834
812
100,544
89,677
162,426
131,692
98,786
88,779
176,926
133,247
5,043
2,963
6,967
6,710
3,397
1,936
6,919
6,658
Non-performing
AAA to AA-
3,828
3,605
0
0
4,755
4,748
4
4
A+ to A-
18,773
17,988
90,143
88,412
16,567
15,428
51,605
50,479
BBB+ to BBB-
19,123
18,757
90,053
88,477
25,317
24,868
50,479
49,319
BB+ to BB-
31,333
20,596
54,930
53,641
28,900
17,464
112,617
109,904
B+ to B-
220
218
32,262
31,477
184
176
36,635
35,852
CCC+ and lower
1,399
1,380
11,967
11,725
144
133
11,833
11,632
74,678
62,544
279,355
273,732
75,866
62,817
263,172
257,192
3,241
2,252
9,373
9,071
2,665
1,844
8,700
8,620
385,514
354,452
582,481
543,071
389,969
358,654
581,618
529,063
Total excl.
non-performing
Non-performing
TOTAL
*
78
7,303
BBB+ to BBB-
Total excl.
non-performing
RETAIL
IRB
EAD
Non-performing
CORPORATES
Standardized
Gross
exposure
External rating*
Total excl.
non-performing
INSTITUTIONS
IRB
Standard & Poor’s rating.
Measuring credit quality using the standardized approach and the internal approach shows more than 40% of gross exposures to be low-risk (between AAA and A-).
More than 86% of exposures are between AAA and BB-.
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Pillar III
3
Exposures by credit quality using the IRBF approach
12/31/2013
(1)
IRBF
SOVEREIGNS
External rating*
Gross
exposure
AAA to AA-
26,608
26,589
A+ to A-
1,833
BBB+ to BBBBB+ to BBB+ to BCCC+ and lower
Total excl.
non-performing
Non-performing
INSTITUTIONS
Non-performing
Total IRBF excl.
non-performing
Total IRBF
non-performing
TOTAL IRBF
*
(1)
(2)
Expected
losses (EL)
16
26,606
0
0
0%
1,833
0
1,833
0
181
10%
434
419
14
433
0
100
23%
11
11
1
11
0
12
104%
18
6
13
16
1
34
217%
11
11
0
11
1
29
257%
28,916
28,869
45
28,911
2
356
1%
RWA
0
0
0
0
0
0
742
707
1
742
0
104
14%
A+ to A-
5,470
3,076
1,361
5,413
2
1,014
19%
BBB+ to BBB-
1,260
469
747
1,169
3
815
70%
BB+ to BB-
967
329
638
799
5
587
73%
B+ to B-
39
19
20
29
1
44
151%
CCC+ and lower
707
429
278
637
28
1,332
209%
9,186
5,029
3,045
8,788
39
3,895
44%
48
48
0
48
22
0
Non-performing
Total excl.
non-performing
EAD
AAA to AA-
Total excl.
non-performing
CORPORATES(2)
o/w balance o/w off-balance
sheet exposure sheet exposure
Average RW
(weighted by
EAD)
AAA to AA-
1,010
747
145
920
0
137
A+ to A-
9,168
8,539
502
9,034
6
2,299
25%
BBB+ to BBB-
8,297
5,309
2,821
7,396
18
4,607
62%
BB+ to BB-
21,013
16,872
4,027
19,799
153
17,056
86%
B+ to B-
7,553
5,474
1,998
6,924
188
9,925
143%
CCC+ and lower
295
236
57
282
28
602
213%
47,336
37,176
9,550
44,356
392
34,626
78%
2,470
1,946
520
2,303
1,000
18
85,438
71,075
12,640
82,055
434
38,877
2,518
1,994
520
2,351
1,022
18
87,956
73,069
13,160
84,407
1,455
38,895
15%
47%
The “gross exposure” column includes both credit and counterparty risks. The “balance sheet” and “off-balance sheet exposure” columns relate only to credit risk.
Specialized financing exposures excluding those calculated by weighting.
3
3
3
3
3
3
3
131
3
3
RISK MANAGEMENT
Pillar III
12/31/2012
IRBF(1)
SOVEREIGNS
External rating*
EAD
Expected
losses (EL)
AAA to AA-
30,174
30,165
9
30,172
0
198
1%
A+ to A-
0
0
0
0
0
0
30%
0
0
0
0
0
0
BB+ to BB-
353
352
1
352
0
2
B+ to B-
0
0
0
0
0
0
CCC+ and lower
0
0
0
0
0
1
30,527
30,518
10
30,525
0
202
0
0
0
0
0
0
Non-performing
1%
2,678
1,351
1,052
2,633
0
403
15%
A+ to A-
8,367
5,834
1,531
8,134
2
1,769
22%
BBB+ to BBB-
1,632
1,323
297
1,555
3
951
61%
BB+ to BB-
1,136
487
632
973
31
683
70%
B+ to B-
25
7
18
16
0
25
150%
CCC+ and lower
674
672
2
673
30
1,368
203%
14,512
9,674
3,532
13,984
66
5,198
37%
Non-performing
31
28
2
30
21
0
AAA to AA-
1,160
822
225
1,034
0
157
15%
A+ to A-
4,104
3,299
666
3,900
1
699
18%
BBB+ to BBB-
7,236
4,478
2,618
6,428
13
4,092
64%
BB+ to BB-
26,672
22,024
4,564
25,159
216
20,349
81%
B+ to B-
9,413
7,434
1,878
8,915
243
13,011
146%
CCC+ and lower
246
182
61
230
22
495
215%
48,831
38,241
10,012
45,666
496
38,804
85%
2,379
1,949
428
2,248
983
0
93,870
78,433
13,554
90,175
561
44,204
Total excl.
non-performing
Non-performing
Total IRBF excl.
non-performing
Total IRBF
non-performing
TOTAL IRBF
*
(1)
(2)
1%
AAA to AA-
Total excl.
non-performing
CORPORATES(2)
RWA
BBB+ to BBB-
Total excl.
non-performing
INSTITUTIONS
o/w balance o/w off-balance
sheet exposure sheet exposure
Average RW
(weighted by
EAD)
Gross
exposure
2,409
1,978
430
2,278
1,005
0
96,279
80,411
13,984
92,453
1,566
44,204
49%
Specialized financing exposures calculated by weighting using the IRB approach
12/31/2013
Weighting
12/31/2012
Gross exposure
RWA
EL
Gross exposure
RWA
EL
1.6
0.8
0.0
70%
0.3
0.2
0.0
11.9
8.4
0.0
90%
10.9
9.8
0.1
11.1
10.0
0.1
13.5
9.2
0.0
0%
50%
115%
250%
TOTAL
Exposures are almost entirely calculated using the internal rating-based approach (IRB).
132
RISK MANAGEMENT
Pillar III
3
Exposures by credit quality using the IRBA approach on sovereign, institution and corporate asset classes
3
12/31/2013
External rating*
Average
PD rate on
sound
(including
sensitive)
and
non-rated
EADs
AAA to AA-
IRBA(1)
SOVEREIGNS
Gross
exposure
o/w
balance
sheet
exposure
o/w
offbalance
sheet
exposure
Offbalance
sheet
average
CCF
0.00%
47,328
43,368
497
Total IRBA excl.
non-performing
Total IRBA nonperforming
TOTAL IRBA
*
(1)
47,328
0
7.2%
0
0%
0.01%
1,318
324
201
100%
1,318
0
25.0%
27
2%
90
44
19
100%
90
0
36.8%
13
14%
BB+ to BB-
0.04%
305
303
0
100%
305
0
47.0%
32
11%
B+ to B-
1.31%
46
7
39
20%
15
0
47.1%
16
106%
CCC+ and lower
22.23%
31
31
0
31
4
57.1%
105
338%
0.02%
49,117
44,077
755
0%
51
51
0
96%
49,086
4
8.0%
193
51
51
100.4%
0
AAA to AA-
0.05%
3,088
1,629
73
26%
3,034
3
31.1%
185
6%
A+ to A-
0.05%
27,166
5,383
707
42%
25,837
4
32.1%
1,893
7%
BBB+ to BBB-
0.39%
5,316
1,581
1,532
72%
4,891
8
37.8%
2,513
51%
BB+ to BB-
1.60%
860
434
190
33%
732
7
53.9%
900
123%
B+ to B-
3.25%
223
74
140
20%
111
3
92.1%
277
251%
CCC+ and lower
9.26%
28
12
15
20%
16
1
89.1%
61
387%
0.14%
36,681
9,113
2,657
57%
34,621
26
33.5%
5,830
17%
361
361
0
361
224
62.1%
0
Non-performing
Non-performing
100%
0.03%
Total excl.
non-performing
Total excl.
non-performing
Average
LGD
A+ to A-
Non-performing
CORPORATES
EAD
BBB+ to BBB-
Total excl.
non-performing
INSTITUTIONS
Average
RW
(weighted
RWA
by EAD)
Expected
losses
(EL)
AAA to AA-
0.38%
12,802
4,097
7,994
37%
7,739
3
27.2%
598
8%
A+ to A-
0.09%
29,048
6,425
16,596
48%
20,395
9
31.6%
3,076
15%
BBB+ to BBB-
0.46%
42,204
20,169
18,915
52%
33,124
40
28.4%
12,031
36%
BB+ to BB-
1.91%
23,919
13,893
8,555
56%
20,160
109
29.7%
12,641
63%
B+ to B-
5.15%
6,840
4,141
2,463
52%
5,655
73
26.3%
4,683
83%
CCC+ and lower
21.95%
222
199
23
74%
217
13
29.5%
298
137%
1.06%
115,035
48,923
54,547
49%
87,289
247
29.2%
33,326
38%
4,495
4,219
184
4,404
1,510
34.3%
1,641
200,833
102,112
57,959
170,996
277
4,907
4,631
184
4,817
1,786
1,641
205,741 106,743
58,143
50% 175,813
2,062
40,990
3
3
3
3
39,349
3
3
133
3
3
RISK MANAGEMENT
Pillar III
12/31/2012
(1)
IRBA
SOVEREIGNS
Average
PD on
performing
(including
sensitive)
and
unrated
External rating*
EADs
Gross
exposure
o/w
balance
sheet
exposure
o/w
offbalance
sheet
exposure
Offbalance
sheet
average
CCF
EAD
96%
42,817
0
8%
26
0%
38
0
35%
2
6%
20
0
47%
25
126%
14
2
73%
62
445%
0%
AAA to AA-
0.00%
42,841
38,010
620
A+ to A-
0.03%
38
38
0
1.50%
20
20
1
19.46%
14
14
0
0.01%
42,913
38,082
621
54
54
0
Expected
losses
(EL)
Average
LGD
Average
RW
(weighted
RWA
by EAD)
BBB+ to BBBBB+ to BB-
20%
B+ to BCCC+ and lower
Total excl.
non-performing
Non-performing
INSTITUTIONS
2
8%
115
54
56
103%
0
0.03%
7,250
1,621
72
44%
6,291
0
15%
410
7%
A+ to A-
0.06%
24,332
3,817
590
48%
24,025
3
23%
2,556
11%
BBB+ to BBB-
0.39%
4,422
2,084
1,358
79%
4,138
7
41%
1,943
47%
BB+ to BB-
2.42%
1,193
405
475
35%
886
13
71%
1,392
157%
B+ to B-
3.79%
201
61
136
20%
92
3
79%
217
236%
CCC+ and lower
11.03%
59
19
37
20%
30
3
82%
108
363%
0.17%
37,458
8,007
2,668
60%
35,462
29
25%
6,627
19%
406
398
2
404
328
81%
0
Non-performing
AAA to AA-
0.02%
29,371
4,353
24,048
25%
11,349
2
25%
1,088
10%
A+ to A-
0.06%
26,307
5,666
16,150
48%
17,854
4
31%
2,677
15%
BBB+ to BBB-
0.40%
40,830
17,860
19,931
51%
31,058
33
27%
11,742
38%
BB+ to BB-
1.91%
23,589
14,562
7,453
57%
20,360
120
28%
14,304
70%
B+ to B-
5.25%
7,398
4,767
2,357
56%
6,364
75
22%
5,074
80%
CCC+ and lower
11.18%
588
570
14
55%
582
25
42%
1,032
177%
1.06%
128,082
47,778
69,951
42%
87,567
258
27%
35,917
41%
4,540
4,043
225
4,410
1,737
40%
2,016
208,453
93,867
73,240
165,918
289
Total excl.
non-performing
Non-performing
Total IRBA excl.
non-performing
TOTAL IRBA
*
(1)
42,889
AAA to AA-
Total excl.
non-performing
CORPORATES
96%
5,000
4,495
227
4,868
2,121
2,016
213,453
98,362
73,467
43% 170,786
2,410
44,675
134
42,659
RISK MANAGEMENT
Pillar III
3
Exposures by credit quality using the IRBA approach on retail customers asset class**
3
12/31/2013
IRBA(1)
MORTGAGE LOANS(2)
Average
PD on
performing
(including
sensitive)
and
unrated
External rating*
EADs
EAD
Expected
losses
(EL)
Average
LGD
Average
RW
(weighted
RWA
by EAD)
A+ to A-
0.11%
50,404
48,734
1,670
60%
49,733
9
15%
2,100
4%
0.45%
53,049
51,365
1,683
59%
52,358
38
15%
6,228
12%
BB+ to BB-
2.25%
21,970
20,796
1,174
63%
21,534
79
15%
6,934
32%
B+ to B-
9.09%
11,347
10,860
487
61%
11,155
149
14%
7,049
63%
CCC+ and lower
33.49%
3,766
3,685
80
54%
3,729
176
14%
2,937
79%
2.19%
140,535
135,440
5,095
60%
138,509
450
15%
25,248
18%
2,180
2,172
8
2,172
879
40%
409
AAA to AAA+ to A-
0.10%
3,558
865
2,693
74%
2,847
1
42%
81
3%
BBB+ to BBB-
0.50%
3,054
1,119
1,934
77%
2,602
6
43%
279
11%
BB+ to BB-
2.48%
1,230
516
713
84%
1,112
11
39%
357
32%
B+ to B-
10.71%
656
380
275
92%
633
26
36%
468
74%
CCC+ and lower
34.47%
259
196
63
91%
253
32
37%
276
109%
2.67%
8,756
3,077
5,679
77%
7,447
78
41%
1,462
20%
207
196
11
199
137
69%
44
Total excl. non-performing
Non-performing
A+ to A-
0.08%
36,181
34,685
1,496
77%
35,833
4
13%
1,125
3%
BBB+ to BBB-
0.40%
30,710
29,245
1,465
76%
30,355
20
15%
3,182
10%
BB+ to BB-
2.37%
16,837
15,061
1,776
75%
16,397
140
19%
4,167
25%
B+ to B-
8.94%
8,543
7,750
793
76%
8,354
156
20%
2,983
36%
CCC+ and lower
32.98%
3,094
2,879
214
74%
3,039
205
21%
1,589
52%
2.43%
95,364
89,619
5,745
76%
93,978
525
16%
13,046
14%
3,245
3,198
47
3,206
1,709
53%
899
A+ to A0.40%
3,241
2,866
374
79%
3,162
2
19%
406
13%
BB+ to BB-
1.71%
14,894
13,396
1,497
80%
14,598
152
20%
3,501
24%
B+ to B-
6.29%
11,717
10,059
1,656
77%
11,334
152
21%
3,836
34%
CCC+ and lower
26.96%
4,848
4,324
523
72%
4,704
271
21%
2,412
51%
6.64%
34,700
30,647
4,050
78%
33,798
577
20%
10,155
30%
3,741
3,456
284
3,494
1,882
54%
983
Total IRBA excl.
non-performing
279,355
258,783
20,569
273,732
1,631
49,911
9,373
9,022
351
9,071
4,607
2,336
288,728 267,805
20,920
282,803
6,237
52,247
TOTAL IRBA
*
**
(1)
(2)
3
3
3
AAA to AABBB+ to BBB-
Non-performing
3
AAA to AA-
Non-performing
SMES AND
PROFESSIONAL
CUSTOMERS
Offbalance
sheet
average
CCF
BBB+ to BBB-
OTHER RETAIL
CUSTOMER EXPOSURES
EXCL. PROFESSIONAL
CUSTOMERS
o/w
offbalance
sheet
exposure
AAA to AA-
Non-performing
REVOLVING EXPOSURES
Gross
exposure
o/w
balance
sheet
exposure
73%
3
3
The rating models for the individual and professional segments were improved during fiscal year 2013 and were therefore more predictive and discriminating at December 31, 2013.
Includes real estate loans guaranteed by a mortgage or equivalent surety recognized by the ACPR.
135
3
3
RISK MANAGEMENT
Pillar III
12/31/2012
(1)
IRBA
MORTGAGE LOANS(2)
Average
PD on
performing
(including
sensitive)
and
unrated
External rating*
EADs
Average
LGD
22,767
22,157
610
53%
22,482
3
15%
798
4%
0.37%
26,437
25,594
843
53%
26,043
16
15%
2,778
11%
BB+ to BB-
1.70%
57,798
55,637
2,161
53%
56,791
158
15%
15,764
28%
B+ to B-
8.23%
14,137
13,737
400
53%
13,949
167
14%
8,678
62%
CCC+ and lower
28.63%
3,873
3,791
81
52%
3,834
155
14%
3,056
80%
2.71%
125,011
120,915
4,096
53%
123,099
499
15%
31,073
25%
1,870
1,862
8
1,862
563
30%
275
584
1,691
1,955
1
38%
50
AAA to AAA+ to A-
0.10%
2,274
BBB+ to BBB-
0.36%
1,798
498
1,300
81%
1,553
2
41%
116
7%
BB+ to BB-
1.66%
3,454
1,465
1,990
84%
3,126
23
42%
761
24%
B+ to B-
8.97%
1,113
633
480
95%
1,091
36
35%
710
65%
CCC+ and lower
28.24%
212
162
50
94%
209
22
37%
213
102%
2.73%
8,852
3,342
5,510
83%
7,934
84
40%
1,849
23%
215
205
11
208
110
53%
67
81%
3%
AAA to AAA+ to A-
0.09%
26,561
25,223
1,339
61%
26,040
3
14%
839
3%
BBB+ to BBB-
0.36%
20,405
19,143
1,262
64%
19,953
11
15%
1,939
10%
BB+ to BB-
1.73%
34,300
31,167
3,133
66%
33,227
137
17%
6,983
21%
B+ to B-
7.90%
10,661
9,681
980
72%
10,390
163
19%
3,463
33%
CCC+ and lower
28.10%
3,237
3,014
222
74%
3,178
180
20%
1,592
50%
2.57%
95,164
88,228
6,935
66%
92,788
494
16%
14,817
16%
3,112
3,067
46
3,085
1,225
40%
391
Non-performing
AAA to AA-
0.03%
4
0
4
100%
4
0
52%
0
A+ to A-
0.04%
2
0
2
100%
2
0
52%
0
7%
BBB+ to BBB-
0.45%
1,839
1,446
393
82%
1,770
2
20%
266
15%
5%
BB+ to BB-
1.86%
17,065
15,277
1,787
83%
16,760
70
19%
4,230
25%
B+ to B-
6.71%
10,725
9,339
1,385
78%
10,423
148
21%
3,561
34%
CCC+ and lower
28.25%
4,510
4,064
446
78%
4,411
269
21%
2,305
52%
6.79%
34,146
30,126
4,017
81%
33,370
489
20%
10,363
31%
3,503
3,235
268
3,465
1,374
40%
366
263,173
242,611
20,558
257,191
1,566
8,700
8,369
333
8,620
3,272
1,099
271,873 250,980
20,891
265,811
4,838
59,201
Non-performing
Total IRBA excl.
non-performing
Total IRBA
non-performing
TOTAL IRBA
71%
136
Average
RW
(weighted
RWA
by EAD)
0.09%
Non-performing
*
(1)
(2)
EAD
Expected
losses
(EL)
A+ to A-
SMES AND
PROFESSIONAL
CUSTOMERS
Offbalance
sheet
average
CCF
BBB+ to BBB-
Non-performing
OTHER RETAIL
CUSTOMER EXPOSURES
EXCL. PROFESSIONAL
CUSTOMERS
o/w
offbalance
sheet
exposure
AAA to AA-
REVOLVING EXPOSURES
Gross
exposure
o/w
balance
sheet
exposure
58,102
RISK MANAGEMENT
Pillar III
3
Exposure to counterparty risk relating to foreign currency and repo transactions
12/31/2013
Standardized
12/31/2012
IRB
TOTAL
Standardized
IRB
TOTAL
3
Derivatives
Sovereigns
154
2,720
2,875
139
3,480
3,619
Institutions
1,772
17,461
19,233
2,248
18,690
20,937
Corporates
1,249
8,234
9,484
1,561
8,279
9,840
12
3
15
71
3
74
3,188
28,419
31,607
4,019
30,452
34,471
15
1,567
1,583
34
730
765
Retail customers
TOTAL
Repos
Sovereigns
Institutions
104
8,562
8,666
720
9,404
10,124
Corporates
195
4,037
4,232
329
2,925
3,255
14,166
14,503
1,083
13,059
14,143
Retail customers
TOTAL
23
337
23
Credit risk reduction techniques
Conditions for the incorporation of sureties
Articles 167–1 and 167-2 of the February 20, 2007 decree set out the conditions
for the proper incorporation of sureties, in particular:
Credit risk reduction techniques are widely used within the Group and are
divided into real sureties and personal guarantees.
Definition of sureties
A real surety is collateral or an equivalent pledge that reduces the credit risk on
an exposure given the right of the establishment that is subject to this risk, in the
event of default or any other specific credit event relating to the counterparty,
to liquidate, hold, transfer of gain ownership of certain amounts or assets.
A personal guarantee is a collateral that reduces the credit risk on an exposure,
due to the commitment provided by a third party to pay a set amount in the
event of counterparty default or any other specific event.
Accounting method using standardized or IRBA approach
Under the standardized approach, personal guarantees and real sureties are
taken into account, subject to their eligibility, using an enhanced weighting
of the guarantee portion of the exposure. Real sureties such as cash or liquid
collateral are deducted from the gross exposure.
Under the IRBF approach, real sureties are taken into account, subject to their
eligibility, by decreasing the Loss Given Default applicable to the transactions.
Personal guarantees are taken into account, subject to their eligibility, by
substituting a third party’s PD with that of a guarantor.
Under the IRBA approach for retail customers, personal guarantees and real
sureties are taken into account, subject to their eligibility, by decreasing the
Loss Given Default applicable to the transactions in question.
3
3
• the borrower’s credit quality and the instrument’s value are not significantly
positively correlated. Debt securities issued by the borrower are not eligible;
• the surety is duly documented and accompanied by a strict procedure
authorizing a rapid recovery of debt;
• the bank has duly documented procedures in place, that are adapted to the
various kind and amounts of instruments used;
3
• the bank sets the market value of the instrument and restates it where
necessary, in particular when this market value deteriorates significantly.
Risk diversification
The Risk division is governed by regulatory ceilings, internal ceilings and
individual limits. Group entities are furthermore subject to unit, sometimes
sector, and geographic limits.
Providers of sureties
The Caisse d’Epargne network mainly uses the services of Compagnie Européenne
de Garanties et de Cautions or CEGC, Fonds de garantie à l’accession sociale
à la propriété or FGAS and, to a lesser extent, Crédit Logement (a financial
institution and a subsidiary of most of the main French banking networks). These
institutions are specialized in guaranteeing bank loans, especially home loans.
CEGC has received an A rating from Standard & Poor’s, with a negative outlook.
FGAS offers guarantees from the French government for secured loans. Loans
with FGAS guarantees granted before December 31, 2006 are given a 0%
weighting and loans granted guarantees after that date have a risk weighting
of 15%.
3
3
3
137
3
3
RISK MANAGEMENT
Pillar III
Crédit Logement has a long-term A+ rating from Standard & Poor’s, with a
stable outlook.
The Banque Populaire network currently uses the tool for revaluing real estate
guarantees, business assets and pledged assets for all risk segments.
The Banque Populaire network has, for its part, traditionally used Mutual
Guarantee Companies SOCAMI (home loans) and SOCAMA (craftsman loans),
in addition to the real sureties used. It also turns to CASDEN Banque Populaire
to back loans to civil servants of the French national education system, Crédit
Logement and recently CEGC.
At the Banque Populaire network, in addition to real estate guarantees, real
sureties also taken into account by the revaluation tool are pledges of vehicles,
pledges of materials and equipment, pleasure craft mortgage loans, and pledges
of business assets.
For home loans, the Banque Populaire and Caisse d’Epargne networks also use
several mutual insurers, such as MGEN, Mutuelle de la Gendarmerie, etc.
Oséo continues to be used for professional and corporate customers.
Valuation and management of instruments comprising real
sureties
The Caisse d’Epargne network, for its part, uses the tool for revaluing guarantees
against homes for all risk segments.
The Caisse d’Epargne network has two kinds of real sureties that are primarily
taken into account (residential mortgages and guarantees from Mutual
Guarantee Companies), as these represent the majority of real sureties (or
with equivalent effect) received. An enhanced valuation process has been
implemented for guarantees above certain amounts.
The revaluation tool for real-estate guarantees has been made available to
both networks.
➡
PERSONAL AND PHYSICAL GUARANTEES BY CATEGORY OF EXPOSURE
12/31/2013
12/31/2012
Personal guarantees
Total personal
guarantees
Sovereigns
845
Institutions
2,156
Corporates
17,878
Retail customers
TOTAL
138
Physical guarantees
o/w credit
derivatives
o/w real
o/w financial
Total personal
guarantees
Total physical
guarantees
8
8
-
806
7
1,029
6
1,023
3,053
937
1,978
14,927
7,553
7,374
16,418
15,081
73,463
71,411
2,052
94,539
75,314
1,978
89,428
78,978
10,449
114,816
91,339
109,025
129,903
Total physical
guarantees
RISK MANAGEMENT
Pillar III
3
European sovereign exposure(1) at December 31, 2013 based on the format established by the EBA(2)
12/31/2013
Austria
Belgium
12/31/2012
Net direct exposures
(excluding
derivatives)
Gross direct
exposures
Net direct exposures
excluding derivatives
o/w banking book
645
213
306
(93)
424
1,976
1,651
1,102
549
1,348
o/w trading book
Bulgaria
0
0
0
0
0
Cyprus
58
58
58
0
60
Czech Republic
48
48
48
0
93
Denmark
96
96
91
5
98
0
0
0
0
0
Estonia
Finland
34
29
0
29
(103)
France
49,957
34,564
39,212
(4,648)
32,802
Germany
4,554
(4,844)
109
(4,953)
(789)
Greece
19
19
19
0
13
Hungary
110
94
40
54
54
Iceland
152
152
0
152
0
Ireland
191
191
190
1
176
10,196
4,147
3,579
567
4,018
Latvia
0
0
0
0
0
Liechtenstein
0
0
0
0
0
Lithuania
18
18
0
18
33
Luxembourg
10
10
10
0
0
0
0
0
0
0
1,589
941
556
385
75
Norway
0
0
0
0
0
Poland
406
378
366
13
492
Portugal
66
66
55
11
132
Romania
0
0
0
0
0
Slovakia
113
113
113
(1)
247
Slovenia
217
217
217
0
259
Italy
Malta
Netherlands
Spain
1,100
22
24
(2)
216
Sweden
1
1
0
1
0
United Kingdom
0
0
0
0
0
71,558
38,183
46,097
(7,914)
39,649
TOTAL
Total net direct exposures excluding derivatives was €38.2 billion at
December 31, 2013, down close to €1.5 billion over the fiscal year, due to the
trading book (-€7.9 billion). Net direct exposures excluding derivatives in the
banking book were mainly due to France, which alone accounted for 85% of
this exposure.
Net direct exposure in the banking book of peripheral European countries
remained stable at €3.9 billion in fiscal year 2013.
3
3
3
3
3
3
3
(1)
Exposure of banking activities on a consolidated basis.
(2)
Method defined by the European Banking Authority (EBA) as part of the December 2013 transparency exercise; exposures at December 31, 2012 have been restated based on the same method.
139
3
3
RISK MANAGEMENT
Pillar III
Terminology
Equities: exposures representing investments in associates.
Sovereigns: debt securities issued by governments, central administrations
and similar bodies, local authorities or public sector entities with the status of
sovereign counterparties, central banks, multilateral development banks and
international organizations.
Other assets: this category includes all assets other than those whose risk
relates to third parties (fixed assets, goodwill, residual values on lease financing
agreements, etc.).
Institutions: loans and advances to regulated credit institutions and similar
entities, local authorities or other public sector entities without the status of
sovereign counterparties.
EAD (Exposure at Default): this is the amount due by the client on the effective
default date. This amount is made up of the remaining principal, past due
payments, accrued interest not yet due, fees and penalties.
Corporates: loans to large corporates and small and medium sized-enterprises
(SMEs).
RWA (Risk-Weighted Assets): the calculation of credit risks is carried out
through a more refined weighting of outstandings, which takes into account
the default risk of counterparties and that of receivables.
Retail customers: loans to individual customers, small or medium-sized entities,
professional customers and individual entrepreneurs.
PD (Probability of Default): probability of default of counterparty in the long
run.
Exposure to retail customers is also broken down into a number of categories:
home loans, renewable loans, other loans for individuals and exposures to very
small enterprises and small businesses.
LGD (Loss Given Default): the expected loss rate in the event of default on
a loan.
Securitizations: loans relating to securitization transactions.
CCF: Credit Conversion Factor.
3.2.8
Securitization transactions
PRUDENTIAL REQUIREMENTS
The prudential requirements of the EU CRD (Capital Requirements Directive),
as transcribed into French law by the decree of February 20, 2007 concerning
securitization transactions, are distinct from conventional loan transactions. Two
methods are used to measure the risk exposure of securitization transactions:
the standardized approach and the internal ratings based approach with specific
weighting categories.
The CRD III directive (Directive 2010/76/EU published in the Official Journal of
the European Union on November 24, 2010 and applicable since December 31,
2011) increases capital requirements for securitization and resecuritization
positions held in both banking and trading books. This directive also complements
the Pillar III regulations in an aim to improve transparency on securitization and
resecuritization positions.
MANAGEMENT OF SECURITIZATION
WITHIN GROUP BPCE
Group outstandings totaled €23.5 billion at December 31, 2013, down by
€11.4 billion over the fiscal year, with a high predominance of Natixis and Crédit
Foncier. The investor securitization exposures contained in the GAPC (Workout
portfolio management) and own-account securitization positions of the former
Caisse Nationale des Caisses d’Epargne (CNCE) and of Crédit Foncier are all
managed on a run-off basis in accordance with the Group’s strategic guidelines.
140
CR: capital requirement.
Outstandings are managed under a run-off method where positions are
gradually run down but will continue to be managed (including disposals)
to safeguard the interests of the Group by actively reducing positions under
acceptable pricing conditions.
The various relevant portfolios are subject to specific monitoring within the
entities and subsidiaries as well as by the central institution. Depending on the
scope involved, dedicated management or steering committees regularly review
the main positions and management strategies.
Within the central institution, the Risk Management division carries out regular
reviews of securitization exposures (quarterly mapping), changes in the structure
of portfolios, risk-weighted assets and potential losses. Regular assessments
of potential losses are discussed at an umbrella committee meeting, as are
disposal opportunities.
At the same time, dedicated teams carry out ad hoc investigations into the
likely effect of risk factors including changes in default and recovery rates on
potential losses and changes in RWA.
Finally, the Risk Management division controls risks associated with sensitive
securitization positions by identifying rating downgrades and monitoring
changes in exposures (valuation, detailed analysis). Major exposures are
systematically submitted to the quarterly Group Watchlist and Provisions
Committee to determine the appropriate level of provisioning.
RISK MANAGEMENT
Pillar III
3
BREAKDOWN OF SECURITIZATION ACTIVITIES
3
Breakdown of total outstandings
➡
BREAKDOWN OF OUTSTANDINGS BY TYPE OF SECURITIZATION
Banking book
12/31/2013
12/31/2012
Outstandings
EAD
Outstandings
EAD
21,941
21,815
31,316
31,319
Conventional securitization
Synthetic securitization
TOTAL
0
0
50
50
21,941
21,815
31,366
31,369
3
Trading book
12/31/2013
EAD
Outstandings
EAD
1,596
1,596
3,523
3,523
TOTAL
➡
12/31/2012
Outstandings
3
BREAKDOWN OF OUTSTANDINGS BY RISK WEIGHT CATEGORY
Banking book under the IRB approach
12/31/2013
Banking book under the IRB
approach
7% – 10%
12/31/2012
Securitization Resecuritization
4,014
5
12% – 18%
1,126
20% – 35%
1,655
135
1,034
40% – 75%
239
273
82
21
2
6
100%
150%
Banking book under the IRB
approach
Trading book
Trading book
5,863
101
7
641
1,812
50
1,394
429
150
133
45
67
6
17
41
6
8
200%
225%
250%
219
61
300%
41
3
267
36
1
350%
425%
1
89
3
232
2,855
83
6
11
2
72
500%
113
20
650%
18
37
397
2
6
247
3
750%
850%
1,250% including capital
deduction
554
101
8
173
805
202
92
1,333
263
12,166
760
123
227
2,690
833
Transparency method
Regulatory formula method
TOTAL
181
71
7,863
807
141
3
3
3
➡
RISK MANAGEMENT
Pillar III
BREAKDOWN OF EAD BY RISK WEIGHT CATEGORY
Banking book under the standardized approach
12/31/2013
12/31/2012
Securitization
Securitization
20%
5,273
9,676
40%
142
105
50%
3,011
3,007
100%
3,104
4,472
1,068
400
274
81
225%
40
350%
650%
1250%
Transparency method
TOTAL
274
546
13,146
18,326
Banking book securitization
➡
BREAKDOWN OF INVESTOR SECURITIZATION OUTSTANDINGS
12/31/2013
12/31/2012
Banking book
Banking book
Balance sheet exposure
Off-balance sheet exposure
TOTAL
➡
EAD
EAD
RWA
RWA
EAD
EAD
RWA
RWA
15,471
862
10,467
875
22,481
459
10,794
592
1,847
48
318
5
3,058
76
387
21
17,317
910
10,785
880
25,539
535
11,181
612
BREAKDOWN OF INVESTOR SECURITIZATION OUTSTANDINGS BY PRINCIPLE CATEGORIES OF UNDERLYING ASSETS
as a percentage
12/31/2013
12/31/2012
RMBS
60%
61%
CDO
19%
20%
ABS
17%
17%
Other
4%
2%
100%
100%
TOTAL
142
RISK MANAGEMENT
Pillar III
➡
BREAKDOWN OF INVESTOR SECURITIZATION OUTSTANDINGS BY RATING
12/31/2013
as a percentage
Investment grade
Non investment grade
Not rated
Default
Standard & Poor’s
equivalent rating
12/31/2012
Banking book
Standard & Poor’s
equivalent rating
Banking book
AAA
27%
AAA
34%
AA+
6%
AA+
4%
AA
1%
AA
5%
AA-
6%
AA-
10%
A+
8%
A+
9%
A
14%
A
9%
A-
3%
A-
3%
BBB+
5%
BBB+
11%
BBB
8%
BBB
8%
BBB-
7%
BBB-
1%
BB+
3%
BB+
0%
BB
2%
BB
2%
BB-
1%
BB-
0%
B+
0%
B+
1%
B
2%
B
0%
B-
1%
B-
1%
CCC+
0%
CCC+
0%
CCC
0%
CCC
0%
CCC-
0%
CCC-
0%
CC
1%
CC
0%
C
0%
C
0%
Not rated
4%
Not rated
2%
D
0%
D
0%
TOTAL
➡
12/31/2012
Banking book
3
3
Banking book
EAD
EAD
RWA
RWA
EAD
EAD
RWA
RWA
35
71
29
234
190
409
26
343
35
71
29
234
190
409
26
343
TOTAL
3
3
BREAKDOWN OF ORIGINATOR SECURITIZATION OUTSTANDINGS
3
100%
100%
12/31/2013
➡
3
3
BREAKDOWN OF SPONSOR SECURITIZATION OUTSTANDINGS
12/31/2013
12/31/2012
Banking book
TOTAL
EAD
EAD
Banking book
RWA
RWA
EAD
EAD
RWA
18
2
243
172
3,464
558
4,454
856
3,482
0
560
0
4,696
0
1,028
RWA
3
0
143
3
3
RISK MANAGEMENT
Pillar III
Trading book securitization(1)
➡
BREAKDOWN OF INVESTOR AND SPONSOR SECURITIZATION OUTSTANDINGS(2)
12/31/2013
12/31/2012
Trading book
Investor
Sponsor
TOTAL
➡
Trading book
EAD
EAD
RWA
RWA
EAD
EAD
RWA
RWA
1,163
256
517
27
2,428
792
1,059
2,398
171
7
44
7
262
41
68
41
1,333
263
561
34
2,690
833
1,128
2,439
BREAKDOWN OF INVESTOR AND SPONSOR SECURITIZATION OUTSTANDINGS BY PRINCIPAL CATEGORIES OF UNDERLYING ASSETS
as a percentage
12/31/2013
12/31/2012
Trading book
Trading book
CDO
38%
62%
ABS
57%
32%
RMBS
0%
1%
Other
5%
5%
100%
100%
Type of underlying assets
TOTAL
➡
BREAKDOWN OF INVESTOR AND SPONSOR SECURITIZATION POSITIONS BY RATING
12/31/2013
as a percentage
Trading book
Standard
& Poor’s equivalent
rating
Trading book
54%
AAA
42%
AA+
1%
AA+
4%
AA
13%
AA
12%
AA-
0%
AA-
1%
A+
4%
A+
2%
A
6%
A
5%
A-
2%
A-
4%
BBB+
1%
BBB+
1%
BBB
1%
BBB
9%
BBB-
0%
BBB-
0%
BB+
6%
BB+
1%
BB
0%
BB
10%
BB-
0%
BB-
0%
B+
0%
B+
1%
Standard
& Poor’s equivalent
rating
AAA
Investment grade
B
0%
B
1%
B-
0%
B-
0%
CCC+
0%
CCC+
0%
CCC
0%
CCC
0%
CCC-
2%
CCC-
2%
CC
5%
CC
1%
C
1%
C
1%
Not rated
3%
Not rated
5%
D
0%
D
Non investment grade
Not rated
Default
TOTAL
100%
(1)
Without taking into account the guarantee extended by BPCE to Natixis on GAPC (Workout portfolio management).
(2)
No originator positions in the trading book.
144
12/31/2012
0%
100%
RISK MANAGEMENT
Pillar III
TERMINOLOGY
Conventional securitization: this consists of the transfer to investors of financial
assets such as loans or receivables, transforming these loans into financial
securities issued on the capital market by means of special purpose vehicles.
Synthetic securitization: in a synthetic transaction, ownership of the asset is
not transferred but the risk is transferred to a financial instrument, the credit
derivative.
Resecuritization: a securitization in which the credit risk associated with a
portfolio of underling assets is divided into tranches and for which at least one
of the underlying asset exposures is a securitization position.
Tranche: a fraction of the credit risk set out contractually and which is associated
with an exposure or exposures.
Liquidity line: the securitization position resulting from a financing agreement
with the aim of ensuring the punctuality of payment flows to investors.
Originator: either an entity which, on its own or through related entities,
was directly or indirectly involved in the original agreement which created
the obligations of the debtor or potential debtor and which gave rise to the
securitization transaction or arrangement; or an entity that purchases a third
party’s on-balance sheet exposures and then securitizes them.
Sponsor: an entity, other than the originator, that establishes and manages an
asset-backed commercial paper program, or other securitization operation or
arrangement that purchases exposures from third-party entities.
Investor: all of the securitization positions invested in by the Group in which
it does not act as originator or sponsor. These are mainly tranches acquired in
programs initiated or managed by external banks.
3
3
3
Securitization position: exposure to a securitization transaction or arrangement.
3.2.9
Risk related to equities for the banking book
Non-trading books with equity risk consist mainly of listed equities, unlisted
equities and mutual fund or hedge fund shares.
divisions (audit trail of opinions of the various parties in the investment
request process);
For investments in funds, a specific monitoring process was implemented in
the Banque Populaire and Caisse d’Epargne networks as well as the subsidiaries
(excluding Natixis), which now benefit from:
• total risk exposure and global sum management by asset management
company.
3
• an online tool for the monitoring, control and management of requests
for investments in funds, used by entities’ Finance and Risk Management
➡
RISK-WEIGHTED ASSETS IN THE EQUITY CATEGORY
Outstandings at
12/31/2013
Outstandings at
12/31/2012
150%
368
733
190%
2,805
2,681
290%
1,731
1,503
370%
6,698
4,049
Other weightings
TOTAL
3
2,620
2,760
14,222
11,726
3
The weight of funds subject to the transparency method (“Other weightings”) decreased by 5% in 2013.
3
3
145
3
3
RISK MANAGEMENT
Pillar III
3.2.10 Market risk
MARKET RISK MANAGEMENT
Risk monitoring
The Risk Management division is responsible for the control of market activities
within Groupe BPCE, which is subject to regular review by the Group Market
Risk Committee.
Within the scope of the trading book, market risk is monitored daily by measuring
Group VaR and using global and historic stress tests. The proprietary Value-atRisk calculation system developed by Natixis is used by the Group. This system
provides a tool for the measurement, monitoring and control of market risk
on a consolidated level and at the level of the Caisse d’Epargne and Banque
Populaire networks and BPCE subsidiaries on a daily basis and taking account
of correlations between the various portfolios. There are certain specifics within
Groupe BPCE, in particular:
• given the significance of its capital market activities, Natixis’ risk management
is specifically adapted to this entity;
• for the Banque Populaire banks, only BRED Banque Populaire has a capital
markets business. It conducts daily monitoring of its Central Treasury division
and trading floor activities and the management of stable surplus funds using
99% 1-day value-at-risk, sensitivity and stress scenario indicators;
• for the Caisses d’Epargne and BPCE subsidiaries, daily monitoring of trading
book activities is based on supervision by the Risk Management division of
99% 1-day value-at-risk, stress tests and compliance with regulatory limits.
All limits (operational indicators, VaR, and stress tests) are monitored daily
by local Risk Management divisions. If applicable, breaches may lead to a
management decision concerning the position in question (close, hedge,
hold, etc.).
For the banking portfolio, monitoring is broken down by asset class: bonds,
securitizations, private equity and UCITS. Specific monitoring of the bonds
portfolio is carried out on a monthly basis using in particular credit spread
stress tests and risk premium monitoring.
The Group’s single treasury and central bank collateral management pool is
subject to daily monitoring of risks and economic results for all of its activities,
which are mainly related to the banking portfolio. In particular, a 99% 1-day
Monte Carlo VaR is calculated and analyzed by risk factor. Compliance with
operational limits in terms of sensitivity to rates, both overall and by time
buckets, as well as by counterparty, is monitored daily. Supervision of this
activity also includes specific stress scenarios as well as exposure limits per
operator (for both individual and cumulative transactions processed per day).
Monitoring of the workout portfolio
Natixis Asset Management has continued its management mandate for the
workout portfolio of the former Caisse Nationale des Caisses d’Epargne’s
proprietary activities. Risk delegation was defined by BPCE for the management
carried out by Natixis Asset Management, which presents disposals carried out
and portfolio monitoring in terms of profit and loss and market forecasts at
BPCE monthly Management Committee meetings. A risk review is conducted
by the Risk Management division as part of the Group Market Risk Committee.
146
MARKET RISK MEASUREMENT METHODS
The market risk monitoring system relies on three types of indicators used to
manage activity, on an overall basis and by similar activity, by focusing on more
directly observable criteria, including:
• sensitivity to variations in the underlying instrument, variation in volatility
or to correlation, nominal amounts, and diversification indicators. The limits
corresponding to these qualitative and quantitative operational indicators
thus complement the VaR, stress test and loss-alert limits;
• daily assessment of global market risk measurement through a 99% 1-day
VaR;
• stress tests to measure potential losses on portfolios in extreme market
conditions. The Group system relies on global stress tests and specific stress
tests for each activity.
Specific reports to the business line concerned are sent daily to the relevant
operators and managers. The Group Risk Management division also provides
a weekly report summarizing all of the Group’s market risk, with a detailed
breakdown for Natixis and BRED Banque Populaire.
Moreover, for Natixis, an overall report on market risks is also distributed daily
to the executive management of BPCE and the front office managers. A report
specific to the guaranteed scope is also sent daily to the central institution.
Finally, a consolidated review of Groupe BPCE’s market risks, relating to VaR
calculations, and hypothetical and historical stress scenarios, is presented to
the Group Market Risk Committee, in addition to risk reporting performed for
the entities.
Sensitivities
The monitoring and control of compliance with sensitivity limits are carried out
daily at the local level by the Risk Management divisions. If a limit is breached,
an alert procedure is triggered in order to define the measures required for a
return within operational limits.
VaR
Market risk is also monitored and assessed via synthetic VaR calculations, which
determine potential losses from each activity at a given confidence level (99%)
and holding period (one day). For calculation purposes, the joint behavior of
market parameters that determine portfolio values is modeled using statistical
data.
All decisions relating to risk factors using the internal calculation tool are
revised regularly by committees involving all of the relevant participants (Risk
Management division, Front Office and Results department). Quantitative and
objective tools to measure the relevance of risk factors are also used.
VaR is based on digital simulations, using a Monte Carlo method which takes
into account possible non-linear portfolio returns based on the different risk
factors. It is calculated and monitored daily for all of the Group’s trading books,
and a VaR limit defined on a global level and per activity. The calculation tool
generates 10,000 scenarios, which provides satisfactory precision levels. For
RISK MANAGEMENT
Pillar III
certain complex products which account for a minor share of the trading books,
their inclusion in the VaR is obtained by using sensitivities. VaR backtesting is
carried out on approved scopes and confirms the overall robustness of the model
used. Extreme risks, which are not recognized by the VaR, are processed using
stress tests in place within the Group.
This internal VaR model used by Natixis was approved by the Autorité de
contrôle prudentiel et de résolution in January 2009. Natixis thus uses the VaR
to calculate capital in respect of market risks for approved scopes.
Stress tests
Global stress tests are calculated daily and fall under three categories:
• historic stress tests reproduce changes in market parameters observed during
past crises, their impacts on current positions and P&Ls. They can be used
to assess the exposure of the Group’s activities to known scenarios. Eleven
historic stress tests have been in place since 2010;
• hypothetical stress tests consist in simulating changes in market parameters
in all activities on the basis of plausible assumptions concerning the
dissemination of an initial shock. These shocks are based on scenarios defined
according to economic criteria (real estate crisis, economic crisis), geopolitical
considerations (terrorist attacks in Europe, toppling of a regime in the Middle
East) or other factors (bird flu). The Group has had six theoretical stress tests
since 2010;
• specific stress tests calculated on a daily basis in management tools have
been rolled out across all areas and are subject to alerts. They are set on the
basis of the same severity standard and are aimed at identifying the main
loss areas by portfolio.
At the same time, a bond stress test was set up within Groupe BPCE in
June 2012. It has been adjusted based on a mixed hypothetical and historical
approach for the duration of the European sovereign crisis (second half of 2011).
Shocks are defined over a three month period, and are broken down by sector
(sovereign, financial, corporate). This stress test is regularly reviewed by the
Group Market Risk Committee.
3
3
3
3
MARKET RISK MEASUREMENT QUANTITATIVE DATA
Breakdown of VaR (99% – 1-day) – Groupe BPCE
12/31/2012
6/28/2013
12/31/2013
Interest rate risk
16.2
15.4
9.2
Credit risk
18.8
13.9
8.3
Equity risk
2.8
2.9
2.4
Exchange rate risk
1.5
2.2
2.1
Commodity risk
0.3
1.1
0.6
Netting
(27.6)
(26.3)
(15.1)
GROUPE BPCE VAR
12.1
9.3
7.4
Consolidated VaR for Groupe BPCE’s trading scope (99% one-day Monte Carlo VaR) amounted to €7.4 million as of December 31, 2013, down €4.7 million over
the fiscal year. The VaR reached a maximum of €13.8 million on April 8, 2013 and its average over the year was €9.7 million.
3
3
3
3
147
3
3
RISK MANAGEMENT
Pillar III
Stress testing results
➡
MAIN HYPOTHETICAL STRESS TESTS
12/31/2013
Commodities
Emerging market
crisis
Natixis trading
(106)
(77)
(49)
(38)
(26)
(25)
Natixis Wholesale Banking
(102)
(74)
(37)
(30)
(27)
(18)
Natixis GAPC
Increase in
interest rates Default by a bank
Default by an
influential
corporation
Fall in stock
market indices
(3)
(3)
(12)
(7)
1
(7)
BRED trading
(15)
(14)
(24)
(21)
(9)
(2)
Trading floor
(2)
(15)
(18)
(27)
(23)
(9)
Financial management
(1)
4
3
2
0
0
Caisses d’Epargne trading
(2)
(1)
(2)
(2)
(1)
0
BPCE trading subsidiaries
OVERALL TRADING BOOK
0
0
0
0
0
0
(123)
(92)
(75)
(61)
(36)
(27)
2008 Lehman
crisis
2008 corporate
crisis
The most sensitive hypothetical stress test is a fall in market indices(1), mainly within Natixis’ Wholesale Banking scope.
➡
MAIN HISTORICAL STRESS TESTS
12/31/2013
1990 Gulf War
1994 bond
market crash
1998 LTCM
collapse
2007 Federal
Reserve
subprime action
Natixis trading
3
(24)
(38)
(49)
(62)
(119)
Natixis Wholesale Banking
4
(24)
(40)
(38)
(52)
(79)
Natixis GAPC
(1)
0
2
(11)
(10)
(40)
BRED trading
(8)
(14)
1
15
(2)
(5)
Trading floor
(8)
(15)
2
17
(1)
(5)
0
2
(1)
(2)
(2)
0
(1)
0
(2)
(1)
(1)
(1)
Financial management
Caisses d’Epargne trading
BPCE trading subsidiaries
OVERALL TRADING BOOK
0
0
0
0
0
0
(6)
(38)
(39)
(35)
(66)
(125)
The largest historical scenario remains the Corporate 2008 scenario(2).
(1)
Assumption of a drop in market indices: sharp decline in market indices, sharp rise in index volatility, decrease in interest rates, increase in credit spreads.
(2)
Reproduces market fluctuations following the near-failure of Bear Stearns and the announcement of record losses for Fannie Mae. As the crisis reached the tranches considered to be the most secure, the equity
markets continued to plunge, the swap/cash spreads and liquidity skyrocketed. Sector credit segments, in particular US financials and corporates, were hit hard. Securitized assets credit spreads, in particular
CDOs, reached record highs.
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3
Groupe BPCE’s market risks are mainly borne by Natixis, for which market risk measurement quantitative data is provided below.
Change in Natixis VaR including the BPCE guarantee
The VaR’s decrease over the course of the year is indicative of a gradual
reduction of exposures (continued disposal of positions in GAPC), and lower
market volatility.
The 99% 1-day VaR level for Natixis’ trading portfolios averaged €7.9 million.
It peaked at €10.6 million on May 9, 2013 and stood at €6.3 million at
December 31, 2013.
➡
3
The chart below shows the trading book historical VaR between December 31,
2012 and December 31, 2013 for both the global scope and GAPC after taking
into account the BPCE guarantee, as well as historical VaR for the Wholesale
Banking scope.
3
OVERALL NATIXIS VAR INCLUDING THE BPCE GUARANTEE – TRADING PORTFOLIO (1-DAY VAR 99%)
12
10
8
3
6
4
2
13
3
12
/3
1/
13
11
/3
0/
13
10
/3
1/
13
09
/3
0/
13
08
/3
1/
13
07
/3
1/
13
06
/3
0/
13
1/
05
/3
13
0/
04
/3
13
1/
/3
03
13
8/
/2
02
13
1/
/3
01
12
/3
1/
12
0
Global VaR incl. BPCE guarantee
GAPC VaR incl. BPCE guarantee
Wholesale Banking VaR
Natixis backtesting on the regulatory scope
The chart below takes into account backtesting (comparison of loss potential ex-post as estimated ex-ante by VaR with actual losses recognized in income) on the
regulatory scope, and tests the robustness of the VaR indicator:
3
35
25
3
15
5
-5
- 15
- 25
3
P&L
VaR without guarantee
13
1/
/3
12
13
0/
11
/3
13
1/
/3
10
13
0/
/3
09
13
1/
/3
08
13
1/
/3
07
13
0/
/3
06
13
1/
/3
05
13
0/
/3
04
13
1/
/3
03
13
8/
/2
02
13
1/
/3
01
12
/3
1/
12
- 35
VaR without guarantee
Two backtesting exceptions were noted and reported to the Audit and Risk Committee and to the ACPR in accordance with Articles 17 ter and 38 of CRBF regulation
97-02 governing loss alerts.
149
3
3
RISK MANAGEMENT
Pillar III
These exceptions, of which the first was method-related, exceeded VaR by
more than 20% and were therefore reported to the Audit and Risk Committee
and the ACPR as stated in regulation 97-02 (Articles 17 ter and 38) governing
alert thresholds.
The April 8, 2013 exception was linked to the updated valuation of the collateral
provided by certain counterparties, under the dual-curve calculation method.
This exception was related to the calculation method and exceeded the VaR
level by more than 20%.
The June 21, 2013 exception resulted from the market shock observed on
that day (interest rate hike and widening of sovereign yield curve spreads in
Europe), sparked by the statements issued by the Fed Chairman. This market
trend exceeded the 2.33% standard deviation and was thus not captured by VaR.
➡
Natixis stressed VaR
Change in regulatory output and stressed VaR after taking into account the
BPCE guarantee.
CHANGE IN REGULATORY OUTPUT AND STRESSED VAR AFTER TAKING INTO ACCOUNT THE BPCE GUARANTEE
25
20
15
10
5
13
1/
/3
12
11
/3
0/
13
13
1/
/3
10
09
/3
0/
13
13
1/
/3
08
13
1/
/3
07
13
0/
/3
06
13
1/
/3
05
13
0/
/3
04
03
/3
1/
13
13
8/
/2
02
13
1/
/3
01
12
/3
1/
12
0
Reg SVaR incl. BPCE guarantee
Reg SVaR with BPCE guarantee
IRC indicator
This indicator is based on the regulatory scope after taking into account the BPCE guarantee.
460
410
360
310
260
210
160
110
Reg IRC after guarantee
60 days moving average
150
13
1/
/3
12
13
0/
/3
11
1/
13
/3
10
13
0/
/3
09
13
1/
/3
08
07
/3
1/
13
13
0/
/3
06
13
1/
/3
05
13
04
/3
0/
13
1/
/3
03
13
8/
/2
02
13
1/
/3
01
12
/3
1/
12
60
RISK MANAGEMENT
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3
TERMINOLOGY
Interest rate risk: the risk borne by the holder of a receivable or a debt relating
to subsequent changes in interest rates.
Exchange rate risk: the risk relating to receivables and debts in foreign
currencies, which lies in the risk of changes in exchange rates relative to the
national currency.
Value at Risk (VaR): risk measurement that quantifies potential losses from a
financial investment in monetary terms; a probability of occurrence threshold
(confidence interval) and a time horizon are imposed on this measurement.
3
Stress Test: risk measurement that calculates the monetary loss associated
with a stress scenario by simulating extreme economic and financial conditions.
Risk of change in the share price: risk relating to the price of the position held
in a given financial asset.
3
3.2.11 Operational risk
ORGANIZATION OF OPERATIONAL RISK
MANAGEMENT
The Risk Management division’s Operational Risk division identifies, manages
and monitors operational risks and contributes to the reduction of Groupe BPCE’s
losses by ensuring that the operational risk management system is reliable and
efficient. Within this framework, the Operational Risk division manages the
operational risk function and focuses its work on three key duties:
• assessment and prevention of operational risks;
• drawing up operational risk policies for each working method and business
line procedure;
ALERT PROCEDURE FOR INCIDENTS
The alert procedure for serious incidents has been extended to the entire scope
of Groupe BPCE. The aim of this system is to enhance and reinforce the system
for collecting loss data within the Group.
An operational risk incident is deemed to be serious when the potential financial
impact at the time the incident is detected is over €150,000 (€1 million for
Natixis). Operational risk incidents with a material impact on the image and
reputation of the Group or its subsidiaries are also deemed to be serious.
• permanent operational risk control.
This procedure therefore encompasses material operational risks within the
meaning of Article 17 ter of CRBF regulation 97-02, for which the minimum
threshold is set at 0.5% of Tier-1 capital.
OPERATIONAL RISK STEERING COMMITTEES
DEVELOPMENT OF GROUPE BPCE LOSSES
Operational risk steering within the Group is coordinated at two levels:
The Group’s gross operational losses were down more than 20% in 2013
compared to 2012.
• at the level of each Group entity, the Operational Risk Management
Committee can be combined with the Non-Compliance Risk Management
Committee to create a Compliance and Operational Risk Management
Committee, to which the Fund-of-funds Risk Committee can be associated
according to the wishes of the institution. The Committee decides on the
implementation of a risk management policy and ensures the relevance and
effectiveness of operational risk management procedures. It monitors the
level of risk and validates and oversees action plans to reduce their exposure.
It reviews recorded incidents and controls monitoring of corrective measures
decided. Lastly, it reviews the contribution of the Risk Management function
to permanent controls. The Committee meets at least once every six months;
• at the level of Groupe BPCE, the Group Operational Risk Management
Committee meets on a quarterly basis. This committee brings together the
various relevant business lines (Compliance, Information System Security, BCP
and Financial Audit) and reports to the Group Risk Management Committee,
and its main duties are:
➡
BREAKDOWN OF GROSS LOSSES BY BASEL BUSINESS LINE
24.8%
3
3
3
Commercial banking
48.9%
13.5%
Retail banking
Payment and settlement
6.7%
Institutional sales and trading
0.1%
Branch services
- to validate the single mapping of operational risk at the Group level,
1%
- to monitor Group areas of risk,
Retail brokerage
3
3.7%
Loans to corporates
1.4%
Asset management (business)
3
- to validate action plans,
- to prepare consolidated reports of losses, incidents and alerts.
151
3
3
➡
RISK MANAGEMENT
Pillar III
BREAKDOWN OF GROSS LOSSES BY BASEL BUSINESS CATEGORY
19.6%
External fraud
More than 85% of Groupe BPCE’s losses were distributed among the following
three business lines:
• retail banking (48.9%);
• commercial banking (24.8%);
• payment and settlement (13.5%).
57.3%
Execution, delivery
and process
management
13.6%
Commercial customers,
products and practices
4.4%
Employment and occupational
safety practices
3.5%
Internal fraud
0.6%
0.9%
Interruption of business
and system malfunctions
Damage to tangible assets
3.2.12 Stress tests
Stress tests are aimed at measuring the sensitivity of different portfolios
to shocks, in terms of expected losses, risk-weighted assets and capital
requirements.
• measuring, taking into account the economic scenario, the flow of annual
defaults and allocations to provisions for default flows and for existing default
stock at the beginning of the scenario;
The Group’s stress test program is primarily based on a global approach covering
the Group’s main risks: credit risk including securitization (change in cost of risk
and risk-weighted assets), counterparty risk (change in impairments), market
risk (market shocks, change in securities portfolios and risk-weighted assets),
etc. This approach covers all Group entities, taking into account their specific
characteristics.
• measuring, based on the economic scenario, adjustments affecting the
portfolios and the resulting changes in risk-weighted assets.
These methods are adapted to the Group’s main portfolios and entities.
The tests are applied to a two-year period and include two scenarios: a budget
scenario and an adverse scenario. The adverse scenario, drawn up by the Group’s
economists, describes the following situation:
Results from the adverse stress tests, which are presented to the Group Risk
Management Committee, highlight Groupe BPCE’s resilience.
• an economic and political slump within the euro zone, as an extension to
the sovereign crises, involving a return to recession for the euro zone and, in
particular, the French economy;
• for France, this European crisis could also spawn a lack of credibility on the
lasting consolidation of public finances, as the focus up to now has been on
revenues;
• a further increase in the unemployment rate in France, thus weakening
households.
The macroeconomic indicators produced as part of the scenario notably include:
GDP, inflation, unemployment rate, money market and bond interest rates, for
France and the main economies to which the Group is exposed.
For credit risk, methods for measuring cost of risk and risk-weighted assets
include:
• measuring the sensitivity of default rates, write-off rates and credit rating
adjustments to economic variables;
152
Methods for measuring counterparty risk and market risk are generally based
on existing solutions, and parameters taken from or in line with the chosen
macroeconomic scenario.
In addition to the overall stress test, the Group carries out specific tests, some
of which are recurrent, on sensitive portfolios or portfolios which require special
supervision.
Credit portfolio stress tests are presented to the Group Risk Management
Committee during portfolio reviews. Scenarios are generally based on the adverse
scenario, but either present higher severity or specific stress parameters. These
stress tests are therefore used to assess the risks inherent in these portfolios and
to define risk policies. These exercises also provide the opportunity to compare
the results of the overall stress test on these scopes with the application of
specific methods (static stress tests, use of generational data, etc.).
Historical and hypothetical stress tests are carried out on market activities and
are presented to the Group Market Risk Committee. In addition, specific stress
tests are carried out on the AFS bond portfolio market.
RISK MANAGEMENT
Liquidity, interest rate and foreign exchange risks
3.3 Liquidity, interest rate and foreign exchange risks
Like all credit institutions, Groupe BPCE is exposed to structural liquidity, interest
rate and foreign exchange risks. These risks are closely monitored by the Group
and its institutions to secure immediate and future income, ensure that balance
sheets are balanced and promote Group’s development.
Governance
The risk monitoring system’s structure and operating model are managed by
the Group ALM Committee, chaired by the Chairman of the BPCE Management
Board. This Committee sets in particular the rules and limits governing the
management of these three major risk categories applicable at the consolidated
level and to each institution, as well as the main guidelines in terms of funding
policy, allocation of liquidity to the business lines and management of risk
indicators. It regularly monitors the risk indicators and changes to the main
structural balance sheet aggregates of the Group and its main institutions.
3.3.1
The structural liquidity, interest rate and foreign exchange risk management
policy is jointly implemented by the Asset-Liability Management function
(oversight of funding plan implementation, management of liquidity reserves,
cash management, calculation and monitoring of the various risk indicators) and
the Risk Management function (validation of the control framework, controls
of compliance with rules and limits). The Group Finance division and the Group
Risk Management division are responsible for adapting this framework to their
respective functions.
The adaptation of the operational management framework within each
institution is subject to validation by the Board of Directors, the Steering and/
or Supervisory Board. Dedicated operational committees within each institution
oversee the implementation of the funding strategy, balance sheet management
and the management of liquidity, interest rate and foreign exchange risks
for the institution, in line with rules and limits set at the Group level. The
implementation of the framework at each institution relies on an asset-liability
management tool used by both the Banque Populaire and Caisse d’Epargne
networks.
3
3
3
3
Liquidity and funding risk
3
Structural liquidity risk is defined as the risk of the Group not having sufficient
funds to meet its commitments or to settle or offset a position due to market
conditions within a specified period and at a reasonable cost. This could occur,
for example, in the event of massive withdrawals of customer deposits or an
overall crisis of confidence on the markets.
OPERATIONAL LIQUIDITY RISK MANAGEMENT
OBJECTIVES AND POLICIES
• in the short term, it involves assessing an institution’s ability to withstand
a crisis;
• in the medium term, liquidity is measured in terms of cash requirements;
• in the long term, it involves monitoring the institution’s asset-liability
mismatch level.
The main aim of the Group’s liquidity risk management framework is to always
be in a position to cope with a prolonged, highly intense liquidity crisis while
monitoring cost control, promoting the balanced development of the business
lines and complying with regulations in force.
To this end, the Group relies on three mechanisms:
• supervision of each business line’s liquidity consumption, predominantly by
maintaining a balance between growth in the credit segment and customer
deposit inflows;
• centralized management of funding aimed primarily at limiting the use of
short-term funding, spreading out the maturity dates of medium- and longterm funds and diversifying sources of liquidity;
• the constitution of liquidity pools.
In addition to these measures, a coherent set of indicators, limits and
management rules are combined in a centralized framework of standards and
rules. These indicators and rules allow for the measurement and consolidated
management of liquidity risk.
Liquidity risk management is carried out at the consolidated Group level and
at each entity. Liquidity risk is assessed differently over the short, medium and
long term:
3
Consequently, BPCE has defined a set of indicators and limits:
• one-day and one-week liquidity gap indicators measure the Group’s very
short-term funding requirements. These gaps are subject to limits at both
the Group level and within each institution;
• stress scenarios measure the Group’s ability to meet its commitments and
continue its regular commercial activities during a crisis depending on shortterm funding volumes, medium- and long-term debt maturities and liquidity
reserves. This includes internal stress test indicators aimed at ensuring shortterm liquidity security beyond the one-month horizon required by regulations.
These stress tests, based on bank- and/or market-specific scenarios, are broken
down into various levels of stress in order to forecast the impact on the
Group’s liquidity position. Adaptation of liquidity stress rules to all business
lines takes assumptions unique to each activity into account;
3
• the ratio of coverage of customer assets by liabilities is a relative measurement
of the Group’s autonomy with respect to the financial markets;
3
153
3
3
RISK MANAGEMENT
• the Group’s market coverage measures its overall dependence to date on
funds from monetary and bond markets. The contribution of the institutions
to this coverage is managed by a liquidity budget system. These budgets are
reviewed on an annual basis and govern the maximum liquidity consumption
for each entity in line with the Group’s budget process;
• the liquidity gap, which compares the amount of remaining liabilities with
remaining assets over a ten-year period, enables the Group to manage
medium- and long-term debt maturities and anticipate its funding
requirements. It is governed by limits at the Group level and within each
institution;
• measuring resource diversification, allowing the Group to avoid excessive
dependence on a single creditor;
• the pricing policy, which ensures the performance of liquidity allocation.
The definition of these indicators and any associated limits are included in a
body of consolidated standards that is reviewed and validated by the decisionmaking bodies of the Group and its institutions.
For medium and long-term funding requirements (more than one year),
in addition to deposits from customers of the Banque Populaire and Caisse
d’Epargne networks, which are the primary source of funding, the Group also
issues bonds through two main operators:
• BPCE (either directly as BPCE or through BPCE SFH, which issues obligations
de financement de l’habitat or OH, a category of secured bond backed by
French legislation); and
• its subsidiary Crédit Foncier (essentially with Compagnie de Financement
Foncier, a subsidiary of Crédit Foncier, which issues covered bonds known as
obligations foncières or OF, also backed by French legislation).
Note that BPCE is also responsible for the medium and long-term funding
activities of Natixis, which is no longer a regular issuer in the markets.
BPCE has short-term funding programs (certificates of deposit, Euro Commercial
Paper and US Commercial Paper) and medium- and long-term funding programs
(Medium Term Notes (or MTN), Euro Medium Term Notes (or EMTN), US MTN,
AUD MTN and a securitized bond program, backed by the home loans of the
Banque Populaire and Caisse d’Epargne networks).
CENTRALIZED FUNDING MANAGEMENT
The Group Finance division organizes, coordinates and supervises the funding
of Groupe BPCE on the markets.
The short-term funding of Groupe BPCE is carried out by a single treasury and
central bank collateral management team, created following the merger of BPCE
and Natixis’ cash management teams. This integrated treasury team is capable
of managing the Group’s treasury more efficiently, particularly in periods of
liquidity pressure. The Group has access to short-term market funding through
its two main issuers: BPCE and its subsidiary Natixis.
CHANGES IN INDICATORS IN 2013
Customer loan-to-deposit ratio
The Group’s customer loan-to-deposit ratio(1) was 124% at December 31, 2013,
down four points compared with December 31, 2012.
Liquidity gaps
The Group’s liquidity gap complies with internal limits.
Gaps
Strategy and funding conditions in 2013
The Group’s priority in terms of medium- and long-term funding in the markets
is to ensure sources of funding are properly diversified, in terms of types of
investors, vehicles, geographic regions and currencies.
As part of its 2013 medium- and long-term funding program, Groupe BPCE
raised a total amount of €32.2 billion(2), with an average maturity at issue of
5.3 years: BPCE’s medium- and long-term funding pool raised €28 billion(2)
with an average maturity at issue of 4.2 years, and €4.2 billion were raised
by Crédit Foncier’s medium- and long-term funding pool with an average at
issue of 12.7 years.
1/1/2014
to 12/31/2014
1/1/2015
to 12/31/2017
1/1/2018
to 12/31/2021
(15.92)
(19.28)
(1.60)
Unsecured bonds accounted for 74% of the €32.2 billion raised in 2013; covered
bonds accounted for 26% with an amount of €8.3 billion (€3.9 billion BPCE
SFH, €4.2 billion Compagnie de Financement Foncier and €0.2 billion Natixis
Pfandbriefbank).
The Group’s emphasis on diversification was highlighted this year by the
following issues:
• $750 million over three years issued on April 18 in the United States, as part
of the BPCE’s new funding program in the US market, $400 million issued
on October 3, 2013 to increase the previous issue and $1,250 billion over
five years issued in December 3, 2013; and
• JPY 131.6 billion (€949 million) issued to Japanese investors on December 6,
2013.
(1)
Excluding SCF (Compagnie de Financement Foncier, the Group’s société de crédit foncier - a french legal covered bonds issues).
(2)
Including €5.4 bn raised in excess of the 2012 plan and allocated to the 2013 plan (€4.0 bn from the BPCE funding pool and €1.5 bn from the Crédit Foncier funding pool).
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RISK MANAGEMENT
This “Samurai” issue (yen-denominated bonds issued in Japan by foreign
borrowers) included three maturities: two years (26% of the amount
raised), three years (43%) and five years (31%). BPCE entered the Japanese
domestic market in 2012 with an issue in three tranches for a total amount of
JPY 67.3 billion. This issue in December was the largest of its kind in 2013, all
issuers combined, and the largest ever carried out by a French bank.
The Group also carried out two Tier-2 issues: the first in euros, on July 11, 2013,
for €1 billion; the second, on October 15, 2013, the Group’s first Tier-2 issue
in dollars, for $1.5 billion. Both issues have a term of 10 years with repayment
at maturity (without a call option).
The breakdown by currency of unsecured issues from BPCE’s medium- and
long-term single treasury and central bank collateral management division is a
good indicator of the diversity of the Group’s medium- and long-term funding
sources. The breakdown by currency of the issues carried out in 2013 (excluding
the surplus from end-2012 which was charged to the 2013 program) is as
follows: 70% in euros, 18% in US dollars, 8% in yen, 2% in pound sterling, 1%
in Swiss francs and 1% in other currencies.
The vast majority of medium- and long-term funding raised in 2013 was at a
fixed rate. In general, the fixed rate is swapped to a floating rate as part of the
Group’s interest rate risk management.
Liquidity reserves
Liquidity reserves include deposits with central banks, available securities and
receivables eligible for central bank funding, and available assets that may be
sold under repurchase agreements or are readily sold on the market.
In addition to these liquidity reserves, the Group has access to large, high-quality,
asset portfolios such as home loans and loans to local authorities which may be
converted into liquid securities through securitization transactions or secured
bond issues.
3.3.2
The Group held €160 billion in liquidity reserves at December 31, 2013, of which
€109 billion were available assets eligible for central bank refinancing and
€51 billion were liquid assets placed with central banks. The Group’s liquidity
reserves have increased by €24 billion since December 31, 2012.
Regulatory liquidity ratio
The one-month regulatory liquidity ratio of BPCE is calculated on a monthly
basis. This ratio was at 112% at December 31, 2013 (136% at December 31,
2012), versus a minimum requirement of 100%.
3
OUTLOOK
Groupe BPCE closely monitors the work of the various regulatory authorities in
terms of liquidity risk management; in particular by attending consultations and
meetings organized by European authorities as well as by French and European
professional organizations.
The Group is also continuing its work relating to the implementation of two new
Basel liquidity ratios, i.e. the Liquidity Coverage Ratio (LCR) and the Net Stable
Funding Ratio (NSFR), with the main objective being to reach an LCR of 100%
as of January 1, 2015. During 2013, the Group defined the main mechanisms
relating to the orientation of its commercial activities, the optimization of
liquidity portfolio management and the calibration of the funding program
required over the medium to long term to reach this objective and is continuing
its implementation in 2014.
INTEREST RATE RISK OVERSIGHT
AND MANAGEMENT SYSTEM
OBJECTIVES AND POLICIES
Structural interest rate risk is controlled by a system of indicators and limits
defined by the Group Asset and Liability Management Committee. It measures
structural risks on the balance sheet, excluding any kind of independent
risk (trading, own accounts, etc.). The indicators used are divided into two
approaches: a static approach that only takes into account on-balance sheet and
off-balance sheet positions at a set date and a dynamic approach which includes
commercial and financial expectations. They can be classified into two sets:
• gap indicators that compare the amount of exposures to liabilities with that
of exposures to assets on the same rate index and over different maturities.
These indicators are used to validate the main balance sheet aggregates to
ensure the sustainability of the financial results achieved. Gaps are calculated
based on contractual debt schedules and the results of the common behavioral
models for various indexes as well as for the fixed rate;
3
3
3
The objective of the Group’s interest rate risk management mechanism is to
monitor the level of institutions’ changes in rates in order to contribute to the
growth of the Group and the business lines while evening out the impact of
any unfavorable rate changes on the value of the Group’s banking portfolios
and future income.
3
At December 31, 2013, liquidity reserves covered 164% of the Group’s shortterm funding (€97 billion at December 31, 2013 compared with €103 billion
at December 31, 2012). The hedging rate was 132% at December 31, 2012.
Structural interest rate risk
Structural interest rate risk (or overall interest rate risk) is defined as the risk
incurred in the event of change in interest rates due to all balance sheet and
off-balance sheet transactions, except for – if applicable – transactions subject
to market risks. This risk is an intrinsic component of the business line and of
credit institutions’ profitability.
3
155
3
3
3
3
RISK MANAGEMENT
• sensitivity indicators measure the change in the net present value of a portfolio
or a projected interest margin where there are differences between the change
in the market interest rate and the central scenario established quarterly by
the Group’s economists. In addition to the Basel II regulatory indicator on the
sensitivity of the balance sheet’s net present value to interest-rate shocks of
+/-200 basis points, the Group has introduced sensitivity indicators on the net
interest margin of all of its commercial banking activities. These indicators aim
to estimate the sensitivity of institutions’ results to interest rate uncertainties,
business forecasts (new business and customer behavior) and sales margin.
Instruments authorized to hedge this risk are strictly vanilla (non-structured),
excluding any sale of options and favoring accounting treatment that does not
impact the Group’s consolidated results.
Interest rate gaps
Most of the Group’s interest rate gap is carried by Commercial Banking and Insurance and primarily by the networks. This gap is relatively stable over time and
complies with internal limits.
Gaps (at a fixed-rate(1))
(1)
10/1/2013
to 9/30/2014
10/1/2014
to 9/30/2017
10/1/2017
to 9/30/2021
(31.41)
(24.93)
(10.84)
The indicator takes into account all asset and liability positions and the floating-rate positions until the next interest rate fixing date.
Sensitivity indicators
The sensitivity of the net present value of the Group’s balance sheet to 200 basis
point drops or increases in interest rates is much lower than the 20% regulatory
limit. Groupe BPCE is sensitive to increases in interest rates with an indicator of
-3.99% at September 30, 2013, close to the 2012 rate of -3.23%.
of the curve, flattening of the curve) compared to the central scenario showed,
at September 30, 2013, a flattened yield curve (+50 basis points for short-term
rates and -50 basis points for long-term rates) to be the least favorable scenario
with expected losses of €147 million year-on-year. At the same date, sensitivity
to a 100 basis point increase in rates was -€53 million.
For network activities, the change in the projected one-year net interest margin
calculated under four scenarios (increase in rates, decrease in rates, steepening
3.3.3
Structural exchange rate risk
Structural exchange rate risk is defined as the risk of a realized or unrealized
loss due to an unfavorable fluctuation in foreign currency exchange rates. Its
management distinguishes between the structural exchange risk policy and the
management of operational exchange rate risk.
EXCHANGE RATE RISK OVERSIGHT AND
MANAGEMENT SYSTEM
For Groupe BPCE (excluding Natixis), exchange rate risk is monitored using
regulatory indicators (measuring corresponding capital adequacy requirements
by entity). The residual exchange rate positions held by the Group (excluding
Natixis) are not material because virtually all foreign currency assets and
liabilities are match-funded in the same currency.
As regards international trade financing transactions, risk-taking must be
limited to counterparties in countries with freely-translatable currencies, on
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the condition that translation can be technically carried out by the entities’
information systems.
Natixis’ structural exchange rate positions on net investments in foreign
operations funded by buying currency forwards are tracked on a quarterly basis
by its Asset and Liability Management Committee in terms of sensitivity as well
as solvency. The resulting risk indicators are submitted to the Group Asset and
Liability Management Committee on a quarterly basis.
For the period ending December 31, 2013, Groupe BPCE, subject to capital
regulatory requirements for exchange rate risk, had an exchange rate position
that increased to €1,343 million, with €118 million for exchange rate risk.
The exchange rate position is mainly associated with Natixis.
RISK MANAGEMENT
Insurance of insurable risks
3.4 Insurance of insurable risks
At January 1, 2013, BPCE had subscribed, for its own account and on behalf of its
subsidiaries (with the exception of Natixis for the insurance coverage described
below in points A. a, b and c) and the Banque Populaire and Caisse d’Epargne
networks, the following main insurance programs:
A/ A combined “Global Banking (Damages to Valuables and Fraud)”
& “Professional Liability” policy with a total indemnity capacity of
€152.5 million per year of insurance, of which:
a) €20 million per year, combined “Fraud/Professional Civil Liability”
insurance available subordinate to the amounts guaranteed set out in
b) and/or c) below,
b) €37.5 million per claim and per year, solely dedicated to the “Global
Banking” risk,
c) €30 million per claim and per year, solely dedicated to the “Professional
Civil Liability” risk,
d) €65 million per claim and per year, combined “Global Banking/
Professional Civil Liability” insurance available in addition to or after
use of the amounts guaranteed set out in b) and/or c) above;
The maximum amount that can be paid out for any one claim under this
arrangement is €103.5 million under the “Professional Civil Liability”
guarantee and €105.5 million under the “Global Banking” guarantee in
excess of the applicable deductibles;
C/ “Operating Civil Liability” covering €75 million per claim, as well as a
“Subsidiary Owner Civil Liability”/“Post Delivery – Reception Civil Liability”
warranty extension for up to €30 million per claim and per year of insurance;
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3
D/ “Company Directors Civil Liability” for up to €200 million per claim and per
year of insurance;
E/ “Property Damage” to “Headquarter Buildings & Similar” and to their content
(including IT equipment) and the consecutive losses in banking activities, for
up to €250 million per claim;
3
F/ “Intangible IT Damage” (losses of data where no physical damage has
occurred to the equipment storing the data) & consecutive losses in banking
activities, for up to €65 million per claim and per year of insurance.
The territoriality of this coverage extends to the whole world, for initial risk or
umbrella risk, subject to certain exceptions, mainly in terms of “Professional Civil
Liability” where the guarantee does not cover permanent institutions based in
the United States (where coverage is taken up locally by Natixis’ US operations).
All the insurance policies mentioned above were taken out with reputable,
creditworthy insurance companies and in excess of the deductibles and Groupe
BPCE’s risk-retention capacity.
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3
B/ “Regulated Intermediation Liability” (in three areas: Financial Intermediation,
Insurance Intermediation, Real Estate Transactions/Management) with a
total maximum payout of €10 million per claim and per year;
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3
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RISK MANAGEMENT
Legal risks
3.5 Legal risks
3.5.1
Legal and regulatory issues and constraints
Outstanding legal risks at December 31, 2013 likely to have a negative influence
on the Group’s assets, were subject to provisions in line with the Group’s best
estimate based on information available information.
To date, there are no other governmental, legal or arbitration procedures of the
which the Group is aware that are likely to have, or have had during the past
twelve months, any significant effect on the financial position or profitability
of either the company or the Group.
Tax legislation and its application in France and in
countries where Groupe BPCE operates are likely to
have a significant impact on Groupe BPCE’s profits.
As a multinational banking group that carries out large and complex
international transactions, Groupe BPCE (particularly Natixis) is subject to tax
legislation in a large number of countries throughout the world, and globally
structures its activity in order to optimize its effective tax rate. Changes in
tax laws or their application by the relevant authorities in these countries
could significantly impact Groupe BPCE’s profits. Groupe BPCE has established
management methods with the aim of creating value based on the synergies
between and sales capacities of its various entities. Groupe BPCE also works to
structure financial products sold to its clients with the aim of maximizing their
tax benefits. The structure of Groupe BPCE’s intra-group transactions and of
financial products sold by Groupe BPCE are based on its own interpretations
of applicable tax regulations and laws, generally based on opinions given by
independent tax experts and occasionally, as needed, on approval or specific
interpretations from the tax authorities. It is possible that in the future tax
authorities may question some of these interpretations, following which Groupe
BPCE could be subject to tax re-assessments.
or criminal nature. The vast majority of these proceedings related to the normal
course of the Group’s business. In recent years, proceedings launched against
intermediaries such as banks and financial advisors by investors and regulatory
authorities have increased, in particular due to the deterioration in the economic
environment and market conditions. These lawsuits and proceedings have
increased the risk of losses or damage to the reputation of Groupe BPCE and
other financial institutions.
Due to their nature, it is difficult to foresee the outcome of litigation, regulatory
proceedings and other adversarial proceedings involving Groupe BPCE entities,
in particular cases opened by various types of claimants, cases for which
compensation claims are for unspecified or undetermined amounts or, finally,
cases characterized by unusual proceedings.
Reputational risk could unfavorably impact Groupe
BPCE’s profitability and commercial outlook.
Various aspects may increase reputational risk for Groupe BPCE entities and
damage their commercial outlook. Groupe BPCE’s reputation may be harmed
by the use of inappropriate means to promote and market its products and
services, or the inadequate management of potential conflicts of interest, legal
and regulatory requirements, competition issues, compliance issues, money
laundering laws, information security policies and sales and trading practices
(including methods for disclosing information to customers). Its reputation
could also be harmed by inappropriate employee behavior, fraud or malpractice
committed by financial sector participants to which BPCE is exposed, any
decrease, restatement or correction of financial results, or any legal or regulatory
action with a potentially unfavorable outcome. Any damage to Groupe BPCE’s
reputation, or to that of its entities, could be accompanied by a decrease in
business that is likely to weigh on its results and financial situation.
Groupe BPCE is exposed to legal risks which are
liable to weaken its financial position and the results
of its operations.
Groupe BPCE and some of its employees, current or previous, may be involved
in various forms of litigation, in particular proceedings of civil, administrative
3.5.2
Legal and arbitration proceedings – BPCE
DOUBL’O, DOUBL’O MONDE FCP MUTUAL FUNDS
Entities involved: certain Caisses d’Epargne
summoned individually, asset management
companies, Natixis subsidiaries and BPCE
for the class action lawsuit by Collectif Lagardère
Certain clients have held mediation procedures with the former Caisse d’Epargne
Group’s mediator or the AMF’s mediator.
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AMF proceedings
The decision dating April 19, 2012 by the AMF’s Enforcement Committee which,
in accordance with the opinion of the rapporteur, considered that the “statute
of limitations was effective on October 30, 2008, the date on which the controls
were carried out”.
The AMF filed an appeal against this decision with the French Council of State.
RISK MANAGEMENT
Legal risks
Civil proceedings
Individual summons of Caisses d’Epargne:
Individual legal actions have also been initiated against certain Caisses
d’Epargne.
Total claims relating to lawsuits in progress relating to Caisses d’Epargne: around
€2,700,000 (this is not exhaustive as it is based on information provided by
the Caisses d’Epargne).
Several rulings have been handed down in civil courts, the majority of which
were in favor of the Caisses d’Epargne.
Lagardère class action lawsuit:
Collectif Lagardère launched legal action against Caisse d’Epargne Participations
(now BPCE) in August 2009 to obtain compensation for the losses caused by its
alleged failures to fulfill its information, advisory and warning obligations for the
sale of Doubl’o and Doubl’o Monde mutual fund shares by the Caisses d’Epargne.
These resulted in one legal proceeding before the magistrate’s court of the
7th arrondissement in Paris and two legal proceedings before the Paris Court
of First Instance.
A ruling given by the magistrate’s court of the 7th arrondissement in Paris on
September 6, 2011 declared the plaintiffs’ action inadmissible due to a lack of
standing against BPCE.
In two rulings dated June 6, 2012, the Paris Court of First Instance declared
the plaintiffs’ and voluntary participants’ action against BPCE admissible and
referred the case to a pre-trial hearing on September 12, 2012. A provision of
€1,100,000 was booked at the end of September 2012.
On September 12, 2012 the cases were dismissed due to a lack of due diligence
by the plaintiffs. The proceeding was reinstated and referred to a pre-trial
hearing on September 4, 2013. The other individual proceedings concern six
customers.
Criminal action
On September 18, 2013, Caisse d’Epargne Loire Drôme Ardèche was found
guilty by the Lyon Court of Appeal of misleading advertising relating to the
Doubl’o mutual fund in its “Doubl’Ô Monde” leaflet. Caisse d’Epargne Loire
Drôme Ardèche has decided to appeal.
PAYMENT PROTECTION INSURANCE
Only entity involved since December 8, 2009:
Caisse d’Epargne Ile-de-France
Proceeding
French consumer organization UFC-Que Choisir questioned the legality of
payment protection insurance offered to customers by insurers and banks when
taking out real estate loans. CNP Assurances, CNCE and the Caisses d’Epargne
were summoned before the Paris Court of First Instance on May 18, 2007 by
UFC-Que Choisir, which is claiming that a share of the return on these policies
be returned to the borrowers. UFC-Que Choisir is seeking that CNP Assurances
and the former Groupe Caisse d’Epargne be ordered to pay €5,053,193.83. The
average claim by customers of Groupe Caisse d’Epargne is €1,000, the highest
3
being €10,027 and the lowest €112. The former Groupe Caisse d’Epargne
acted in total compliance with regulations governing collective insurance
policies taken out with insurance companies, in particular with market leader
CNP Assurances, which it offers to own clients, which thus benefit from the
negotiation of the collective price if they choose this kind of policy.
3
The compensation received by the former Groupe Caisse d’Epargne in return for
investing in these policies is not, as has been suggested, a share in their profits
but rather a commission paid by the insurer. This commission corresponds to
Groupe BPCE’s remuneration for its role in selling insurance policies. The former
Groupe Caisse d’Epargne carries out a certain number of tasks on behalf of the
insurer due to the nature of its relationship with the subscribing customer:
distribution of the insurance product, management of the contract during its
lifetime and handling formalities in the event of a claim.
3
Events
The Paris Court of First Instance, in its ruling dated December 8, 2009, declared:
• the voluntary participation of UFC in support of the claims of the main plaintiff
admissible;
• the forced participation claims put forth by the main plaintiff and UFC against
the Caisses d’Epargne other than Caisse d’Epargne Ile-de-France (CEIDF)
inadmissible;
3
• the voluntary participation of ten CEIDF customers admissible;
• the participation of all other policyholders inadmissible.
The pre-trial judge decided on November 7, 2011 to reject the plaintiffs’ request
for a stay of proceedings.
The judicial proceedings resumed before the Paris Court of First Instance.
During the January 28, 2014 hearing, the pre-trial judge referred this case to
the March 25, 2014 hearing.
3
FRENCH ANTI-TRUST AUTHORITY PROCEEDINGS
Check Imaging Exchange (échange image chèques)
commissions
Market case brought by Banques Populaires Participations (BP Participations)
and Caisses d’Epargne Participations (CE Participations) and now by BPCE
following the merger-absorption of BP Participations and CE Participations
by BPCE.
On March 18, 2008, BFBP and CNCE received, as was the case for other banks
on the marketplace, a notice of grievance from the French anti-trust authority.
The banks are accused of having established and mutually agreed on the
amount of the check imaging exchange commission, as well as related check
commissions.
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3
The anti-trust authority delivered its decision on September 20, 2010 to fine
the banks found guilty (€90.9 million for BPCE). These banks (except for the
Banque de France) lodged an appeal.
On February 23, 2012, the Paris Court of Appeals overruled the anti-trust
authority’s decision and the €90.9 million fine paid by BPCE was refunded.
On March 23, 2012, the anti-trust authority launched an appeal of the Court
of Appeals’ ruling.
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RISK MANAGEMENT
Legal risks
Interbank fees on direct debits and interbank
payment orders
The anti-trust authority, in its decision dated July 5, 2012, noted the
commitments given by French banks to abolish the main multilateral interbank
fees (MIF) on direct debits, interbank payment orders, electronic payment orders,
credit transfers and bills of exchange as of September 1, 2013. This was planned
in two stages: from September 1, 2012 these commissions were halved and
were completely abolished as of September 1, 2013.
In a decision dated July 30, 2013, the anti-trust authority accepted the
commitments given by the banks concerning the MIFs applicable to
R-transactions on direct debits, interbank payment orders, electronic payment
3.5.3
orders, credit transfers and bills of exchange. The MIF amounts were revised
on the basis of a study of bank costs conducted by an independent firm of
economists. The MIFs are applicable as of September 1, 2013.
STRUCTURED LOANS
Certain local authorities, holding loans for which the interest rates were at
first reduced and then subject to a structured formula based on changes in the
exchange rates of certain currencies, expressed concern over the actual change
in parities. Some of them have taken the issue to court. Proceedings in progress
have not, however, put an end to discussions aimed at finding a negotiated
solution to this dispute.
Legal and arbitration proceedings – Natixis
Like many banking groups, Natixis and its consolidated subsidiaries are involved
in litigation before the courts and can be investigated by regulatory authorities.
On November 3, 2008, the plaintiffs filed an appeal with the United States
Supreme Court for the decision to reject the appeal to be revoked.
The financial consequences, assessed at December 31, 2013, of litigation deemed
likely to, or which has in the recent past had a material impact on Natixis’
financial situation and/or that of Natixis and its consolidated subsidiaries as
a whole, their profitability or their business, have been included in Natixis’
On March 9, 2009, the Supreme Court agreed to hear the plaintiffs’ motion.
The defense pleaded its case on November 2, 2009.
The most significant disputes are described below. Their inclusion in the list
does not indicate that they will necessarily have an impact on Natixis and/or
its consolidated subsidiaries. The other disputes are deemed not liable to have
a material impact on Natixis’ financial situation or profitability and/or that of
Natixis and its consolidated subsidiaries as a whole, or have not reached a stage
where it can be determined whether they will have such an impact.
JERRY JONES ET AL. VERSUS HARRIS
ASSOCIATES LP
In August 2004, three shareholders acting in the name of and on behalf of
three investment funds (Oakmark Fund, Oakmark Equity and Income Fund and
Oakmark Global Fund) filed a complaint against Harris Associates LP, a whollyowned subsidiary of Natixis Global Management, before the United States
District Court for the Northern District of Illinois. The plaintiffs alleged that Harris
Associates LP billed services to these three funds at an excessively high rate in
light of applicable regulations. These proceedings are among numerous legal
claims initiated in recent years against investment advisors Harris Associates
LP and the plaintiffs filed motions for summary judgment.
On February 27, 2007, the judge accepted all aspects of the Harris Associates
LP’s petition and rejected that of the plaintiffs. The plaintiffs appealed against
this decision on March 20, 2007. Both parties filed written arguments and
appeared before the Court of Appeals on September 10, 2007.
In a ruling dated March 30, 2010, the US Supreme Court referred the case to
the Court of Appeals for the Seventh Circuit so that the Court can determine
whether the District Court’s ruling in favor of Harris Associates LP should be
overturned or upheld.
CLASS ACTIONS IN THE UNITED STATES RELATING
TO MUNICIPAL GUARANTEED INVESTMENT
CONTRACTS
Since March 13, 2008, Natixis and Natixis Funding have been named among the
defendants in a number of class actions filed by and in the name of a number of
states, counties and municipalities issuing bonds with the courts of New York,
Washington DC and California. The actions concern alleged collusion between
suppliers and brokers of municipal derivatives in price fixing and bid-rigging
between 1992 and today. The various plaintiffs have also named some 30plus other US and European banks and brokers as defendants. Some plaintiffs
seek to certify a class of all state, local and municipal government entities,
independent government agencies and private entities that purchased municipal
derivatives from the defendants or through brokers from 1992 to the present,
and to recover damages that result from the alleged anticompetitive activities.
Most of these actions have been consolidated in the United States District
Court for the Southern District of New York under the name of In Re: Municipal
Derivatives Antitrust Litigation.
On May 19, 2008, a bench trial at the Court of Appeals for the Seventh Circuit
confirmed the District Court’s ruling in favor of Harris Associates LP.
These various requests for damages and interest are the result of investigations
currently being conducted in the United States by the US Internal Revenue
Service (the “IRS”), the antitrust division of the department of Justice (the “DOJ”)
and the Securities and Exchange Commission (the “SEC”) and state district
attorneys.
On June 2, 2008, the plaintiffs requested a rehearing of the appeal by the entire
Court of Appeals. On August 8, 2008, the Court of Appeals rejected the plaintiffs’
request for a review of their appeal.
The class actions, in which Natixis Funding is one of the 13 suppliers or brokers
of derivatives, continues, with the applications to dismiss the requests of the
claimants having been rejected on March 25, 2010.
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RISK MANAGEMENT
Legal risks
The trials of the municipalities, acting individually against the 40 defendants,
(including Natixis Funding and Natixis) will also continue, with the motions to
dismiss the requests of the claimants having been rejected on April 26, 2010.
The allegations against Natixis are that Natixis was the guarantor of Natixis
Funding in the derivative transactions and that it was the agent of Natixis
Funding. The defendants responded to all the complaints filed by the plaintiffs.
The parties entered the phase of legal proceedings relative to discovery, the scope
of which is currently being negotiated. The coming months will be dedicated
to the motions for discovery and review of documents by the plaintiffs. At the
same time, the parties will prepare for the most important aspect of the legal
proceedings; an attempt to obtain certification as a class action by the plaintiffs.
The defendants are in the process of recruiting an expert economist and a
statistician to analyze the data of all the transactions to prepare arguments
against class action certification. During this time, the district attorneys of the
26 States and the Department of Justice will continue their investigations.
MADOFF AFFAIR
Outstanding Madoff assets, net of insurance, were estimated at €351 million
at December 31, 2013, and were fully provisioned at this time. The effective
impact of this exposure will depend on both the extent of recovery of assets
invested in Natixis’ name and the outcome of the measures taken by the bank,
primarily legal. With this in mind, Natixis has appointed law firms to assist it in
these recovery efforts. Moreover, in 2011, a dispute emerged over the application
of the insurance policy for professional liability in this case.
Irving H. Picard, the trustee for the liquidation of Bernard L. Madoff Investments
Securities LLC (“BMIS”) filed a complaint in the United States Bankruptcy Court
for the Southern District New York, against several banking institutions, including
€400 million in claims against Natixis. Natixis is disputing the complaints
lodged against it and intends to take the necessary measures to defend itself
and safeguard its rights. The complaint is currently under examination by the
Bankruptcy Court of the Southern District of New York.
Furthermore, the trustees for the liquidation of Fairfield Sentry Limited and
Fairfield Sigma Limited have initiated a large number of proceedings against
investors who had previously received payment from these funds in respect
of share redemptions (over 200 proceedings were filed in New York). Certain
Natixis entities are involved as defendants in some of these lawsuits. Natixis
considers these lawsuits to be completely without basis and intends to defend
itself vigorously.
CIC/CRÉDIT MUTUEL
On September 11, 2008, CIC and Crédit Mutuel issued a summons against the
Lagardère Group and Natixis with a view to obtaining cancellation from the
Paris Commercial Court of contracts under which they bought EADS shares from
the Natixis group on a forward basis and, consequently, payment of around
€28 million by Natixis to the claimants, in exchange for return of the EADS
shares to Natixis.
On the basis of a non-public report by the Autorité des marchés financiers, the
plaintiffs alleged that Lagardère SCA breached stock market law with the issue
of bonds convertible into EADS shares subscribed for by Natixis in April 2006.
No claims have been formulated against Natixis in the CIC Group’s summons,
concerning both the signing and performance of contracts. The legal argument
put forward by the Crédit Mutuel group to question the validity of its purchases
of EADS shares appears unfounded.
In a ruling handed down on January 27, 2010, the Paris Commercial Court
declared the actions of CIC and Crédit Mutuel inadmissible and ordered them
to pay €120,000 to Natixis and €50,000 to Lagardère in respect of Article 700
of the French Code of Civil Proceedings. The order of April 28, 2011, issued by
the Paris Court of Appeals (Cour d’Appel de Paris) upheld the lower court’s
ruling, which dismissed the claim by the plaintiffs. Following an appeal for
annulment filed by CIC and Crédit Mutuel, in a ruling dated July 10, 2012, the
Court of Cassation overturned the ruling of the Paris Court of Appeals dated
April 28, 2011 for reasons of form relating to the drafting of the appeal. The
Paris Court of Appeal, under a different judge, confirmed the rejection of CIC
and Crédit Mutuel’s claims.
COORDINATED FILING OF CRIMINAL COMPLAINTS
BY ADAM
In March 2009, a preliminary inquiry was ordered by the Paris public prosecutor’s
office following a complaint by minority shareholders of Natixis coordinated by
the French minority shareholders’ association ADAM (Association de Défense des
Actionnaires Minoritaires). As the plaintiffs are filing a civil action in a criminal
proceeding, a judicial inquiry has been opened and is still ongoing.
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3
3
3
ANAKENA/MAXIMUS CLAIM
On November 13, 2009, Maximus Master Fund Limited and its portfolio
manager, Anakena, filed a complaint against Natixis before the Commercial
Court of Paris seeking the payment of €59.9 million in damages and interest,
and alleging that Natixis had abused its rights as the majority investor by asking
the fund to redeem its investment in the middle of the financial crisis. A ruling
was handed down by the Commercial Court of Paris, dismissing all of the claims
filed by Anakena and Maximus. Anakena and Maximus filed an appeal against
the ruling. The Court of Appeals upheld the lower court’s ruling on March 26,
2013. Anakena and Maximus filed an appeal to the Court of Cassation.
COMMUNE OF SANARY-SUR-MER
On August 5, 2011, the Commune of Sanary-sur-Mer in France filed a complaint
against Natixis and other defendants before the Administrative Tribunal of
Toulon seeking the joint and several payment of €83 million for the loss of
the Commune’s planned investments and the loss of future contributions
to its budget following the abandonment of the planned construction of a
local casino/hotel complex. Regarding the construction project, Natixis had
already committed to issuing a bank guarantee of completion in the amount
of €20 million. All of the claims filed by the Commune of Sanary-sur-Mer were
dismissed in a ruling handed down by the Administrative Tribunal of Toulon
on April 12, 2013. The Commune of Sanary-sur-Mer has appealed this ruling.
3
3
3
NATIXIS ASSET MANAGEMENT
(FORMERLY CDC GESTION) – EMPLOYEE PROFITSHARING
On January 5, 2012, a complaint was filed against Natixis Asset Management
before the Paris District Court (Tribunal de Grande Instance de Paris) by 187 former
employees of CDC Gestion (current name Natixis Asset Management). The
purpose of the complaint is the legal recognition of their rights to the common
law profit-sharing schemes from 1989 to 2001.
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RISK MANAGEMENT
Legal risks
Following the administrative priority preliminary rulings raised by Natixis Asset
Management on the interpretation of the French Labor Code, on August 1,
2013 the Constitutional Council declared unconstitutional the first paragraph
of Article L. 442-9 of the French Labor Code in its version prior to Law No. 20041484 of December 30, 2005 and considered that employees of companies
whose share capital is predominantly held by public entities cannot call for a
profit-sharing scheme to be applicable to them in respect of the period during
which the provisions declared unconstitutional were in force. The case is still in
progress before the Paris District Court.
MMR
In 2007, Ixis Corporate & Investment Bank (the predecessor of Natixis) issued
EMTNs (Euro Medium Term Notes) indexed to a fund that invested in the Bernard
Madoff Investment Securities fund. Renstone Investments Ltd (the apparent
predecessor of MMR Investment Ltd) is alleged to have subscribed, via a financial
intermediary acting as the placement agent, for these bonds in the amount of
$50 million. MMR Investment Ltd filed a joint claim against Natixis and the
financial intermediary, claiming not to have received the bonds, despite having
paid the subscription price to the financial intermediary. The claim pertains
firstly to the restitution of the subscription price of the bonds and secondly to
the invalidity of the subscription, due in particular to lack of consent. Natixis
considers this claim to be groundless.
HERMÈS
On June 21, 2013, a complaint was filed against Natixis as well as other
defendants before the Commercial Court of Paris by Hermès seeking to cancel
the equity swaps on Hermès shares.
UNION MUTUALISTE RETRAITE
In June 2013, Union Mutualiste Retraite filed three complaints against AEW
Europe in relation to the acquisition and management of two real estate
portfolios in Germany between 2006 and 2008. The amounts claimed by the
Union Mutualiste Retraite equal €93 million. AEW Europe considers this claim
to be without grounds.
SECURITIZATION IN THE UNITED STATES
Banks in the United States initiated legal proceedings against Natixis for
residential mortgage-backed security (RMBS) transactions executed between
2001 and mid-2007.
Natixis considers that the negligence of which it is accused is without grounds
and that the proceedings it faces are beyond the statute of limitations.
EDA SELCODIS
SOLSTICE CASHFLOW
In terminating a swap agreement entered into by Natixis FP in connection with
a CDO transaction, the CDO’s trustee called on the New York magistrate judge to
interpret the provisions of this swap agreement. The Magistrate Judge, in a ruling
dated December 22, 2012, considered that Natixis is liable for the payment
of $10.5 million for the cancellation of the swap. Natixis disputed this ruling
and decided to appeal. A transaction has been carried out regarding this case.
On June 18, 2013, EDA Selcodis filed a complaint against Compagnie Européenne
de Garanties et de Cautions for the sudden termination of commercial relations
following the refusal of Compagnie Européenne de Garanties et de Cautions to
grant EDA Selcodis a guarantee. The amounts claimed by EDA Selcodis equal
€32 million. In November 2013, EDA Selcodis filed a joint complaint against
Natixis, BRED Banque Populaire and CEGC for unlawful agreements for which
EDA Selcodis is requesting that each entity pay a sum of €32 million.
Compagnie Européenne de Garanties et de Cautions considers all of these claims
to be unfounded.
SEEM
On January 22, 2013, Natixis was served a compulsory summons by the company
SEEM. This summons seeks to require Natixis, jointly and severally with Cube
Energy SCA, to pay compensation amounting to some €23 million for the
alleged breach by Cube Energy SCA of its duty of loyalty to its partner, SEEM.
Natixis is confident that this matter will have a positive outcome for itself and
the companies in its Group.
ICMOS FRANCE
ICMOS France, a subsidiary of Natixis’ former alternative management division
which has now been placed in liquidation, received a notification of grievances
from the AMF due to failings in its structure and internal procedures. It is claimed
that this company implemented neither the structure nor human and material
resources required by its activity and that it was not independent of Natixis. At
the beginning of December 2013, it was fined €150,000 by the AMF.
There are no other governmental, legal or arbitrational procedures in progress
that are likely to have a significant impact on Natixis’ financial statements.
3.5.4
Situation of dependency
BPCE is not dependent upon any specific patents, licenses, industrial procurement contracts, or commercial or financial agreements.
162
RISK MANAGEMENT
Technical insurance risks
3.6 Technical insurance risks
Insurance risk is the risk to profits of any difference between expected and
actual claims. Depending on the insurance products involved, risk varies based
on changes in macroeconomic factors, customer behavior, public health policy,
pandemics, accidents and natural disasters (such as earthquakes, industrial
accidents, terrorist acts or acts of war). The Credit insurance activity is also
exposed to credit risk.
Insurance risk management requires a solid comprehension of technical
insurance risks in order to meet its commitments to insurers and policyholders.
Particular attention must also be paid to the financial risks borne through assets
held to back commitments.
In addition to protecting the balance sheet and income statement of insurance
companies, the aim is to guarantee the solvency and liquidity of the insurance
companies.
3.6.1
To this end, the Group’s companies have set up a system to measure, report and
oversee risks, in compliance with regulatory requirements under Solvency I. At
the same time, they are currently implementing the new Solvency II directive.
The preparatory stage is tested at the Group level and within each company to
ensure the application of solvency phase-in arrangements (prudential reporting,
risk management system, pre-application report, issue of national-specific
templates).
Moreover, based on the Financial Conglomerates Directive, a cross-divisional
Group insurance risk monitoring system has been rolled out, with particular
attention paid to the operational and regulatory interoperability between the
banking and insurance sectors.
The main risks to which the company is exposed are underwriting risks relating
to its insurance business, the risk of default relating to its reinsurers and the
risks relating to its investment portfolio.
UNDERWRITING RISK
This can be divided into three separate components:
Under-pricing risk: in order to ensure that the premiums paid by policyholders
correspond to the risk transferred, BPCE Assurances has adopted a policy of
supervising its portfolio based on giving a score for each policy according to past
events over the last three years. It takes into account in particular the nature,
number and cost of claims and other variables specific to the business line in
question (rate of liability and bonus/penalty level in car insurance, for example).
The corrective measures planned may range from increasing the premium paid
or even termination of the policy on expiry.
This supervisory policy also helps to identify potential risks of serious claims and
therefore contributes to the implementation of adequate reinsurance coverage.
Under-provisioning risk: at each inventory date, the Technical and Reinsurance
division (within the Finance and Technical business line) performs an actuarial
valuation of provisions for claims to be paid out (those already known and those
to be declared in the future). To this end, it uses methods widely recognized by
the profession and required by the regulatory body.
3
3
3
BPCE Assurances
BPCE Assurances, formerly called GCE Assurances, primarily sells non-life and
liability insurance products (automotive, comprehensive home insurance, legal
protection), provident insurance (personal accident insurance) and health and
non-bank insurance.
3
of comparing analyses in order to achieve a “technical” consensus, validated by
the Executive Committee.
Catastrophe risk: this is defined as exposure to a serious event generating a
large number of claims (storm, civil liability risk, etc.). Such risk can often only
be covered to a limited extent by mutual insurance companies on a national
scale in France, or is of such severity that it may call the company’s solvency
into question. It is therefore subject to reinsurance coverage, either from the
French government in the case of natural disasters or attacks, for example, or
from private reinsurers in the case of storms or civil liability claims, or with
reinsurance pools.
3
BPCE Assurances has carried out internal studies to identify potential sources of
catastrophe risk and has compared them with a specialist broker. The company
has decided to protect itself against this type of exposure on the basis of a
recurrence interval of 200 years. Priorities are adapted depending on the rollout of the business.
3
RISK OF DEFAULT BY REINSURERS
This risk is defined as the inability of one or more reinsurers to honor part or all
of their commitments to the company. In order to prevent this risk as much as
possible when investing its businesses each year, BPCE Assurances observes a
number of principles and criteria including:
3
• credit quality: at December 31, 2013, all of BPCE Assurances’ reinsurers were
rated at least BBB- by Standard & Poor’s;
• diversification of reinsurers for a certain number of treaties and also within
certain treaties (with a deliberately small proportion, including for leading
insurers).
The final level of provisions is subject to a decision-making process involving the
Financial Planning division (Finance and Technical business line) and consisting
163
3
3
3
RISK MANAGEMENT
RISK RELATING TO THE INVESTMENT PORTFOLIO
BPCE Assurances had an investment portfolio with a carrying amount of
€827 million at December 31, 2013.
Its allocation was determined based on asset-liability simulations carried out
over the business plan horizon. An allocation set is tested on three indicators
(financial, accounting and capital adequacy) in various scenarios: a base scenario
and unfavorable scenarios.
On the basis of this method and given the rate of run-off of insurance liabilities,
the portfolio is primarily invested in fixed-income assets with a relatively short
duration.
3.6.2
• ensuring the monitoring and implementation of the investment policy defined
by the Risk Management Committee;
• choosing issuers or investment vehicles;
• deciding on investments or divestments to be made;
• preparing a report on the monitoring of bond issuers’ ratings;
• monitoring various limits set by the Risk Management Committee.
Natixis Assurances
As Natixis Assurances predominantly sells savings products, the main risks
resulting from insurance policies are of a financial nature:
RISK OF NO LONGER BEING ABLE TO MEET
THE MINIMUM CONTRACTUAL RATE OF RETURN
IN THE EVENT OF A DECLINE IN INTEREST RATES
To deal with this risk, ABP Vie (a subsidiary of Natixis Assurances) has only sold
policies without a minimum guaranteed rate in recent years: more than 90%
of the policies have a 0% minimum guaranteed rate. The minimum guaranteed
rate averages 0.2%.
RISK OF POLICY REDEMPTIONS IN THE EVENT
OF AN INCREASE IN INTEREST RATES
Natixis Assurances has identified the segment of the insured population that
presents a high risk of policy redemption, based on the key criteria of age, fiscal
seniority and amount of capital. For these policyholders, Natixis Assurance has
hedged the risk of interest rate increases and has limited the scope covered by
such policies to approximately a quarter of its assets. Against this backdrop, it
has hedged its portfolio with cap policies and has also subscribed to variablerate bonds.
The liability adequacy test carried out in accordance with IFRS 4 showed
that insurance liabilities measured under local standards, for the year ended
December 31, 2013, were greater than the fair value of these liabilities, taking
into account the redemption option incorporated in the policies.
FINANCIAL RISK IN THE EVENT OF AN INCREASE IN
INTEREST RATES
The sensitivity of net equity to variations in interest rates is mitigated by the
classification of about €3.5 billion, fair value, in fixed income securities in the
held-to-maturity category.
Concerning securities in other categories, the sensitivity analysis carried out at
end-December 2013 showed that a 1-point increase in bond yields would have
a negative impact of €48 million on equity (taking into account the variation
attributable to policyholders and taxation), i.e. 3.9% of equity.
164
Investments are monitored by the Financial Management Committee, which
is responsible for:
MARKET RISK
Natixis Assurances is subject to variations in the value of its financial assets.
Management of financial risks involves defining a strategic allocation taking
into account liability commitments, regulatory constraints (particularly in terms
of non-concentration) and commercial requirements. Thus, allocation ranges
are defined for each type of asset.
According to the sensitivity analysis carried out at end-December 2013:
• a 10% drop in the stock market would have a negative impact of €13.5 million
on equity (after taking into account the variation attributable to policyholders
and taxation), i.e. 1.1% of equity;
• a 10% drop in the real estate market would have a negative impact of
€4.6 million on equity (after taking into account the variation attributable
to policyholders and taxation), i.e. 0.4% of equity.
Also, Natixis Assurances fully reinsures the guaranteed minimum payment on
unit-linked policies (100%).
CREDIT RISK
The monitoring and management of counterparty risk is carried out in
compliance with Natixis’ standards and internal limits, as determined by
the Credit Risk Committee, as well as the regulatory constraints imposed on
insurance companies. Thus, 66% of the fixed-income portfolio is invested in
securities rated higher than A-.
PROVIDENT INSURANCE BUSINESS
Mortality and morbidity risks are limited by the implementation of a pricing
structure appropriate for the policyholders in question and guarantees that
are insured, the use of experience tables and the upstream practice of medical
history-based selection of new policyholders.
Natixis Assurances uses reinsurance to limit its exposure to the risk of dispersion
of capital guaranteed upon death, personal accidents and loss of autonomy,
as well as the frequency of claims for cessation of work, invalidity and loss of
autonomy. A reinsurance treaty in the event of epidemics or pandemics has
also been put in place in order to limit exposure to the increase in deaths that
would ensue.
RISK MANAGEMENT
The annual reinsurance plan seeks to diversify reinsurers and to deal only with
parties having a high-quality rating. No reinsurance treaty is entered into or
renewed with parties that are non-investment grade (rating of BB+ to D-). In
practice, the rating of reinsurers with which Natixis Assurances deals is between
AA and BBB+. The reinsurers that Natixis Assurances works with have a low
issuer risk, and the risk of concentration in a given counterparty is limited since
Natixis uses several reinsurers.
3.6.3
3
The nature of insured risks associated with reinsurance coverage does not create
any particular exposure in terms of concentrated insurance risks.
3
CONCENTRATION OF RISKS
Coface
COFACE
Through its activities, Coface is exposed to two main types of risk. The first is the
technical risk constituted by the risk of losses on Coface’s portfolio of insurance
policies. The second is the financial risk related to the risk of losses arising
from adverse changes in interest rates, exchange rates or the market value of
securities or real estate investments. Coface has implemented tools designed
to control these risks and to ensure they remain within conservative limits.
TECHNICAL RISK
Credit risk concerns the risk of loss generated by the portfolio of insurance
policies.
A distinction is traditionally made between frequency risk and peak risk:
• frequency risk represents the risk of a sudden and significant increase in
past due payments from a multitude of debtors. This risk is measured for
each region and country by monitoring the instantaneous loss ratio and the
monthly indicator that breaks down the changes in domestic/export credit
by DRA (Debtor Risk Assessment) and business sector, by acceptance rate on
the DRA scale or by product line (sureties, single risks). The loss ratios for the
various underwriting centers are also monitored at the consolidated level for
Coface. Missed payments are analyzed weekly by the Group Management
Board and monthly by Coface’s Arbitration Committee;
3
• event risk represents the risk of abnormally high losses recorded for the same
debtor or group of debtors, or of an accumulation of losses for the same
country.
In addition to weekly and monthly monitoring at the level of each region and
country, Coface has implemented a system based on:
• centralized declarations of threatened claims liable to exceed a certain
amount (currently €0.5 million for all Coface arbitration centers);
• at the risk underwriting level, MSE monitoring (Maximum Standard Exposure)
which beyond a certain level of outstanding risk based on the DRA triggers
the validation and setting of a global sum by the Group arbitrage division;
• a DRA risk evaluation system covering all buyers;
• external quota share reinsurance treaties (25% disposal rate) and deductibles
(of €40 million) for 2013 which limit technical frequency and event risks.
DIVERSIFICATION OF THE CREDIT RISK PORTFOLIO
Coface maintains a diversified credit risk portfolio, in order to minimize the
risk that a default by a debtor, a slowdown in a particular sector of activity or
an adverse event in a given country may have on Coface’s overall claims rate.
Furthermore, the fact that the great majority of Coface’s risks are short-term
(95% of total outstandings) allows it to reduce the risk covered for a debtor or
a group of debtors relatively quickly and anticipate a decrease in their solvency.
3
3
3
3
3
165
3
3
RISK MANAGEMENT
EXPOSURE TO DEBTOR RISK AT END-DECEMBER 2013
➡
POLICIES SIGNED EXCLUDING TRANSACTIONS ON BEHALF OF THE STATE/ALL GUARANTEED PRODUCTS
Outstandings
Total Buyer Outstandings
Rejections
€1 – 10 thousand
(in millions of euros)
Number of limits
Number of buyers
Outstanding
-
876,862
614,149
0.0%
3,709
524,909
481,172
0.8%
6,052
476,234
376,206
1.3%
4,671
286,931
178,201
1.0%
3,546
192,870
97,736
0.8%
4,591
176,365
96,474
1.0%
3,102
124,769
54,738
0.7%
2,611
101,178
39,250
0.6%
3,519
102,646
46,864
0.8%
2,017
71,293
23,431
0.4%
1.1%
5,059
98,524
51,437
12,781
296,686
101,842
2.8%
10,075
199,009
56,712
2.2%
17,077
276,986
69,033
3.8%
14,078
195,205
40,293
3.1%
11,916
145,010
26,403
2.6%
27,537
283,401
43,502
6.1%
€801 thousand – €1.5 million
41,388
322,587
38,020
9.1%
€1.5 million – €3 million
50,895
272,411
24,241
11.2%
€3 million – €5 million
39,288
149,993
10,219
8.7%
50,359
141,414
7,257
11.1%
89,611
142,863
4,732
19.8%
21,360
17,798
321
4.7%
14,191
10,221
110
3.1%
≥ €200 million
13,094
5,693
32
2.9%
452,530
5,491,858
2,482,375
100%
TOTAL
Second-level controls are set up to ensure that the Group’s credit risk standards are observed.
FINANCIAL RISK
Coface has implemented an investment policy that incorporates the management
of financial risk through the definition of its strategic allocation, regulations
governing insurance companies and constraints related to the management of
its liabilities. Management of financial risks is thus based on a rigorous system
of standards and controls which is regularly reviewed:
• interest rate risk and credit risk: the majority of Coface’s allocations are in
fixed-income products which guarantee it recurring and stable revenue. The
overall sensitivity(1) of Coface’s bond portfolio was 2.1 at December 31, 2013.
Coface is not exposed to Greek, Irish, Portuguese or Spanish sovereign debt.
Coface has limited exposure to Italian sovereign debt as part of a defined-risk
budget. It accounted for 3.9% of its global portfolio at December 31, 2013;
• exchange rate risk: the majority of Coface’s investments are denominated
in euros. Subsidiaries and branches using other currencies must observe the
same principles of congruence. At December 31, 2013, a foreign exchange
hedge via swap was carried out to hedge USD and GBP-denominated bond
investments for a total amount of €143 million;
• equity risk: exposure is limited to less than 10% of the portfolio and is
concentrated in the euro zone, in connection with its core business. At
December 31, 2013, listed equities represented 4% of the investment portfolio
and were partially hedged via the acquisition of put options on indices;
• counterparty risk: maximum exposure to any given counterparty is set at 5%
of assets under management, with exceptional exemptions for short-term
exposure. More than 62% of the bond portfolio carried a median rating(2)
of above A-;
• liquidity risk: a significant portion of held-for-sale securities are invested
in money market products with average maturities of three months (38%
at December 31, 2013, i.e. more than €750 million). The vast majority of
the portfolio is listed on OECD markets and carries a liquidity risk which is
currently considered as weak.
Second-level controls on compliance with Coface’s investment policy are also
carried out.
(1)
A bond’s sensitivity measures its loss in value in the event of an interest rate hike. For example, bonds with a duration of 2.1 will see a 2.1% reduction in their market value if interest rates increase by 1%.
(2)
Second lowest rating in the event of three available ratings from the three international rating agencies; if one of the ratings is only provided for two of the agencies, the lower rating will be considered, if a rating
is available from one agency alone, this rating will be considered.
166
RISK MANAGEMENT
3.6.4
CEGC
Compagnie Européenne de Garanties et de Cautions is Natixis’ guarantee and
surety platform for multiple business lines. Its primary risks include underwriting
risk, market risk, reinsurer default risk and operational risk.
Underwriting risk is monitored in two ways: at the consolidated level through
the use of several statistical tools, scores and risk indicators, and individually (i.e.
by counterparty) via special Committees such as the Underwriting Committee,
the Litigation and Provisions Committee, and the Watchlist Committee.
UNDERWRITING RISK
The system is based on a risk and solvency management charter which
details the company’s risk appetite and is broken down into a set of updated
procedures for risk management and granting sureties and guarantees as well
as underwriting risk monitoring (premiums, reserves, natural disaster) listed
by business line, market risks (equities, interest rates, defaults, property, etc.),
default risks (reinsurers, debtors) and operational risks.
Underwriting risk is the main risk incurred by CEGC. The regulated commitments
carried as liabilities amounted to €1.1 billion at December 31, 2013 (up 16%
compared to fiscal year 2012). This increase was due to the outstanding
performance of the guarantees for mortgage loans granted to retail customers.
Low interest rates offered by the market led to a massive wave of borrowers
refinancing their outstanding loans.
Underwriting risk is essentially a type of counterparty risk, as the commitments
given by CEGC to beneficiaries of guarantees give direct exposure to subscribers
(policyholders).
For each of its activities, underwriting risk management is largely based on an
analysis of the transactions under consideration (quality of counterparties, type
and analysis of the project, funding or commitments and sureties collected) and
on an individual and collective delegation system tailored to the specific risks of
each market and the experience of the delegates. The delegation system covers
specific market risks by level of risk, which reflects the probability of occurrence
of a claim, and by level of commitment, which reflects the severity of the claim in
the event of occurrence. The approval process governs CEGC’s delegation system
through the establishment of absolute limits on risk exposure per business line
(severity of the claim in the event of occurrence) and by counterparty rating or
quality (probability of occurrence).
The counterparty risk selection procedure is deployed according to the type of
activities and guarantees issued.
CEGC holds an investment portfolio with a balance-sheet value of €1.2 billion
at December 31, 2013 versus €1.1 billion at end-2012. Market risk arising from
the investment portfolio is considered minor in comparison with underwriting
risk. CEGC does not have to address refinancing issues in depositing guarantee
premiums upon commitment. There is no mismatch risk either, as the investment
portfolio is fully backed by equity and underwriting reserves.
Portfolio management is secure and follows the standards regulating the
insurance business, in particular in terms of assets representing commitments.
These standards cover the type and quality of the assets, the level of portfolio
dispersion as well as liquidity levels.
The system for managing these risks is based on 1) a finance management
charter which details the limits, rules and alerts applicable to the entire portfolio
and by asset class and 2) special Committees (ALM Committee and Finance
Management Committee) that oversee compliance with these rules, implement
the asset allocation policy and review the returns on the transactions carried out.
Market value
As a% of gross
balance sheet value
of the provision
As a% of market
value
97
124
7.8%
9.3%
Equities
Bonds
862
913
69.8%
68.4%
Diversified
85
89
6.9%
6.7%
Cash
96
96
7.8%
7.2%
Real estate
64
80
5.2%
6.0%
FCPR
22
24
1.7%
1.8%
Other
9
7
0.7%
0.6%
REINSURANCE RISK
CEGC covers its portfolio of commitments with a reinsurance program tailored
to its activities. Through this program, the company is able not only to secure its
underwriting income and solvency margin on the loan guarantee markets, but
also to protect its equity in the event of high-severity claims on other markets.
3
3
MARKET RISK
Gross balance sheet
value of the provision
3
3
3
3
3
Each year, CEGC’s reinsurance coverage requirements are defined according to
the development of its business.
Reinsurer default risk is governed by counterparty concentration and rating
limits.
167
3
3
3
RISK MANAGEMENT
OPERATIONAL RISK
The company’s operational risk is limited thanks to risk management systems
implemented in each business line’s lending procedures.
➡
CEGC uses a default mapping tool and database tailored to its activities and
developed on the basis of business line processes. This database is the standard
reference framework used to catalogue incidents and high-risk situations and
to monitor corrective action plans, according to the methodology implemented
by Natixis.
CEGC’S TECHNICAL RESERVES
December 2013
Change (December 2013 versus
December 2012)
973
+18%
11
+19%
6
+41%
13
(49%)
3
(50%)
Professionals
47
+14%
Social economy – Social housing
20
+21%
Run-off activities
21
+5%
1,094
+15%
In millions of euros
Single-family home builders
Property administrators – Realtors
Corporates
Real estate developers
TOTAL
168
RISK MANAGEMENT
Financial Stability Forum recommendations concerning financial transparency
3.7 Financial Stability Forum recommendations
concerning financial transparency
3.7.1
3
Sensitive exposures (excluding Natixis) at December 31, 2013
UNHEDGED SENSITIVE CDO EXPOSURES
3
At December 31, 2013 the Group was not exposed to the US residential market.
➡
EXPOSURE BY ASSET TYPE – OTHER CDOS
12/31/2013
European ABS CDOs
TRUPS CDOs
CLOs
Corporate CDOs and CSOs
Other
TOTAL
12/31/2012
Gross exposure
Net exposure
Net exposure
Change 2013/2012
18
8
41
(33)
0
0
0
0
930
920
995
(75)
67
33
24
9
54
48
52
(4)
1,069
1,008
1,111
(103)
More than 90% of the Group’s exposure to other CDOs concerns CLOs.
➡
3
3
BREAKDOWN OF NET EXPOSURE AT 12/31/2013
91%
CLO
3
3
3%
CSOs and other CORP CDOs
5%
Other
1%
ABS CDOs
3
3
169
3
3
➡
RISK MANAGEMENT
BREAKDOWN BY ACCOUNTING PORTFOLIO – OTHER CDOS
12/31/2013
Trading book
Fair value option asset portfolio
Portfolio of loans and receivables
Available-for-sale assets portfolio
TOTAL
➡
12/31/2012
Amount
Percentage (%)
Amount
Percentage (%)
26
3%
13
1%
21
2%
26
2%
901
89%
1,021
92%
61
6%
51
5%
1,008
100%
1,111
100%
BREAKDOWN BY RATING – OTHER CDOS
12/31/2013
12/31/2012
Amount
Percentage (%)
Amount
Percentage (%)
AAA
121
12%
168
15%
AA
611
61%
641
58%
A
163
16%
203
18%
BBB
13
1%
47
4%
BB
6
1%
5
0%
B
2
0%
2
0%
CCC
0
0%
2
0%
CC
0
0%
0
0%
C
0
0%
0
0%
D
0
0%
0
0%
93
9%
41
4%
1,008
100%
1,111
100%
NR
TOTAL
PROTECTION PURCHASED
Protection purchased from counterparties to hedge CDO exposures
(excluding US residential market)
12/31/2013
12/31/2012
Gross notional
amount of hedged
instruments
Impairment of
hedged CDOs
271
(11)
TOTAL
Fair value of
protection
Gross notional
amount of hedged
instruments
Impairment of
hedged CDOs
Fair value of
protection
11
435
(59)
59
These transactions fit in with the Negative Base Trade strategies concerning two separate transactions:
• two senior tranches of European CLOs rated AAA/AAA and AAA/AA+ by two ratings agencies.
Protection purchased from credit enhancers
Protection purchased from credit enhancers by Crédit Foncier for financial assets is in the form of financial guarantees (and not CDS) and represents a guarantee
attached to the enhanced asset. These enhancement commitments are thus not considered as directly exposed to monolines.
170
RISK MANAGEMENT
3
CMBS EXPOSURE
➡
12/31/2013
Trading book
TOTAL
➡
3
BREAKDOWN OF EXPOSURE BY ACCOUNTING PORTFOLIO – CMBS
12/31/2012
Gross exposure
Net exposure
Net exposure
Change 2013/2012
1
1
1
0
0
0
0
0
248
161
217
(56)
31
30
34
(4)
280
192
252
(60)
BREAKDOWN OF NET EXPOSURE BY RATING – CMBS
12/31/2013
12/31/2012
Amount
Percentage (%)
Amount
Percentage (%)
AAA
22
11%
34
14%
AA
30
15%
31
12%
A
53
28%
109
43%
BBB
54
28%
29
11%
0
0%
0
0%
12
6%
10
4%
BB
B
CCC
CC
TOTAL
➡
0
0%
5
2%
22
11%
34
14%
192
100%
252
100%
12/31/2013
12/31/2012
3
3
BREAKDOWN OF NET EXPOSURE BY REGION – CMBS
as a%
Germany
12%
9%
France
19%
24%
Italy
10%
8%
United Kingdom
28%
23%
Rest of Europe
31%
36%
100%
100%
TOTAL
3
3
RMBS EXPOSURE
➡
3
BREAKDOWN BY ACCOUNTING PORTFOLIO – SPANISH RMBS
12/31/2013
12/31/2012
Gross exposure
Net exposure
Net exposure
Trading book
2
2
1
Change 2013/2012
1
3
3
3
0
161
145
162
(17)
TOTAL
166
150
166
(16)
171
3
3
3
➡
RISK MANAGEMENT
BREAKDOWN BY RATING – SPANISH RMBS
12/31/2013
AAA
AA
A
BBB
BB
B+
Trading book
0
2
0
0
0
0
0
0
2
1
0
0
0
18
63
53
6
6
TOTAL
0
19
65
54
6
6
➡
BREAKDOWN BY ACCOUNTING PORTFOLIO – UK RMBS
12/31/2013
Gross exposure
12/31/2012
Net exposure
Net exposure
Change 2013/2012
9
9
10
(1)
137
136
157
(21)
TOTAL
147
145
167
(22)
➡
BREAKDOWN BY RATING – UK RMBS
12/31/2013
AAA
AA
A
9
0
0
127
8
0
TOTAL
137
8
0
3.7.2
Natixis’ exposure as at December 31, 2013
UNHEDGED SENSITIVE CDO EXPOSURES
ABS CDOs with a subprime component presented gross exposure of €651 million as at December 31, 2013. Reversals of impairment losses of €12 million were
booked (excluding the effect of the BPCE guarantee) during 2013, bringing total cumulative impairment to €560 million.
Total exposure
Net exposure at December 31, 2012, after impairment
126
Change in exposure (liquidation, redemption and currency effect)
(47)
Impairments during fiscal year 2013 (in millions of euros)
12
NET EXPOSURE AT DECEMBER 31, 2013, AFTER IMPAIRMENT
91
172
RISK MANAGEMENT
3
The stock of impairments decreased in 2013 by €154 million (excluding the effect of the BPCE guarantee), bringing total impairments to €197 million at December 31,
2013 compared with €351 million at December 31, 2012.
3
EXPOSURE TO CREDIT ENHANCERS
Data as at December 31, 2013
Data as at December 31, 2012
Notional amount
Pre-value
adjustment
exposure
Value adjustments
Notional amount
Pre-value
adjustment
exposure
-
-
-
-
-
-
358
21
(6)
2,106
72
(27)
RMBS protection
56
8
(7)
132
27
(4)
CMBS protection
38
1
-
46
-
-
Subprime CDO protection
CLO protection
Other risks
TOTAL
Value adjustments
4,335
462
(184)
5,200
629
(320)
4,787
492
(197)
7,484
728
(351)
12/31/2013
Pre-value adjustment exposure
12/31/2012
492
728
Value adjustments
(197)
(351)
RESIDUAL EXPOSURE
295
377
Percentage discount
40%
48%
Other changes
Net exposure at
12/31/2013
CMBS EXPOSURE
Trading book
Net exposure at
12/31/2012
Changes in
value 2013
4
-
(4)
0
12
-
(12)
0
25
-
(25)
0
63
-
(63)
0
104
-
(104)
0
TOTAL
3
3
3
3
3
3
173
3
3
RISK MANAGEMENT
RMBS EXPOSURE
➡
US RMBS PORTFOLIOS, INCLUDING SUBPRIME RMBS
Exposures in the financial statements at December 31, 2013, were as follows:
US RMBS
Net exposure at
12/31/2012
Change in value
in 2013
Other
changes
Net exposure at
12/31/2013
Trading book
1
-
(1)
0
0
-
-
0
465
-
(464)
0
-
466
-
Non-wrapped
Trading book
2
0
(465)
2
6
-
(6)
0
172
-
(150)
21
Wrapped
178
-
(156)
21
Trading book
1
-
-
1
0
-
-
0
US Agencies
TOTAL
1
-
-
1
645
-
(621)
24
% exposure net of BPCE guarantee
% exposure net of external guarantee
100%
0%
Breakdowns by rating and by type of underlying asset of US RMBSs were as follows at December 31, 2013.
Breakdown by rating
AAA
% breakdown
2%
AA
1%
A
88%
BBB
2%
BB
1%
B
0%
CCC
0%
CC
0%
C
0%
D
0%
NR
6%
TOTAL
100%
Breakdown by underlying
US Agencies
% breakdown
2%
Prime
0%
Alt-A
87%
Subprime
10%
Other
1%
TOTAL
174
100%
RISK MANAGEMENT
➡
NET EXPOSURES – UK RMBS
Net exposure at
12/31/2012
Change in value
in 2013
Other changes
Net exposure at
12/31/2013
Trading book
3
0
(3)
0
6
0
(6)
0
Loans and receivables portfolio
49
0
(49)
0
Available-for-sale asset portfolio
80
-
(80)
0
138
-
(138)
0
TOTAL
➡
3
3
NET EXPOSURES – SPANISH RMBS
Net
exposure
at
12/31/2012
Change in
value
in 2013
AAA
AA
A
BBB
BB
B
CCC
C
Trading book
7
-
(7)
0
-
-
-
-
-
-
-
-
0
-
-
0
-
-
-
-
-
-
-
-
183
-
(170)
12
-
-
-
-
12
-
-
6
-
(6)
0
-
-
-
-
-
-
-
-
196
-
(183)
12
-
-
-
-
-
12
-
-
Available-for-sale asset portfolio
TOTAL
% exposure net of BPCE guarantee
Percentage of net exposure under BPCE
guarantee (including assets carried by
SAHARA)
3
Net
exposure
Other
at
changes 12/31/2013
3
0%
100%
3
3
3
3
175
3
3
RISK MANAGEMENT
Risks relating to the BPCE guarantee for part of the Natixis assets managed on a run-off basis
3.8 Risks relating to the BPCE guarantee for part of
the Natixis assets managed on a run-off basis
The guarantee for part of the Natixis assets managed on a run-off basis against
the risk of future losses and earnings volatility was put in place at end-2009,
with retroactive effect as of July 1, 2009.
This guarantee system, validated by the ACPR, concerns an equal share of 85%
of risks relating to covered assets and is based on two mechanisms:
• a guarantee of the nominal amount, relating to assets recognized as “loans
and receivables” (L&R) and available-for-sale securities (AFS) through the
implementation of a financial guarantee with no time limit;
GUARANTEE RELATING TO CREDIT DEFAULT
The scope relates to “loans and receivables” (L&R) and available-for-sale
securities (AFS). The BPCE guarantee comes into effect at 85% if there is a
default:
• on the payment of a coupon;
• on repayment of the nominal amount.
• a guarantee of the value of trading assets through the implementation of
total return swap (TRS) contracts (one in dollars, the other in euros), coupled
with an option mechanism allowing Natixis to benefit from any profits made
on these assets. The option has a term of 10 years. If it is exercised, the TRS
is canceled.
MECHANISM IMPLEMENTED FOR TRADING ASSETS:
TOTAL RETURN SWAP (TRS)
During the life of the guarantee system, changes in value and any additional
provisions for the covered assets (at 85%) will be recorded as income at BPCE
rather than Natixis (before any impact on the option mechanism). They are
therefore 100% recognized as equity as attributable to equity holders of the
parent for the portion relating to BPCE rather than divided between the equity
attributable to equity holders of the parent and non-controlling interests.
• if the performance of the underlying assets has deteriorated, BPCE has to pay
Natixis 85% of the underperformance of these assets;
The monitoring of these portfolios is regularly reviewed by the Market Risk
Committee.
The TRS is a derivative instrument that allows transfer of the economic benefit
of underlying assets. Each year, at the exchange date:
• if the performance of the underlying assets has increased, Natixis has to pay
BPCE 85% of the outperformance of these assets.
Furthermore, on a prudential basis, the guarantee system has had a neutral
impact from the start of the transaction in 2009, as risk-weighted assets covered
by the system are already fully consolidated by Groupe BPCE (which owned
71.96% of Natixis’ voting rights at end-2013) under the full consolidation
method.
Assets under these guarantees break down as follows:
Notional amount as
of 12/31/2013
Net value at
12/31/2013(1)
Net value at
12/31/2012
ABS CDOs
0.7
0.1
0.4
Other CDOs
1.3
1.0
4.3
RMBS
0.2
0.1
0.8
CMBS
0.1
0.1
0.3
Other ABS
0.2
0.2
0.4
5.3
(2)
Covered assets
3.1
2.9
Corporate loans
3.2
3.2
3.4
TOTAL
8.7
7.6
14.9
(1)
(2)
Net of provisions.
Covered assets correspond to positions covered by monoline insurers.
At December 31, 2013 the impact of the guarantee was limited within the Group and net outstandings of the guaranteed scope had decreased by €7.3 billion
compared to December 31, 2012.
176
RISK MANAGEMENT
Risks relating to the management of the proprietary activities of the former Caisse Nationale des Caisses d’Epargne (CNCE)
3.9 Risks relating to the management of the
proprietary activities of the former Caisse
Nationale des Caisses d’Epargne (CNCE)
Former CNCE’s proprietary trading is managed strictly on a run-off basis
since end-2008. When BPCE was founded, this run-off activity was assigned
to Caisses d’Epargne Participations, and continued to be managed in run-off
mode. Natixis Global Asset Management has had a management mandate since
December 1, 2009, with the following system of delegation:
• risk delegation: control of observance of delegations by Natixis Global Asset
Management’s Risk Management division and the Group Finance division;
• monthly management report (presented by Natixis Global Asset Management
to BPCE’s Management Committee): valuation of the portfolio, effective sales,
breakdown of the portfolio and focus by asset class, short-, medium- and
long-term management indicators;
• monthly risk reporting by the Natixis Global Asset Management Risk
Management division: observance of mandates, changes to the portfolio
and analytical monitoring, risk indicators;
• risk monitoring is reviewed by the Group Risk Management division as part
of the Group Market Risk Committee.
In conjunction with the merger by absorption of Banques Populaires
Participations and Caisses d’Epargne Participations by BPCE in 2010, a protection
3
3
mechanism for the “management of proprietary activities” of the former CNCE
was put into place, with the main goal of protecting BPCE against the potential
losses of this proprietary activity and to safeguard, at the Caisses d’Epargne level,
economic exposure to certain proprietary trading run-off activities.
3
The scope concerned by this mechanism is limited to listed and unlisted mediumand long-term and discretionary management portfolios. The building of this
mechanism is based on an SPV (Special Purpose Vehicle), wholly-owned by
Caisses d’Epargne which entered into a Total Return Swap with CE Participations
by instrument, which allows these transactions to be qualified as hedging
instrument transactions. The merger by absorption of CE Participations by
BPCE resulted in a transfer of assets and Total Return Swaps to BPCE. These
transactions took effect retroactively on January 1, 2010.
3
Total Return Swaps between the SPV and BPCE consist of swapping changes in
values and returns of the portfolio hedged against remuneration corresponding to
the financing cost of hedged assets, based on a notional amount corresponding
to the net carrying value of assets at January 1, 2010 at a rate determined
contractually.
3
The mechanism breaks down as follows:
Caisses d'Epargne
100%
3
Payment of increase in value + interest
BPCE
Financing Cost
SPV
Caisses d'Epargne
Offsetting decreases in value
3
Assets
At December 31, 2013, total outstandings were €1.24 billion, down €260 million
compared with December 31, 2012. These are as follows:
• €1.15 billion relates to the “Medium- and Long-term portfolio”
(at December 31, 2013, CLOs made up 83% of the portfolio);
• €92 million relates to the delegated management portfolio.
177
3
3
178
4
ACTIVITIES AND 2013
FINANCIAL INFORMATIONS
4.1 FOREWORD
180
4.4 BPCE SA GROUP FINANCIAL DATA
4.4.2
4.2 SIGNIFICANT EVENTS OF 2013
181
4.2.1
Economic and financial environment
181
4.2.2
Significant events of the fiscal year
182
4.3 GROUPE BPCE FINANCIAL DATA
183
4.3.1
Groupe BPCE results
183
4.3.2
Groupe BPCE’s core businesses
184
4.3.3
Income statement by sector of activity
184
4.3.4
185
4.3.5
Wholesale Banking, Investment Solutions and
Specialized Financial Services
189
4.3.6
Equity interests
191
4.3.7
Workout portfolio management and Other businesses 193
4.3.8
Analysis of the Groupe BPCE consolidated balance
sheet
Analysis of the consolidated balance sheet
of BPCE SA group
4.5 INVESTMENTS
196
197
198
4.5.1
In 2013
198
4.5.2
In 2012
198
4.5.3
In 2011
198
4.6 POST-BALANCE SHEET EVENTS
198
4.7 OUTLOOK FOR GROUPE BPCE
199
194
179
4
ACTIVITIES AND 2013 FINANCIAL INFORMATIONS
Foreword
4.1 Foreword
The financial data for the fiscal year ended December 31, 2013 and the
comparative data for 2012 were prepared under IFRS as adopted by the
European Union and applicable on December 31, 2013, therefore excluding
some provisions of IAS 39 on hedge accounting.
This management report discusses the results of Groupe BPCE and BPCE SA
group, built around the central institution, BPCE, which was established on
July 31, 2009 following the merger of Groupe Banque Populaire and Groupe
Caisse d’Epargne.
180
BPCE SA group’s results are summarized because the operations and results
of the two groups are closely related. The main changes to the scope of
consolidation are:
• the exclusion of the holding company, CE Holding Promotion, and therefore
its equity interests in Nexity, Habitat en Région Services and Erixel;
• the exclusion of the contributions of the Banque Populaire banks and Caisses
d’Epargne.
Significant events of 2013
4.2 Significant events of 2013
4.2.1
4
Economic and financial environment
The global economy more significantly consolidated its fragile recovery starting
in the second quarter of 2013, under rather disinflationary conditions, with
tensions easing in Europe, a gradual decline in risk aversion, and persistently
very accommodative monetary policies on both sides of the Atlantic. It benefited
from the consistent reinforcement of the US economy, the rebound in Japan,
resilient economic activity in China and the end of the European recession
despite the wind-down in emerging countries. However, it gained only 2.8%
in 2013 versus 3% in 2012. 2013 was in particular the scene of the political
skirmish on public finances between Democrats and Republicans in the United
States, the temporary resurgence of financial tensions in Europe in March, and
geopolitical concerns over oil in September (war in Syria).
France’s GDP virtually stagnated (+0.2%), as it did in 2012, posting varying
quarterly trends. Purchasing power, which had fallen by 1% in 2012, picked
up very slightly by 0.3% in 2013, boosted by the sharp drop in inflation (0.9%
versus 2% in 2012). Household consumption and business investment remained
relatively sluggish. French public spending, already among the highest in Europe,
hit a peak of 57.1% of GDP. Reflecting the major fiscal shock incurred since
2011, taxes and social security contributions increased from 43.7% of GDP in
2011 to 45% in 2012 and then 46% in 2013. The annual performance level of
the French economy suffered another downturn in commercial employment.
The development of subsidized employment was not enough to halt the rise in
unemployment (10.5% versus 9.8% in 2012). However, this economic stagnation
appeared inconsistent with the improvement in economic conditions observed
in the majority of the other European countries - especially Germany - in the
second half.
Monetary policies remained particularly supportive in the United States and
Japan. The ECB once again helped to restore confidence in the sustainability
of the euro, while it also made indisputable progress in terms of European
governance (banking union, etc.). It cut its key interest rate to 0.5% on May
2, then to 0.25% on November 7, in response to the declining inflation trend
(0.7% in October) and diminishing liquidity surplus. Its unlimited bank lending
program was also extended to 2015.
US, German and French long rates climbed in 2013 as the tightening of US
monetary policy and normalization got under way. The 10-year OAT remained
fairly low on average during the year at 2.2% versus 2.5% in 2012. French long
rates benefited from an exceptionally low risk premium, despite the downgrading
of France’s sovereign rating from AA+ to AA by Standard & Poor’s on November
8. Another source of impact was a reduced need for public funding and the ECB’s
4
commitment to saving the euro, undertaken in July 2012. Developed country
markets improved substantially in the second half, after stagnating in the first
half, to the detriment of emerging markets. Their remarkable performance can
be attributed to the improvement in the OECD’s economic outlook and sharp
decline in uncertainty reflected in the waning of implied volatility and in gold
and silver sales. The CAC 40 gained 18%, versus 15.2% in 2012, reaching 4,296
points at December 31, 2013, versus 3,641 points at December 31, 2012.
2013: A BIG STEP FOR BANKING REGULATION
4
4
2013 marked a big step in the overhaul of bank regulatory mechanisms launched
in response to the 2008 financial crisis. Efforts led, both in Europe and France, to
regulations marking significant changes in several areas, including supervision,
prudential oversight, capital market activities, etc.
The Basel III reform was transposed into European regulation in June 2013
with the adoption of the Capital Requirements Regulation (CRR) and Capital
Requirements Directive (CRD IV). In addition to enhancing capital quality
requirements, the CRR/CRD IV introduced stronger liquidity requirements as
well. It will be gradually rolled out from January 1, 2014.
In line with the recommendations of the Liikanen Report in Europe,
recommending the isolation of retail banking activities within full-service
banking groups, while segregating proprietary trading activities from market
making activities, the draft law on the separation and regulation of banking
activities was permanently adopted by the French Parliament in July 2013 and
enacted on July 26, 2013. The main measure introduced by this law was the
separation of activities supporting the funding of the economy from so-called
speculative activities, with the key aim of ensuring the financial stability and
solvency of banks vis-à-vis their depositors.
In December 2013, the Banking Union, which established a new architecture
for banking supervision, entered a decisive phase with the European Finance
Ministers’ announcement of the agreement to implement a Single Resolution
Mechanism (SRM) to deal with banking crises. This agreement established the
second pillar of the Banking Union and supplemented the mechanism approved
at the end of 2012, which implemented as from 2014 a Single Resolution
Mechanism (SRM) for banks, under the aegis of the ECB. The plan is for the
SRM to be permanently adopted by the European Parliament by May 2014 and
gradually rolled out over the next decade.
4
4
4
4
181
4
4
Significant events of 2013
4.2.2
Significant events of the fiscal year
SIMPLIFICATION OF THE STRUCTURE OF GROUPE BPCE
The buyback by the Banque Populaire banks and Caisses d’Epargne of the
cooperative investment certificates (CCIs) held by Natixis for their subsequent
cancellation was completed on August 6, 2013, in accordance with the
timetable set when the transaction was initiated in February 2013. Following
the cancellation of the CCIs repurchased by each of the Banque Populaire banks
and Caisses d’Epargne, the capital of these institutions will be held entirely by
their cooperative shareholders.
This transaction represents a new phase in the construction of Groupe BPCE. In
addition to the buyback of the CCIs, this phase also includes:
• Natixis’ repayment to BPCE of the P3CI (€6.9 billion) set up in January 2012,
and of the symmetrical loan set up by Natixis in favor of BPCE;
• an extraordinary dividend payout by Natixis of about €2 billion to its
shareholders;
• the redemption of the deeply subordinated notes issued by BPCE in
March 2012 and subscribed for by the Banque Populaire banks and Caisses
d’Epargne for €2 billion with a cash adjustment of €89 million;
182
• the repayment by Natixis to BPCE of a 10-year senior loan (€2.3 billion);
• BPCE’s capital reduction in favor of the Banque Populaire banks and Caisses
d’Epargne for €2 billion.
STEPPED-UP DISPOSALS OF NON-CUSTOMER
ASSETS
Within the scope of Natixis, GAPC stepped up its asset disposal policy in 2013,
thus confirming the Group’s target of winding up GAPC by mid-2014. Over one
year, €5.4 billion in assets were sold off, with a discount that had a limited
impact on net income attributable to equity holders of the parent.
Under its strategic plan for 2012-2016, Crédit Foncier initiated deleveraging
transactions at the end of 2011. Over the course of 2013, €4.95 billion in
international securities were sold and €1.13 billion in liabilities were redeemed,
with an impact of -€146 million on net banking income. The significant pickup in disposals over 2013 brought total assets sold since the beginning of the
plan to €9.8 billion.
Groupe BPCE financial data
4.3 Groupe BPCE financial data
4.3.1
4
4
Groupe BPCE results
Groupe BPCE confirmed the robust results and solid sales momentum of its core businesses.
Groupe BPCE
Change 2013/2012
Core businesses
Change 2013/2012
2013
2012
€m
%
2013
2012
€m
%
Net banking income
22,826
21,946
880
4.0%
21,776
20,873
903
4.3%
Operating expenses
(16,135)
(15,935)
(200)
1.3%
(14,255)
(14,101)
(154)
1.1%
6,691
6,011
680
11.3%
7,521
6,772
749
11.1%
(2.1) pts
Cost/income ratio
70.7%
72.6%
-
(1.9) pt
65.5%
67.6%
--
Cost of risk
(2,042)
(2,199)
157
(7.1)%
(1,954)
(1,788)
(166)
9.3%
220
186
34
18.3%
217
206
11
5.3%
Share in income of associates
Net gains or losses on other assets
Change in the value of goodwill
Income before tax
Income tax
Non-controlling interests
NET INCOME ATTRIBUTABLE TO EQUITY
HOLDERS OF THE PARENT
36
3
33
ns
27
12
15
ns
(16)
(258)
242
ns
0
0
0
ns
4,889
3,743
1,146
30.6%
5,811
5,202
609
11.7%
(1,899)
(1,366)
(533)
39.0%
(2,084)
(1,735)
(349)
20.1%
(321)
(230)
(91)
39.6%
(405)
(405)
0
0.0%
2,669
2,147
522
24.3%
3,322
3,062
260
8.5%
NET BANKING INCOME
OPERATING INCOME
Groupe BPCE’s net banking income amounted to €22.8 billion in 2013, up 4.0%
on 2012. Its businesses generated strong sales activity despite the weak growth
of the economy. The income earned by its core businesses totaled €21.8 billion,
up 4.3% on 2012.
Gross operating income came out at €6.7 billion in 2013, an increase of 11.3%
on 2012.
OPERATING EXPENSES
Operating expenses came to -€16.1 billion, representing a slight increase
(+1.3%) on 2012. This change was primarily concentrated in the Investment
Solutions division, which continued to expand and implemented new asset
management projects (expanded distribution) and in Workout portfolio
management and Other businesses, with the impacts of the Natixis SA
restructuring plan announced in December 2013.
The cost/income ratio improved by 1.9 point compared with 2012 to 70.7%
in 2013.
At €2.0 billion, Groupe BPCE’s cost of risk improved by 7.1% on 2012, though
to varying degrees depending on the division. In its core businesses, cost of
risk rose by 9.3%, impacted in particular at the level of Real Estate Financing
Services by the provisioning of specific loans and by collective provisions on
the workout international assets portfolio. Workout portfolio management and
Other businesses, however, posted a sharp decline in cost of risk related primarily
to GAPC. Cost of risk in basis points was kept at a moderate level, i.e. 35 bp on
average for the year.
4
4
4
4
As a result, operating income totaled €4.6 billion in 2013.
NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS
OF THE PARENT
With net income attributable to equity holders of the parent of €2.7 billion, up
24.3% on 2012, Groupe BPCE consolidated its solidity despite the unsupportive
economic conditions prevailing in France.
4
4
183
4
4
4.3.2
Groupe BPCE’s core businesses
Groupe BPCE is structured around its two core businesses.
Workout portfolio management and Other businesses encompass:
Commercial Banking and Insurance, including:
• the contribution of Natixis’ Workout portfolio management business and the
run-off management of the former CNCE’s proprietary trading and delegated
management businesses;
• the Banque Populaire network, comprised of 19 Banque Populaire banks
and their subsidiaries, Crédit Maritime Mutuel, and the mutual guarantee
companies;
• the Caisse d’Epargne network consisting of the 17 Caisses d’Epargne;
• Real Estate Financing, the results of which predominantly reflect the
contribution of the Crédit Foncier group;
• Insurance, International and the Other networks, chiefly comprising the
Group’s equity interest in CNP Assurances, BPCE Assurances, international
and overseas subsidiaries (including BPCE IOM) and Banque Palatine.
Wholesale Banking, Investment Solutions and Specialized Financial Services
encompass Natixis’ core businesses:
• Wholesale Banking, which has now established itself as BPCE’s bank serving
large corporate and institutional customers;
• Investment Solutions, with asset management, life insurance and private
banking and the private equity business;
• Specialized Financial Services, which includes factoring, lease financing,
consumer credit, sureties and guarantees, employee benefits planning,
payments and securities services.
Equity interests is the third business segment, consisting of the Group’s equity
interests in Nexity Volksbank Romania, along with Natixis’ equity interests in
Coface and Natixis Private Equity.
• the contribution made by the Group’s central institution and holding
companies, and of the activities sold (MeilleurTaux);
• revaluation of own debt;
• impact of dynamic management transactions in the Crédit Foncier balance
sheet (disposal of securities and liability redemptions);
• items related to goodwill impairment and the amortization of valuation
differences, as these items form part of the Group’s acquisition and investment
strategy.
Note that the segment data presented for 2012 have been restated, notably for:
• the reclassification of MeilleurTaux and Otérom Holding, following the sale
of MeilleurTaux on April 16, 2013, from the Equity interests segment to the
Workout portfolio management and Other businesses segment;
• restatements carried out by Natixis under Basel III and other conventions
applied for the determination of business lines: business line results measured
under Basel III, modification of the rate of return on normative capital to 3%,
reallocation of the systemic risk levy and the contribution for ACP control
costs to the different divisions (previously allocated to the Corporate Center),
exclusive allocation of the results generated by Global Structured Credit
Solutions to the FIC-IT. These restatements led to a transfer in terms of BPCE
SA group’s segment reporting between the different segments.
Segment reporting for Groupe BPCE in previous periods has been restated
accordingly.
4.3.3
Income statement by sector of activity
Commercial Banking
and Insurance
Net banking income
Operating expenses
Wholesale Banking,
Investment
Solutions and SFS
Core businesses
Workout portfolio
management and
Other businesses
Equity interests
Groupe BPCE
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
15,378
14,780
6,398
6,093
21,776
20,873
1,653
1,711
(603)
(638)
22,826
21,946
(10,103) (10,064)
(4,152)
(4,037) (14,255) (14,101)
5,275
4,716
2,246
2,056
7,521
(1,395)
(1,396)
(485)
6,772
258
315
(1,088)
(438) (16,135) (15,935)
(1,076)
6,691
6,011
Cost/income ratio
65.7%
68.1%
64.9%
66.3%
65.5%
67.6%
84.4%
81.6%
ns
ns
70.7%
72.6%
Cost of risk
(1,574)
(1,447)
(380)
(341)
(1,954)
(1,788)
2
(5)
(90)
(406)
(2,042)
(2,199)
186
200
192
17
14
217
206
3
(19)
0
(1)
220
26
11
1
1
27
12
(30)
(6)
39
(3)
36
3
0
0
0
0
0
0
0
0
(16)
(258)
(16)
(258)
Income before tax
Income tax
NET INCOME ATTRIBUTABLE
TO EQUITY HOLDERS OF
THE PARENT
184
3,927
3,472
1,884
1,730
5,811
5,202
233
285
(1,155)
(1,744)
4,889
3,743
(1,478)
(1,195)
(606)
(540)
(2,084)
(1,735)
(106)
(138)
291
507
(1,899)
(1,366)
(41)
(44)
(364)
(361)
(405)
(405)
(82)
(81)
166
256
(321)
(230)
2,408
2,233
914
829
3,322
3,062
45
66
(698)
(981)
2,669
2,147
The net banking income generated by the Group’s two core businesses,
Commercial Banking and Insurance and Wholesale Banking, Investment
Solutions and Specialized Financial Services, increased in comparison with
2012, reflecting solid sales momentum. Their contribution was substantial
4.3.4
with Commercial Banking and Insurance accounting for 67.4% and Wholesale
Banking, Investment Solutions and Specialized Financial Services accounting
for 28% of total group net banking income.
4
4
Banque Populaire
banks
2013
Caisses d’Epargne
2012
2013
2012
Real Estate
Financing Services
2013
Insurance,
International and
Other networks
Commercial Banking
and Insurance
Change 2013/2012
2012
2013
2012
2013
2012
€m
1,183
15,378
14,780
598
4.0%
(775) (10,103) (10,064)
(39)
0.4%
559
11.9%
Net banking income
6,390
6,033
6,997
6,756
777
808
1,214
Operating expenses
(4,205)
(4,185)
(4,562)
(4,518)
(546)
(586)
(790)
%
2,185
1,848
2,435
2,238
231
222
424
408
5,275
4,716
Cost/income ratio
65.8%
69.4%
65.2%
66.9%
70.3%
72.5%
65.1%
65.5%
65.7%
68.1%
(685)
(747)
(529)
(441)
(250)
(132)
(110)
(127)
(1,574)
(1,447)
(127)
8.8%
25
21
0
0
4
8
171
163
200
192
8
4.2%
Cost of risk
Income before tax
Income tax
THE PARENT
- (2.4) pts
0
4
(2)
0
15
7
13
0
26
11
15
ns
1,525
1,126
1,904
1,797
0
105
498
444
3,927
3,472
455
13.1%
(571)
(388)
(780)
(650)
2
(41)
(129)
(116)
(1,478)
(1,195)
(283)
23.7%
(6)
(7)
0
0
(2)
(1)
(33)
(36)
(41)
(44)
3
(6.8)%
948
731
1,124
1,147
0
63
336
292
2,408
2,233
175
7.8%
The division’s net income was up 7.8% compared to 2012 despite the poor
growth of the economy. The Banque Populaire and Caisse d’Epargne networks
made up 86% of the division’s net income in 2013.
BANQUE POPULAIRE BANKS
Even in France’s persistently challenging economic environment, the Banque
Populaire network maintained solid sales activity. This was reflected in the
sharp gain of new customers in 2013 (i.e. +96,000 new individual customers
and +10,000 new professional customers) and the continued enhancement
of customer relations, resulting in a 4.9% increase in active customers using
banking and insurance services.
Individual customers favored on-balance sheet savings products. Growth
was primarily driven by Livret A passbook savings accounts (+14.4%), with
outstandings up €1.2 billion in 2013, and by a substantial rise (+40.8%) in
LDD passbook savings account outstandings to €8 billion in 2013. These
improvements include the impacts of the reform of centralization rules and
the account limit increase. Demand deposits were also on a good track (+5.8%
to €18 billion at end-2013).
Professional, corporate and institutional customers continued to favor term
deposits (up 15.8% to €23 billion at end-2013) and demand deposits (up 6.8%
to €31 billion at end-2013) over UCITS (down 9.2% to €16 billion at end-2013).
➡
Business was strong across all markets: on-balance sheet deposit outstandings
rose by 3.8% in the individual customer segment and by 9.9% in other markets.
4
4
4
CUSTOMER SAVINGS (IN BILLIONS OF EUROS)
4
4.2%
Strong sales momentum driven by on-balance sheet
deposit outstandings: +6.3% (including centralized
savings)
The Banque Populaire banks recorded strong overall inflows in a highly
competitive deposits market impacted by regulatory developments in centralized
savings (higher account limits, lower rates of return). Deposit outstandings rose
by 4.2% to €207.1 billion, driven by on-balance sheet savings (+6.3% including
centralized savings), which now account for 68% of total savings. Financial
savings outstandings were fairly stable (-0.1%) at nearly €66 billion at end2013, reflecting UCITS outflows, while life insurance assets under management
picked up by 3.2% after a rebound in inflows during 2013.
4
207.1
198.8
Financial savings
On-balance sheet
(incl. centralized
savings)
66.0
65.9
132.8
141.2
4
9.1 %
12/31/2012
12/31/2013
185
4
4
Increase in loan outstandings: +3.5% despite a
persistently challenging economic environment
➡
LOAN OUTSTANDINGS (IN BILLIONS OF EUROS)
3.5%
The Banque Populaire banks, which are fully committed to their customers,
continued to actively finance the economy with an annual increase of 3.5% in
loan outstandings to €165.5 billion at December 31, 2013.
Loan outstandings in the individual customers market are buoyed by the strong
upturn in home loans with loans outstanding up 7.0% thanks to the expansion
of the customer base.
160.0
165.5
24.6
23.9
54.2
53.8
On the professional, corporate and institutional customers market, loan
outstandings were virtually stable (-0.2%) at €78 billion. New equipment loans
remained significant, though at a lower level than in 2012, due to unsupportive
economic conditions, and outstanding loans (including finance leases) totaled
€54 billion at end-2013 (+0.8%).
Other
Equipment loans
Real Estate loans
81.6
87.4
12/31/2012
12/31/2013
Financial results
The Banque Populaire network’s net banking income totaled €6.4 billion in 2013, up 5.9% compared to 2012 (+5.6% excluding the change in the home savings
provision).
Change 2013/2012
2013
2012
€m
%
Interest margin
4,035
3,858
177
4.6%
Fees and commissions
2,325
2,267
59
2.6%
30
(92)
122
ns
6,390
6,033
357
5.9%
Other income and expenses
NET BANKING INCOME
The interest margin came to €4.0 billion (+4.1% excluding the change in the
home savings provision), boosted by increased deposit and loan outstandings,
and the increase in the intermediation margin thanks in large part to lower rates
across all savings products. The rise in fee and commission income (+2.6% on
2012) was driven by loan fees and account activity fees.
The number of individual customers using the main banking services thus
increased by 3.7% year-on-year. The other customer markets also posted solid
gains, with annual growth of +4.8% in active professional customers and +7.3%
in active corporate customers.
Operating expenses were relatively stable compared to 2012 (+0.5%), reflecting
solid management by the Group’s institutions.
Dynamic growth in on-balance sheet deposit
outstandings: +4.7% (including centralized savings)
Gross operating income came out at €2.2 billion (+17.0% excluding the change
in the home savings provision). As a result, the cost/income ratio improved by
3.6 points to 65.8%.
The network’s savings outstandings gained 3.2% year-on-year to €370.4 billion
at end-2013, amid persistently fierce competition and under the impact of
regulatory developments.
Cost of risk improved by 8.3% compared to 2012, coming out at €0.7 billion.
It stood at 41 bp(1) in 2013, up 5 bp (36 bp in 2012(1)(2)).
In the individual customers segment, outstandings rose by 1.2% in 2013, buoyed
by home savings plans (+7.2%), demand deposits (+6.2%) and regulated savings,
still supported by the increased account limit: Livret A and LDD outstandings
posted gains of +4.4% and +9.1% year-on-year, respectively. Financial
savings picked up slightly (+1.1%) on the back of life insurance assets under
management (+1.4%); UCITS assets under management were down 3.1%,
however.
The contribution of the Banque Populaire banks to the division’s net income
amounted to €0.9 billion, up €216 million relative to 2012 (+29.6%).
CAISSES D’EPARGNE
The Caisses d’Epargne enjoyed very robust activity in 2013, driven in large part
by changes in regulations governing centralized savings, and consolidating their
significant involvement in financing the French economy.
(1)
Cost of risk in basis points on average annual gross customer loan outstandings.
(2)
Excluding a provision on a specific loan granted to a lease financing company.
186
Savings outstandings on the professional, corporate and institutional customer
markets climbed 14.7% to €62 billion. On-balance sheet savings deposits
were very dynamic across all of these segments, particularly in liquid vehicles.
Term accounts increased by 45.9%. Financial savings outstandings fell by 7.2%
year-on-year due in large part to UCITS vehicles (-32.3%) versus a 6.8% rise
for life insurance assets under management.
➡
CUSTOMER SAVINGS (IN BILLIONS OF EUROS)
370.4
In the individual customers market, loan outstandings rose by 8.8% on 2012
to €116 billion due to the upturn in home loans (+9.6%), with a high level of
new home loans in 2013 despite the slowdown in the second half. Consumer
loan outstandings were up 2.2% to €11 billion in a sluggish economic climate.
118.5
Growth in loans to business and institutional customers was strong across all
segments, with outstandings of €84 billion (+7.9% on 2012), driven by real
estate loans (+11.2%), short-term loans (+9.9%) and equipment loans (+6.5%).
3.2%
358.8
118.1
➡
240.7
251.9
4
200.9
185.3
22.9
21.6
9.1 %
57.8
54.3
12/31/2012
4
LOAN OUTSTANDINGS (IN BILLIONS OF EUROS)
8.4%
Financial savings
On-balance sheet
savings (incl.
Centralized savings)
4
12/31/2013
Other
Equipment loans
Real Estate loans
Robust lending activity
The pick-up in loan outstandings (+8.4% on 2012) to €200.9 billion also
confirmed the Caisse d’Epargne network’s commitment to funding the economy
and the regions.
109.4
120.2
12/31/2012
12/31/2013
4
Financial results
At €7 billion in 2013, the Caisse d’Epargne network’s net banking income climbed substantially compared to 2012 (+2.7% excluding the change in the home
savings provision) despite the unsupportive macroeconomic climate rife with intense competition, lower fees on centralizable passbook savings accounts and
regulatory impacts on interbank fees.
4
Change 2013/2012
2013
2012
€m
%
Interest margin
4,112
3,935
176
4.5%
Fees and commissions
2,934
2,782
152
5.5%
(48)
39
(87)
ns
6,997
6,756
241
3.6%
Other income and expenses
NET BANKING INCOME
The interest margin(1), excluding the change in the home savings provision,
rose by 2.9% thanks to an increase in loan and inflow volumes linked to an
improvement in the intermediation margin. The rise in fee and commission
income (+5.5%) was driven by service fees and account activity fees.
Operating expenses climbed slightly by 1.0% on 2012 to -€4.6 billion.
4
Gross operating income came out at €2.4 billion in 2013, up 6.0% year-onyear (excluding the change in the home savings provision). The cost/income
ratio (restated for the home savings provision) improved by 1.1 points to 65%.
In an unsupportive economic environment, the network’s cost of risk came to
-€0.5 billion, up 19.8%, but still low at 27 bp(2) in 2013 (25 bp in 2012).
The Caisses d’Epargne contributed €1.1 billion to the division’s net income in
2013.
4
4
(1)
Fees and commissions on centralized savings have been restated for the interest margin and included in fee and commission income.
(2)
Cost of risk in basis points on average annual gross customer loan outstandings.
187
4
4
REAL ESTATE FINANCING SERVICES
The Crédit Foncier group accounts for most of the Real Estate Financing Services
sub-division in terms of both new loans and financial results.
It posted total new loans of €11.7 billion, representing an increase on 2012
despite the challenging economic environment. In the individual customers
segment, new loans amounted to €7.6 billion. This was predominantly
attributable to new loans, as Crédit Foncier is not very active in the loan
repurchase segment. First-time home-buying loans gained 3 points while buyto-let continued to decline.
New loans on the real estate investment and public-sector equipment market
totaled €4.1 billion, up 9.0% on 2012 despite the overall downturn on the
market. The high level of syndicated loans resulted in higher fee and commission
income.
INSURANCE, INTERNATIONAL AND OTHER
NETWORKS
In non-life insurance, BPCE Assurances generated net income of €37.7 million
in 2013 versus €38.9 million in 2012. Net income was driven by 4.2% growth in
revenues, on the back of commercial performances and increased sales (+5.7%),
with an improvement in the personal accident insurance, comprehensive home
insurance and health insurance sectors (+23%, +5% and +75%, respectively).
The claims rate for the period improved in comparison with 2012 (59.3% versus
61%), and major profits were generated on claims (€38.2 million, as in 2012).
BPCE Assurances contributed €22.6 million to Groupe BPCE’s net income
attributable to equity holders of the parent.
In 2013, the Crédit Foncier Group generated over €4.9 billion on disposals of
international assets, bringing total disposals carried out since the plan was
initiated in Q4 2011 to €9.8 billion. The spread tightening resulting in part from
the improvement in the economic environment helped the Crédit Foncier Group
conduct its disposals under satisfactory market conditions.
CNP Assurances posted an overall rise of 4.6% in revenues in 2013, with positive
trends in personal protection insurance, pensions and savings (despite a 1.8%
drop in France, with outflows of €348 million in life insurance investment
products). Current net income came out at €1,087 million and net income at
€1,030 million, up 8.3%. The cost/income ratio improved from 36.7% in 2012
to 35.8% in 2013. Extraordinary and non-current items had a total adverse
impact of -€57 million, including the impacts of the impairment of the Cyprus
holding for -€63 million.
Crédit Foncier group’s total loan outstandings stood at €106.1 billion,
representing a decline relative to December 31, 2012.
The International business segment mainly reflected the results of Groupe BPCE
International et Outre-mer (BPCE IOM):
Net banking income for Real Estate Financing Services totaled €777 million
for the year, down 3.8% compared to 2012. This decrease includes the impacts
of the Crédit Foncier Group’s deleveraging transactions and its determination
to refocus on its businesses in France, serving its own customers and those of
Groupe BPCE. This decrease was partially offset by solid fee and commission
income.
• its contribution to the division’s net income came to €54 million versus
€14 million in 2012, thanks in large part to the Overseas territories division’s
solid net interest margin. This resulted in a 15.5% increase in gross operating
income compared to 2013, boosted by the improved cost of risk (-41.3%),
as 2012 was significantly undermined by a provision recorded by Banque
des Mascareignes;
Operating expenses were -€546 million (-6.8% on 2012), reflecting the
continued efforts to reduce these expenses. The expense reduction target
of €90 million by 2017 was maintained, largely because of the very strong
employee adherence to the retirement forecasting agreement signed in 2012
and the launch of the project aimed at pooling the Crédit Foncier and Caisses
d’Epargne information systems.
• the other international subsidiaries mainly include Natixis Pramex Algérie and
contributed €13 million to the division’s net income.
Cost of risk was primarily impacted in 2013 by a collective provision on the
run-off international assets portfolio and by additional provisions on certain
Corporate loans.
188
Finally, the Other networks generated stable net income compared to 2012, at
€74 million. In this total, Banque Palatine saw its contribution to the division’s
net income rise 34.4% to €49.6 million, despite a higher cost of risk in 2013.
4.3.5
This sector combines Natixis’ three core businesses; its contribution to Groupe BPCE’s net income is calculated after recognizing the 28% share of non-controlling
interests and impairment losses on Greek government bonds by Other businesses.
Wholesale Banking
Investment
Solutions
Specialized
Financial Services
Wholesale Banking,
Investment
Solutions and SFS
2012
2013
2012
2013
2012
2013
2012
€m
%
Net banking income
2,867
2,836
2,259
2,065
1,272
1,192
6,398
6,093
305
5.0%
Operating expenses
(1,657)
(1,719)
(1,662)
(1,528)
(833)
(790)
(4,152)
(4,037)
(115)
2.8%
1,210
1,117
597
537
439
402
2,246
2,056
190
9.2%
Cost/income ratio
57.8%
60.6%
73.6%
74.0%
65.5%
66.3%
64.9%
66.3%
-
(1.4) pt
(312)
(265)
12
0
(80)
(76)
(380)
(341)
(39)
11.4%
899
852
627
552
358
326
1,884
1,730
154
8.9%
Income tax
(323)
(306)
(159)
(123)
(124)
(111)
(606)
(540)
(66)
12.2%
(161)
(152)
(136)
(145)
(67)
(64)
(364)
(361)
(3)
0.8%
415
394
332
284
167
151
914
829
85
10.3%
Income before tax
WHOLESALE BANKING
➡
PERCENTAGE OF BUSINESSES IN THE WHOLESALE BANKING
DIVISION’S NET BANKING INCOME (EXCLUDING CPM AND OTHER)
4
Change 2013/2012
2013
Cost of risk
4
Structured Financing revenues gained 4.1% year-on-year at constant exchange
rates. Business was very strong, with more than €17.5 billion in new loans
(€12.9 billion of which recorded on the balance sheet). Net margins on average
outstandings were resilient. Service fee income accounted for 30% of revenues,
up 5 points on 2012.
Revenues generated by the Fixed Income, Credit, Foreign Exchange, Commodities
and Cash Management businesses were virtually stable compared to 2012.
4
4
4
Equities activities generated net banking income of €418 million, which was
stable relative to 2012.
51%
Capital Market
Activites
36%
Structured Financing
13%
Commercial Banking
In 2013, Wholesale Banking’s net banking income amounted to €2,867 million,
up 1.1% versus 2012. Restated for the contribution of discontinued operations
that no longer fit with the Wholesale Banking model as adopted by Natixis in Q3
2012 (€132 million in revenues in 2012 versus a residual loss of €11 million in
2013) and the main non-recurring items (€34 million in 2012 and €38 million
in 2013), revenues were up 6.4%.
In 2013, average trading VaR was limited to €6.5 million compared to
€7.3 million in 2012 (excluding GAPC). At year-end it amounted to €6.8 million,
versus €5.1 million at end-2012.
With management requirements on RWA and liquidity consumption, Wholesale
Banking revenues were up 4.0% year-on-year while on-balance sheet
conventional loan outstandings fell by 18%. Revenues were driven by fees
generated on new transactions and by a reduction in refinancing costs. Finally,
credit line drawdown rates remained very low at 16%.
In 2013, Wholesale Banking’s expenses dipped by 3.1% to €1,657 million at
constant exchange rates. Including non-recurring income of €15 million related
to the overhaul of the pension plan in the United States, payroll costs dropped
by 4% when the average headcount decreased by 5%. IT costs fell by 10%.
Other operating expenses were down 11% with the management of lifestyle
expenses and savings generated on real-estate (€19 million).
4
This led to a positive scissor effect on gross operating income, which came out
at €1,210 million, up €93 million year-on-year. The cost/income ratio came
out at 57.8% in 2013, down 2.8 points on 2012.
At €312 million in 2013, cost of risk increased by nearly €47 million, reflecting
tense economic conditions, particularly in Europe.
Wholesale Banking’s net income attributable to equity holders of the parent
totaled €415 million in 2013 versus €394 million in 2012.
4
INVESTMENT SOLUTIONS
Investment Solutions posted a 9.4% increase in revenues year-on-year to
€2,259 million (+11.4% at constant exchange rates).
At December 31, 2013, net banking income in Asset Management was up 9.7%
year-on-year to €1,832 million (i.e. +12.2% at constant exchange rates), driven
by fees on assets under management in the US and a high level of incentive
fees on both sides of the Atlantic.
189
4
4
4
At the end of December 2013, assets under management stood at €629 billion,
up €50.4 billion (+8.7%) compared to December 31, 2012, at constant exchange
rates, driven by a significant market effect (+€37.2 billion) in Europe and the US
and by net inflows (+€13.4 billion), at their highest level since 2007.
➡
ASSETS UNDER MANAGEMENT (IN BILLIONS OF EUROS)
+13.4
+37.2
-0.2
-12.4
629
591
12/31/2012 Foreign
exchange
Net inflows Market
effect
Others
12/31/2013
Net inflows of €13.4 billion, i.e. €20.5 billion excluding money market products,
underscored the momentum enjoyed by the business. Trends varied by region,
however: Europe recorded net outflows of -€9.8 billion while the United States
posted net inflows of €22.4 billion, driven in large part by Harris Associates in
equity products and by Loomis in bond products.
At €599.4 billion, average assets under management were up 8.7% in 2013
versus 2012 (in constant euros), with the average rate of return on assets
under management increasing slightly by 25.3 bp year-on-year (versus 24.6 bp
in 2012).
Net banking income in Insurance climbed by 39.5% on 2012 to €267.7 million,
led by the rebound in life insurance net banking income (€150.3 million, i.e.
+66.1%). With claims in line with the rates on guarantees, personal protection
insurance and payment protection insurance (PPI) delivered satisfactory
profitability: net banking income amounted to €130.1 million, up 12.4%
versus 2012.
In Insurance, after several fiscal years impacted by volatility and negative
trends in the financial environment, coupled with the indirect consequences
of regulatory or tax constraints, 2013 saw the relative stabilization of business
conditions sparking a rebound in inflows.
In life insurance, gross inflows bounced back by 40.4% to €3.3 billion, thanks
in large part to the considerable development of Natixis Life in Luxembourg,
which posted increased premiums of almost 50%. The 36% rise in gross inflows
generated in France compared favorably to the improvement in the French
190
market, limited to 6%. The second half, however, recorded a steep slowdown
in gross premium inflows, as contributing banks rebuilt their on-balance sheet
resources. With business picking up again in 2013, Natixis Assurances saw its
net redemption inflows return to the black in 2013 (+€0.4 billion) versus net
outflows of -€1.2 billion in 2012. Driven by the rebound in net inflows and
the revaluation sparked by the rally on the financial markets, assets under
management gained nearly 4.5% year-on-year.
Personal protection insurance and PPI) continued to expand at a fast pace of
14.1% on the back of PPI’s rapid development (+20.0%): earned premiums
came to €606 million in 2013 (two-thirds of which from payment protection
guarantees). The increase in PPI earned premiums can be attributed to the
limited seniority of the business (gradual distribution starting in 2007) and the
100% takeover of the guarantees distributed by the Banque Populaire network,
previously co-insured (50/50).
Private Banking’s net banking income picked up 13.2% (+€14.5 million versus
2012) to €124.2 million in 2013 on the back of a scope effect linked to the
merger of 1818 Gestion with Natixis Multimanager at end-2012 (resulting in
the creation of VEGA Investment Managers). Excluding this scope effect, net
banking income was up 2.1% thanks to robust momentum in fees on AUM,
while fees on transactions remained historically low. Private Banking recorded
net inflows of €345 million. Assets under management were up €1.6 billion
over the year to €22.4 billion.
Private Equity’s net banking income totaled €34.5 million in 2013. Results were
down sharply in France compared to 2012, impacted by low sell-side volumes
(reduced liquidity on the market) and limited revaluations, while European and
US funds generated solid performances in 2013. At the same time, Asia did
less well than expected (delayed IPOs and negative foreign exchange effects).
Capital under management, including commitments not paid-up in the funds,
amounted to €5,099 million at December 31, 2013, up 38.7% compared to
December 31, 2012. Capital managed for third parties accounted for 83.1% of
capital under management (74.0% in 2012), confirming the higher proportion
of third parties in managed funds. Funds of funds accounted for 59.4% of total
capital under management, private equity 31.1% and venture capital 9.5%.
The Investment Solutions division’s expenses rose by 8.7% (+10.8% at
constant exchange rates). Asset Management’s expenses increased with the
implementation of new projects (mainly stepped-up distribution) and business
development in the United States.
Gross operating income was up 11.2% (13.3% at constant exchange rates) to
€597 million.
Cost of risk slid improved by €11.9 million in line with capital gains on disposals
and reversals of impairments recorded by the Asset Management business after
selling its NAM 2 securitization portfolio.
Net income attributable to equity holders of the parent came to €332 million
at December 31, 2013.
SPECIALIZED FINANCIAL SERVICES (SFS)
Net banking income amounted to €1,272 million in 2013, up 6.7%. Growth
was driven by Specialized Financing, which posted a 13% increase in net
banking income in 2013, while Financial Services revenues were relatively stable
(excluding employee benefits planning, up 6%).
➡
PERCENTAGE OF BUSINESSES IN THE NET BANKING INCOME
OF THE SPECIALIZED FINANCIAL SERVICES DIVISION
1%
Film Industry Financing
10%
20%
Employee Benefits Planning
Consumer Credit
16%
4
Specialized Financing businesses recorded strong growth in net banking income
compared to 2012, driven by a particularly strong increase in Consumer Finance
(+35%) related to the BNP PF scope effect and solid sales momentum on the
networks. Sureties and Financial Guarantees, up 4%, saw a drop in claims and
an increase in financial income.
4
Within Financial Services, the rise in Employee Benefits Planning (+6%) offset
the decline in net banking income from Securities Services (-8% related to the
drop in transaction volumes), while revenues in Payments activities were stable
(good momentum in Electronic Banking in particular, up 6%).
Specialized Financial Services recorded total expenses of €833 million at end2013, up 5% on 2012, with the impact of the scope effect on Consumer Credit
accountable for nearly two-thirds of this increase.
Overall, net income attributable to equity holders of the parent rose 10.6% to
€167 million at December 31, 2013.
23%
Payments
Lease Financing
4
9%
Financial guarantees
and Sureties
11%
10%
Securities Services
Factoring
4.3.6
4
4
Equity interests
The Group’s equity interests (including Nexity, Coface, Natixis Private Equity and Volksbank Romania) are recognized in the Equity interests business line.
Equity interests
Change 2013/2012
2013
2012
€m
%
Net banking income
1,653
1,711
(58)
(3.4)%
Operating expenses
(1,395)
(1,396)
1
(0.1)%
258
315
(57)
(18.1)%
ns
Cost of risk
2
(5)
7
3
(19)
22
ns
233
285
(52)
(18.2)%
(106)
(138)
32
(23.2)%
(82)
(81)
(1)
1.2%
45
66
(21)
(31.8)%
Income before tax
Income tax
OF THE PARENT
Net income for fiscal year 2013 amounted to €45 million, down €21 million,
mainly linked to Natixis Private Equity, which was impacted by major strategic
disposals of fund units and by a substantial drop in positive net revaluations.
Nexity posted revenues of €2,737 million in 2013, down 3.3%:
NEXITY
• Commercial Real Estate: revenues dropped by 12.4%, due to several late
deliveries that did not contribute to revenues until the end of the year;
Nexity’s backlog totaled €3,355 million at the end of 2013, representing
an increase of 8.3% compared to end-2012, comprising 18 months of the
company’s real estate development activity. Orders for commercial real estate
climbed sharply over the year even in a challenging market environment.
Furthermore, in December 2013 Nexity signed a memorandum of understanding
on the acquisition of the Oralia Group. This acquisition will consolidate Nexity’s
No. 2 position in real estate management in France.
4
4
• Residential Real Estate: revenues dipped by 1.2% versus 2012, to
€1,832 million. Weak housing activity in France was largely offset by solid
international business;
• Services and Networks: the 1.5% fall in revenues can be explained by several
factors, including the drop in client financial income, the erosion of the
property administration agency portfolio and weaker transaction activity.
191
4
4
4
2013
2012
1,832
1,855
(1.2)%
Commercial real estate
453
517
(12.4)%
Services and Networks
446
453
(1.5)%
6
6
0.0%
2,737
2,831
(3.3)%
Residential real estate
Other activities
REVENUES
Change 2013/2012
Note: The network sales activity was integrated in the Residential Real Estate division as of January 1, 2013. Previously it belonged to the Services and Networks division. Customer assistance solutions (customer
financing aid, telephone platform, marketing, etc.) were integrated in the Other Activities as of January 1, 2013. Previously they belonged to the Services and Networks division.
Current operating income was stable at €192 million (versus €200 million
in 2012), i.e. a margin rate of 7.0%, representing a slight decline compared to
end-2012 (7.1%). An analysis of the change in business line margin rates shows
a decline in the margins posted by the Residential Real Estate division (9.1%
versus 9.7% in 2012) and Services and Networks division (5.0% versus 5.3%
in 2012) and an improvement in the Commercial Real Estate division’s margin
(8.4% versus 4.9% in 2012).
Nexity’s contribution to the net income of the Equity interests division amounted
to €44 million in 2013, up 10.0% compared to 2012.
CORPORATE DATA SOLUTIONS (FORMERLY COFACE
NON-CORE ACTIVITIES)
2013 was marked by the disposal of Coface Services Belgium in Q1 (impact of
-€2.5 million in net banking income and -€2.4 million in expenses) and Ignios
(formerly Coface Servicios Portugal) at the end of the fiscal year, with no impact
on the financial statements.
Net banking income totaled €101 million in 2013, down 14.3% on 2012 due
to the gradual reduction of factoring activities in 2012 and the disposals carried
out in 2012 (TKB) and 2013 (Services Belgium). On a comparable scope basis,
net banking income was up 1% year-on-year.
COFACE
2013 was in line with 2012 in terms of the deterioration in the global economic
environment, with the euro zone still in recession (-0.4%). Customer business
volumes were on the decline, but credit insurance premiums proved resilient
thanks to solid debtor risk diversification (in terms of geographic regions and
sectors). Overall, credit insurance premiums recorded a limited decline of less
than 1% (on a like-for-like basis) to €1,033 million. The refocusing of the
Factoring business line on the more profitable contracts in Germany and Poland
was finalized in 2013. As a result, despite an annual drop of 11.1%, the business
line posted a 12.4% rise in net banking income between H1 and H2 2012.
Overall, revenues slid only slightly by 1.6% at constant scope and exchange
rates, rebounding by 4.3% in current terms in the fourth quarter, compared
to Q4 2012.
The net combined ratio came out at 83.5%. It should be noted that the combined
ratio before reinsurance was stable at 81.5% excluding moving costs, thanks
to rigorous risk control (the loss ratio improved by 0.5 points to 51.1%) and
nearly stable costs.
Net banking income stood at €706 million in 2013, up 0.2% on 2012, thanks
to management of underwriting profitability. This included the capital gains
generated from the centralized management of financial assets. Net banking
income from Insurance picked up 1.4% in 2013 versus an 11% drop for
Factoring net banking income in Germany and Poland over the same period,
which nevertheless recorded a rise of 8% in Q4 2013 compared to Q4 2012.
192
NATIXIS PRIVATE EQUITY (NPE)
Natixis Private Equity predominantly holds shares of funds and is currently
comparable to a fund of funds. Natixis’ share of assets under management (or
cash at risk) was €290 million at the end of December 2013, down 36.5% on
the end of December 2012, while off-balance sheet commitments were down
51.7% to €90 million.
2013 net banking income was -€19 million versus +€8 million in 2012. This
included an impact of -€6 million associated with the strategic disposal of
fund units. These disposals contributed to the sharp drop in risk-weighted assets
outstandings over the year (-39%).
OTHER EQUITY INTERESTS: VOLKSBANK ROMANIA
2013 net income from other equity interests was -€30.1 million versus
-€22.9 million in 2012. Volksbank România is still struggling, leading to an
impairment of €29.4 million in its equity-method value on Groupe BPCE’s books
in 2013, versus an impairment of €21.5 million in 2012.
4.3.7
Workout portfolio management and Other businesses
Workout portfolio management
and Other businesses
2013
4
Change 2013/2012
2012
€m
%
Net banking income
(603)
(638)
35
(5.5)%
Operating expenses
(485)
(438)
(47)
10.7%
(1,088)
(1,076)
(12)
1.1%
(90)
(406)
316
(77.8)%
0
(1)
1
ns
Cost of risk
Income before tax
39
(3)
42
ns
(16)
(258)
242
(93.8)%
(1,155)
(1,744)
589
(33.8)%
Income tax
291
507
(216)
(42.6)%
166
256
(90)
(35.2)%
(698)
(981)
283
(28.8)%
OF THE PARENT
The division recorded a loss of €698 million in 2013.
Net income attributable to equity holders of the parent from the Workout
portfolio management activity amounted to €16 million, compared with
-€21 million in 2012.
GAPC kept up a strong pace of disposals with €5.4 billion sold in 2013, resulting
in a reduction of assets and risk-weighted assets. It extended its hedging and derisking operations in complex interest rate derivatives and continued to liquidate
its structured fund portfolios. GAPC’s contribution to net income attributable to
equity holders of the parent amounted to €19 million in 2013.
4
4
4
Furthermore, net income attributable to equity holders of the parent generated
by Other businesses was -€714 million in 2013 (versus -€960 million in 2012).
The main impacts in 2013 were:
• revaluation of own debt at fair value through profit or loss in respect of the
bank’s own credit risk of -€123 million;
• asset disposals and liabilities redemptions by Crédit Foncier, resulting in a net
capital loss of €91 million;
4
• Natixis’ restructuring costs, impacting net income by -€36 million;
• permanent impairment of the Banca Carige shares of -€36 million.
4
4
4
193
4
4
4.3.8
Analysis of the Groupe BPCE consolidated balance sheet
Change 2013/2012
Hedging derivatives
12/31/2013
12/31/2012
€bn
%
60.4
53.8
6.6
12.3%
206.1
215.0
(8.9)
(4.1)%
6.6
10.7
(4.1)
(38.1)%
79.4
83.4
(4.0)
(4.8)%
108.0
118.8
(10.8)
(9.1)%
578.4
574.9
3.6
0.6%
5.1
7.9
(2.9)
(36.0)%
11.6
11.0
0.5
4.8%
Current and deferred tax assets and other assets
55.9
59.8
(3.8)
(6.4)%
Fixed assets
7.8
8.0
(0.1)
(1.6)%
Goodwill
4.2
4.2
(0.1)
(1.9)%
1,123.5
1,147.5
(24.0)
(2.1)%
ASSETS
Hedging derivatives
0.0
0.0
0.0
ns
179.8
194.8
(15.0)
(7.7)%
6.2
11.1
(4.9)
(44.4)%
88.8
111.4
(22.6)
(20.3)%
458.2
430.5
27.7
6.4%
Debt securities
214.7
230.5
(15.8)
(6.9)%
1.2
2.0
(0.8)
(38.0)%
1.3%
Current and deferred tax liabilities and other liabilities
49.2
48.6
0.6
51.6
49.4
2.1
4.3%
5.3
4.9
0.3
6.6%
Provisions for risks and other costs
Subordinated debt
10.4
9.9
0.5
5.1%
51.3
50.6
0.8
1.6%
LIABILITIES
At December 31, 2013, the consolidated balance sheet of Groupe BPCE totaled
€1,123.5 billion, down 2.1% compared with December 31, 2012.
CHANGES IN SIGNIFICANT ASSET ITEMS
The main asset items are loans and receivables due from customers (51.5% of
total assets at December 31, 2013) and credit institutions (9.6%), financial assets
at fair value through profit or loss (18.3%), and available-for-sale financial
assets (7.1%). Taken together, these items account for nearly 86.5% of the
Group’s assets.
Financial assets at fair value through profit or loss
These financial assets comprise securities held for trading, including derivatives,
and certain assets and liabilities that the Group has chosen to recognize at fair
value through profit or loss according to the option available under IAS 39.
The €8.9 billion decrease in this line item over the period breaks down as
follows:
• a decrease in the fixed income securities portfolio (-€12.0 billion), due in
large part to government securities (-€8.3 billion) and bonds (-€3.5 billion);
194
6.8
3.8
3.0
79.7%
1,123.5
1,147.5
(24.0)
(2.1)%
• an increase in the variable-income securities portfolio (+€8.5 billion);
• a decrease in repurchase agreement transactions (-€6.5 billion).
Available-for-sale financial assets
Available-for-sale financial assets comprise bonds, equities and treasury bills
and equivalent securities that do not fall into any other asset category. This
portfolio totaled €79.4 billion at December 31, 2013 versus €83.4 billion at
December 31, 2012. The €4.0 billion decline was attributable to the decrease
in fixed income securities (-€4.5 billion).
and credit institutions
This item comprises non-derivative financial assets with fixed or determinable
payments that are not quoted on an active market, adjusted for impairment
where applicable. These assets decreased by 1.0% over the period and amounted
to €686.5 billion at December 31, 2013.
Net outstanding loans and receivables due from customers totaled
€578.4 billion, an increase of €3.6 billion over the period (+0.6%) resulting
mainly from strong activity in the Group’s businesses, in particular in Commercial
Banking and Insurance, with a €5.18 billion increase in equipment loans and
a €16.9 billion increase in home loan outstandings.
This improvement offset the decline in securities purchased under resale
agreements (-€7.3 billion) and securities classified as loans and receivables
(-€10.3 billion).
Non-performing loans accounted for 4.0% of total loans to customers
at December 31, 2013, up slightly in relation to December 31, 2012 while
recognized impairment losses (including collective impairment) amounted to
€12.3 billion.
Net outstanding loans and receivables due from credit institutions on demand
totaled €108.0 billion, down €10.8 billion over the year (-9.1%). This decrease
includes the drop in term accounts and loans (-€6.9 billion), repurchase
agreement transactions (-€0.8 billion) and securities classified as loans and
receivables (-€2.1 billion). Non-performing loan outstandings and recognized
impairment losses were down over the period.
Amounts due to customers and credit institutions
This item totaled €547.0 billion at December 31, 2013, up €5.1 billion in
relation to December 31, 2012.
Amounts due to customers stood at €458.2 billion, up €27.7 billion over the
year. This increase stemmed mainly from:
• an increase in amounts held in regulated savings accounts (+€4.2 billion),
essentially in Livret A and Livret B passbook savings accounts and the home
savings plan;
• a €3.7 billion decline in repurchase agreement transactions.
Amounts due to credit institutions stood at €88.8 billion, down €22.6 billion
over the period (-20.3%). This change includes the sharp decline in term deposits
and loans (-€17.7 billion), demand deposits (-€2.2 billion), and securities sold
under repurchase agreements (-€2.6 billion).
Debt securities
At December 31, 2013, nearly 88.4% of all balance sheet liabilities were
comprised of the following:
Debt securities amounted to €214.7 billion at December 31, 2013, down
€15.8 billion over the period. This trend can be attributed to the decline across
all segments, and particularly in bonds (-€4.1 billion) and interbank securities
and negotiable debt securities (-€11.4 billion).
• financial liabilities at fair value through profit or loss (16.0%);
• equity attributable to equity holders of the parent (4.6%).
Financial liabilities at fair value through profit or loss
On the liabilities side, this portfolio consists of debt instruments carried at fair
value at the reporting date with an offsetting entry in the income statement.
At December 31, 2013, these liabilities amounted to €179.8 billion, down
€15.0 billion (-7.7%) over the period, mainly due to the drop in securities sold
under repurchase agreements (-€9.7 billion) and liabilities held for trading
(-€4.2 billion).
4
• an increase in current accounts with credit balances (+€11.9 billion);
• an increase in demand accounts and term accounts (+€15.1 billion);
CHANGES IN SIGNIFICANT LIABILITY AND EQUITY
ITEMS
• amounts due to customers (40.8%) and credit institutions (7.9%);
• debt securities (19.1%);
4
4
4
Shareholders’ equity
Equity attributable to equity holders of the parent totaled €51.3 billion at
December 31, 2013 compared to €50.6 billion at December 31, 2012. This
increase was mainly due to:
4
• the incorporation of income for the period: +€2.7 billion;
• the change in capital: +€1.9 billion, including €2.2 billion from the capital
increase carried out by the Banque Populaire banks and Caisses d’Epargne;
• the buyback of the cooperative investment certificates (CCIs) by the Banque
Populaire banks and Caisses d’Epargne: -€3.3 billion.
4
4
4
195
4
4
BPCE SA group financial data
4.4 BPCE SA group financial data
4.4.1
BPCE SA group’s net income is calculated by restating the contribution of non-consolidated entities and adding back (only in 2012) the share of income of the
Banque Populaire banks and the Caisses d’Epargne obtained through the cooperative investment certificates (CCIs) held by Natixis.
In 2013, the transition from Groupe BPCE’s net income to BPCE SA group’s net income broke down as follows:
2013
GROUPE BPCE NET INCOME
2,669
Entities not consolidated or consolidated under a different method (1)
(2,224)
Other items(2)
1,110
BPCE SA GROUP NET INCOME
(1)
(2)
1,555
Including the Banque Populaire banks, Caisses d’Epargne and their local subsidiaries and local savings companies, Nexity.
Including the interest on deeply subordinated notes vis-à-vis the networks and the impacts of the buyback of the CCIs.
The Group posted net income of €1.6 billion, predominantly including the impacts of the buyback of the CCIs held by Natixis by the Banque Populaire banks and
Caisses d’Epargne.
Commercial Banking
and Insurance*
Wholesale Banking,
and SFS
Workout portfolio
management and
Other businesses
Equity interests
BPCE SA group
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Net banking income
1,867
1,844
6,398
6,093
788
830
(628)
(683)
8,425
8,084
Operating expenses
(1,237)
(1,244)
(4,152)
(4,037)
(715)
(714)
(492)
(452)
(6,596)
(6,447)
630
600
2,246
2,056
73
116
(1,120)
(1,135)
1,829
1,637
66.3%
67.5%
64.9%
66.3%
90.7%
86.0%
ns
ns
78.3%
79.8%
(357)
(252)
(380)
(341)
2
(5)
(58)
(438)
(793)
(1,036)
177
632
17
14
4
(18)
(1)
3
197
631
14
4
1
1
(30)
(4)
1,487
(4)
1,472
(3)
0
0
0
0
0
0
(8)
(25)
(8)
(25)
Cost/income ratio
Cost of risk
Income before tax
464
984
1,884
1,730
49
89
300
(1,599)
2,697
1,204
(115)
(147)
(606)
(540)
(36)
(41)
261
506
(496)
(222)
(40)
(170)
(364)
(361)
(12)
(20)
(230)
228
(646)
(323)
NET INCOME ATTRIBUTABLE TO
EQUITY HOLDERS OF THE PARENT
309
667
914
829
1
28
331
(865)
1,555
659
Income tax
*
Excluding the Banque Populaire banks, Caisse d’Epargne and their local subsidiaries and local savings companies.
The performances of Commercial Banking and Insurance were mainly impacted
by the buyback of the CCIs held by Natixis, generating income of €334 million in
2012. Restated for this item, the division saw a decline of €24 million compared
to 2012, adversely affected by a poorer performance from Real Estate Financing
Services that was not offset by the strong showings from International Insurance
and Other Networks.
The Wholesale Banking, Investment Solutions and SFS division posted net
income of €914 million, up 10% on 2012, driven by dynamic business across
all business lines.
196
Decreased net income in the Equity interests division were linked to a value
adjustment on Volksbank Romania and by the lesser contribution from Natixis’
activities (particularly Natixis Private Equity).
Net income from Workout portfolio management and Other businesses can be
attributed to the impact of the revaluation of debt at fair value through profit
or loss in respect of own credit risk for -€123 million; the impact of disposals
and redemptions of covered bonds by the Crédit Foncier Group for -€91 million;
the permanent impairment of the Banca Carige shares for -€36 million; Natixis’
restructuring costs for -€36 million and the capital gain on the disposal of the
CCIs for €1 billion.
4.4.2
Analysis of the consolidated balance sheet of BPCE SA group
4
Change 2013/2012
Hedging derivatives
12/31/2013
12/31/2012
€bn
%
51.7
46.6
5.1
11.0%
211.3
224.6
(13.3)
(5.9)%
6.4
10.5
(4.0)
(38.5)%
44.2
46.5
(2.3)
(4.9)%
134.1
140.6
(6.4)
(4.6)%
210.1
228.8
(18.6)
(8.1)%
4.1
6.3
(2.2)
(34.6)%
4.8
5.2
(0.4)
(8.6)%
43.6
60.5
(16.9)
(28.0)%
Fixed assets
3.3
3.4
(0.1)
(3.4)%
Goodwill
2.8
2.9
(0.1)
(3.1)%
716.5
775.7
(59.2)
(7.6)%
0.0
0.0
0.0
ns
180.8
198.3
(17.5)
(8.8)%
5.4
9.9
(4.5)
(45.5)%
123.8
153.1
(29.4)
(19.2)%
10.8%
Current and deferred tax assets and other assets
ASSETS
Hedging derivatives
79.8
72.0
7.8
203.9
216.6
(12.7)
(5.9)%
1.0
1.6
(0.6)
(38.5)%
Current and deferred tax liabilities and other liabilities
36.0
37.0
(1.0)
(2.8)%
45.7
43.8
1.9
4.3%
6.7%
Debt securities
Provisions for risks and other costs
2.4
2.2
0.1
Subordinated debt
10.7
10.0
0.8
7.9%
21.2
24.7
(3.4)
(13.9)%
LIABILITIES
At December 31, 2013, the consolidated balance sheet of BPCE SA group totaled
€716.5 billion, down 7.6% compared with December 31, 2012.
This was due in large part to financial assets and liabilities at fair value through
profit or loss (-€13.3 billion and -€17.5 billion, respectively) compared to
December 31, 2012; loans and receivables due from credit institutions and
from customers (-€6.4 billion and -€18.6 billion, respectively).
4
5.8
6.4
(0.6)
(10.1)%
716.5
775.7
(59.2)
(7.6)%
4
4
4
4
Furthermore, equity attributable to equity holders of the parent totaled
€21.2 billion at December 31, 2013 compared to €24.7 billion at December
31, 2012. The decrease of €3.4 million was due primarily to:
• the income for the period: +€1.6 billion;
• the capital reduction: -€2.0 billion from the buyback of CCIs by the Banque
Populaire banks and Caisses d’Epargne;
• the redemption of perpetual deeply subordinated notes as part of the
simplification of Groupe BPCE: -€2.0 billion.
4
4
197
4
4
Investments
4.5 Investments
4.5.1
In 2013
BPCE made no material investments (i.e. investments of more than €1 billion requiring the approval of the qualified majority of the Supervisory Board) during
fiscal year 2013.
4.5.2
In 2012
BPCE made no material investments (i.e. investments of more than €1 billion requiring the approval of the qualified majority of the Supervisory Board) during
fiscal year 2012.
4.5.3
In 2011
In 2011, BPCE invested €1.5 billion in Crédit Foncier’s capital increase.
4.6 Post-balance sheet events
In accordance with its strategy aimed at developing the bancassurance model,
the Group plans to transfer its equity investment in BPCE Assurances to Natixis,
via Natixis Assurances, by the end of Q1 2014.
and casualty insurance activities with Caisses d’Epargne customers and health
insurance activities with customers of the Caisses d’Epargne and Banque
Populaire banks.
This deal was approved by the BPCE Supervisory Board and the Natixis Board of
Directors, which both met on February 19, 2014. BPCE Assurances (60%-owned
by Groupe BPCE), in partnership with MACIF and MAIF, is developing property
This transfer to Natixis will be carried out while maintaining the capital
agreements and existing cooperation with MAIF and MACIF.
198
Outlook for Groupe BPCE
4.7 Outlook for Groupe BPCE
FORECASTS FOR 2014: MODERATE REBOUND IN THE
FRENCH ECONOMY
In 2014, a normalization of economic conditions can be hoped for in developed
countries, thanks to the strengthening of the European Union, mainly via the
Banking Union, and provided the US economy continues to improve. At around
just 3.2%, however, global growth could suffer from the furthering of the
deleveraging process in the private and public sectors, the slowdown in emerging
countries (particularly in China due to the dilemma between financial stability
and economic stimulation) and the varying economic conditions in European
countries.
By steering clear of deflation, drawing strength from increased European
cohesion and benefiting from improved domestic activity in Germany, and
possible in Italy and Spain as well, French GDP is expected to grow by about
0.8%. There are several obstacles explaining this modest rate of recovery: the
need to continue staggering the adjustment of public finances by starting to
cut public spending; the vulnerability of corporate financial positions; and the
observable loss of competitiveness, excluding prices, reflected in the structural
foreign trade deficit. Consequently, business investment, which is the only
catalyst for a true recovery, is only expected to make a slow comeback despite
the introduction of the Employment Competitiveness Tax Credit (CICE) and the
aging of capital. Consumer purchasing capital may continue to suffer from
increased tax pressure and the persistently poor job market, at least until mid2014. This would automatically lead to a reduction in the savings rate, without
necessarily restimulating consumption. Inflation is expected to increase slightly
by 1.2%, mainly due to the impact of the VAT hike on January 1, 2014.
In addition to the turning point in the Fed’s quantitative easing with a less
accommodative monetary policy, monetary policies on both sides of the Atlantic
should continue to focus on promoting the management of public accounts
under sustainably low inflation conditions. Furthermore, the ECB is expected
to avoid the risk of a deflationary spiral, even if it has to use other instruments
that would alter the size and structure of its balance sheet, in order to stimulate
4
4
the currently stagnant flow of loans to corporates and to combat the rise in real
interest rates, particularly in peripheral countries. The bond market could prove
to be a source of volatility, however, in the event of a stronger-than-expected
recovery, especially in the United States, or if growth prospects in China should
fall. The economic trend reversal seen in developed countries, coupled with the
gradual termination of the Fed’s bond buyback program, should keep pushing
up long rates.
As from November 2014, the ECB will be the direct supervisor of the 130 biggest
European banks, representing some 85% of the Monetary Union’s banking
assets. Before assuming this new mantle, the ECB will assess the balance sheet
quality of the banks under its supervision. This will be a two-part assessment:
a review of the quality of balance sheet assets (Asset Quality Review or AQR)
and a new round of stress tests carried out by the EBA.
OUTLOOK FOR GROUPE BPCE
2013 saw the completion of the 2010-2013 “Together” plan for the recovery
and construction of the Group. Groupe BPCE has become a major cooperative
banking group, fully dedicated to its customers in the banking and insurance
activities. The Group’s structure has been simplified and consolidated, Natixis’
turnaround has proven to be a success, and the Group’s financial structure has
been considerably enhanced and its risk profile reduced.
In November 2013, Groupe BPCE presented its new strategic plan for 20142017: “Growing differently”, focused on development and transformation,
centered on the goal of constantly striving to better meet the expectations
and needs of our customers, while affirming the Group’s cooperative role. The
objectives of this new strategic plan, which is being rolled out under tense
macroeconomic conditions and extensive regulatory changes, are to develop a
new “physical” and “digital” customer relationship model, change the Group’s
refinancing models, step up its international development, and expand the global
business lines and differentiation strategy, drawing on the Group’s cooperative
structure.
4
4
4
4
4
4
199
4
200
5
FINANCIAL REPORT
5.1 IFRS CONSOLIDATED FINANCIAL
STATEMENTS OF GROUPE BPCE AS
AT DECEMBER 31, 2013
5.4 STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS
366
5.5 BPCE PARENT COMPANY FINANCIAL
STATEMENTS
368
202
5.1.1
Consolidated balance sheet
202
5.1.2
Consolidated income statement
204
5.1.3
Statement of net income and gains and losses
recognized directly in equity
205
5.5.1
BPCE management report
206
5.5.2
Balance sheet and off-balance sheet
374
Income statement
376
Notes to the parent company annual financial
statements
377
5.1.4
Statement of changes in equity
5.1.5
Consolidated cash flow statement
208
5.5.3
5.1.6
Notes to the financial statements of Groupe BPCE
209
5.5.4
5.2 STATUTORY AUDITORS’ REPORT ON THE
CONSOLIDATED FINANCIAL STATEMENTS
287
5.3 IFRS CONSOLIDATED FINANCIAL
STATEMENTS OF BPCE SA GROUP AS
AT DECEMBER 31, 2013
290
5.3.1
290
5.3.2
292
5.3.3
Statement of net income and gains and losses
recognized directly in equity
293
5.3.4
294
5.3.5
296
5.3.6
Notes to the financial statements of BPCE SA group 297
5.6 STATUTORY AUDITORS’ REPORT
ON THE FINANCIAL STATEMENTS
368
415
201
5
FINANCIAL REPORT
IFRS Consolidated Financial Statements of Groupe BPCE as at December 31, 2013
of Groupe BPCE as at December 31, 2013
5.1.1
ASSETS
Financial assets at fair value through profit and loss
Notes
12/31/2013
5.1
60,410
12/31/2012
53,792
5.2.1
206,072
214,991
Hedging derivatives
5.3
6,643
10,733
5.4
79,374
83,409
5.6.1
108,038
118,795
5.6.2
578,419
574,856
5,060
7,911
11,567
11,042
5.7
Current tax assets
Deferred tax assets
873
957
5.9
5,749
5,229
5.10
46,675
51,145
5.11
2,629
2,442
Investment property
5.12
2,022
1,829
5.13
4,539
4,783
Intangible assets
5.13
1,282
1,358
Goodwill
5.14
4,168
4,249
1,123,520
1,147,521
TOTAL ASSETS
The information provided at 12/31/2012 has not been restated for the impact of IAS 19 as revised. The effects of this standard are explained in Note 2.3.
202
FINANCIAL REPORT
5
5
LIABILITIES
Hedging derivatives
Notes
12/31/2013
12/31/2012
5.2.2
179,832
194,793
5.3
6,185
11,116
5.15.1
88,814
111,399
5.15.2
458,189
430,519
5.16
214,654
230,501
1,238
1,994
234
248
Debt securities
Current tax liabilities
Deferred tax liabilities
5.9
310
364
5.17
48,693
47,997
5.18
51,573
49,432
Provisions
5.19
5,251
4,927
Subordinated debt
5.20
10,375
9,875
58,172
54,356
51,339
50,554
20,011
27,871
Retained earnings
28,419
20,863
240
(327)
2,669
2,147
6,833
3,802
1,123,520
1,147,521
TOTAL LIABILITIES AND EQUITY
5
5
5
5
The information provided at 12/31/2012 has not been restated for the impact of IAS 19 as revised. The effects of this standard are explained in Note 2.3.
5
5
203
5
5
FINANCIAL REPORT
5.1.2
Notes
Fiscal year 2013
Fiscal year 2012
Interest and similar income
6.1
27,960
30,695
Interest and similar expenses
6.1
(16,416)
(19,700)
Commission income
6.2
9,654
9,012
Commission expenses
6.2
(1,935)
(1,699)
Net gains or losses on financial instruments at fair value through profit or loss
6.3
1,735
2,321
Net gains or losses on available-for-sale financial assets
6.4
489
(101)
Income from other activities
6.5
10,200
10,187
Expenses from other activities
6.5
Net banking income
Operating expenses
6.6
Depreciation, amortization and impairment for property, plant and equipment and intangible assets
Cost of risk
6.7
Operating income
Share in net income of associates
6.8
(8,861)
(8,769)
22,826
21,946
(15,209)
(15,020)
(926)
(915)
6,691
6,011
(2,042)
(2,199)
4,649
3,812
220
186
Gains or losses on other assets
6.9
36
3
6.10
(16)
(258)
4,889
3,743
6.11
(1,899)
(1,366)
2,990
2,377
Income before tax
Income tax
Net income
NET INCOME ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT
(321)
(230)
2,669
2,147
The information provided for fiscal year 2012 has not been restated for the impact of IAS 19 as revised. The effects of this standard are explained in Note 2.3.
204
FINANCIAL REPORT
5.1.3
Statement of net income and gains and losses recognized directly
in equity
Net income
Revaluation differences on defined-benefit pension schemes
5
Fiscal year 2013
Fiscal year 2012
2,990
2,377
161
0
Tax impact of revaluation differences on defined-benefit pension schemes
(48)
0
Items that cannot be reclassified in income
113
0
Foreign exchange rate adjustments
(311)
(103)
Change in the value of available-for-sale financial assets
793
2,026
Change in the value of hedging derivatives
498
(442)
Income taxes
Items that can be reclassified in income
(319)
(286)
661
1,195
Share of gains and losses recognized directly in the equity of associates
(6)
162
Gains and losses recognized directly in equity (after income tax)
768
1,357
3,758
3,734
3,397
3,475
361
259
NET INCOME AND GAINS AND LOSSES RECOGNIZED DIRECTLY IN EQUITY
Attributable to equity holders of the parent
5
5
5
5
5
5
5
205
5
5
FINANCIAL REPORT
5.1.4
SHAREHOLDERS’ EQUITY AT JANUARY 1, 2012
Share capital(1)
Additional paid-in
capital(1)
Perpetual deeply
subordinated notes
Retained earnings
15,982
10,369
3,532
16,908
Dividend payments
Capital increase
(490)
1,520
1,091
Buyback of deeply subordinated notes
Interest on deeply subordinated notes
(232)
Impact of acquisitions and disposals on non-controlling interests
(minority interests)
26
Income
Other changes
SHAREHOLDERS’ EQUITY AT DECEMBER 31, 2012
28
17,502
10,369
3,532
Allocation of net income for 2012
2,147
(13)
Impact of change in IAS 19 as revised
SHAREHOLDERS’ EQUITY AT JANUARY 1, 2013
17,502
10,369
3,532
Dividend payments
Capital increase(2)
Buyback of the BP and CE CICs(3)
17,331
19,465
(481)
2,189
(3,501)
(278)
(6,548)
6,708
Buyback of deeply subordinated notes
Interest on deeply subordinated notes
(224)
Impact of acquisitions and disposals on non-controlling interests
(minority interests)
(62)
Income
Other changes(4)
SHAREHOLDERS’ EQUITY AT DECEMBER 31, 2013
(1)
(2)
(3)
(4)
(240)
16,190
3,821
3,532
24,888
At December 31, 2013, “Share capital” and “Additional paid-in capital” comprised the capital of the Banque Populaire banks and the Caisses d’Epargne in respective amounts of €7.2 billion and €9 billion
(€8.5 billion and €9 billion at December 31, 2012) and additional paid-in capital of €0.9 billion and €2.9 billion, respectively (€4.4 billion and €5.9 billion at December 31, 2013).
Since January 1, 2013, the Banque Populaire banks and the Caisses d’Epargne carried out capital increases of €2.2 billion (€1.2 billion during 2012), generating an increase in “Share capital”; treasury shares
were eliminated from “Retained earnings” for a total of €451 million, i.e. -€250 million since January 1, 2013. The shareholders’ equity of the local savings companies is also included in “retained earnings” after
the elimination of the Caisses d’Epargne cooperative shares held. The issuance of cooperative shares since January 1, 2013 resulted in an increase in retained earnings of €1.2 billion.
On August 6, 2013, the Caisses d’Epargne and the Banque Populaire banks bought back the cooperative investment certificates (CICs) held by Natixis. This intra-group transaction resulted in the reclassification
of €3.3 billion from equity attributable to equity holders of the parent to non-controlling interests (minority interests) (see Note 1.3 on significant events).
Other changes include in particular the remuneration of perpetual deeply subordinated notes subscribed for by minority shareholders.
206
FINANCIAL REPORT
5
Change in fair value of financial instruments
Foreign exchange
rate adjustments
Revaluation
difference on
employee benefits
102
Available-for-sale
financial assets Hedging derivatives
(1,185)
(88)
1,547
Net income
attributable to
equity holders of
the parent
(572)
(131)
2,147
14
362
5
(703)
2,147
Total equity
attributable to
equity holders of
the parent
Equity attributable
to non-controlling
interests (minority
interests)
Total consolidated
equity
45,136
3,738
48,874
(490)
(119)
(609)
2,611
(83)
2,528
(13)
(13)
(232)
(53)
(285)
26
2
28
1,328
29
1,357
2,147
230
2,377
28
71
99
50,554
3,802
54,356
5
5
(2,147)
(162)
14
(162)
362
(703)
(175)
(36)
(211)
50,379
3,766
54,145
(481)
(692)
(1,173)
1,911
10
1,921
(3,341)
3,341
(189)
(224)
(234)
100
569
293
2,669
(220)
(62)
931
(410)
2,669
(189)
5
(224)
(62)
62
728
40
768
2,669
321
2,990
(240)
174
(66)
51,339
6,833
58,172
5
5
5
207
5
5
FINANCIAL REPORT
5.1.5
Income before tax
Net depreciation and amortization of property, plant and equipment, and intangible assets
Goodwill impairment
Net charge to provisions and provisions for impairment (including insurance companies’ technical reserves)
Net cash flows generated by investing activities
Income/expenses from financing activities
Other changes
Total non-monetary items included in net income before tax
Net increase or decrease arising from transactions with credit institutions
Net increase or decrease arising from transactions with customers
Net increase or decrease arising from transactions involving financial assets and liabilities
Net increase or decrease arising from transactions involving non-financial assets and liabilities
Income taxes paid
Net increase/(decrease) in assets and liabilities resulting from operating activities
Net cash flows generated by operating activities (A)
Net increase or decrease related to financial assets and equity interests
Net increase or decrease related to investment property
Net increase or decrease related to property, plant and equipment, and intangible assets
Net cash flows generated by investing activities (B)
Net increase (decrease) arising from transactions with shareholders(1)
Other increases or decreases generated by financing activities
Net cash flows generated by financing activities (C)
Impact of changes in exchange rates (D)
TOTAL NET CASH FLOWS (A+B+C+D)
Cash and net balance of accounts with central banks
Cash and net balance of accounts with central banks (assets)
Due to central banks (liabilities)
Net balance of demand transactions with credit institutions
Current accounts with overdrafts(2)
Demand accounts and loans
Demand accounts in credit
Demand repurchase agreements
Opening cash and cash equivalents
Cash and net balance of accounts with central banks
Cash and net balance of accounts with central banks (assets)
Due to central banks (liabilities)
Net balance of demand transactions with credit institutions
Current accounts with overdrafts(2)
Demand accounts and loans
Demand accounts in credit
Demand repurchase agreements
Closing cash and cash equivalents
NET CHANGE IN CASH AND CASH EQUIVALENTS
(1)
(2)
Fiscal year 2013
Fiscal year 2012
4,889
1,021
16
2,970
(129)
496
0
2,518
6,892
(9,713)
20,466
(13,022)
3,475
(2,514)
(1,308)
10,473
(78)
(100)
(590)
(768)
3,743
1,005
258
1,777
(319)
(569)
421
4,839
7,412
961
38,670
(11,400)
(11,812)
(1,354)
15,065
26,220
(2,341)
307
(861)
(2,895)
559
661
1,220
(1,371)
9,554
1,906
(2,598)
(692)
(156)
22,477
53,792
0
15,995
(15)
7,165
167
(8,730)
(4,444)
47,950
5,072
14,770
(9,162)
(1,187)
25,473
60,411
53,792
6,383
176
(5,986)
(3,480)
57,504
9,554
7,165
167
(8,730)
(4,444)
47,950
22,477
Cash flows from or to the shareholders include:
• the redemption of deeply subordinated notes recorded in equity for -€189 million (-€13 million at December 31, 2012);
• net changes in equity of the Banque Populaire banks and Caisses d’Epargne amounting to +€1,921 million (+€2,528 million at December 31, 2012);
• dividend payouts, amounting to -€1,173 million (-€609 million at December 31, 2012).
Current accounts with overdrafts do not include Livret A and LDD passbook savings account funds centralized with Caisse des Dépôts et Consignations.
208
FINANCIAL REPORT
5.1.6
Note 1
Note 2
Note 3
Note 4
Notes to the financial statements of Groupe BPCE
General background
211
Note 5
5
Notes to the balance sheet
234
1.1
Groupe BPCE
211
5.1
234
1.2
Guarantee mechanism
212
5.2
Financial assets and liabilities at fair
value through profit or loss
234
5.3
Hedging derivatives
237
5.4
238
5.5
Fair value of financial assets and liabilities
239
5.6
Loans and receivables
242
1.3
Significant events
212
1.4
Post-balance sheet events
212
Applicable accounting standards
and comparability
213
5.7
Held-to-maturity financial assets
244
2.1
213
5.8
Reclassification of financial assets
244
2.2
Standards
213
5.9
Deferred tax assets and liabilities
245
2.3
First application of IAS 19 as revised
214
5.10 Accrued income and other assets
245
2.4
Use of estimates
215
5.11 Investments in associates
246
2.5
Presentation of the consolidated
financial statements and balance sheet date 215
Consolidation principles and methods
216
3.1
Consolidating entity
3.2
Scope of consolidation and
consolidation methods
216
3.3
Special cases
216
3.4
Consolidation rules
217
Accounting principles
and measurement methods
216
5.12 Investment property
246
5.13 Property, plant and equipment and
intangible assets
246
5.14 Goodwill
247
5.15 Amounts due to credit institutions
and customers
249
5.16 Debt securities
249
5.17 Accrued expenses and other liabilities
250
5.18 Technical reserves of insurance companies
250
5.19 Provisions
251
5.20 Subordinated debt
252
218
5.21 Ordinary shares and equity instruments
issued
252
5.22 Change in gains and losses recognized
directly in equity
253
4.1
Financial assets and liabilities
218
4.2
Investment property
230
4.3
and intangible assets
230
4.4
Assets held for sale and associated liabilities 230
4.5
Provisions
230
4.6
Interest income and expenses
231
4.7
Commissions on services
231
4.8
Foreign currency transactions
231
4.9
Finance leases and similar transactions
Note 6
Notes to the income statement
Interest and similar income and expense
6.2
Fee and commission income and expenses 254
6.3
Net gains or losses on financial
instruments at fair value through profit or loss 255
6.4
Net gains or losses on available-for-sale
financial assets
5
5
5
254
5
256
4.10 Employee benefits
232
6.5
Income and expenses from other activities
256
4.11 Share-based payments
233
6.6
Operating expenses
257
4.12 Deferred tax assets and liabilities
233
6.7
Cost of risk
257
4.13 Insurance businesses
233
6.8
258
4.14 Real estate businesses
233
6.9
258
6.10 Change in the value of goodwill
258
6.11 Income tax
259
5
254
6.1
231
5
209
5
5
5
FINANCIAL REPORT
Note 7
Note 8
Note 9
Risk exposure and regulatory ratios
7.1
Capital management and regulatory
capital requirements
259
7.2
Credit risk and counterparty risk
260
7.3
Market risk
262
7.4
Interest rate risk and exchange rate risk
262
7.5
Liquidity risk
262
Employee benefits
8.1
Payroll costs
263
Employee benefits
263
8.3
Share-based payments
267
Segment reporting
Segment analysis of the consolidated
income statement
270
9.2
Segment analysis of the consolidated
balance sheet
271
Segment reporting by geographic region
271
10.1 Financing and guarantee commitments
Note 11
Related-party transactions
210
Note 15
272
273
273
11.2 Transactions with company directors
273
Note 14
Transferred financial assets, other
financial assets pledged as collateral
and assets received as collateral that
can be sold or repledged
274
12.1 Transferred financial assets not fully
derecognized and other financial assets
pledged as collateral
274
12.2 Fully derecognized financial assets
for which the Group retains an ongoing
commitment
274
Offsetting financial assets and
financial liabilities
275
13.1 Financial assets
276
13.2 Financial liabilities
276
Fair value of financial assets
and liabilities at amortized cost
277
Sovereign risk
277
272
11.1 Transactions with consolidated companies
11.3 Relations with social housing companies
Note 13
269
9.1
Commitments
Note 12
263
8.2
9.3
Note 10
259
273
Note 16
Exposure related to banking and trading activities
278
Exposure related to insurance activities
278
Consolidation scope
279
16.1 Changes in scope of consolidation
during fiscal year 2013
279
16.2 Securitization transactions
279
16.3 Gauranteed UCITS
279
16.4 Scope of consolidation
at December 31, 2013
280
FINANCIAL REPORT
Note 1
1.1
General background
5
5
GROUPE BPCE
Groupe BPCE comprises the Banque Populaire network, the Caisse d’Epargne network, the BPCE central institution and its subsidiaries.
Groupe BPCE
5
100%
100%
19 Banque Populaire
Banks
$PNNFSDJBM#BOLJOH
*OTVSBODFTVCTJEJBSJFT
(1)
17 Caisses d'Epargne
50%
50%
BPCE
Central Institution
71.96% (3)
t$SÏEJU'PODJFSEF'SBODF
t#BORVF1BMBUJOF
t#1$&*OUFSOBUJPOBM
FU0VUSFNFS
t#1$EATTuSBODFT) (2)
NATIXIS
5
&RVJUZ*OUFSFTUT
t/FYJUZ
()
t$PGBDF
5
28.04%
'SFFnPBU
(1)
Via Local Savings Companies.
With the equity interest held by the Caisses d’Epargne in BPCE Assurances,
the Group owns a 60% stake in the company.
(3)
Percentage of voting rights held by BPCE.
(4)
Via CE Holding Promotion.
(2)
Wholesale Banking, Investment Solutions
and Specialized Financial Services
The two banking networks: the Banque Populaire banks
and the Caisses d’Epargne
Groupe BPCE is a cooperative group whose shareholders own the two local
retail banking networks, the 19 Banque Populaire banks and the 17 Caisses
d’Epargne. Each of the two networks owns an equal share in BPCE, the Group’s
central institution.
The Banque Populaire network consists of the Banque Populaire banks and
the mutual guarantee companies granting them the exclusive benefit of their
guarantees.
The Caisse d’Epargne network consists of the Caisses d’Epargne and the local
savings companies.
The Banque Populaire banks are wholly-owned by their cooperative shareholders.
The capital of the Caisses d’Epargne is wholly-owned by the local savings
companies (LSCs). Local savings companies are cooperative structures with
open-ended share capital owned by cooperative shareholders. The LSCs are
tasked with coordinating the cooperative shareholder base, in line with the
general objectives defined by the individual Caisse d’Epargne with which they
are affiliated, and cannot perform banking transactions.
5
BPCE
BPCE, a central institution as defined by French banking law and a credit
institution licensed to operate as a bank, was created pursuant to law No.
2009-715 of June 18, 2009. BPCE was incorporated as a French limited liability
company governed by a Management Board and a Supervisory Board, whose
share capital is owned jointly and equally by the 17 Caisses d’Epargne and the
19 Banque Populaire banks.
5
BPCE’s corporate mission embodies the continuity of the cooperative principles
underlying the Banque Populaire banks and the Caisses d’Epargne.
Specifically, BPCE represents the interests of its various affiliates in dealings with
the supervisory authorities, defines the range of products and services offered by
them, organizes depositor protection, approves key appointments of company
directors and oversees the smooth functioning of the Group’s institutions.
As a holding company, BPCE is the head entity of the Group and holds the joint
ventures between the two networks in retail banking, corporate banking and
financial services, and their production units. It defines the Group’s corporate
strategy and growth and expansion policies.
211
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FINANCIAL REPORT
BPCE’s main subsidiaries are organized around three major segments:
• Natixis, a 71.96%-owned listed company that combines Wholesale Banking,
Investment Solutions and Specialized Financial Services;
• Commercial Banking and Insurance (including Crédit Foncier, Banque Palatine
and BPCE International et Outre-mer);
• Subsidiaries and equity interests.
In respect of the Group’s financial functions, BPCE is responsible, in particular,
for the centralized management of surplus funds, for the execution of any
financial transactions required to develop and fund the Group, and for choosing
the most appropriate counterparty for these transactions in the broader interests
of the Group. BPCE also provides banking services to the other Group entities.
1.2
GUARANTEE MECHANISM
Pursuant to Article L. 512-107-6 of the French Monetary and Financial Code,
the guarantee and solidarity mechanism was set up to ensure the liquidity and
capital adequacy of the Group and its associates, and to organize financial
support within the Banque Populaire and Caisse d’Epargne networks.
BPCE is tasked with taking all measures necessary to guarantee the capital
adequacy of the Group and each of the networks, including implementing the
appropriate internal financing mechanisms within the Group and establishing
a Mutual Guarantee Fund common to both networks, for which it determines
the operating rules, the conditions for the provision of financial support to the
existing funds of the two networks, as well as the contributions of associates
to the fund’s initial capital endowment and reconstitution.
BPCE manages the Banque Populaire Network Fund and the Caisse d’Epargne
Network Fund and has put in place the Mutual Guarantee Fund.
The Banque Populaire Network Fund was formed by a deposit made by the
Banks of €450 million that was booked by BPCE in the form of a 10-year term
account which is indefinitely renewable.
The deposit made to the Caisses d’Epargne Network Fund by the Caisses of
€450 million was booked by BPCE in the form of a 10-year term account which
is indefinitely renewable.
The Mutual Guarantee Fund was formed by deposits made by the Banque
Populaire banks and the Caisses d’Epargne. These deposits were booked by BPCE
in the form of 10-year term accounts which are indefinitely renewable. The
amount of the deposits by network was €172 million as of December 31, 2013,
and the funds will be topped up each year by an amount equivalent to 5% of
the contributions made by the Banque Populaire banks, the Caisses d’Epargne,
and their subsidiaries to the Group’s consolidated income.
The total amount of deposits made to BPCE in respect of the Banque Populaire
Network Fund, the Caisse d’Epargne Network Fund and the Mutual Guarantee
Fund may not be less than 0.15% and may not exceed 0.3% of the total
risk-weighted assets of the Group.
The booking of deposits in the institutions’ individual accounts under the
guarantee and solidarity system results in the recording of an item of an
equivalent amount under a dedicated capital heading.
The mutual guarantee companies (sociétés de caution mutuelle), whose sole
corporate purpose is to guarantee loans issued by Banque Populaire banks, are
covered by the liquidity and capital adequacy guarantee of the Banque Populaire
banks with which they are jointly licensed in accordance with Article R. 515-1
of the French Monetary and Financial Code.
The liquidity and capital adequacy of the Caisses de Crédit Maritime Mutuel are
guaranteed in respect of each individual Caisse, by the Banque Populaire bank
212
which is both the core shareholder and provider of technical and operational
support for the Caisse in question to the partner Banque Populaire bank.
The liquidity and capital adequacy of the local savings companies are
secured, firstly, at the level of each individual local savings company by the
Caisse d’Epargne which is the shareholder of the local savings company in
question.
BPCE’s Management Board holds all the requisite powers to mobilize the
resources of the various contributors without delay and in accordance with
the agreed order, on the basis of prior authorizations given to BPCE by the
contributors.
1.3
1.3.1
SIGNIFICANT EVENTS
Simplification of the structure of Groupe BPCE
The buyback by the Banque Populaire banks and Caisses d’Epargne of the
cooperative investment certificates (CICs) held by Natixis for their subsequent
cancellation was completed on August 6, 2013, in accordance with the
timetable set when the transaction was initiated in February 2013. Following
the cancellation of the CICs bought back by each of the Banque Populaire banks
and Caisses d’Epargne, their capital is now wholly owned by their cooperative
shareholders.
This transaction represents a new phase in the construction of Groupe BPCE. In
addition to the buyback of the CICs, this phase also includes:
• Natixis’ repayment to BPCE of the P3CI (€6.9 billion) set up in January 2012,
and of the symmetrical loan set up by Natixis in favor of BPCE;
• an extraordinary dividend payout by Natixis of about €2 billion to its
shareholders;
• the repayment of the deeply subordinated notes issued by BPCE in March 2012
and subscribed for by the Banque Populaire banks and Caisses d’Epargne for
€2 billion with a cash adjustment of €89 million;
• the repayment by Natixis to BPCE of a 10-year senior loan (€2.3 billion);
• BPCE’s capital reduction in favor of the Banque Populaire banks and Caisses
d’Epargne for €2 billion.
As this was an internal deal carried out within Groupe BPCE, it had no impact
on total equity, with the exception of the share of the extraordinary dividend
allocated to Natixis’ minority shareholders (impact of -€560 million on noncontrolling interests (minority interests)).
This deal led to the reclassification of €3.3 billion between equity attributable
to equity holders of the parent and non-controlling interests (minority interests)
(increase in non-controlling interests (minority interests)), i.e.:
• cancellation of the recognition of the elimination of treasury shares deducted
from non-controlling interests (minority interests);
• recognition of an increase in reserves attributable to minority interests
following the transfer from the Banque Populaire banks and Caisses d’Epargne
to Natixis.
1.4
POST-BALANCE SHEET EVENTS
In accordance with its strategy aimed at developing the bancassurance model,
the Group plans to transfer its equity interest in BPCE Assurances to Natixis,
via Natixis Assurances, by the end of Q1 2014. This deal was approved by the
BPCE Supervisory Board and the Natixis Board of Directors, which both met on
February 19, 2014.
FINANCIAL REPORT
BPCE Assurances (60%-owned by Groupe BPCE), in partnership with MACIF
and MAIF, is developing property and casualty insurance activities with Caisses
d’Epargne customers and health insurance activities with customers of the
Caisses d’Epargne and Banque Populaire banks. This transfer to Natixis will be
Note 2
2.1
REGULATORY FRAMEWORK
STANDARDS
The standards and interpretations used and detailed in the annual financial
statements as at December 31, 2013 were complemented by standards,
amendments and interpretations whose application is mandatory for reporting
periods starting from January 1, 2013, and, more specifically:
• IFRS 13 entitled “Fair Value Measurement” adopted for use by the European
Commission on December 11, 2012 with mandatory application to fiscal years
beginning on or after January 1, 2013. IFRS 13 indicates how to measure fair
value, but does not change the conditions for applying fair value. This standard
applies on a prospective basis (see note 4.1.6).
The impacts of the application of this new standard at December 31, 2013
are described in note 6.3.
• IAS 19 (revised) “Employee Benefits”, applicable to fiscal years beginning on
or after January 1, 2013 with retroactive effects.
This standard changes the method used to recognize defined-benefit
obligations, generating a change in accounting method with the following
new provisions:
- recognition of all actuarial gains or losses under other comprehensive
income that cannot be reclassified in income;
- immediate recognition of changes in pension schemes in income;
- measurement of the return on hedging assets using the same rate as that
used to discount liabilities.
At the date of first application, i.e. at January 1, 2013, the impacts of the first
application of IAS 19 as revised were recorded as follows:
- revaluation differences on employee benefits not recorded at January 1,
2012 with a corresponding entry in gains and losses recognized directly
in equity;
- the cumulative cost of past services not recorded at January 1, 2012 with
a corresponding entry in retained earnings;
(1)
As this is an intra-group deal, it will lead to a reclassification from “Equity
attributable to equity holders of the parent” to “Non-controlling interests
(minority interests)” and will therefore have no impact on total equity.
5
Applicable accounting standards and comparability
In accordance with EC Regulation No. 1606/2002 of July 19, 2002 on the
application of international accounting standards, the Group has prepared its
consolidated financial statements for the fiscal year ended December 31, 2013
under International Financial Reporting Standards (IFRS) as adopted for use
by the European Union and applicable at that date, thereby excluding certain
provisions of IAS 39 relating to hedge accounting (1).
2.2
carried out while maintaining the capital agreements and existing cooperation
with MAIF and MACIF.
5
- the difference in standards impacting income for fiscal year 2012 with a
corresponding entry in retained earnings. This difference can be broken
down into the following three items:
5
- spreading of actuarial gains or losses recognized under IAS 19,
- spreading of changes in pension schemes recognized under IAS 19,
- difference in rate of return on plan assets;
- the changes in provisions corresponding to the revaluation differences
generated in fiscal year 2012 according to IAS 19, as revised, with a
corresponding entry in gains and losses recognized directly in equity.
The impacts of the first application of IAS 19 as revised on the consolidated
financial statements at December 31, 2012 and for fiscal year 2012 are
detailed in paragraph 2.3.
5
Due to the immaterial nature of the impact of the first application of this
standard, the comparative financial information has not been restated.
• The amendment to IFRS 7 “Disclosures: Offsetting Financial Assets and
Financial Liabilities”: this amendment introduces new provisions for the
disclosure of information relating to financial assets and liabilities subject
to a “master netting agreement” or similar agreements in the notes to the
financial statements. This information is presented in Note 13 - Offsetting
financial assets and liabilities.
• The purpose of the amendment to IAS 1 “Presentation of Financial Statements”
is to expand the financial information provided on “Net income and gains and
losses recognized directly in equity”. Gains and losses recognized directly in
equity must be presented so as to distinguish the individual items that can
be reclassified in net income from those items that will never be reclassified
in net income.
5
5
The other standards, amendments and interpretations adopted by the European
Union, whose application was mandatory in 2013, did not have a material
impact on the Group’s financial statements.
Groupe BPCE did not elect for early adoption of the texts adopted by the
European Union on December 31, 2012, which had not yet entered into force
as of that date: IFRS 10 “Consolidated Financial Statements”, IFRS 11 “Joint
Arrangements” and IFRS 12 “Disclosure of Interests in Other Entities” relating
to consolidation adopted by the European Commission on December 11, 2012
and applicable to the fiscal years beginning on or after January 1, 2014. The
implementation of these standards is not expected to have a material impact
on Groupe BPCE’s scope of consolidation.
This analysis takes into account IFRIC’s ongoing interpretation regarding real
estate development activities. A position is expected during 2014, which
may impact the proportionate consolidation of jointly-controlled real estate
transactions.
These standards are available on the website of the European Commission at the following URL: http://ec.europa.eu/internal_market/accounting/ias/index_en.htm.
213
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2.3
FINANCIAL REPORT
FIRST APPLICATION OF IAS 19 AS REVISED
This note summarizes the impacts of the first application of IAS 19 as revised on the consolidated balance sheet at December 31, 2012 and on the consolidated
income statement for fiscal year 2012.
Assets
12/31/2012
Impact at 1/1/2012
Impact on fiscal
year 2012
12/31/2012 restated
53,792
53,792
214,991
214,991
Hedging derivatives
10,733
10,733
83,409
83,409
118,795
118,795
574,856
574,856
7,911
7,911
11,042
11,042
Financial assets at fair value through profit and loss
Current tax assets
Deferred tax assets
957
957
5,229
81
16
5,326
51,145
(36)
1
51,110
2,442
2,442
Investment property
1,829
1,829
4,783
4,783
Intangible assets
1,358
1,358
Goodwill
4,249
TOTAL ASSETS
4,249
1,147,521
45
17
1,147,583
12/31/2012
Impact at 1/1/2012
Impact on fiscal
year 2012
12/31/2012 restated
Liabilities
Hedging derivatives
194,793
194,793
11,116
11,116
111,399
111,399
430,519
430,519
Debt securities
230,501
230,501
1,994
1,994
Current tax liabilities
248
Deferred tax liabilities
364
47,997
49,432
Provisions
4,927
Subordinated debt
9,875
248
(28)
11
347
47,997
49,432
276
15
5,218
9,875
54,356
(203)
(9)
54,144
50,554
(170)
(5)
50,379
27,871
Retained earnings
20,863
(29)
(327)
(141)
27,871
20,834
(21)
(489)
16
2,163
2,147
3,802
(33)
(4)
3,765
1,147,521
45
17
1,147,583
TOTAL LIABILITIES AND EQUITY
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FINANCIAL REPORT
5
Income statement
Fiscal year 2012
Net banking income
Impact on fiscal
year 2012
Fiscal year 2012
restated
21,946
Operating expenses
21,946
(15,020)
Depreciation, amortization and impairment for property, plant and equipment
and intangible assets
28
(14,992)
28
6,039
(915)
(915)
6,011
Cost of risk
(2,199)
Operating income
(2,199)
3,812
Gains or losses on other assets
28
3,840
186
186
3
3
(258)
Income before tax
Income tax
Net income
5
5
(258)
3,743
28
3,771
(1,366)
(9)
(1,375)
2,377
19
2,396
(230)
(3)
(233)
2,147
16
2,163
Fiscal year 2012
Impact on fiscal
year 2012
Fiscal year 2012
restated
5
Net income and gains and losses recognized directly in equity
Net income
2,377
19
2,396
0
(40)
(40)
0
13
13
0
(27)
(27)
1,195
0
1,195
1,357
(27)
1,330
3,734
(8)
3,726
3,475
(4)
3,471
259
(4)
255
Items that cannot be reclassified in income
Items that can be reclassified in income
162
Gains and losses recognized directly in equity (after income tax)
NET INCOME AND GAINS AND LOSSES RECOGNIZED DIRECTLY IN EQUITY
Non-controlling interests (Minority interests)
2.4
USE OF ESTIMATES
Preparation of the financial statements requires Management to make estimates
and assumptions in certain areas with regard to uncertain future events.
These estimates are based on the judgment of the individuals preparing these
financial statements and the information available at the balance sheet date.
Actual future results may differ from these estimates.
Specifically with respect to the financial statements for the period ended
December 31, 2013, the accounting estimates involving assumptions were
mainly used for the following measurements:
• the fair value of financial instruments determined on the basis of valuation
models (Note 4.1.6);
• the amount of impairment of financial assets, and more specifically
permanent impairment losses on available-for-sale assets and impairment
losses applicable to loans and receivables on an individual basis or calculated
on the basis of portfolios (Note 4.1.7);
5
162
5
• provisions recorded under liabilities in the balance sheet and more specifically
the provision for regulated home savings products (Note 4.5) and provisions
for insurance policies (Note 4.13);
• calculations related to the cost of pensions and future employee benefits
(Note 4.10);
• deferred tax assets and liabilities (Note 4.12);
• goodwill impairment testing (Note 3.4.3).
2.5
5
PRESENTATION OF THE CONSOLIDATED FINANCIAL
STATEMENTS AND BALANCE SHEET DATE
As no specific format is required under IFRS, the presentation used by the Group
for summarized statements follows Recommendation No. 2013-04 issued by the
Autorité des Normes Comptables (ANC – French national accounting standards
authority) on November 7, 2013.
5
The consolidated financial statements are based on the individual financial
statements as at December 31, 2013. The Group’s consolidated financial
statements as at December 31, 2013 were approved by the Management
Board on February 13, 2014. They will be presented to the Annual General
Shareholders’ Meeting on May 16, 2014.
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FINANCIAL REPORT
Note 3
3.1
Consolidation principles and methods
CONSOLIDATING ENTITY
The consolidating entity of Groupe BPCE comprises:
• the Banque Populaire banks, namely the 17 Banque Populaire regional banks,
CASDEN Banque Populaire and Crédit Coopératif;
• the 17 Caisses d’Epargne;
• the Caisses du Crédit Maritime Mutuel, affiliated with BPCE pursuant to
Financial Security law No. 2003-706 of August 1, 2003;
• the Sociétés de Caution Mutuelle (SCM or Mutual guarantee companies)
collectively affiliated with the Banque Populaire banks to which they are
linked;
• the Group’s central institution, BPCE.
In addition, the Group comprises:
• the subsidiaries of the Banque Populaire banks;
• the subsidiaries of the Caisses d’Epargne, including CE Holding Promotion and
its subsidiaries (mainly Nexity and Habitat en Région);
Significant influence
Significant influence is the power to participate in the financial and operating
policy decisions of an entity, without exercising control over it. Significant
influence is presumed to exist when the Group holds, directly or indirectly,
20% or more of the voting rights of an entity.
3.2.2
Consolidation methods
Consolidation methods are based on the Group’s ability to control an entity,
irrespective of the nature of that entity’s business activities.
Full consolidation
The financial statements of entities under exclusive control are fully consolidated.
Proportionate consolidation
Entities that the Group controls jointly with a limited number of investors are
consolidated on a proportionate basis.
Equity method
• the subsidiaries owned by the central institution, including Natixis, Crédit
Foncier, Banque Palatine and BPCE International et Outre-Mer.
Companies over which the Group has significant influence are accounted for
using the equity method.
Groupe BPCE includes the credit institutions that have signed an association
agreement with Crédit Coopératif. Their share of their net income and equity is
recorded under non-controlling interests (minority interests).
3.3
3.2
SCOPE OF CONSOLIDATION AND CONSOLIDATION
METHODS
3.2.1
Control carried out by the Group
SPECIAL CASES
Special purpose entities
The Group consolidates special purpose entities (SPEs) formed specifically to
manage a transaction or a group of transactions with similar characteristics –
even if the Group has no equity interest in the entity – if in substance they are
controlled by the Group.
The Group’s consolidated financial statements include the financial statements
of all the entities over which it exercises control or significant influence, whose
consolidation had a material impact on the aforementioned financial statements.
Control is established if, in substance:
The existence and effect of potential voting rights that are currently exercisable
or convertible are considered when assessing the type of control exercised by
the Group. These potential voting rights may result, for example, from share call
options traded on the market, debt or equity instruments that are convertible
into ordinary shares, or equity warrants attached to other financial instruments.
However, potential voting rights are not taken into account to calculate the
percentage of ownership.
• the Group has decision-making and management powers over the ordinary
activities or the assets of the SPE; these powers may be delegated by the
setting up of an “autopilot” mechanism;
Exclusive control
Exclusive control is the power to govern the financial and operating policies
of an entity so as to obtain benefits from its activities, and results from either
the direct or indirect ownership of the majority of voting rights, the power to
appoint or dismiss a majority of the members of the management bodies, or from
the right to define financial and operational policy by virtue of a management
contract or in accordance with the Group’s bylaws.
Joint control
Joint control is the contractually agreed sharing of control over an economic
entity involving a limited number of shareholders, such that the entity’s financial
and operating policies are determined by agreement between those partners,
and exists only when the strategic decisions require the unanimous consent of
the parties sharing control.
216
• the activities of the SPE are conducted exclusively on behalf of the Group,
such that the Group derives benefits from those activities;
• the Group is entitled to the majority of the benefits deriving from the SPE;
• the Group is exposed to a majority of the risks relating to the activities of
the SPE.
However, entities operating in a fiduciary capacity, using discretionary asset
management and in the interests of all parties involved, are not consolidated.
Employee pension funds and supplementary health insurance plans are also
excluded from the scope of consolidation.
Private equity businesses
However, IAS 28 and IAS 31, which cover investments in associates and interests
in joint ventures, recognize the specific nature of the private equity business.
Private Equity interests in which the Group’s ownership stands at between 20%
and 50% do not have to be accounted for using the equity method if they are
classified at inception in the “Financial assets at fair value through profit or
loss” category.
The Natixis group’s private equity subsidiaries have chosen to measure the
relevant holdings, considering that this valuation method provides investors
with more relevant information.
FINANCIAL REPORT
3.4
CONSOLIDATION RULES
The consolidated financial statements are prepared using uniform accounting
policies for reporting similar transactions in comparable circumstances. Where
material, consolidation adjustments are made to ensure the consistency of the
measurement methods applied by consolidated entities.
3.4.1
Foreign currency translation
The consolidated financial statements are expressed in euros.
Balance sheet items of foreign subsidiaries and branches whose functional
currency is not the euro are translated using the exchange rate in force at the
balance sheet date. Income and expense items are translated at the average
exchange rate for the period, which is the approximate value of the transaction
price if there are no significant fluctuations.
Foreign exchange rate adjustments arise from a difference in:
• net income for the year translated at the average rate and at the closing rate;
• equity (excluding net income for the year) translated at the historic exchange
rate and at the year-end rate.
On the acquisition date, goodwill is allocated to one or more cash generating
units (CGUs) likely to enjoy the benefits of the acquisition. Cash-generating
units have been defined within the Group’s core businesses so as to represent
the lowest level within an activity used by Management to monitor ROI.
Impairment tests consist in comparing the carrying amount of each CGU or
group of CGUs (including allocated goodwill) with its recoverable amount, i.e.
the higher of the fair value of the unit and its value in use.
The marked-to-market value is defined as the fair value of the amount, less
costs, for which an asset could be exchanged or a liability settled between
knowledgeable, willing parties in an arm’s length transaction, on the basis of
available market information and taking account of any specific circumstances.
The value in use of each CGU is calculated using the most appropriate method,
although generally with reference to the present value of estimated future
cash flows.
A permanent impairment loss is recognized in income if the carrying amount
of the CGU exceeds its recoverable amount.
Transactions completed after January 1, 2010
3.4.2
• combinations between mutual insurers are now included within the scope
of IFRS 3;
The impact of intercompany transactions on the consolidated balance sheet and
consolidated income statement was eliminated. Dividends, as well as gains and
losses on intercompany asset disposals, are also eliminated. Where appropriate,
capital losses from asset disposals resulting in impairment are maintained.
3.4.3
Business combinations
Transactions completed before January 1, 2010
All business combinations are accounted for by applying the purchase method,
except business combinations involving two or more mutual insurers or entities
under joint control, as these transactions are explicitly excluded from the scope
of the previous version of IFRS 3.
The cost of a business combination is the aggregate amount of the fair values
at the date of acquisition of assets given, liabilities incurred or assumed, and
equity instruments issued by the acquirer, in exchange for control of the entity,
plus any costs directly attributable to the business combination.
All identifiable assets, liabilities, and contingent liabilities of the acquiree are
recognized at fair value at the acquisition date. The initial measurement of a
business combination may be adjusted within 12 months of the acquisition date.
Goodwill represents the difference between the cost of the business combination
and the acquirer’s share in the assets, liabilities and any liabilities at fair value.
Goodwill is recognized in the acquirer’s balance sheet and negative goodwill is
recognized immediately in income.
In the event that the Group changes its interest in an entity it already controls,
the transaction gives rise to the recognition of additional goodwill, which is
determined by comparing the cost of the shares with the Group’s share of the
net assets acquired.
Goodwill is recognized in the functional currency of the acquiree and is
translated at the closing exchange rate.
5
Goodwill is tested for impairment at least annually, or more frequently if events
or changes in circumstances indicate that it may be impaired.
The portion attributable to equity holders of the parent is recorded in equity
under “Foreign exchange rate adjustments” and the portion attributable to
minority shareholders under “Non-controlling interests (minority interests)”.
Elimination of intragroup transactions
5
The treatments described are amended as follows by revised IFRS 3 and IAS 27:
• costs directly linked to business combinations are now recognized in income
for the period;
• earnouts are now included in the acquisition cost at their fair value at the date
of acquisition of a controlling interest in an entity, even if the earnouts are
only potential. Depending on the settlement method, earnouts are recognized
against:
5
5
5
- capital and later price revisions will not be booked,
- or debts and later adjustments are recognized against income (financial
debts) or according to the appropriate standards (other debts outside the
scope of IAS 39);
• on an entity’s acquisition date, non-controlling interests (minority interests)
may be valued:
5
- either at fair value (method resulting in the allocation of a share of the
goodwill to non-controlling interests (minority interests)),
- or at their share in the fair value of the identifiable assets and liabilities of
the entity acquired (method similar to that applicable to transactions prior
to December 31, 2009).
The choice between these two methods must be made for each business
combination.
Whatever method chosen when the acquisition is made, increases in the
percentage stake in an entity already controlled will be systematically recognized
in capital:
• when an entity is acquired, any share previously held by the Group must be
revalued at fair value through profit or loss. Consequently, in the event of a
step acquisition, the goodwill is determined by referring to the fair value at
the acquisition date;
217
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FINANCIAL REPORT
• when the Group loses control of a consolidated company, any share previously
held by the Group must be revalued at fair value through profit or loss.
3.4.4
Commitments to buy out non-controlling interests
(written puts)
The Group has entered into commitments with minority shareholders of certain
fully consolidated companies to buy out their shares.
Note 4
In accordance with IAS 32, when minority shareholders are granted written
puts for their investment, their share of the net assets of subsidiaries should be
treated as debt and not as equity.
The difference between this commitment and non-controlling interests, which
are the counterpart of debt, is recognized differently according to whether
the commitments to buy out non-controlling interests were concluded before
January 1, 2010, which is when IFRS 3 and IAS 27 came into force (recognition
in goodwill), or afterwards (recognition in equity).
Accounting principles and measurement methods
4.1
FINANCIAL ASSETS AND LIABILITIES
4.1.1
Amounts due from credit institutions and customers and certain investments
not quoted in an active market and not held for trading are generally recorded
in “Loans and receivables” (see Note 4.1.2).
Loans and receivables are initially recorded at fair value plus any costs directly
related to their issuance, less any proceeds directly attributable to issuance.
On subsequent balance sheet dates, they are measured at amortized cost using
the effective interest method.
commitment fees received that will not result in any drawdowns are apportioned
on a straight-line basis over the life of the commitment.
Expenses and income arising on loans with a term of less than one year at
inception are deferred on a pro rata basis with no recalculation of the effective
interest rate. For floating or adjustable rate loans, the effective interest rate is
adjusted at each rate refixing date.
4.1.2
Securities
Securities recorded as assets are classified into four categories as defined by
IAS 39:
The effective interest rate is the rate that exactly discounts estimated future
cash flows (payments or receipts) to the value of the loan at inception. This rate
includes any discounts recorded in respect of loans granted at below-market
rates, as well as any transaction income or costs directly related to the issue of
the loans, which are treated as an adjustment to the effective yield on the loan.
No internal cost is included in the calculation of amortized cost.
• financial assets at fair value through profit or loss;
• held-to-maturity financial assets;
When loans are extended under conditions that are less favorable than market
conditions, a discount corresponding to the difference between the nominal
value of the loan and the sum of future cash flows discounted at the market
interest rate is deducted from the nominal value of the loan. The market interest
rate is the rate applied by the vast majority of local financial institutions at
a given time for instruments and counterparties with similar characteristics.
This asset category includes:
A discount is applied to loans restructured when the borrower encounters
financial difficulties to reflect the difference between the present value of the
contractual cash flows at inception and the present value of expected principal
and interest repayments after restructuring. These loans are regarded as impaired
outstandings within the meaning of IAS 39. The discount rate used is the original
effective interest rate. This discount is expensed to “Cost of risk” in the income
statement and offset against the corresponding outstanding on the balance
sheet. It is written back to net interest income in the income statement over the
life of the loan using an actuarial method. The restructured loan is reclassified
as performing based on expert opinion when no uncertainty remains as to the
borrower’s capacity to honor the commitment.
The external costs consist primarily of commissions paid to third parties in
connection with arrangement of loans. They essentially comprise commissions
paid to business partners.
Income directly attributable to the issuance of new loans principally comprises
set-up fees charged to customers, rebilled costs and commitment fees (if it is
more probable than improbable that the loan will be drawn down). The loan
• loans and receivables;
• available-for-sale financial assets.
Financial assets and liabilities at fair value through profit or loss
• financial assets and liabilities held for trading, i.e. securities acquired or issued
principally for the purpose of selling them in the near term; and
• financial assets and liabilities that the Group has chosen to recognize at fair
value through profit or loss at inception using the fair value option available
under IAS 39.
The qualifying criteria used when applying this option are described in Note 4.1.4
“Financial assets and liabilities at fair value through profit or loss”.
These assets are measured at fair value at the date of initial recognition and
at each balance sheet date. Changes in fair value over the period, interest,
dividends, gains or losses on disposals on these instruments are recognized in
“Net gains or losses on financial instruments at fair value through profit or loss”.
Held-to-maturity financial assets
Held-to-maturity (HTM) financial assets are securities with fixed or determinable
payments and fixed maturity that the Group has the intention and ability to
hold until maturity.
IAS 39 does not permit the sale or transfer of these securities before maturity
except in certain specific circumstances. In the event that the securities are
sold before maturity, all held-to-maturity assets must be reclassified at Group
level and the held-to-maturity category cannot be used during the current year
or the following two years. Exceptions to the rule apply in the following cases:
• a significant deterioration in the issuer’s credit quality;
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FINANCIAL REPORT
• a change in tax regulations canceling or significantly reducing the tax
exemption on interest earned on investments held to maturity;
• a major business combination or significant withdrawal of activity (sale
of a sector, for example) requiring the sale or transfer of held-to-maturity
investments in order to maintain the entity’s existing situation in terms of
interest rate risk or its credit risk policy;
• a change in legal or regulatory provisions significantly modifying either the
definition of an eligible investment or the maximum amount of certain types
of investment, requiring that the entity dispose of a held-to-maturity asset;
• a significant increase in capital requirements forcing the entity to restructure
by selling held-to-maturity assets;
• a significant increase in the risk weighting of held-to-maturity assets in terms
of prudential capital regulations.
In the exceptional cases described above, the income from the disposal is
recorded under “Net gains or losses on available-for-sale financial assets”.
Instruments contracted to hedge these securities against interest rate risk are
not permitted. However, hedges against exchange rate risk or the inflation
component of certain held-to-maturity financial assets are allowed.
Held-to-maturity financial assets are recognized at fair value at inception,
plus any transaction costs directly attributable to their acquisition. They are
subsequently measured at amortized cost using the effective interest method,
including any premiums, discounts and acquisition fees, where material.
The “Loans and receivables” portfolio comprises non-derivative financial assets
with fixed or determinable payments and which are not quoted in an active
market. In addition, these assets must not be exposed to a risk of material losses
unrelated to a deterioration in their credit quality.
Some securities not quoted in an active market may be classified in this portfolio.
These are initially recognized at fair value, plus any transaction costs and less
any transaction income. Securities classified in this category comply with the
rules for recognition, measurement and impairment applicable to loans and
receivables.
When a financial asset recorded under loans and receivables is sold before its
maturity, the income from the disposal is recorded under “Net gains or losses
on available-for-sale financial assets”.
Available-for-sale financial assets are all securities not classified in the previous
three categories.
Available-for-sale financial assets are initially recognized at fair value, plus any
transaction costs.
On the balance sheet date, they are carried at their fair value and changes in
fair value are recorded under “Gains and losses recognized directly in equity”
(except for foreign currency money market assets, for which changes in the fair
value of the foreign currency component affect net income). The principles used
to determine fair value are described in Note 4.1.6.
If they are sold, these changes in fair value are taken to income.
Interest income accrued or received on fixed-income securities is recorded under
“Interest or similar income”. Interest income accrued or received on variableincome securities is recorded under “Net gains or losses on available-for-sale
financial assets”.
5
Date of recognition
Securities are recorded in the balance sheet on the settlement/delivery date.
Rules applicable to partial disposals
The first-in, first-out (FIFO) method is applied to any partial disposals of
securities.
4.1.3
5
Debt and equity instruments
Financial instruments issued by the Group qualify as debt or equity instruments
depending on whether or not the issuer has a contractual obligation to deliver
cash or another financial asset to the holder of the instrument, or to exchange
the instrument under conditions that are potentially unfavorable to the Group.
This obligation must arise from specific contractual terms and conditions, not
merely economic constraints.
5
Debt securities
Issues of debt securities (which are not classified as financial liabilities at
fair value through profit or loss) are initially recognized at fair value less any
transaction costs. They are subsequently measured at amortized cost at each
balance sheet date using the effective interest method.
These instruments are recognized on the balance sheet under “Amounts due to
credit institutions”, “Amounts due to customers” or “Debt securities”.
5
Subordinated debt
Subordinated debt differs from other debt and bonds in that it will be repaid
only after all the senior and unsecured creditors, but before the repayment of
participating loans and securities and deeply subordinated notes.
The subordinated debt which the issuer is obliged to repay is classified as debt
and initially recognized at fair value less transaction costs.
5
Cooperative shares
IFRIC 2 “Cooperative shares in cooperative entities and similar instruments”
clarifies the provisions of IAS 32. In particular, the contractual right of the holder
of a financial instrument (including cooperative shares in cooperative entities)
to request redemption does not, in itself, automatically give rise to an obligation
for the issuer. Rather, the entity must consider all of the terms and conditions
of the financial instrument in determining its classification as a debt or equity.
Based on this interpretation, cooperative shares are classified as equity if the
entity has an unconditional right to refuse redemption of the cooperative shares
or if local laws, regulations or the entity’s bylaws unconditionally prohibit or
curtail the redemption of cooperative shares.
Based on the existing provisions of the Group’s bylaws relating to minimum
capital requirements, cooperative shares issued by the Group are classified as
equity.
4.1.4
Financial assets and liabilities at fair value through profit or
loss
The amendment to IAS 39 adopted by the European Union on November 15, 2005
allows entities to designate financial assets and liabilities on initial recognition
at fair value through profit or loss. However, an entity’s decision to designate a
financial asset or liability at fair value through profit or loss may not be reversed.
Compliance with the criteria stipulated by the standard must be verified prior
to any recognition of an instrument using the fair value option.
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FINANCIAL REPORT
In practice, this option may be applied only under the specific circumstances
described below:
Elimination of or significant reduction in a measurement or
recognition inconsistency (accounting mismatch)
Applying the option enables the elimination of accounting mismatches
stemming from the application of different valuation rules to instruments
managed in accordance with a single strategy. This accounting treatment applies
in particular to certain structured loans granted to local authorities.
Harmonization of accounting treatment and performance
management and measurement
Derivative financial instruments are classified into the following two categories:
Trading derivatives
Trading derivatives are recognized on the balance sheet under “Financial assets
at fair value through profit or loss” when their market value is positive, and under
“Financial liabilities at fair value through profit or loss” when their market value
is negative. Realized and unrealized gains and losses on derivatives held for
trading are taken to income on the “Net gains or losses on financial instruments
at fair value through profit or loss” line.
Hedging derivatives
The option applies for a group of assets and/or liabilities managed and
measured at fair value, provided that it is based on a formally documented risk
management or investment strategy, and information about the Group is also
reported internally on a fair value basis.
The hedging relationship qualifies for hedge accounting if, at the inception of
the hedge, there is formal documentation of the hedging relationship identifying
the hedging strategy, the type of risk hedged, the designation and characteristics
of the hedged item and the hedging instrument. In addition, the effectiveness
of the hedge must be demonstrated at inception and subsequently verified.
This circumstance mainly arises in connection with Natixis’ capital market
activities.
Derivatives contracted as part of a hedging relationship are designated according
to the purpose of the hedge.
Hybrid financial instruments containing one or more embedded
derivatives
An embedded derivative is a component of a financial or non-financial hybrid
(combined) instrument that qualifies as a derivative. It must be separated from
the host contract and accounted for as a derivative if the hybrid instrument
is not measured at fair value through profit or loss, and if the economic
characteristics and risks associated with the derivative are not closely related
to those of the host contract.
The fair value option may be applied when the embedded derivative(s)
substantially modify the cash flows of the host contract and when the separate
recognition of the embedded derivative(s) is not specifically prohibited by IAS 39
(e.g. an early redemption option at cost embedded in a debt instrument). The
option allows the entire instrument to be measured at fair value, and therefore
avoids the need to extract, recognize or separately measure the embedded
derivative.
This accounting treatment applies in particular to some structured debt issues
containing material embedded derivatives.
4.1.5
Derivative financial instruments and hedge accounting
A derivative is a financial instrument or other contract with all three of the
following characteristics:
• its value changes in response to the change in a specific interest rate, financial
instrument price, commodity price, foreign exchange rate, index of prices
or rates, credit rating or credit index, or other variable, provided that, in the
case of a non-financial variable, this variable may not be specific to one of
the parties to the contract;
• it requires no initial net investment or an initial net investment that is smaller
than would be required for other types of contracts that would be expected
to have a similar response to changes in market factors; and
• it is settled at a future date.
All derivative financial instruments are recognized on the balance sheet at the
trade date and measured at fair value at inception. They are remeasured at their
fair value at each balance sheet date regardless of whether they were acquired
for trading or hedging purposes.
Changes in the fair value of derivatives are recognized in income for the period,
except for derivatives qualifying as cash flow hedges for accounting purposes
or as net investment hedges in a foreign currency.
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FAIR VALUE HEDGES
Fair value hedges are intended to reduce exposure to changes in the fair value
of an asset or liability carried on the balance sheet, or a firm commitment, in
particular the interest rate risk on fixed-rate assets and liabilities.
The gain or loss on the revaluation of hedging instruments is recognized in
income in the same manner as the gain or loss on the hedged item attributable
to the risk being hedged. The ineffective portion of the hedge, if any, is recorded
in the income statement under “Net gains or losses on financial instruments at
fair value through profit or loss”.
Accrued interest on the hedging instrument is taken to income in the same
manner as the accrued interest on the hedged item.
Where identified assets or liabilities are hedged, the revaluation of the hedged
component is recognized on the same line of the balance sheet as the hedged
item.
The ineffective portion relating to the dual-curve valuation of collateralized
derivatives is taken into account when calculating the effectiveness of a hedge.
If a hedging relationship ceases (investment decision, failure to fulfill
effectiveness criteria, or because the hedged item is sold before maturity), the
hedging instrument is transferred to the trading book. The revaluation difference
recorded in the balance sheet in respect of the hedged item is amortized over
the residual life of the initial hedge. If the hedged item is sold before maturity
or redeemed early, the cumulative amount of the revaluation gain or loss is
recognized in income for the period.
CASH FLOW HEDGES
The purpose of cash flow hedges is to hedge the exposure to the variability of cash
flow that is attributable to a particular risk associated with a recognized asset or
liability or with a future transaction (hedge of interest rate risk on floating-rate
assets or liabilities, hedge of conditions relating to future transactions such as
future fixed interest rates, future prices, exchange rates, etc.).
The portion of the gain or loss on the hedging instrument that is deemed to be an
effective hedge is recognized on a separate line of “Gains and losses recognized
directly in equity”. The ineffective portion of the gain or loss on the hedging
instrument is recorded in the income statement under “Net gains or losses on
financial instruments at fair value through profit or loss”.
Accrued interest on the hedging instrument is taken to income under interest
income in the same manner as the accrued interest on the hedged item.
FINANCIAL REPORT
The hedged items are accounted for using the treatment applicable to their
specific asset category.
If a hedging relationship ceases (because the hedge no longer meets the
effectiveness criteria, the derivative is sold or the hedged item ceases to exist),
the cumulative amounts recognized in equity are transferred to the income
statement as and when the hedged item impacts profit or loss, or immediately
if the hedged item ceases to exist.
SPECIFIC CASES OF PORTFOLIO HEDGING (MACRO-HEDGING)
Documentation as cash flow hedges
Some Group institutions document their macro-hedges on cash flows (hedging
of portfolios of loans or borrowings).
In this case, portfolios of assets or liabilities that may be hedged are, for each
maturity band:
• floating-rate assets and liabilities; the entity incurs a risk of variability in
future cash flows from floating-rate assets or liabilities insofar as future
interest rate levels are not known in advance;
• future transactions deemed to be highly probable (forecasts); assuming total
outstandings remain constant, the entity is exposed to the risk of variability
in future cash flows on future fixed-rate loans insofar as the interest rate at
which the loan will be granted is not yet known. Similarly, the Group may be
exposed to the risk of variability in future cash flows on the funding that it
will need to raise in the market.
Under IAS 39, hedges of an overall net position of fixed rate assets and fixed rate
liabilities with similar maturities do not qualify for hedge accounting. The hedged
item is therefore deemed to be equivalent to a share of one or more portfolios of
identified variable-rate instruments (portion of deposit outstandings or variablerate loans); the effectiveness of the hedges is measured by creating a mortgage
instrument for each maturity band whose changes in fair value from inception
are compared to those for the documented hedging derivatives.
The characteristics of this instrument are identical to those of the hedged
item. Effectiveness is then assessed by comparing the changes in value of the
hypothetical instrument with the actual hedging instrument. This method
requires the preparation of a maturity schedule.
The effectiveness of the hedge must be shown prospectively and retrospectively.
The hedge is effective prospectively if, for each target maturity band, the nominal
amount of items to be hedged is higher than the notional amount of the hedging
instruments.
The retrospective test calculates the retrospective effectiveness of a hedge
initiated at various balance sheet dates.
At each balance sheet date, changes in the fair value of hedging instruments,
excluding accrued interest, are compared with those of hypothetical instruments.
The ratio of their respective changes should be between 80% and 125%.
If the hedged item is sold or the future transaction is no longer highly probable,
the cumulative unrealized gain or loss recognized in equity is transferred
immediately to income.
When the hedging relationship ceases, if the hedged item is still shown on the
balance sheet, or if it is still highly probable, unrealized cumulative gains and
losses are recognized in equity on a straight line basis. If the derivative has not
been canceled, it is reclassified as a trading derivative, and changes in its fair
value are recognized in income.
The version of IAS 39 adopted for use by the European Union does not include
certain hedge accounting provisions that appear incompatible with the
strategies implemented by European banks to reduce overall exposure to interest
rate risk. In particular, this “carve-out” allows the Group to make use of hedge
accounting for interbank interest rate risk on customer transactions at fixed
rates (loans, savings accounts and demand deposits). The Group mainly uses
plain-vanilla interest rate swaps designated at inception as fair value hedges
of fixed-rate deposits or loans.
Macro-hedging derivatives are accounted for in the same manner as derivatives
used to hedge the fair value of specific transactions (micro-hedging).
In a macro-hedging relationship, gains and losses on the revaluation of the
hedged item are recorded in “Revaluation differences on interest rate riskhedged portfolio”.
5
5
5
The hedges are deemed effective if the derivatives offset the interest rate risk
on the underlying fixed-rate portfolio. The ineffective portion relating to the
bi-curve valuation of collateralized derivatives is taken into account.
Effectiveness is tested in two ways:
• asset-based testing: for plain-vanilla swaps designated as hedging instruments
at inception, the Group verifies prospectively at the date the instrument is
designated as a hedge and retrospectively at each balance sheet date that
no excess hedging exists;
• quantitative testing: for other swaps, the change in the fair value of the
actual swap must offset the changes in the fair value of a hypothetical
instrument that exactly reflects the underlying hedged item. These tests are
conducted prospectively at the date the instrument is designated as a hedge
and retrospectively at each balance sheet date.
If a hedging relationship ceases, the revaluation adjustment is amortized on a
straight-line basis over the remaining term of the initial hedge, if the hedged
item has not been derecognized. It is taken directly to income if the hedged
item is no longer recorded in the balance sheet. In particular, derivatives used
for macro-hedging may be disqualified for hedge accounting purposes when
the notional amount of the hedged items falls below the nominal amount of
the hedging instruments, for example in the case of the prepayment of loans
or the withdrawal of deposits.
HEDGING OF A NET INVESTMENT IN A FOREIGN OPERATION
The net investment in a foreign operation is the amount of the investment held
by the consolidating entity in the net assets of the operation.
The purpose of a net investment hedge in a foreign currency is to minimize
the foreign exchange effect for a consolidating entity of an investment in an
entity whose functional currency is different from the presentation currency
of the consolidating entity’s financial statements. Net investment hedges are
accounted for in the same manner as cash flow hedges.
Unrealized gains and losses initially recognized in equity are taken to income
when the net investment is sold in full or in part.
4.1.6
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5
Determination of fair value
General principles
Fair value is the price that would be received for the sale of an asset or paid
for the transfer of a liability in an arm’s length transaction between market
participants at the valuation date.
Fair value is therefore determined using the exit price.
5
Documentation as fair value hedges
Some of the Group’s institutions document their macro-hedging of interest rate
risk as fair value hedges by applying the so-called carve-out arrangements under
IAS 39 as adopted by the European Union.
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FINANCIAL REPORT
On first recognition, fair value is usually the transaction price and is thus the
price paid to purchase the asset or the price received to assume the liability.
On subsequent valuations, the fair value of assets and liabilities must be
estimated and determined using observable market data wherever possible,
while ensuring that all inputs comprising said fair value converge with the price
that market participants would use in a transaction.
This fair value consists of:
• the instrument’s quoted price, if the instrument is quoted on an active market.
A financial instrument is regarded as quoted on an active market if quoted
prices are readily and regularly available from an exchange, dealer, broker,
industry group, pricing service or regulatory agency, and these prices represent
actual and regularly occurring transactions on the principal market or, failing
that, on the most favorable market, on an arm’s length basis;
DEBIT VALUATION ADJUSTMENT (DVA)
The DVA is symmetrical to the CVA and represents the expected loss from the
counterparty’s point of view on the passive valuation of derivatives. It reflects
the effect of the Group’s credit quality on the valuation of derivatives. The DVA
adjustment is assessed by observing the Group’s “credit” market input.
The following criteria are used to determine whether or not a market is active:
• level of market activity and trend (including the level of activity on the primary
market);
• the length of historical data of prices observed in similar market transactions;
• scarcity of prices recovered by a service provider;
• sharp bid-ask price spread;
• steep price volatility over time or between different market participants.
• a value established using valuation techniques, if the market for a financial
instrument is not active. The valuation techniques used must maximize the use
of appropriate observable inputs and minimize the use of unobservable inputs.
They may refer to observable data from recent transactions, the fair value of
similar instruments, discounted cash flow analysis and option pricing models,
proprietary models in the case of complex instruments or unobservable data
when no pricing or market data are available.
Natixis control system (Natixis is the main contributor to the Group’s
balance sheet items measured at fair value)
Depending on the instrument and its associated risk, the valuations thus
obtained include additional valuation adjustments, the main instances of which
are as follows:
On less liquid markets, other market data are used to validate the fair value of
financial instruments, with priority given to the use of observable data.
BID-ASK PRICE SPREAD ADJUSTMENT
This adjustment represents the difference between the bid and ask price,
corresponding to another market participant’s exit cost. It reflects the price
requested by a market participant in respect of the risk in holding a position or
having to sell it at a price proposed by another market participant.
MODEL UNCERTAINTY ADJUSTMENT
This adjustment takes into account imperfections in the valuation techniques
used, and in particular risk factors not considered even though observable
market inputs are available. This is the case when the risks inherent in the
instruments differ from those incurred by the observable market data used to
determine their valuation.
INPUT UNCERTAINTY ADJUSTMENT
The observation of certain prices or inputs used in the valuation techniques
can be difficult or not available with sufficient regularity to determine the exit
price. In these circumstances, an adjustment may be necessary to reflect the
probability that in the fair value assessment of the financial instrument, market
participants may adopt more conservative values for these same inputs.
CREDIT VALUATION ADJUSTMENT (CVA)
This adjustment applies to valuations that do not take into account the
counterparty’s credit quality. It corresponds to the expected loss linked to the
risk of default by a counterparty and aims to take into account the fact that the
Group may not recover the full market value of the transactions.
The CVA calculation methodology is essentially based on an analysis of the
relevance of the market inputs used in respect of their availability and market
practices.
222
The determination of fair value is subject to a control system aimed at ensuring
that fair values are determined or validated by an independent function.
Fair values determined using external stock quotes or market inputs are subject
to validation by an independent department (the market data monitoring
department). A level-two control is performed by the Risk department.
The following factors are notably taken into account:
• the origin of the external source (stock quote pages, contributing departments,
etc.);
• consistency between different sources;
• frequency of data feeds;
• the representative nature of recent market transaction inputs.
For fair values determined based on valuation models, the control system
includes the independent validation of the models’ construction and the inputs
they use.
This validation is carried out under the authority of the Risk department.
It involves checking the consistency and relevance of the model in terms of the
purpose it is intended to serve (establishment of prices, valuation, hedging, risk
measurement and control) and the product to which it is applied, based on:
• a theoretical approach: the financial and mathematical foundations of the
model;
• the model’s application: the pricers used to generate risks and results;
• the model’s stability under input stress;
• a review of the stability and convergence of digital methods used;
• an audit of the proposed approach;
• the calibration of the model’s inputs;
• the model’s integration in the information systems.
Furthermore, the methodology used to determine fair value is subject to
monitoring by several bodies, including the Risk department, Finance department
and Market Data Monitoring department: these bodies notably include the
Observability Committee, Valuation Committee and Impairment Committee.
FINANCIAL REPORT
Fair value hierarchy
Complex instruments:
For financial reporting purposes, IFRS 13 requires fair value measurements
applied to financial instruments recognized on the balance sheet to be allocated
to one of three levels:
Certain hybrid and/or long-maturity financial instruments are measured using
a recognized model on the basis of market inputs derived from observable data
such as yield curves, implied volatility layers of options, market consensus data
or active over-the-counter markets.
LEVEL 1: VALUATION USING PRICES QUOTED ON A LIQUID MARKET
Level 1 comprises instruments whose fair value is determined based on directly
usable prices quoted on active markets.
The principal models used to determine the fair value of these instruments are
described by type of product below:
This mainly includes listed securities and derivatives traded on organized markets
(futures, options, etc.) whose liquidity can be demonstrated, and shares of UCITS
whose NAV is determined and reported on a daily basis.
• Equity products: the valuation of complex products is determined based on:
- market data;
LEVEL 2: VALUATION USING OBSERVABLE MARKET INPUTS
Level 2 comprises instruments quoted on an inactive market and instruments
measured using a valuation technique incorporating inputs that are either
directly observable (prices) or indirectly observable (price derivatives) through
to maturity. This mainly includes:
Simple instruments:
Most over-the-counter derivatives, swaps, forward rate agreements, caps, floors
and plain vanilla options are traded in an active market. An active market is a
liquid market in which trades occur regularly.
These instruments are valued using generally accepted models (discounted cash
flow method, Black & Scholes model, interpolation techniques), and on the basis
of directly observable inputs.
For these instruments, the extent to which model is used and the observability
of inputs has been documented.
Instruments measured using level 2 inputs also include:
- a payoff, i.e. the formula of positive or negative flows attached to the
product at maturity;
- a model used to monitor changes in the underlying instrument.
5
The main models used for equity products are the Tskew and Pskew local
volatility models.
The aim of local volatility models is to model volatility over time and the price
of the underlying instrument. The key property of the model is to incorporate
the implied volatility of the option relative to its exercise price as dictated
by market trends.
5
The Tskew model is used to determine the valuation of options with single and
multiple underlyings. Its principle is to calibrate the distributions at maturity
of the underlying(s) on standard option prices.
The Pskew model is similar to the Tskew model and is used specifically for
plain cliquet options such as capped/floored cliquets.
• Fixed income products: the characteristics of fixed income products generally
determine the choice of model. Underlying risk factors associated with the
payoff are taken into account.
• listed securities with low liquidity whose fair value is determined by similar
instruments listed on an active market, or identical or similar instruments
listed on an inactive market but for which regular transactions have been
observed;
The principal models used for the valuation and management of fixed income
products are the Hull & White models (one factor, two factors or Hull &
White one-factor stochastic volatility), the Hunt Kennedy model and the
shifted BGM model).
• units of UCITS whose NAV is not determined and published on a daily basis,
but are subject to regular reporting or offer observable data from recent
transactions;
The Hull & White models make it simple to determine the price of vanilla fixed
income products and can be easily calibrated. Products valued with these
models generally contain a Bermuda cancellation option (i.e. the option can
be exercised at dates set at the start of the contract).
For each issue, this valuation represents the product of the notional amount
outstanding and its sensitivity, taking into account the existence of calls and
the difference between the revaluation spread (based on the BPCE cash reoffer
curve at December 31, 2013 and December 31, 2012) and the average issue
spread. Changes in the revaluation of own debt are generally insignificant
for issues with initial maturity of less than one year.
5
These products can have a single underlying, multiple underlyings or hybrids
(fixed income/equity for example).
• securities not quoted on an active market whose fair value is determined
based on observable market data (for example, using market data for listed
peers or the earnings multiple method);
• debt securities designated at fair value, mainly by Natixis, and to a lesser
extent Crédit Foncier. The methodology used by Natixis to value the “issuer
credit risk” component of issues designated at fair value is based on the
discounting of future cash flows using directly observable inputs such as yield
curves and revaluation differences.
5
5
5
The SBGM and Hunt Kennedy models are used to value fixed income products
that are sensitive to volatility smile (i.e. implied change in volatility relative to
exercise prices) and auto-correlation (or correlation between yields).
• Foreign exchange products: the characteristics of foreign exchange products
generally determine the choice of model.
The principal models used for the valuation and management of foreign
exchange products are local volatility and stochastic models.
5
Inputs relating to all the above-mentioned Level 2 instruments were
demonstrated to be observable. From a methodology perspective, observability
is based on four inseparable criteria:
• inputs are derived from external sources (a recognized contributor);
• they are updated periodically;
5
• they are representative of recent transactions;
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FINANCIAL REPORT
• their characteristics are identical to the characteristics of the transaction.
If necessary, an approximation may be used, provided that the relevance of
such an arrangement is demonstrated and documented.
The fair value of instruments established by valuation models is adjusted
in order to account for liquidity risk, counterparty risk and own credit risk
(valuation of passive positions, modeling risk and input risk).
The margin generated when these instruments begin trading is immediately
recognized in income.
LEVEL 3: VALUATION USING NON-OBSERVABLE MARKET INPUTS
Level 3 comprises instruments measured using unrecognized models and/or
models based on non-observable market data, where they are liable to materially
impact the valuation. This mainly includes:
• unlisted shares whose fair value could not be determined using observable
inputs;
• instruments with a deferred day-one margin;
• units of UCITS for which the fund has not published a recent NAV at the
valuation date, or for which there is a lock-up period or any other constraint
calling for a significant adjustment to available market prices (NAV, etc.) in
respect of the low liquidity observed for such shares;
• instruments carried at fair value on the balance sheet and for which data are
no longer available due to a freeze in trading in the wake of the financial crisis,
which were not reclassified within “Loans and receivables” pursuant to the
amendment to IAS 39 and IFRS 7 published on October 13, 2008 (see below).
When there is a significant drop in trading in a given market, a valuation model
is used based on the only available relevant data.
224
In accordance with Pillar III requirements, a description of the crisis simulations
and the ex-post control system applied (validation of the accuracy and
consistency of internal models and modeling procedures) is provided for each
model in Chapter 3 “Risk Management”.
Under IAS 39, day-one profit should be recognized only if it is generated by a
change in the factors that market participants would consider in setting a price,
i.e. only if the model and parameters input into the valuation are observable.
If the selected valuation model is not recognized by current market practices,
or if one of the inputs used is not observable, the trading profit on the trade
date cannot be recognized immediately in the income statement, but is taken
to income on a straight-line basis over the life of the transaction or until the
date the inputs become observable. Any losses incurred at the trade date are
immediately recognized in income.
At December 31, 2013, instruments on which the recognition of day-one profit/
loss has been deferred included:
• structured equity and index products with multiple underlyings;
• synthetic loans;
• options on funds (multi-assets and mutual funds);
• structured fixed income products;
• securitization swaps.
These instruments are almost all located at Natixis.
The table below provides the main non-observable inputs and the value ranges
for these instruments.
FINANCIAL REPORT
Class of instrument
Main types of products
comprising level 3 in
the class of instrument
Valuation techniques used
Main unobservable
data
Unbservable data
ranges among relevant
level 3 products
5%-95%(a)
Credit derivatives
CDOs, Index tranche
Technique for estimating defaults given
correlation effects and recovery modeling
Correlation curve
specific to the
portfolio underlying
the CDO
Credit derivatives
CDS on projects
(other than CDS on
securitization assets)
Extrapolation from prices based on recovery
assumption
Recovery rate
60%-70%
Interest rate derivatives
Securitization swaps
Discounted expected cash flows based on
early redemption assumptions on the
underlying portfolio
Early redemption
rate
4%-15%
Sticky CMS / Volatility
Bonds
Interest rate options valuation models
Forward CMS
volatility
0% - 5%
Payoffs as Target
Volatility strategy and
CPPI on Mutual
Funds
The approach used is a hybrid model that
combines the local volatility-type multiunderlying equity model with a one-factor
Heath-Jarrow-Morton (HJM1F) interest rate
model.
Bonds backed by
securitizations
(CMBS),
securitization assets
(ABS CDOs, CREs
CDOs), and loans
(CLOs)
Combined approach depending on the
products, based on expected cash flows and
scoring techniques in relation to the NAV of
benchmark products
Default and
recovery data
according to
different asset
classes(b).
Hybrid currency / interest rate options
valuation model
Correlation
between currency
and interest rates
and long-term
volatility
AUD/JPY and
USD/JPYcorrelation
5% - 70%
Long-term volatility:
12% - 30%
Long maturity
multi-underlying Volatility options valuation model incorporating
payoffs
correlation between assets
Correlation inputs
16% - 98%
Callable Spread
Option and Corridor
Callable Spread
Option Model representing several yield curve factors
Forward Spread
volatility
20% - 40%
Bi-Lognormal model to measure the time
value of Spread-Lock options and replication
for CMS and TEC Forwards
Spread Lock curve
and TEC Forward
volatility
Spread Lock:
-0.30% / -0.31%
Volatility 50% -85%
Fund-based derivatives
Securities portfolios (CDOs, CLOs, etc.)
Hybrid interest rate / currency derivatives
Equity derivatives
(a)
(b)
Long-term PRDC /
PRDKO / TARN
structures
Spread Lock Swap
and Spread Lock
Option
5
5
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Index - Interest rate
Fund data correlation 22% - 34%
5
All transactions including this type of data are fully back-to-back; this input justifying the level 3 classification is entirely hedged.
The valuation models for instruments affected by the financial crisis are described in Note 4.1.6.
Policy concerning fair value hierarchy transfers
Instruments impacted by the financial crisis
Fair value hierarchy transfers are examined and validated by special purpose
committees. This policy takes into account various indicators concerning market
activity and liquidity, as explained in the general principles.
The instruments impacted by the financial crisis and recorded at fair value in
the balance sheet are essentially held by Natixis.
A study is conducted on any instrument for which these criteria are not met
or for which these criteria may become observable again. Transfers to or from
Level 3 are subject to prior validation.
In the absence of observable market data, directly and indirectly held ABS CDO
portfolios with subprime exposure are measured using a valuation method based
on a discounted cash flow approach using Intex modeling.
ABS CDOS WITH SUBPRIME EXPOSURE
Information on fair value hierarchy transfers is provided in Note 5.5.3. The
amounts given in this note are values calculated on the date of the last valuation
before the transfer.
5
5
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FINANCIAL REPORT
CUMULATIVE LOSS RATE (SUBPRIME)
12/31/2013
Pre-2005 vintage
12/31/2012
8.1%
7.3%
2005 vintage
20.1%
18.0%
2006 vintage
37.8%
34.0%
2007 vintage
65.3%
60.0%
The following assumptions applied in previous years remained unchanged:
• the current rating of assets posted as collateral rated CCC+ or below is taken
into account by applying a 97% discount to the underlyings. This discount
was reduced to 70% for underlying assets initially rated AAA in standard
securitization transactions (i.e., excluding Commercial Real Estate CDOs – CRE
CDOs, ABS CDOs, ABS CDO Mezzanine, on which a 97% discount continues
to be applied);
• non-subprime underlying assets held (excluding RMBS and CLOs) are valued
using a discount matrix taking into account transaction types, ratings and
vintages;
• underlying RMBS are valued by projecting final losses from estimated losses
to date, as calculated by the “delinquency pipeline”, the severity of loss given
default and the losses already incurred based on assets and pool vintages;
these parameters may, where applicable, be stressed according to the inherent
characteristics of the assets;
• valuation of underlying CLOs based on the model used for directly held CLO
positions.
In the case of structures in which Natixis holds the underlying assets, each
underlying tranche is valued transparently, using the corresponding mark-tomodel or mark-to-market techniques, as in previous years.
CDS CONTRACTED WITH CREDIT ENHANCERS (MONOLINE INSURERS AND CDPCS)
The valuation model used to measure write-downs on CDS contracted with
monoline insurers consists in applying a standard rate of recovery of 10% for
unrealized capital losses on the underlying assets concerned (rate justified by
the low capitalization of monoline insurers given their risk exposures) and a
probability of default calibrated to the credit risk associated with the credit
enhancer.
The current method for determining provisions for contracts with CDPCs (Credit
Derivatives Product Companies) consists in applying a transparency-based
approach to the underlying assets, based on an estimate of exposure at the
time of default, with the PD and LGD based on the tranche’s maturity. A stress
factor of 1.2 was applied to the probabilities of default thus determined for the
underlyings, based on a recovery rate of 27%. Counterparties are associated
with a probability of default whenever the losses resulting from the calculation
exceed the CDPC’s net available assets.
In addition to these provisions, a general reserve also takes into account the
volatility of the fair value of the contracts.
OTHER INSTRUMENTS NOT EXPOSED TO US HOUSING RISK MEASURED BY NATIXIS
USING A VALUATION MODEL
The section below describes the underlying principles used to value assets
resulting from securitization transactions for which no market prices could be
identified and which were therefore measured using valuation models:
U.S. non-residential ABS CDOs
A scoring model was used defining the level of risk associated with each
structure based on a series of criteria.
226
CRE CDOs (Commercial Real Estate CDOs) and CMBS (Commercial
Mortgage Backed Securities)
The credit stress approach for CRE CDOs differs depending on the type of
underlying. For US CMBS included in the collateral, it is based on projected
future cash flows using an identical approach to the one applied for European
CMBS and described below. For other categories of underlying assets, the
previous model, based on loss tables determined according to the rating and
the vintage, is retained.
The model used for European CMBS is based on projected future cash flows and
defaults on underlying loans for each structure, which are determined based on
the individual characteristics for each loan and a correlation assumption applied
to loans in the same pool.
Trust Preferred Securities (Trups) CDOs
The valuation model is based on projected future cash flows and default
rates determined according to a statistical approach that deduces the default
probability of banks according to their financial ratios. For other sectors, default
rates are estimated considering the current ratings of assets.
CLOs
The model is based on detailed knowledge of the features of the transactions
and a credit risk evaluation that includes several parameters including:
• the benchmarked average cumulative default rate, the level of which is
determined according to changes in inventory;
• the recovery rate;
• and the correlation rate.
Private Finance Initiative CDS (PFI CDS)
The valuation model used is based on an approach calibrated to the market
prices of underlying PFI bonds (PFIs are a type of public-private partnership used
to implement public infrastructures) and the use of a uniform collection rate.
Instruments not carried at fair value on the balance sheet
IFRS 13 requires disclosure in the notes to the financial statements of the fair
value, and the associated fair value levels, of all financial instruments carried at
amortized cost, including loans. The valuation methods used to determine the
fair value disclosed in the notes to the financial statements are described below.
ASSETS AND LIABILITIES OF NATIXIS BUSINESS LINES AND OF THE SINGLE
TREASURY AND CENTRAL BANK COLLATERAL MANAGEMENT POOL
Instruments reclassified as “Loans and receivables”
The fair value measurement of instruments reclassified as “Loans and receivables”
in accordance with the amendment to IAS 39 and IFRS 7 “Reclassification of
financial assets” published on October 13, 2008, as referred to in the notes (see
Note 5.8), is based on the valuation principles described below.
The fair value measurement method for CMBS and CLOs is the same as that
used for identical products classified as “Instruments at fair value through profit
or loss” and “Available-for-sale assets”.
FINANCIAL REPORT
The fair value of US and European RMBS is measured using the market price
used for identical products classified as “Instruments at fair value through profit
or loss” and “Available-for-sale assets”.
In addition, the valuation of recoverable cash flows from instruments reclassified
as “Loans and receivables” is based on the following methodologies:
overseeing commercial banking activities, for which the management model is
mainly based on collection of contractual cash flows.
Consequently, the following simplified assumptions were used:
The carrying amount of assets and liabilities is deemed to be their fair value
in the following cases
• for US and European RMBS, projection of final losses based on estimated
losses to date, as calculated by the “delinquency pipeline”, the severity of
loss given default and the losses already incurred based on assets and pool
vintages; these parameters may, where applicable, be stressed according to
the inherent characteristics of the assets;
These notably include:
• the valuation method for CMBS and CLOs is identical to the model described
above.
• demand liabilities;
• variable-rate loans and borrowings;
Other instruments
• transactions in a regulated market (particularly regulated savings products),
whose prices are set by the public authorities.
Loans classified as “Loans and receivables” and amounts payable under
finance leases
Fair value of the loans to retail customers
The large majority of Natixis’ loans are variable-rate loans, and their fair value
is determined on the basis of discounted future cash flows. The discount rate
applied for a given loan is the rate at which Natixis would grant a loan with
similar characteristics to a similar counterparty at the reporting date. As these
are primarily variable-rate loans, the contractual rate is adjusted according to
the trend in market lending rates and in counterparty risk.
The fair value of loans is determined based on internal valuation models
that discount future payments of recoverable capital and interest over the
remaining loan term. Except for special cases, only the interest rate component
is remeasured, as the credit margin is established at the outset and not
subsequently remeasured. Early repayment options are factored into the model
via an adjustment to loan repayment schedules.
If there is a quoted price that meets the criteria of IFRS 13, the quoted price
is used.
Fair value of loans to large corporates, local authorities and credit
institutions
The fair value of loans with an initial term of less than one year is considered
to be their carrying amount.
The fair value of loans is determined based on internal valuation models
that discount future payments of recoverable capital and interest over the
remaining loan term. The interest rate component is remeasured, as is the credit
risk component (where it is an observable piece of data used by the customer
relationship managers). Failing that, the credit risk component is established at
the outset and not subsequently remeasured, as with loans to retail customers.
Early repayment options are factored into the model via an adjustment to loan
repayment schedules.
Borrowings and savings
The fair value of variable-rate borrowings and debt securities is considered
to be their net carrying amount on the balance sheet. Fixed-rate borrowings
and debt securities are discounted based on the fixed rates available on the
market at the reporting date for a debt with a similar term to maturity. Where
fluctuations in the issuer spread are not material, the valuation does not take
this effect into account. This is generally the case for issues with an initial
maturity of less than one year.
Investment property recognized at cost
The fair value of investment property (excluding investment property held by
insurance companies) is determined by reference to the capitalization of rents, a
method widely used by real estate professionals. The capitalization rate applied
to the property depends on a number of factors such as location, the quality and
type of building, use, type of ownership, quality of lessees and characteristics of
the lease, the interest rate and competition in the real estate market.
Financial instruments of the commercial banking business lines
For financial instruments not measured at fair value on the balance sheet, fair
value calculations are provided for information purposes and must only be
interpreted as estimates.
In most cases, the values indicated are not liable to be realized and generally
may not be realized in practice.
These fair values are thus only calculated for information purposes in the notes
to the financial statements. They are not indicators used in the interest of
• short-term financial assets and liabilities (whose initial term is one year or
less) provided that sensitivity to interest-rate risk and credit risk is not material
during the period;
Fair value of debt
The fair value of fixed-rate debt owed to credit institutions and customers with
a term of over one year is deemed to be equal to the present value of future
cash flows discounted at the interest rate observed at the balance sheet date.
The own credit spread is not generally taken into account.
5
5
5
5
5
5
INSTRUMENTS RECLASSIFIED TO “LOANS AND RECEIVABLES” HAVING LEGAL
STATUS AS “SECURITIES”
The illiquidity of such instruments, which is necessary to their classification in
“Loans and receivables”, was assessed at the reclassification date.
Subsequent to reclassification, some instruments may become liquid again and
be measured at Level 1 fair value.
In other cases, their fair value is measured using models identical to those
described above for instruments measured at fair value on the balance sheet.
4.1.7
5
Impairment of financial assets
Impairment of securities
An impairment loss is recognized on an individual basis against securities, with
the exception of securities classified as financial assets at fair value through
227
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5
5
FINANCIAL REPORT
profit or loss, when there is objective evidence of impairment resulting from one
or more loss events having occurred since the initial recognition of the asset.
A loss event is defined as one that has an impact on the estimated future cash
flows of a financial asset which can be reliably estimated.
Different rules are used for the impairment of equity instruments and debt
instruments.
For equity instruments, a long-term or significant decrease in value represents
objective evidence of impairment.
Given the clarifications provided by IFRIC in July 2009 and the recommendations
issued by the stock market regulators, the Group has been prompted to revise
the criteria used to characterize the impairment situations for listed equity
instruments.
A decline of over 50% or lasting for over 36 months in the value of a security
by comparison with its historical cost is an objective indicator of permanent
impairment, leading to the recognition of an impairment loss in income.
In addition, these impairment criteria are also supplemented by a line-by-line
review of the assets that have recorded a decline of over 30% or for more than
six months in their value by comparison with their historical cost or if events
occur that are liable to represent a material or prolonged decline. An impairment
charge is recorded in the income statement if the Group determines that the
value of the asset will not be recovered in its entirety.
For unlisted equity instruments, a qualitative analysis of their situation is carried
out.
Impairment losses recognized on equity instruments may not be reversed and
nor may they be written back to income. Losses are recorded under “Net gains
or losses on available-for-sale financial assets”. A subsequent increase in value
is taken to equity until disposal of the securities.
Impairment losses are recognized on debt instruments such as bonds or
securitized transactions (ABS, CMBS, RMBS, cash CDOs) when there is a known
counterparty risk.
The Group uses the same impairment indicators for debt securities as those
used for individually assessing the impairment risk on loans and receivables,
irrespective of the portfolio to which the debt securities are ultimately
designated. For perpetual deeply subordinated notes, particular attention is
also paid if, under certain conditions, the issuer may be unable to pay the coupon
or extend the issue beyond the scheduled redemption date.
In the event of an improvement in the issuer’s financial position, impairment
losses taken on debt instruments may be written back to the income statement.
Impairment losses and write-backs are recorded in “Cost of risk”.
Impairment of loans and receivables
Impairment is determined as the difference between the amortized cost and the
recoverable amount, i.e. the present value of estimated recoverable future cash
flows taking into account the impact of any collateral. For short-term assets
(maturity of less than one year), there is no discounting of future cash flows.
Impairment is determined globally, without distinguishing between interest
and principal. Probable losses arising from off-balance sheet commitments are
taken into account through provisions recognized on the liability side of the
balance sheet.
Two types of impairment are recognized under “Cost of risk”:
• impairment on an individual basis;
• impairment on a portfolio basis.
IMPAIRMENT ON AN INDIVIDUAL BASIS
Specific impairment is calculated for each receivable on the basis of the
maturity schedules determined based on historic recoveries for each category
of receivable. Collateral is taken into account when determining the amount of
impairment, and when collateral fully covers the risk of default, the receivable
is no longer impaired.
IMPAIRMENT ON A PORTFOLIO BASIS
Impairment on a portfolio basis covers unimpaired outstandings on an individual
basis. In accordance with standard IAS 39, these are grouped together in
portfolios with similar credit risk characteristics that undergo a collective
impairment test.
Banque Populaire and Caisse d’Epargne outstanding loans are included in a
group of similar loans in terms of the sensitivity of risk based on the Group’s
internal rating system. The portfolios subject to the impairment test are those
relating to counterparties with ratings that have been significantly downgraded
since granting, and which therefore are considered sensitive. These loans
undergo impairment, although credit risk cannot be individually allocated to
the different counterparties making up these portfolios, as the loans in question
collectively show objective evidence of impairment.
The amount of impairment is determined based on historical data on the
probability of default at maturity and the expected losses, adjusted, if necessary,
to take into account the prevailing circumstances at the balance sheet date.
This approach may also be supplemented by a segmental or geographical analysis
generally based on an expert opinion, taking account of various economic factors
intrinsic to the loans and receivables in question. Portfolio-based impairment is
calculated based on expected losses at maturity across the identified population.
4.1.8
Reclassifications of financial assets
Several types of reclassification are authorized:
IAS 39 defines the methods for calculating and recognizing impairment of loans.
Reclassifications authorized prior to the amendments to IAS 39
and IFRS 7 adopted by the European Union on October 15, 2008
A loan or receivable is deemed to be impaired if the following two conditions
are met:
These notably include “Available-for-sale financial assets” reclassified as “Heldto-maturity financial assets”.
• there is objective evidence of impairment on an individual or portfolio basis:
there are “triggering events” or “loss events” identifying counterparty risk
occurring after the initial recognition of the loans in question. On an individual
level, the criteria for deciding whether or not a credit risk has been incurred
include the existence of payments past due by more than three months
(six months for real estate and nine months for loans to local authorities)
or, independently of the existence of a missed payment, the existence of an
incurred credit risk or litigious proceedings;
Any fixed-income security with a set maturity date meeting the definition
of “Held-to-maturity securities” may be reclassified if the Group changes its
management strategy and decides to hold the security to maturity. The Group
must also have the ability to hold this instrument to maturity.
• these events lead to incurred losses.
228
FINANCIAL REPORT
Reclassifications authorized since the amendments to IAS 39
and IFRS 7 adopted by the European Union on October 15, 2008
These standards define the terms for reclassifying non-derivative financial
assets at fair value (with the exception of those initially designated at fair
value through profit or loss) to other categories:
• reclassification of “Financial assets held for trading” into the “Available-forsale financial assets” or “Held-to-maturity financial assets” categories.
Any non-derivative financial assets may be reclassified whenever the Group
is able to demonstrate the existence of “rare circumstances” leading to
this reclassification. It should be noted that the IASB has characterized the
financial crisis of the second half of 2008 as a “rare circumstance”.
Only instruments with fixed or determinable payments may be reclassified
to the “Held-to-maturity financial assets” category. The institution must also
have the intention and the ability to hold these instruments until maturity.
Instruments included in this category may not be hedged against interest
rate risk;
• reclassification of “Financial assets held for trading” or “Available-for-sale
financial assets” into the “Loans and receivables” category.
Any non-derivative financial asset meeting the definition of “Loans and
receivables” and, in particular, any fixed-income instruments not quoted in
an active market may be reclassified if the Group changes its management
strategy and decides to hold the instrument for a foreseeable future or to
maturity. The Group must also have the ability to hold this instrument over
the medium to long term.
Reclassifications are carried out at fair value at the reclassification date, with
this value serving as the new amortized cost for instruments transferred to
categories measured at amortized cost.
A new effective interest rate is then calculated at the reclassification date in
order to bring this new amortized cost into line with the redemption value,
which implies that the instrument has been reclassified with a discount.
For instruments previously recorded under available-for-sale financial assets, the
amortization of the new discount over the residual life of the instrument will
generally be offset by the amortization of the unrealized loss recorded under
gains and losses recognized directly in equity at the reclassification date and
taken to the income statement on an actuarial basis.
In the event of impairment subsequent to the reclassification date of an
instrument previously recorded under available-for-sale financial assets, the
unrealized loss recorded under gains and losses recognized directly in equity
at the reclassification date and taken to the income statement on an actuarial
basis is immediately written back to income.
4.1.9
Derecognition of financial assets and liabilities
A financial asset (or group of similar financial assets) is derecognized when the
contractual rights to the asset’s future cash flows have expired or when such
rights are transferred to a third party, together with substantially all of the
risks and rewards associated with ownership of the asset. In such case, rights
and obligations created or retained as a result of the transfer are recorded in a
separate line under financial assets and liabilities.
When a financial asset is derecognized, a gain or loss on disposal is recorded in
the income statement reflecting the difference between the carrying amount
of the asset and the consideration received.
In the event that the Group has neither transferred nor retained virtually all of
the risks and rewards, but has retained control of the asset, the asset continues
to be recognized on the balance sheet to the extent of the Group’s continuing
involvement.
In the event that the Group has neither transferred nor retained virtually all
of the risks and rewards, but has not retained control of the asset, the asset
is derecognized and all of the rights and obligations created or retained as a
result of the transfer are recorded in a separate line under financial assets and
liabilities.
5
5
If all the conditions for derecognizing a financial asset are not met, the Group
keeps the asset in the balance sheet and records a liability representing the
obligations arising when the asset is transferred.
The Group derecognizes a financial liability (or a part of a financial liability)
only when it is extinguished, i.e. when the obligation specified in the contract
is discharged, terminated or expires.
Repurchase agreements
Securities sold under repurchase agreements are not derecognized in the
vendor’s accounts. A liability representing the commitment to return the funds
received is identified and recognized under “Securities sold under repurchase
agreements”. This represents a financial liability recorded at amortized cost or
at fair value if this liability has been classified as “Designated at fair value”.
The assets received are not recognized in the purchaser’s books, but a receivable
is recorded with respect to the vendor representing the funds loaned. The
amount disbursed in respect of the asset is recognized under “Securities
bought under repurchase agreements”. On subsequent balance sheet dates,
the securities continue to be accounted for by the vendor in accordance with
the rules applicable to the category in which they were initially classified. The
receivable is valued according to methods specific to its category: at amortized
cost when classified in “Loans and receivables”, or at fair value when classified
under the fair value option.
Outright securities lending
5
5
5
Outright securities lending transactions do not qualify as transfers of financial
assets within the meaning of IAS 39. The securities loaned are therefore not
derecognized. The securities loaned continue to be recognized in their original
accounting category and are valued accordingly. For the borrower, the securities
borrowed are not recognized.
Restructuring of financial assets
The Group deems restructuring to have led to substantial changes in
derecognized assets, as rights to initial cash flows have essentially expired.
This is the case for:
5
• restructuring leading to a change of counterparty, especially if the
new counterparty has a very different credit quality than the previous
counterparty’s;
• restructuring intended to move from a very structured to simple indexing, as
two assets are not exposed to the same risks.
Restructuring of financial liabilities
A substantial change to the terms of a lending instrument must be recorded
as the extinguishment of former debt and its replacement with a new debt. To
assess the substantial nature of the change, IAS 39 includes a threshold of 10%
based on discounted cash flows, integrating potential costs and fees: when the
difference is greater than or equal to 10%, all of the costs or fees incurred are
recognized as profit or loss on debt extinguishment.
5
The Group may consider other changes to be substantial, such as a change of
issuer (even within the same group) or a change in currency.
5
229
5
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4.2
FINANCIAL REPORT
INVESTMENT PROPERTY
In accordance with IAS 40, investment property is property held to earn rent or
for capital appreciation, or both.
The accounting treatment for investment property is identical to that used for
property, plant and equipment (see Note 4.3) for all Group entities except for
certain insurance entities, which recognize the property they hold as investments
in connection with insurance policies at fair value, with any adjustment to
fair value recorded in income. Fair value is calculated using a multi-criteria
approach, by capitalizing rent at market rates and through comparisons with
market transactions.
Other items of property, plant and equipment are depreciated over their
estimated useful life, which generally ranges from five to ten years.
Property, plant and equipment and intangible assets are tested for impairment
whenever there is any evidence that they may be impaired at the balance sheet
date. If the revised recoverable amount of the asset is lower than its carrying
amount, an impairment loss is recognized in income. If the revised recoverable
amount of the asset is lower than its carrying amount, an impairment loss is
This loss is reversed in the event of a change in the estimated recoverable
amount or if there is no longer any evidence of impairment.
The fair value of the Group’s investment property is based on regular expert
valuations, except in special cases significantly affecting the value of the
relevant asset.
The accounting treatment adopted for property, plant and equipment and
intangible assets used in operations and financed using lease financing
agreements is stated in Note 4.9.
Investment property leased under an operating lease may have a residual value
that will reduce the depreciable amount of the asset.
Equipment leased under operating leases (Group as lessor) is recognized as an
asset on the balance sheet under property, plant and equipment.
Gains or losses on the disposal of investment property are recognized in income
on the “Net income or expenses on other activities” line.
4.4
4.3
PROPERTY, PLANT AND EQUIPMENT
AND INTANGIBLE ASSETS
This item includes property owned and used in the business, equipment
acquired under operating leases, property acquired under finance leases and
assets temporarily unlet held under finance leases. Interests in non-trading real
estate companies (SCIs) are accounted for as property, plant and equipment.
In accordance with IAS 16 and IAS 38, property, plant and equipment and
intangible assets are recognized as assets only if they meet the following
conditions:
• it is probable that future economic benefits associated with the asset will
flow to the company;
• the cost of the asset can be measured reliably.
Property, plant and equipment and intangible assets used in operations are
initially recognized at cost plus any directly attributable acquisition costs.
Software developed internally that fulfills the criteria for recognition as a
non-current asset is recognized at its production cost, which includes external
charges and the payroll costs of employees directly assigned to the project.
The component-based approach is applied to all buildings.
ASSETS HELD FOR SALE AND ASSOCIATED
LIABILITIES
Where a decision is made to sell non-current assets and it is highly probable
that the sale will occur within 12 months, these assets are shown separately on
the balance sheet on the “Non-current assets held for sale” line. Any liabilities
associated with these assets are also shown separately on the balance sheet on
the “Liabilities associated with non-current assets held for sale” line.
Once classified in this category, non-current assets are no longer depreciated/
amortized and are measured at the lower of the carrying amount and fair
value less costs. Financial instruments continue to be measured in accordance
with IAS 39.
4.5
PROVISIONS
Provisions other than those relating to employee benefit commitments,
provisions on regulated home savings products, off-balance sheet commitments,
and insurance policies mainly consist of provisions for restructuring, claims and
litigation, fines and penalties, and tax risks.
Provisions are liabilities of which the timing or amount is uncertain, but which
can be reliably estimated. They correspond to current obligations (legal or
implicit), resulting from a past event, and for which the outflow of resources
will probably be necessary to settle them.
After initial recognition, property, plant and equipment and intangible assets
are measured at cost less any accumulated depreciation, amortization or
impairment. The depreciable amount of the asset takes account of its residual
value where this is material and can be measured reliably.
The amount recognized in provisions is the best estimate of the expense required
to extinguish the present commitment at the balance sheet date.
Property, plant and equipment and intangible assets are depreciated or
amortized in order to reflect the pattern in which the asset’s future economic
benefits are expected to be consumed by the entity, which generally corresponds
to the asset’s useful life. Where an asset consists of a number of components
that have different uses or patterns of consumption of economic benefits, each
component is recognized separately and depreciated over a period that reflects
the useful life of that component.
Changes in provisions are recognized in the income statement on the line items
corresponding to the nature of future expenditure.
The depreciation and amortization periods used by the Group are as follows:
• buildings: 20 to 60 years;
• internal fixtures and fittings: 5-20 years;
• furniture and special equipment: 4-10 years;
• computer equipment: 3-5 years;
• software: not more than 5 years.
230
Provisions are discounted when the impact of discounting is material.
Provisions on regulated home savings products
Regulated home savings accounts (comptes d épargne logement - CEL) and
regulated home savings plans (plans d épargne logement - PEL) are retail
products marketed in France governed by the 1965 law on home savings plans
and accounts, and subsequent implementing decrees.
Regulated home savings products generate two types of commitments for the
Group:
• a commitment to provide a loan to the customer in the future at a rate set
on inception of the contract (for PEL products) or at a rate contingent upon
the savings phase (for CEL products);
• a commitment to pay interest on the savings in the future at a rate set on
inception of the contract for an indefinite period (for PEL products) or at a
FINANCIAL REPORT
rate set on a half-yearly basis according to an indexing formula regulated by
law (for CEL products).
• commissions payable on occasional services are recognized in full in income
when the service is provided (fund transfers, payment penalties, etc.);
Commitments with potentially unfavorable consequences for the Group are
measured for each generation of regulated home savings plans and for all
regulated home savings accounts.
• commissions payable on execution of a significant transaction are recognized
in full in income on completion of the transaction.
A provision is recognized for the associated risks by discounting future potential
earnings from at-risk outstandings:
• at-risk savings correspond to the uncertain future level of savings for plans
in existence at the date the provision is calculated. This is estimated on a
statistical basis for each future period taking account of historical investor
behavior patterns, and corresponds to the difference between the probable
outstandings and the minimum expected savings;
• at-risk loans correspond to the loans outstanding granted but not yet due
at the calculation date plus statistically probable loans outstanding based
on historical customer behavior patterns as well as earned and future rights
relating to regulated home savings accounts and plans.
Earnings for future periods from the savings phase are estimated, for a given
generation of contracts, as the difference between the regulated rate offered
and the expected interest accruing on a comparable savings product on the
market.
Earnings for future periods from the loan phase are estimated as the difference
between the fixed rate agreed at inception for PEL contracts or a rate contingent
on the savings phase for CEL contracts, and the expected interest rate accruing
on home loans in the non-regulated sector.
Where the algebraic sum of the Group’s estimated future commitments in
respect of the savings and loan phases of any generation of contracts indicates a
potentially unfavorable situation for the Group, a provision is recognized, with no
offset between the different generations. The commitments are estimated using
the Monte Carlo method in order to reflect the uncertainty of future interest rate
trends and their impact on customer behavior models and at-risk outstandings.
The provision is recognized under liabilities in the balance sheet and changes
are recorded in net interest income.
4.6
INTEREST INCOME AND EXPENSES
Interest income and expenses are recognized on all financial instruments
measured at amortized cost using the effective interest method.
The effective interest rate is the rate that exactly discounts estimated future
cash payments or receipts through the expected life of the financial instrument
to the net carrying amount of the financial asset or financial liability.
The effective interest rate calculation takes account of all transaction fees paid
or received as well as premiums and discounts. Transaction fees paid or received
that are an integral part of the effective interest rate of the contract, such as
loan set-up fees and commissions paid to financial partners, are treated as
additional interest.
4.7
COMMISSIONS ON SERVICES
Commissions are recorded in the income statement by type of service provided,
and according to the method used to recognize the associated financial
instrument:
5
5
Fees and commissions that are an integral part of the effective yield on an
instrument such as fees on financing commitments given or origination fees are
recognized and amortized as an adjustment to the effective interest rate over
the estimated term of the loan. These fees are therefore recognized as interest
income rather than “Fees and commissions”.
Fiduciary and similar fees and commissions are those that result in assets
being held or invested on behalf of individual customers, pension schemes or
other institutions. Trust-management services mainly cover asset management
business and custody services on behalf of third parties.
4.8
FOREIGN CURRENCY TRANSACTIONS
The method used to account for assets and liabilities relating to foreign currency
transactions entered into by the Group depends upon whether the asset or
liability in question is classified as a monetary or a non-monetary item.
Monetary assets and liabilities denominated in foreign currencies are translated
into the functional currency of the Group entity on whose balance sheet they
are recognized, at the exchange rate prevailing at the balance sheet date. All
resulting foreign exchange gains and losses are recognized in income, except
in two cases:
• only the portion of the foreign exchange gains and losses calculated based
on the amortized cost of available-for-sale financial assets is recognized in
income, with any additional gains and losses being recognized in equity;
• foreign exchange gains and losses arising on monetary items designated as
cash flow hedges or as part of a net investment in a foreign operation are
recognized in equity.
Non-monetary assets carried at historical cost are translated using the exchange
rate prevailing at the transaction date. Non-monetary assets at fair value are
translated using the exchange rate prevailing at the balance sheet date. Foreign
exchange gains and losses on non-monetary items are recognized in income if
gains and losses relating to the items are recorded in income, and in equity if
gains and losses relating to the items are recorded in equity.
4.9
5
5
5
5
FINANCE LEASES AND SIMILAR TRANSACTIONS
Leases are analyzed to determine whether in substance and economic reality
they are finance leases or operating leases.
4.9.1
Finance leases
A finance lease is a lease that transfers to the lessee substantially all the risks
and rewards incidental to ownership of an asset. It is treated as a loan granted
by the lessor to the lessee in order to finance the purchase of an asset.
5
IAS 17 gives five examples of situations that lead to a lease being classified as
a finance lease:
• the lease transfers ownership of the asset to the lessee by the end of the
lease term;
• commissions payable on recurring services are deferred over the period in
which the service is provided (payment processing, securities deposit fees, etc.);
231
5
5
5
FINANCIAL REPORT
• the lessee has the option to purchase the asset at a price that is expected to
be sufficiently below the fair value at the date the option becomes exercisable
for it to be reasonably certain, at the inception of the lease, that the option
will be exercised;
4.10
• the lease term is for the major part of the economic life of the asset;
• at the inception of the lease, the present value of the minimum lease payments
amounts to at least substantially all of the fair value of the leased asset;
4.10.1
• the leased assets are of such a specialized nature that only the lessee can use
them without major modifications.
IAS 17 also describes three indicators that may also lead to a lease being
classified as a finance lease:
• if the lessee can cancel the lease, the lessor’s losses associated with the
cancellation are borne by the lessee (capital loss on the asset, etc.);
• gains or losses from the change in the fair value of the residual value accrue
to the lessee;
• the lessee has the ability to continue the lease for a secondary period at a
rent that is substantially lower than the market rent.
EMPLOYEE BENEFITS
The Group grants its employees a variety of benefits that fall into the four
categories described below:
Short-term employee benefits
Short-term employee benefits mainly include wages, salaries, paid annual leave,
incentive schemes, profit sharing, and bonuses which are expected to be paid within
12 months of the end of the period in which the employee renders the service.
They are recognized as an expense for the period, including amounts remaining
due at the balance sheet date.
4.10.2
Long-term employee benefits
Long-term employee benefits are generally linked to long-service awards
accruing to current employees and payable 12 months or more after the end
of the period in which the employee renders the related service. These notably
comprise long service awards to employees.
A provision is set aside for the value of these obligations at the balance sheet date.
At the inception of the contract, the finance lease receivable is recorded on
the lessor’s balance sheet in an amount equal to the net investment in the
lease, which corresponds to the minimum payments receivable from the lessee
discounted at the interest rate implicit in the lease plus any unguaranteed
residual value accruing to the lessor.
Post-employment benefit obligations are valued using an actuarial method
that takes account of demographic and financial assumptions such as age,
length of service, the likelihood of the employee being employed by the Group
at retirement and the discount rate. The valuation consists in allocating costs
over the working life of each employee (projected unit credit method).
IAS 17 requires unguaranteed residual values to be reviewed on a regular basis.
If there is a reduction in the estimated guaranteed residual value, the income
allocation over the lease term is revised (calculation of a new payment table) and
a charge is recorded in order to correct the financial income already recorded.
4.10.3
Impairment charges for finance leases are determined using the same method
as that described for loans and receivables.
Finance income corresponding to interest is recognized in the income statement
under “Interest and similar income”. It is recognized based on a pattern reflecting
a constant periodic rate of return on the net investment in the finance lease,
using the interest rate implicit in the lease. The rate of return implicit in the
lease is the discount rate that makes the following two items equal:
• the present value of the minimum lease payments receivable by the lessor
plus the non-guaranteed residual value; and
• the initial value of the asset (i.e. fair value at the inception of the lease, plus
any direct initial costs comprising expenses incurred specifically by the lessor
to set up the lease).
In the lessee’s financial statements, lease financing agreements with purchase
options are treated as the purchase of an asset financed by a loan.
4.9.2
Operating leases
An operating lease is a lease under which substantially all the risks and rewards
of ownership of an asset are not transferred to the lessee.
In the lessor’s financial statements, the asset is recognized under property,
plant and equipment and depreciated on a straight-line basis over the lease
term. The depreciable amount does not take into account the residual value
of the asset.
The leased asset is not recognized on the balance sheet of the lessee. Lease
payments are recognized in income on a straight-line basis over the lease term.
Termination benefits
Termination benefits are granted to employees on termination of their
employment contract before the normal retirement date, either as a result of
a decision by the Group to terminate a contract or a decision by an employee
to terminate a contract in exchange for a severance package. A provision is set
aside for termination benefits. Termination benefits that are not expected to
be paid within the 12 months following the balance sheet date are discounted
to present value.
4.10.4
Post-employment benefits
Post-employment benefits include lump-sum retirement bonuses, pensions and
other post-employment benefits.
These benefits can be broken down into two categories: defined-contribution
plans, which do not give rise to an obligation for the Group, and defined-benefit
plans, which give rise to an obligation for the Group and are therefore measured
and recognized by means of a provision.
The Group records a provision in liabilities for employee benefit commitments
that are not funded by contributions charged to income and paid out to pension
funds or insurance companies.
Post-employment benefits are measured in the same way as long-term
employee benefits.
The measurement of these obligations takes into consideration the value of
plan assets.
Revaluation differences on post-employment benefits, relating to changes in
actuarial assumptions and experience adjustments are recognized in equity
(other comprehensive income) and are not subsequently transferred to income.
Revaluation differences on long-term employee benefits are immediately
The annual expense recognized in respect of defined-benefit plans includes the
current service cost, net interest cost (the effect of discounting the obligation),
the expected return on plan assets and past service costs.
The amount of the provision under liabilities in the balance sheet corresponds to
the net total commitment as IAS 19R no longer provides for unrecognized items.
232
FINANCIAL REPORT
4.11
SHARE-BASED PAYMENTS
Share-based payments are those based on shares issued by the Group, regardless
of whether transactions are settled in the form of equity or cash, the value of
which fluctuates in line with the share price.
The cost to the Group is calculated on the basis of the fair value at the grant date
of the share purchase or subscription options granted by certain subsidiaries.
The total cost of the plan is determined by multiplying the unit value of the
option by the estimated number of options that will have vested at the end of
the vesting period, taking account of the likelihood that the grantees will still
be employed by the Group, and of any non-market performance conditions
that may affect the plan.
The cost to the Group is recognized in income from the date the employees are
notified of the plan, without waiting for the vesting conditions, if any, to be
satisfied (for example, in the case of a subsequent approval process), or for the
beneficiaries to exercise their options.
The corresponding adjustment for the expense recorded under equity-settled
plans is an increase in equity.
The Group recognizes a liability for cash-settled plans. The related cost is taken
to income over the vesting period and a corresponding fair value adjustment
is booked to a debt account.
4.12
DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities are recognized when temporary differences
arise between the carrying amount of assets and liabilities on the balance sheet
and their tax base, irrespective of when the tax is expected to be recovered or
settled.
Deferred tax assets and liabilities are measured at the tax rates that are expected
to apply to the period when the asset is realized or the liability settled based
on tax rates (and tax laws) that have been enacted or substantively enacted by
the balance sheet date.
Deferred tax liabilities and assets are offset at the level of each tax entity. The
tax entity may either be a single entity or a tax consolidation group. Deferred
tax assets are recognized only to the extent that it is probable that taxable
profit will be available against which the temporary difference will be utilized
in the foreseeable future.
Deferred tax assets and liabilities are recognized as a tax benefit or expense in
the income statement, except for:
• revaluation differences on post-employment benefits;
• unrealized gains or losses on available-for-sale assets; and
• changes in the fair value of derivatives used as cash flow hedges;
for which the corresponding deferred tax assets and liabilities are recognized
as unrealized gains and losses directly in equity.
Deferred tax assets and liabilities are not discounted to their present value.
4.13
INSURANCE BUSINESSES
Financial assets and liabilities of insurance businesses are recognized in
accordance with the provisions of IAS 39. They are classified into categories
defined by this standard, which calls for specific approaches to measurement
and accounting treatment.
In accordance with Phase I of IFRS 4, insurance contracts are classified into
three categories:
• policies that expose the insurer to a significant insurance risk within the
meaning of IFRS 4: this category comprises policies covering provident
insurance, pensions, property and casualty insurance, and unit-linked savings
policies carrying a minimum guarantee. These policies will continue to be
measured under the rules provided under local GAAP for measuring technical
reserves;
• financial contracts such as savings schemes that do not expose the insurer
to a significant insurance risk are recognized in accordance with IFRS 4 if
they contain a discretionary profit sharing feature, and will continue to be
measured in accordance with the rules for measuring technical reserves
provided under local GAAP;
5
5
5
• financial contracts without a discretionary profit-sharing feature such as
contracts invested exclusively in units of accounts and without a minimum
guarantee, are accounted for in accordance with IAS 39.
Most financial contracts issued by Group entities contain discretionary profitsharing features.
The discretionary profit-sharing feature grants life insurance policyholders
the right to receive a share of the financial income generated, in addition to
guaranteed benefits. For these contracts, in accordance with shadow accounting
principles defined by IFRS 4, the provision for deferred profit sharing is adjusted
to include the policyholders’ share in the unrealized capital gains or losses on
financial instruments measured at fair value in application of IAS 39. The share
of the gains or losses attributable to policyholders is determined on the basis of
the characteristics of contracts likely to generate such gains or losses.
Any change in deferred profit sharing is taken to equity where it results from
changes in the value of available-for-sale financial assets and to income where
it arises from changes in the value of financial assets at fair value through
profit or loss.
At each balance sheet date, the Group assesses whether its recognized insurance
liabilities are adequate, based on the estimated present value of future cash flows
from its insurance policies and investment contracts containing a discretionary
profit sharing feature. The liability adequacy test shows the economic value of
the liabilities corresponding to the average derived from stochastic analyses.
If the sum of the surrender value and deferred profit-sharing is lower than the
fair value of the technical reserves, the shortfall is recognized in income.
4.14
5
5
5
REAL ESTATE BUSINESSES
Revenues from the real estate business are derived from real estate development
activities in the residential and commercial sectors and from related services.
Projects in progress at the end of the fiscal year date are recognized on a
percentage of completion basis in line with the latest operating budgets.
5
When the outcome of a project cannot be reliably estimated, revenues are
recognized only to the extent of costs incurred as revenue that are expected
to be fully recoverable.
Operating income from all real estate development deals includes all projectrelated costs:
• land acquisition;
5
Pending amendments to IFRS 4, insurance liabilities continue to be measured
broadly in line with French GAAP.
233
5
5
FINANCIAL REPORT
Inventories and work in progress comprise land measured at cost, work in
progress (site preparation and construction costs), attributable commercial
expenses (internal and external sales commissions, sales bubbles, etc.) and
deliverables measured at prime cost. Borrowing costs are not included in
inventories.
• site preparation and construction;
• planning taxes (taxes d’urbanisme);
• preliminary surveys (these are only charged to the project if the completion
probability is high);
• internal project management fees;
• project-related marketing costs (internal and external sales commissions,
advertising expenses, on-site sales office, etc.);
Preliminary surveys commissioned in the pre-development phase are only
included in inventories if there is a high probability that the project will actually
go ahead. If this is not the case, these costs are expensed to the period.
• financial expenses attributed to the deals.
Note 5
5.1
When the net realizable value of inventories and work in progress is less than
their cost, a provision for impairment loss is recognized.
Notes to the balance sheet
CASH AND AMOUNTS DUE FROM CENTRAL BANKS
12/31/2013
Cash
Amounts due from central banks
TOTAL CASH AND AMOUNTS DUE FROM CENTRAL BANKS
5.2
FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE
THROUGH PROFIT OR LOSS
5.2.1
12/31/2012
2,647
2,493
57,763
51,299
60,410
53,792
Financial assets at fair value through profit or loss
Financial assets in the trading book mainly include proprietary securities
transactions, repurchase agreements and derivative instruments contracted by
the Group to manage its risk exposure.
Financial assets and liabilities at fair value through profit or loss comprise
instruments held for trading, including derivatives, and certain assets and
liabilities that the Group has chosen to recognize at fair value, at their date of
acquisition or issue, using the fair value option available under IAS 39.
12/31/2013
Trading
Fair value
option
Treasury bills and equivalent
29,336
42
Bonds and other fixed-income securities
12/31/2012
Total
Trading
Fair value
option
Total
29,378
37,625
51
37,676
8,988
2,843
11,831
11,625
3,944
15,569
Fixed-income securities
38,324
2,885
41,209
49,250
3,995
53,245
Equities and other variable-income securities
25,357
11,985
37,342
16,119
12,720
28,839
Loans to credit institutions
335
1
336
233
19
252
Loans to customers
209
9,633
9,842
235
10,144
10,379
Loans
544
468
9,634
10,178
61,911
61,911
55,432
///
55,432
119,657
86,415
206,072
Repurchase agreements(1)
Trading derivatives(1)
TOTAL FINANCIAL ASSETS AT FAIR VALUE THROUGH PROFIT
OR LOSS
(1)
The information is presented in consideration of netting effects, in accordance with IAS 32 (see Note 13).
234
10,163
10,631
68,398
68,398
53,878
///
53,878
119,715
95,276
214,991
FINANCIAL REPORT
5
Conditions for designating financial assets designated at fair value
Accounting
mismatches
Fair value
measurement Embedded derivatives
Financial assets
designated at fair
value
1,679
839
367
2,885
8,329
3,656
0
11,985
Loans and repurchase agreements
TOTAL
5,936
62,409
3,200
71,545
15,944
66,904
3,567
86,415
measured on a fair value basis in connection with these same activities are also
accounted for under the fair value option.
Financial assets accounted for under the fair value option mainly concern
certain contracts for structured loans to local authorities and structured bonds
hedged by derivatives not designated as hedging instruments, assets containing
embedded derivatives and fixed-income instruments index-linked to a credit risk.
Loans and receivables designated at fair value through profit or loss
and credit risk
In connection with Natixis’ capital market activities, the fair value option has
mainly been used to avoid accounting mismatches between assets and liabilities
perceived as having an economic relationship. This is also the case between
an asset and a hedging derivative when the conditions for hedge accounting
are not met. Groups of financial assets and financial liabilities managed and
The statement below shows the portion of fair value attributable to credit risk
for loans and receivables recorded under the fair value option. When purchases
of protection were made in connection with loan arrangements, the fair value
of linked credit derivatives is also stated.
12/31/2013
Loans to customers
TOTAL
9,633
(5)
10,144
(17)
9,634
(5)
10,163
(17)
1
At December 31, 2013, the Group had not purchased protection to hedge
against credit risk associated with loans and receivables classified as fair value
instruments through profit or loss.
5.2.2
19
5
Financial liabilities at fair value through profit or loss
Financial liabilities in the trading book include liabilities arising from shortselling transactions, repurchase agreements and derivative instruments.
Securities sold short
Other financial liabilities
12/31/2013
12/31/2012
41,289
45,808
1,828
1,553
Financial liabilities held for trading
43,117
47,361
Trading derivatives(1)
57,223
56,490
Interbank term accounts and loans
66
125
Customer term accounts and loans
116
18
15,083
17,061
90
88
63,873
73,571
Debt securities
Subordinated debt
Repurchase agreements(1)
Financial liabilities designated at fair value through profit or loss
TOTAL FINANCIAL LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
(1)
5
Change in fair value
attributable to credit risk
Exposure to credit risk
Loans to credit institutions
5
12/31/2012
attributable to credit risk
Exposure to credit risk
5
264
79
79,492
90,942
179,832
194,793
The information is presented in consideration of netting effects, in accordance with IAS 32 (see Note 13).
Some liabilities issued and recognized at fair value through profit or loss are covered by a guarantee. The effect of this guarantee is incorporated into the fair value
of the liabilities.
235
5
5
5
5
5
FINANCIAL REPORT
Conditions for designating financial liabilities at fair value through profit or loss
Accounting
mismatches
Fair value
measurement
Embedded
derivatives
Financial liabilities
designated at fair
value through profit
or loss
66
0
0
66
106
0
10
116
11,240
16
3,827
15,083
0
0
90
90
50
64,087
0
64,137
11,462
64,103
3,927
79,492
Debt securities
Subordinated debt
Repurchase agreements and other financial liabilities
TOTAL
Financial liabilities accounted for under the fair value option mainly consist of
structured debt issues and structured deposits containing embedded derivatives
(e.g. equities for personal savings plans and structured medium-term notes).
Most of these transactions are handled by Natixis and Crédit Foncier.
In connection with Natixis’ capital market activities, the fair value option has
mainly been used to avoid accounting mismatches between assets and liabilities
perceived as having an economic relationship. This is also the case between
an asset and a hedging derivative when the conditions for hedge accounting
are not met.
Financial liabilities at fair value through profit or loss and credit risk
12/31/2013
Fair
value
Contractual
amount due
at maturity
12/31/2012
Difference
attributable
Difference to credit risk
Fair
value
Contractual
amount due
at maturity
Difference
attributable
Difference to credit risk
66
66
125
124
116
119
(3)
18
18
15,083
14,934
149
(156)
17,061
16,533
528
(412)
90
101
(11)
(20)
88
101
(13)
(22)
64,137
64,136
1
73,650
73,660
(10)
79,492
79,290
202
(176) 90,942
90,436
506
Debt securities
Subordinated debt
TOTAL
The amount contractually due on loans at maturity includes the outstanding
amount of the principal at the balance sheet date plus the accrued interest
not yet due. In the case of securities, the redemption value is generally used.
Revaluations attributable to own credit risk (revaluation of own debt) amounted
to -€176 million (-€434 million at December 31, 2012), including a negative
impact on net banking income for the period of -€258 million (negative impact
of -€407 million in 2012).
236
5.2.3
1
(434)
Trading derivatives
The notional amounts of derivative instruments are merely an indication of
the volume of the Group’s business in financial instruments, and do not reflect
the market risks associated with such instruments. Positive or negative fair
values represent the replacement value of these instruments. These values may
fluctuate significantly in response to changes in market data.
FINANCIAL REPORT
12/31/2013
Fixed income instruments
Equity instruments
Foreign exchange instruments
Other instruments
Forward transactions
Fixed income instruments
Equity instruments
Other instruments
Options
Credit derivatives
TOTAL TRADING DERIVATIVES
5.3
12/31/2012
Notional amount
Positive fair
value
Negative fair
value
Notional amount
Positive fair
value
Negative fair
value
5,035,994
36,682
36,849
4,452,332
36,362
36,633
8,021
2
2
17,544
0
51
702,464
7,324
7,501
684,114
6,496
8,020
52,047
63
179
152,897
150
159
5,798,526
44,071
44,531
5,306,887
43,008
44,863
941,444
122
1,190
1,050,249
321
1,404
54,855
3,377
3,087
26,041
3,286
2,603
331,337
4,336
4,890
84,282
3,134
3,486
47,718
760
842
150,577
316
371
1,375,354
8,595
10,009
1,311,149
7,057
7,864
181,969
2,766
2,683
215,302
3,813
3,763
7,355,849
55,432
57,223
6,833,338
53,878
56,490
HEDGING DERIVATIVES
Derivatives may only be designated as hedges if they meet the criteria set out in
IAS 39 at inception and throughout the term of the hedge. These criteria include
formal documentation that the hedging relation between the derivatives and
the hedged items is both prospectively and retrospectively effective.
Fair value hedges mainly consist of interest rate swaps that protect fixed-rate
financial instruments against changes in fair value attributable to changes
in market rates of interest. They transform fixed-rate assets or liabilities into
floating-rate instruments and include mostly hedges of fixed-rate loans,
securities, deposits and subordinated debt.
5
5
5
5
Fair value hedging is also used to manage their overall interest rate risk position.
The cash flow hedges fix or control the variability of cash flows arising from
floating-rate instruments. Cash flow hedging is also used to manage the overall
interest rate risk position.
12/31/2013
12/31/2012
Notional amount
Positive fair
value
Negative fair
value
Notional amount
Positive fair
value
Negative fair
value
630,843
5,113
4,580
595,471
8,330
7,900
16,259
1,362
1,389
18,566
2,220
2,598
647,102
6,475
5,969
614,037
10,550
10,498
Interest rate instruments
5,787
87
5,612
55
Options
5,787
87
5,612
55
652,889
6,562
5,969
619,649
10,605
10,498
17,081
47
202
16,981
61
569
993
16
12
666
2
48
18,074
63
214
17,647
63
617
393
7
1
199
6
Options
393
7
1
199
6
Fair value hedges
Cash flow hedges
18,467
70
215
17,846
69
Credit derivatives
1,341
11
1
2,416
59
1
672,697
6,643
6,185
639,911
10,733
11,116
TOTAL HEDGING INSTRUMENTS
5
5
5
617
5
237
5
5
5.4
FINANCIAL REPORT
AVAILABLE-FOR-SALE FINANCIAL ASSETS
These are non-derivative financial assets that could not be classified in any other category (“Financial assets at fair value”, “Financial assets held to maturity”, or
“Loans and receivables”).
12/31/2013
12/31/2012
Treasury bills and equivalent
33,188
19,201
Bonds and other fixed-income securities(1)
33,193
51,639
(1)
Impaired securities
260
375
66,641
71,215
14,492
14,328
Loans
Available-for-sale financial assets, gross
Impairment of fixed-income securities and loans
Permanent impairment of equities and other variable-income securities
TOTAL AVAILABLE-FOR-SALE FINANCIAL ASSETS
Gains and losses recognized directly in equity on available-for-sale financial assets (before tax)
(1)
52
43
81,185
85,586
(145)
(226)
(1,666)
(1,951)
79,374
83,409
2,469
2,133
At January 1, 2013, certain government bonds were reclassified from «Bonds and other fixed income securities» to «Treasury bills and equivalent» for a total of €12,333 million.
Impairment losses are recognized for available-for-sale financial assets whenever the Group considers that its investment may not be recovered. For variable-income
securities quoted in an active market, a price decline in excess of 50% or for more than a 36-month period constitutes evidence of impairment.
238
FINANCIAL REPORT
5.5
FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
5.5.1
Fair value hierarchy of financial assets and liabilities
5
5
The following statement provides a breakdown of financial instruments by type of price and valuation model:
12/31/2013
FINANCIAL ASSETS
Securities
Variable-income securities
Derivatives
Equity derivatives
Currency derivatives
Credit derivatives
Other derivatives
Other financial assets
Price quoted in an active Measurement techniques Measurement techniques
market
using observable data using unobservable data
(Level 1)
(Level 2)
(Level 3)
Total
55,935
32,243
23,692
2,185
6
1,948
21
210
-
6,815
5,150
1,665
51,709
36,223
829
11,626
2,418
613
544
931
931
1,538
575
602
13
348
0
-
63,681
38,324
25,357
55,432
36,804
3,379
11,660
2,766
823
544
Financial assets held for trading
Securities
58,120
10,741
1,536
9,205
1
59,068
3,355
716
2,639
65,287
2,469
774
633
141
6,257
119,657
14,870
2,885
11,985
71,545
Financial assets designated at fair value through profit or loss
Credit derivatives
10,742
5
5
-
68,642
5,248
1,373
-
7,031
1
11
86,415
5,254
1,378
11
Hedging derivatives
Other securities
FINANCIAL LIABILITIES
Securities
Derivatives
Equity derivatives
Credit derivatives
Other derivatives
10
262
65,695
59,434
6,261
10
65,967
6,621
441
7,475
5,860
1,615
44
7,960
12
3,115
2,283
1,150
1,133
49
5,447
6,643
3,818
75,453
66,444
9,009
103
79,374
40,611
2,203
92
1,885
226
945
678
53,762
37,190
1,166
12,365
2,247
794
883
1,258
757
39
26
436
-
41,289
57,223
38,039
3,090
12,391
2,683
1,020
1,828
Securities
43,759
0
-
55,323
10,519
68,898
1,258
75
100,340
10,519
68,973
0
5
1
6
79,417
4,778
1,400
1
6,179
75
-
79,492
4,783
1,401
1
6,185
Financial liabilities designated at fair value through profit or loss
Credit derivatives
Hedging derivatives
239
5
5
5
5
5
5
5
5
FINANCIAL REPORT
12/31/2012
Price quoted in an active Measurement techniques Measurement techniques
market
using observable data using unobservable data
(Level 1)
(Level 2)
(Level 3)
Total
FINANCIAL ASSETS
Securities
52,981
8,469
3,919
65,369
Derivatives
1,813
51,304
761
53,878
5
463
-
468
54,799
60,236
4,680
119,715
Securities
12,428
3,275
1,012
16,715
15
78,332
214
78,561
12,443
81,607
1,226
95,276
19
10,653
61
10,733
Financial assets designated at fair value through profit or loss
Hedging derivatives
Other securities
382
1,278
2,331
3,991
70,907
6,242
2,179
79,328
9
39
42
90
71,298
7,559
4,552
83,409
Securities
45,234
1,013
-
46,247
Derivatives
2,003
53,799
688
56,490
376
738
-
1,114
47,613
55,550
688
103,851
Securities
-
90,270
-
90,270
-
94
128
222
Financial liabilities designated at fair value through profit or
loss
-
90,364
128
90,492
51
11,064
-
11,116
Hedging derivatives
240
FINANCIAL REPORT
5.5.2
5
Analysis of assets and liabilities classified in Level 3 of the fair value hierarchy
Gains and losses recognized
during the period
Transactions carried
out during the period
In the income statement
On
On transactions
transac- eliminated
tions in
from the
progress at
balance
the sheet at the
Reclassifireporting
reporting
1/1/2013
cations
date
date
Purchases/
Sales/
In equity
Issues Buybacks
5
Transfers during
the period
To another From and
reporting to another
category
level
Other
changes 12/31/2013
FINANCIAL ASSETS
Securities
Derivatives
Equity derivatives
3,919
(11)
(43)
(50)
(2,854)
(16)
(14)
931
3,919
(11)
(43)
(50)
(2,854)
(16)
(14)
931
761
826
(183)
(48)
1,538
201
80
28
(21)
2
3
Other derivatives
611
(213)
(96)
21
441
602
9
634
(96)
(79)
(2)
Credit derivatives
(123)
(220)
(25)
2
(4)
1
(27)
(12)
575
602
6
13
(3)
348
(76)
746
Financial assets held for
trading
4,680
815
(226)
(98)
595
(227)
2,469
Securities
1,012
135
(163)
6
(385)
168
1
774
(168)
6
(385)
168
1,012
Financial assets designated
at fair value through profit
or loss
(13)
3
(2,977)
(96)
135
5
7,214
(460)
(72)
773
(1,343)
(9)
1,226
7,349
(623)
(66)
773
(1,728)
(9)
168
633
1
141
(60)
6,257
(59)
7,031
(1)
59
(5)
(43)
Hedging derivatives
61
(6)
(43)
11
12
2,331
383
(37)
12
52
198
Other securities
(175)
4
227
120
3,115
2,179
122
18
74
33
491
(709)
71
(19)
23
2,283
1,168
61
13
64
26
358
(589)
60
(7)
(4)
1,150
1,011
61
5
10
7
133
(120)
11
(12)
27
1,133
42
(2)
1
6
(4)
7
(1)
49
4,552
503
(18)
86
695
(888)
82
208
142
5,447
688
42
(74)
(98)
21
(67)
(96)
270
572
1,258
100
56
(12)
(20)
(58)
(96)
274
513
757
(4)
(3)
5
39
Available-for-sale financial
assets
85
Derivatives
Equity derivatives
41
(20)
Credit derivatives
532
Other derivatives
15
(37)
(14)
(1)
5
1
Credit derivatives
5
(657)
214
2
5
(9)
(75)
21
55
26
(4)
(1)
436
270
Financial liabilities held
for trading
688
42
(74)
(98)
21
(67)
572
1,258
128
(26)
(53)
(8)
35
(2)
1
75
Financial liabilities
designated at fair value
through profit or loss
128
(26)
(53)
(8)
35
(2)
1
75
(96)
IFRS 13 offers clarifications on the levels of the fair value hierarchy. As a result of these clarifications, the Group reviewed the classification of financial instruments
in the three different levels. The changes in levels resulting from these reclassifications are shown in the “Reclassifications” column and mainly concern structured
loans to local authorities, which have been transferred from Level 2 to Level 3.
241
5
5
5
5
5
FINANCIAL REPORT
5.5.3
Analysis of fair value hierarchy transfers
Fiscal year 2013
From
To
Level 1
Level 1
Level 2
Level 3
Level 2
Level 2
Level 3
Level 3
Level 1
(1)(2)
Level 1
Level 2
Level 3
FINANCIAL ASSETS
Securities
59
574
100
(116)
47
574
100
(116)
12
623
(12)
Derivatives
21
Equity derivatives
602
Credit derivatives
Securities
Financial assets designated at fair value through
profit or loss
(12)
59
574
(128)
693
175
(7)
693
175
(7)
693
Other securities
723
2,444
21
77
2,368
21
77
21
77
76
2,444
175
(7)
240
(12)
11
(23)
(27)
(27)
11
(23)
251
(23)
(39)
Derivatives
298
(28)
289
(15)
Credit derivatives
(1)
(2)
9
(13)
298
(28)
Spread locks amounting to €21 million on the assets side of the balance sheet and €289 million on the liabilities side at December 31, 2013 were transferred to Level 3 of the fair value hierarchy following the
change in the valuation model based on proprietary data.
A deal in the process of being restructured was transferred to Level 3 of the fair value hierarchy for an amount of €602 million at December 31, 2013.
The amounts of transfers indicated in this statement are those of the last
valuation preceding the transfer.
This statement only includes fair value hierarchy transfers observed since
January 1, 2013.
Reclassifications pertaining to re-assessments of allocations among the three
levels, with respect to the clarifications given by IFRS 13, are not reflected in
the statement above.
5.5.4
Sensitivity of Level 3 assets and liabilities to changes in the
principal assumptions
The fair value sensitivity of the financial instruments measured using
unobservable inputs was assessed at December 31, 2013. With the aid of
probable assumptions, this sensitivity was used to estimate the impacts of
market fluctuations due to an unstable economic environment. This estimate
was made based on:
• a “standardized(1)” variation in unobservable inputs for fixed income and equity
instruments. The resulting sensitivity was €1 million;
(1)
242
i.e. the standard deviation of consensus prices used to measure the inputs (TOTEM, etc.).
• a fixed variation:
- +/-10% in the estimated loss rates on underlying assets used to model the
valuation of ABS CDO tranches,
- or +/-1% for CLO underlyings,
- or +/-10% in the probabilities of the banking and insurance sectors for
Trups CDOs.
The sensitivity impact would result in an improvement in value of €16 million,
should the inputs mentioned above improve, or a decrease in value
of €24 million, should the inputs deteriorate.
5.6
LOANS AND RECEIVABLES
Loans and receivables are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. Most loans
originated by the Group are classified in this category.
FINANCIAL REPORT
5.6.1
Specific impairment
Impairment on a portfolio basis
12/31/2013
12/31/2012
108,237
119,061
(181)
(260)
(18)
(6)
108,038
118,795
12/31/2013
12/31/2012
Current accounts with overdrafts
6,481
7,240
8,203
9,169
91,149
98,020
1,893
3,955
Other loans and receivables due from credit institutions
225
317
Impaired loans and receivables
286
360
108,237
119,061
TOTAL LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS
The fair value of loans and receivables due from banks is presented in Note 14.
Breakdown of gross loans and receivables due from credit institutions
(1)
Loans and advances
Securities classified as loans and receivables
TOTAL GROSS LOANS AND RECEIVABLES DUE FROM CREDIT INSTITUTIONS
(1)
5
5
5
5
Livret A and LDD passbook savings account funds centralized with Caisse des Dépôts et Consignations and recorded under “Loans and receivables” amounted to €70,595 million at December 31, 2013 (versus
€75,195 million at December 31, 2012).
5.6.2
12/31/2013
12/31/2012
590,704
586,479
Specific impairment
(10,720)
(9,996)
TOTAL LOANS AND RECEIVABLES DUE FROM CUSTOMERS
(1,565)
(1,627)
578,419
574,856
5
The fair value of loans and receivables due from customers is presented in Note 14.
Breakdown of gross loans and receivables due from customers
12/31/2013
12/31/2012
Current accounts with overdrafts
11,704
12,261
Loans to financial sector customers
3,397
3,724
52,814
52,450
Equipment loans
135,999
130,824
Home loans
272,464
255,602
2,959
3,253
16,384
23,639
Finance leases
16,436
16,697
Short-term credit facilities
Export credits
Subordinated loans
Other loans
Other facilities granted to customers
Securities classified as loans and receivables
Other loans and receivables due from customers
Impaired loans and receivables
TOTAL GROSS LOANS AND RECEIVABLES DUE FROM CUSTOMERS
Loans and receivables restructured due to the debtor’s financial situation came
to €2,658 million at December 31, 2013.
5
498
542
22,437
23,357
523,388
510,088
25,277
35,557
7,005
6,652
23,330
21,921
590,704
586,479
At December 31, 2013, restructured doubtful loans outstanding totaled €244
million, comprising HIME group receivables restructured in the second half of
2013.
243
5
5
5
5
5.7
FINANCIAL REPORT
HELD-TO-MATURITY FINANCIAL ASSETS
These are non-derivative financial assets with fixed or determinable payments that the Group has the intention and ability to hold to maturity.
12/31/2013
12/31/2012
Treasury bills and equivalent(1)
6,113
2,171
Bonds and other fixed-income securities(1)
5,458
8,875
11,571
11,046
(4)
(4)
11,567
11,042
Gross amount of held-to-maturity financial assets
Impairment
GROSS AMOUNT OF HELD-TO-MATURITY FINANCIAL ASSETS
(1)
At January 1, 2013, certain government bonds were reclassified from «Bonds and other fixed income securities» to «Treasury bills and equivalent» for a total of €3,565 million.
The fair value of held-to-maturity financial assets is presented in Note 14.
5.8
RECLASSIFICATION OF FINANCIAL ASSETS
Portfolio of reclassified financial assets
In application of the amendments to IAS 39 and IFRS 7 “Reclassification of financial assets”, the Group reclassified some of its financial assets. No significant
reclassification was carried out in fiscal year 2013.
Carrying amount
12/31/2013
Fair value
12/31/2012
12/31/2013
12/31/2012
Assets reclassified to:
TOTAL SECURITIES RECLASSIFIED
261
377
261
377
10,448
14,412
9,679
12,578
10,709
14,790
9,940
12,956
Fiscal year 2013
Fiscal year 2012
18
118
355
109
Change in fair value that would have been recognized if the securities had not been reclassified
– that would have been recognized in income if the securities had not been reclassified
– that would have been recognized in gains and losses recognized directly in equity if the securities had not been
reclassified
244
FINANCIAL REPORT
5.9
DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets and liabilities on temporary differences arise from the recognition of the items listed in the statement below (positive figures indicate deferred
tax assets, while negative figures in brackets represent deferred tax liabilities):
Unrealized capital gains on UCITS
Fiscal EIGs
12/31/2013
81
81
(328)
(350)
482
375
Provisions for regulated home savings products
251
242
348
41
1,353
1,219
(65)
606
Other non-deductible provisions
Changes in fair value of financial instruments recorded in equity
Other sources of temporary differences
910
689
Deferred tax assets and liabilities related to timing differences
3,032
2,903
Deferred tax assets and liabilities arising on the capitalization of tax loss carryforwards
2,967
3,602
Deferred tax assets and liabilities on consolidation adjustments and eliminations
Unrecognized deferred tax assets and liabilities
NET DEFERRED TAX ASSETS AND LIABILITIES
20
(227)
(580)
(1,414)
5,439
4,864
5,749
5,229
(310)
(365)
12/31/2013
12/31/2012
4,862
4,789
Deferred taxes recognized:
– as assets in the balance sheet
– as liabilities in the balance sheet
ACCRUED INCOME AND OTHER ASSETS
Collection accounts
Prepaid expenses
437
575
Accrued income
781
1,219
Other accruals
4,119
4,162
Accrual accounts - assets
10,199
10,745
Security deposits paid
16,559
17,970
309
463
Settlement accounts in debit on securities transactions
Reinsurers’ share of technical reserves
7,620
7,315
Other debtors
11,988
14,652
Other assets
36,476
40,400
46,675
51,145
TOTAL ACCRUED INCOME AND OTHER ASSETS
5
12/31/2012
Provisions for employee-related liabilities
5.10
5
5
5
5
5
5
5
245
5
5
5.11
FINANCIAL REPORT
INVESTMENTS IN ASSOCIATES
The Group’s main investments in associates are as follows:
CNP Assurances (group)
Socram Banque
12/31/2013
12/31/2012
1,921
1,781
68
66
Equity interests in the Natixis group
140
133
Banque calédonienne d’investissement – BCI
109
100
Other
169
145
2,407
2,225
Maisons France Confort P-I
112
110
Other
110
107
Non-financial companies
222
217
2,629
2,442
Financial sector companies
TOTAL INVESTMENTS IN ASSOCIATES
The financial figures published by the CNP Assurances group, the principal company accounted for as an associate under the equity method, show a balance sheet
total of €365,984 million, revenues of €27,668 million and net income of €1,030 million for fiscal year 2013.
5.12
INVESTMENT PROPERTY
12/31/2013
Property recognized at fair value(1)
Property recognized at historical cost
12/31/2012
Net amount
Gross carrying
amount
Accumulated
depreciation
Net amount
///
1,052
///
///
861
(607)
970
1,582
(614)
Gross carrying
amount
Accumulated
depreciation
///
1,577
TOTAL INVESTMENT PROPERTY
(1)
968
2,022
1,829
Buildings included in insurance company investments. Changes in fair value give rise to the symmetrical recognition of a deferred profit-sharing reserve, averaging 94.8% of the related base amount
at December 31, 2013 (see Note 5.18).
The fair value of investment property came to €2,326 million at December 31,
2013 (€2,246 million at December 31, 2012).
5.13
The fair value of investment property, whose measurement principles are
described in Note 4.2, is classified in Level 3 of the IFRS 13 fair value hierarchy.
PROPERTY, PLANT AND EQUIPMENT AND INTANGIBLE ASSETS
12/31/2013
Accumulated
Gross carrying depreciation and
amount
impairment
12/31/2012
Net amount
Accumulated
Gross carrying depreciation and
amount
impairment
Net amount
Land and buildings
3,901
(1,867)
2,034
3,828
(1,781)
2,047
Leased real estate
386
(164)
222
454
(166)
288
8,011
(5,728)
2,283
7,254
(4,806)
2,448
12,298
(7,759)
4,539
11,536
(6,753)
4,783
Equipment, furniture and other property,
plant and equipment
TOTAL PROPERTY, PLANT AND EQUIPMENT
Intangible assets
Leasehold rights
Software
Other intangible assets
TOTAL INTANGIBLE ASSETS
246
425
(210)
215
425
(205)
220
2,242
(1,654)
588
2,163
(1,559)
604
736
(257)
479
841
(307)
534
3,403
(2,121)
1,282
3,429
(2,071)
1,358
FINANCIAL REPORT
5.14
5
GOODWILL
Changes over the year
Fiscal year 2013
Opening net value as at January 1
5
4,249
Acquisitions
3
Disposals
(11)
Impairment
(16)
Reclassifications
(3)
(54)
Closing net value as at December 31
4,168
5
At December 31, 2013, the gross carrying amount of goodwill amounted to €5,230 million, with impairment totaling €1,062 million.
Breakdown of goodwill
Carrying amount
Coface
Other
Natixis
12/31/2013
12/31/2012
2,097
2,152
26
26
355
355
77
101
2,555
2,634
Nexity
709
706
Regional Banks(1)
685
685
Banque Palatine
95
95
BPCE IOM
52
53
Banque BCP France
42
42
Crédit Foncier
13
13
BCP Luxembourg
8
8
Other
9
13
4,168
4,249
TOTAL GOODWILL
(1)
Regional Banks: Banque Chaix, Banque de Savoie, CCSO – Pelletier, Banque Dupuy, de Parseval, Banque Marze.
Impairment tests
Key assumptions used to determine recoverable value
In accordance with applicable regulations, each goodwill item was tested for
impairment based on the value in use of cash generating units (CGUs) to which
they are linked.
Value in use is determined based on the present value of the CGU’s future cash
flows under medium-term plans drawn up as part of the Group’s budget process.
For the Coface CGU, given Natixis’ plans for withdrawal, a valuation was also
determined on a stand-alone basis.
As a result of these impairment tests, the Group recognized an impairment loss
of €16 million in respect of fiscal year 2013.
5
5
5
5
5
247
5
5
FINANCIAL REPORT
The following assumptions were used:
Discount rate
Long-term
growth rate
10.0%
2.5%
11.2%
2.5%
Coface
11.2%
2.5%
Corporate Data Solutions (CDS, formerly Coface non-core)
12.3%
2.5%
Other
11.2%
2.5%
Nexity
8.9%
2.5%
Regional banks
8.5%
2.5%
Natixis
The discounts rates were determined as follows:
• for the Investment Solutions, Specialized Financial Services and Others CGUs:
the risk-free rate for the eurozone (i.e. the Bund rate averaged over 10 years)
plus a risk premium calculated based on a sample of companies representative
of the CGU;
• -4.8% for the Coface CGU;
• -4.9% for the CDS CGU (formerly the Coface “non core”);
• -8.2% for the Nexity CGU;
• -7.4% for the Regional Banks CGU.
• for the Coface CGU: interest-rate references used by listed companies with
a comparable activity;
These changes would result in the booking of additional impairment losses only
for the CDS (formerly the Coface “non core”) (additional €7 million), Nexity
(€61 million) and Regional Banks (€18 million) CGUs.
• for the CDS CGU: the average of the 10-year risk-free interest rates of the
countries in which the various entities operate, plus a risk premium calculated
according to a sample of companies that are representative of the sector
and an additional risk premium to account for the relative size of the CGU;
Similarly, the sensitivity of future business plan cash flows to variations in key
assumptions does not significantly affect the recoverable value of the CGU, with
the exception of the recoverable amount of the CDS CGU:
• for the Nexity CGU: the discount rate applied is the weighted average cost of
capital. This was calculated based on the following factors:
• for Investment Solutions, a 10% fall in the “equity” markets and a 1 bp fall
in the EONIA rate would have a -4% negative impact on the recoverable
value of the CGU and would not lead to the booking of an impairment loss;
- the average risk-free rate (10-year OAT) over two years,
- a risk premium calculated based on Nexity’s beta (historical data over
5-years),
- a target financial structure;
• the discount rate of the Banque Populaire Regional Banks’ projected cash
flows was determined based on a risk-free rate (10-year OAT) over two years,
plus a risk premium calculated based on a sample of listed European banks
with a retail banking business.
The following impairment losses were recognized as a result of the impairment
tests:
• €6 million on the CDS CGU;
• €6 million on the SCI Altair 1 and SCI Altair 2 Equity interests (i.e. an
impairment loss of 100% of goodwill), given the analyses conducted on the
data center assets at the Lognes site (decline in the site’s occupancy rate by
external clients). An additional provision of €3 million was recorded under
“Depreciation, amortization and impairment on property, plant and equipment
and intangible assets” (i.e. data center). The recoverable value of both CGUs
was determined using the DCF method, based on the latest assessment of
rent performed by an external firm.
Sensitivity of recoverable values
A 20 basis point rise in the discount rates combined with a 50 basis point fall in
the perpetual growth rates would reduce the CGUs’ value in use by:
• -6.4% for the Investment Solutions CGU;
• -4.0% for the Specialized Financial Services CGU;
248
• for Specialized Financial Services, a 1 bp drop in the 3-month Euribor applied
to the factoring business and the replication of a “2008/2008”-type crisis
(decline in new business and increase in cost of risk) in the leasing business
would have a negative impact of -6% on the CGU and would have no impact
in terms of impairment loss;
• for Coface, the main sensitivity factor is the loss ratio. A level of 52% for
this ratio (with reinsurance), reflecting the deterioration of economic
conditions, was applied to conduct the test of the CGU’s impairment at
December 31, 2013. A one-point increase in this loss ratio would have no
significant impact on the recoverable value of the CGU. Only an increase of
9 points in the loss ratio would result in an impairment loss on the CGU;
• for the CDS CGU, the primary sensitivity factor is the extent to which the
business plans are achieved. A -5% variation in said plans would cause the
recoverable value to fall by about €8 million and result in the recognition of
additional impairment for an equivalent amount;
• for the Nexity CGU, the sensitivity of future cash flows, as forecast in the
business plan, to a 10 basis point fall in the normative operating margin,
combined with a 10 basis point rise in the normative working capital
requirement, would have a negative impact on the CGU’s value of -2.9% and
would lead to the recognition of an impairment loss of around €22 million
on the CGU;
• for the Regional Banks CGU, the sensitivity of future cash flows, as forecast in
the business plan, to a 5% point fall in normative net income, combined with a
50 basis point rise in the target capital adequacy ratio, would have a negative
impact on the CGU’s value of -4.9% and would lead to the recognition of an
impairment loss of around €7 million on the CGU.
FINANCIAL REPORT
5.15
5
AMOUNTS DUE TO CREDIT INSTITUTIONS AND CUSTOMERS
These liabilities, which are not classified as financial liabilities at fair value through profit or loss, are carried at amortized cost under “Amounts due to credit
institutions” or “Amounts due to customers”.
5.15.1 Amounts due to credit institutions
12/31/2013
12/31/2012
Demand deposits
6,510
8,729
4,162
5,301
Accrued interest
5
6
Amounts due to credit institutions - repayable on demand
10,677
14,036
Term deposits and loans
56,896
74,639
20,676
22,106
Accrued interest
Amounts due to credit institutions - repayable at agreed maturity dates
TOTAL AMOUNTS DUE TO CREDIT INSTITUTIONS
565
618
78,137
97,363
88,814
111,399
5.15.2 Amounts due to customers
Current accounts
12/31/2013
12/31/2012
111,743
99,880
Livret A savings accounts
94,659
91,181
Regulated home savings products
57,923
54,591
Other regulated savings accounts
82,452
84,960
42
100
Accrued interest
Regulated savings accounts
235,076
230,832
Demand deposits and loans
23,087
15,016
Term deposits and loans
70,812
64,049
Accrued interest
2,012
1,705
Other customer accounts
95,911
80,770
13,616
17,358
1,843
1,679
458,189
430,519
Other amounts due to customers
TOTAL AMOUNTS DUE TO CUSTOMERS
5
5
The fair value of amounts due to credit institutions is presented in Note 14.
5
5
5
The fair value of amounts due to customers is presented in Note 14.
5.16
5
DEBT SECURITIES
Debt securities are classified based on the type of underlying, with the exception of subordinated notes presented under “Subordinated debt”.
Bonds
Interbank market instruments and negotiable debt securities
Other debt securities
Total
Accrued interest
TOTAL DEBT SECURITIES
12/31/2013
12/31/2012
142,316
146,370
67,385
78,775
2,146
2,390
211,847
227,535
2,807
2,966
214,654
230,501
5
The fair value of debt securities is presented in Note 14.
249
5
5
5.17
FINANCIAL REPORT
ACCRUED EXPENSES AND OTHER LIABILITIES
12/31/2013
12/31/2012
Collection accounts
4,540
3,729
Prepaid income
1,931
2,051
Accounts payable
2,427
2,337
Other accruals
7,604
7,345
16,502
15,462
Settlement accounts in credit on securities transactions
727
760
Guarantee deposits received
10,452
9,505
Other payables
13,836
15,407
Other insurance-related liabilities
Other liabilities
TOTAL ACCRUED EXPENSES AND OTHER LIABILITIES
5.18
6,863
32,191
32,535
48,693
47,997
12/31/2013
12/31/2012
TECHNICAL RESERVES OF INSURANCE COMPANIES
Technical reserves of non-life insurance companies
Technical reserves of life insurance companies in euros
Technical reserves of life insurance companies in unit-linked accounts
Technical reserves of life insurance companies
Technical reserves of investment contracts
Deferred profit-sharing
TOTAL TECHNICAL RESERVES OF INSURANCE COMPANIES
Technical reserves of non-life insurance companies include unearned premium
reserves and outstanding claims reserves.
Technical reserves of life insurance companies mainly comprise mathematical
reserves, which generally correspond to the surrender value of policies.
250
7,176
3,602
3,377
38,527
36,799
7,844
7,362
46,371
44,161
13
13
1,587
1,881
51,573
49,432
Technical reserves for financial contracts issued by insurance companies are
mathematical reserves measured on the basis of the underlying assets of these
policies.
Deferred profit-sharing represents the portion of income from participating
insurance policies in the form of a cumulative amount allocated to policyholders
and not yet distributed.
FINANCIAL REPORT
5.19
PROVISIONS
12/31/2012
Change in
method(1)
01/01/2013
Increase
Use
Reversals
unused
Other
changes(2)
12/31/2013
1,570
291
(110)
(60)
(166)
1,702
Provisions for employee benefit
commitments
1,861
177
706
706
19
1,126
1,126
255
(29)
(259)
(37)
1,056
62
62
18
(15)
(5)
1
61
126
Provisions for regulated home savings products
Provisions for off-balance sheet commitments
Provisions for contingencies on real estate
development projects
(30)
50
50
105
(11)
(8)
(10)
Provisions for claims and litigation
761
761
328
(89)
(149)
(11)
840
Other
652
652
239
(38)
(75)
(7)
771
Other provisions
TOTAL PROVISIONS
3,357
4,927
291
5
695
Provisions for restructuring costs
(1)
(2)
5
3,357
964
(182)
(526)
(64)
3,549
5,218
1,141
(292)
(586)
(230)
5,251
5
The data adjustment at December 31, 2012 was prompted by the adoption of IAS 19 as revised (see Note 2.3).
Other changes included the variation in the revaluation difference on employee benefits (€161 million before tax) and the impacts related to changes in scope and foreign exchange rate adjustments.
5
At December 31, 2013, provisions for restructuring included €91 million for Natixis’ Employment Adaptation Plan.
At December 31, 2013, provisions included €351 million for Madoff net outstandings.
5.19.1 Deposits held in regulated home savings products
12/31/2013
12/31/2012
Deposits held in PEL regulated home savings plans
less than 4 years
16,102
8,256
more than 4 years and less than 10 years
27,425
31,256
8,074
8,804
51,601
48,316
more than 10 years
Deposits held in PEL regulated home savings plans
Deposits held in CEL regulated home savings accounts
TOTAL DEPOSITS HELD IN REGULATED HOME SAVINGS PRODUCTS
6,294
6,490
57,895
54,806
12/31/2013
12/31/2012
5.19.2 Loans outstanding granted under regulated home savings products
Loans outstanding granted under regulated home savings plans
269
364
Loans outstanding granted under regulated home savings accounts
936
1,103
1,205
1,467
12/31/2013
12/31/2012
less than 4 years
25
20
more than 4 years and less than 10 years
80
97
more than 10 years
536
493
Provisions for PEL regulated home savings plans
641
610
Provisions for CEL regulated home savings accounts
60
90
Provisions for PEL regulated home savings loans
(3)
(2)
Provisions for CEL regulated home savings loans
(3)
8
Provisions for regulated home savings loans
(6)
6
695
706
TOTAL LOANS OUTSTANDING ON REGULATED HOME SAVINGS PRODUCTS
5.19.3 Provisions on regulated home savings products
5
5
5
Provisions for PEL regulated home savings plans
TOTAL PROVISIONS FOR REGULATED HOME SAVINGS PRODUCTS
251
5
5
5
5.20
FINANCIAL REPORT
SUBORDINATED DEBT
Subordinated debt is classified separately from issues of other debt and bonds because in the event of default, holders of subordinated debt rank after all senior
debt holders.
Term subordinated debt
12/31/2013
12/31/2012
9,614
8,921
Perpetual subordinated debt
104
147
Mutual guarantee deposits
243
248
9,961
9,316
198
193
Subordinated debt and similar
Accrued interest
Revaluation of the hedged component
TOTAL SUBORDINATED DEBT
217
366
10,375
9,875
The fair value of subordinated debt is presented in Note 14.
Changes in subordinated debt and similar during the year
Term subordinated debt
1/1/2013
Issuance(1)
Buyback(2)
8,921
1,852
(1,212)
Perpetual subordinated debt
147
Mutual guarantee deposits
248
18
9,316
1,870
SUBORDINATED DEBT AND SIMILAR
(1)
(2)
Other changes
12/31/2013
53
9,614
(43)
104
(18)
(4)
244
(1,231)
6
9,961
In 2013, in preparation for the implementation of Basel III, the Group issued two Tier-2 eligible redeemable subordinated notes: the first was issued in euros on July 11, 2013 for €1 billion and the second on
October 15, 2013 for $1.5 billion.
Redemptions during the period comprised the early redemption of notes issued by Natixis (€522 million and redemptions at maturity (€690 million).
Deeply subordinated notes qualifying as equity instruments are presented in
Note 5.21.2.
5.21
ORDINARY SHARES AND EQUITY INSTRUMENTS
ISSUED
5.21.1 Cooperative shares
At December 31, 2013, the share capital broke down as follows:
• €7,225 million in cooperative shares fully subscribed for by cooperative
shareholders of the Banque Populaire banks and the SAS, the carrying
entities for the cooperative shareholders (compared to €6,774 million at
December 31, 2012);
• €8,965 million in cooperative shares fully subscribed for by the cooperative
shareholders of the Caisses d’Epargne (compared to €7,228 million at
December 31, 2012);
252
The cooperative investment certificates issued by the Banque Populaire
banks (€1,693 million at December 31, 2012) and the Caisses d’Epargne
(€1,808 million at December 31, 2012) were canceled following the buyback
carried out as part of the Groupe BPCE simplification transactions described
in Note 1.3.
At December 31, 2013, additional paid-in capital broke down as follows:
• €936 million linked to cooperative shares fully subscribed for by the
cooperative shareholders of the Banque Populaire banks and the carrying SAS;
• €2,885 million linked to cooperative shares fully subscribed for by the
cooperative shareholders of the Caisses d’Epargne.
The additional paid-in capital related to the cooperative investment certificates
issued by the Banque Populaire banks (€3,282 million at December 31, 2012)
and the Caisses d’Epargne (€2,678 million at December 31, 2012) was canceled
following the buyback carried out as part of the Groupe BPCE simplification
transactions described in Note 1.3.
FINANCIAL REPORT
5
5.21.2 Perpetual deeply subordinated notes classified as equity
Issuing entity
BPCE
Amount
Issue date Currency (in original currency)
11/26/2003
EUR
471 million
Nominal (in millions of euros)
Redemption
option date
Interest
step-up date
Rate
12/31/2013
12/31/2012
7/30/2014
7/30/2014
5.25%
471
471
142
152
369
369
BPCE
7/30/2004
USD
200 million
3/31/2014
none
Min (10-year
CMAT +0.3%;
9%)
BPCE
10/6/04
EUR
369 million
7/30/2015
7/30/2015
4.63%
BPCE
10/12/04
EUR
80 million
1/12/2014
none
Min (10-year
CMS; 7%)
80
80
BPCE
1/27/2006
USD
300 million
1/27/2014
none
6.75%
214
228
BPCE
2/1/2006
EUR
350 million
2/1/2016
2/1/2016
4.75%
350
350
BPCE
10/30/2007
EUR
509 million
10/30/2017
10/30/2017
6.12%
509
509
BPCE
8/6/2009
EUR
52 million
9/30/2015
none
13.00%
52
52
BPCE
8/6/2009
EUR
374 million
9/30/2019
9/30/2019
12.50%
374
374
BPCE
8/6/2009
USD
134 million
9/30/2015
none
13.00%
93
101
BPCE
8/6/2009
USD
444 million
9/30/2019
9/30/2019
12.50%
309
337
BPCE
10/22/2009
EUR
750 million
4/22/2015
none
9.25%
750
750
BPCE
3/17/2010
EUR
818 million
3/17/2015
3/17/2015
9.00%
818
818
4,531
4,591
TOTAL
5.22
5
5
5
CHANGE IN GAINS AND LOSSES RECOGNIZED DIRECTLY IN EQUITY
Fiscal year 2013
Fiscal year 2012
161
0
(48)
0
(311)
(103)
793
2,026
Change in value over the period affecting equity
866
1,958
Change in value over the period affecting net income
(73)
68
498
(442)
(319)
(286)
Income taxes
GAINS AND LOSSES RECOGNIZED DIRECTLY IN EQUITY (AFTER TAX)
(6)
162
768
1,357
5
5
5
5
253
5
5
FINANCIAL REPORT
Fiscal year 2013
Fiscal year 2012
Gross
Income
Taxes
Net
Gross
Income
Taxes
161
(48)
113
0
0
0
(311)
///
(311)
(103)
///
(103)
793
(154)
639
2,026
(553)
1,473
498
(165)
333
(442)
267
(175)
///
///
(6)
///
///
Net
162
TOTAL GAINS AND LOSSES RECOGNIZED DIRECTLY IN EQUITY
768
1,357
728
1,328
40
29
Note 6
6.1
Notes to the income statement
INTEREST AND SIMILAR INCOME AND EXPENSE
This line item comprises interest income and expenses, calculated using the
effective interest method, on financial assets and liabilities measured at
amortized cost, which include interbank and customer items, held-to-maturity
assets, debt securities and subordinated debt.
It also includes interest receivable on fixed-income securities classified as
available-for-sale financial assets and hedging derivatives, it being specified
that accrued interest on cash flow hedging derivatives is taken to income in the
same manner and period as the accrued interest on the hedged item.
Fiscal year 2013
Fiscal year 2012
Income
Expenses
Net
Income
Expenses
Net
19,479
(6,389)
13,090
19,828
(7,309)
12,519
2,339
(854)
1,485
3,183
(1,748)
1,435
727
///
727
979
///
979
///
(5,459)
(5,459)
///
(6,182)
(6,182)
Hedging derivatives
3,244
(3,662)
(418)
3,983
(4,260)
(277)
1,763
///
1,763
2,033
///
2,033
338
///
338
504
///
504
Impaired financial assets
56
///
56
159
///
159
Other interest income and expenses
14
(52)
(38)
26
(201)
(175)
27,960
(16,416)
11,544
30,695
(19,700)
10,995
Finance leases
Debt securities and subordinated debt
TOTAL INTEREST INCOME AND EXPENSES
Interest income from loans and receivables with credit institutions consists of
€1.537 million in income (€1,940 million in 2012) collected on the Livret A
and LDD passbook savings accounts, which are deposited with Caisse des Dépôts
et Consignations.
This line includes mainly commissions receivable or payable on recurring services
(payment processing, custody fees, etc.) and occasional services (fund transfers,
payment penalties, etc.), commissions receivable or payable on execution of
significant transactions, and commissions receivable or payable on trust assets
managed on behalf of the Group’s customers.
6.2
However, commissions that form an integral part of the effective yield on a
contract are recorded under “Net interest income”.
FEE AND COMMISSION INCOME AND EXPENSES
Commissions are recorded based on the type of service rendered and on the
method of accounting for the financial instrument to which the service relates.
254
FINANCIAL REPORT
Fiscal year 2013
Fiscal year 2012
Income
Expenses
Net
Income
Expenses
Net
49
(28)
21
26
(32)
(6)
2,810
(49)
2,761
2,560
(22)
2,538
586
(603)
(17)
482
(440)
42
Sales of life insurance products
1,210
///
1,210
1,154
///
1,154
Payment services
1,571
(642)
929
1,590
(672)
918
Corporate actions
295
(122)
173
254
(144)
110
2,249
(13)
2,236
2,101
(9)
2,092
Financial instruments and off-balance sheet
transactions
372
(98)
274
335
(93)
242
Other fees and commissions
512
(380)
132
510
(287)
223
9,654
(1,935)
7,719
9,012
(1,699)
7,313
Cash and interbank transactions
Customer transactions
Financial services
Trust management services
TOTAL FEE AND COMMISSION INCOME
AND EXPENSES
6.3
NET GAINS OR LOSSES ON FINANCIAL
INSTRUMENTS AT FAIR VALUE THROUGH
PROFIT OR LOSS
This item includes gains and losses (including the related interest) on financial
assets and liabilities classified as held for trading or designated at fair value
through profit or loss.
“Gains/(losses) on hedging transactions” include gains and losses arising
from the revaluation of derivatives used as fair value hedges, as well as gains
and losses from the revaluation of the hedged item in the same manner, the
revaluation at fair value of the macro-hedged portfolio and the ineffective
portion of cash flow hedges.
Gains and losses on financial instruments held for trading
Fiscal year 2013
Fiscal year 2012
1,605
2,047
Gains and losses on financial instruments designated at fair value through profit or loss
214
216
Gains and losses on hedging transactions
109
(23)
Ineffective portion of fair value hedges
56
(34)
Ineffective portion of cash flow hedges
53
11
(193)
81
1,735
2,321
Gains and losses on foreign exchange transactions
TOTAL NET GAINS OR LOSSES ON FINANCIAL INSTRUMENTS AT FAIR VALUE THROUGH PROFIT
OR LOSS
In 2013, “Gains and losses on financial instruments held for trading” included a
change in the fair value of derivatives in the amount of -€26 million due to the
difference in impairments for counterparty risk (Credit Value Adjustment - CVA)
and in the amount of €88 million due to the consideration of non-performance
risk in the valuation of derivative financial liabilities (Debit Valuation Adjustment
- DVA).
“Gains and losses on financial instruments designated at fair value through
profit or loss” include the valuation of the issuer spread on issues classified as
fair value instruments through profit or loss with an impact of -€258 million
impact on income for the period versus -€407 million last year.
Day one profit
Fiscal year 2013
Fiscal year 2012
Day one profit at the start of the year
48
49
Deferred profit on new transactions
9
19
(21)
(20)
36
48
Profit recognized in income during the year
DAY ONE PROFIT AT YEAR-END
255
5
5
5
5
5
5
5
5
5
5
6.4
FINANCIAL REPORT
NET GAINS OR LOSSES ON AVAILABLE-FOR-SALE FINANCIAL ASSETS
This item includes dividends from variable-income securities, gains and losses on the sale of available-for-sale financial assets and other financial assets not valued
at fair value as well as impairment losses recognized on variable-income securities due to a permanent impairment in value.
Fiscal year 2013
Fiscal year 2012
Gains or losses on disposals
384
(35)
Dividends received
284
356
Permanent impairment of variable-income securities
(179)
(422)
TOTAL NET GAINS OR LOSSES ON AVAILABLE-FOR-SALE FINANCIAL ASSETS
489
(101)
In 2013, permanent impairment of variable-income securities came to
€179 million versus €422 million in 2012. This expense involved insurance
portfolios for €60 million (€122 million in 2012), the impact of which is 94.8%
neutralized (fully neutralized in 2012), given the profit-sharing mechanism.
In 2013, permanent impairment of variable-income securities(1) included an
additional impairment loss of €96 million on previously impaired securities
(€289 million in 2012). The automatic application of indicators of losses in
value presented in paragraph 5.4 did not result in any new material impairments
in 2013.
6.5
INCOME AND EXPENSES FROM OTHER ACTIVITIES
This item mainly comprises:
• income and expenses on investment property (rental income and expense,
gains and losses on disposals, depreciation, amortization and impairment);
• income and expenses resulting from the Group’s insurance business (notably
premium income, paid benefits and claims, and changes in technical reserves
of insurance companies);
• income and expenses on operating leases;
• income and expenses on real estate development activities (revenues,
purchases used).
Fiscal year 2013
Fiscal year 2012
Income
Expenses
Net
Income
Expenses
Net
Income and expenses from insurance activities
5,678
(5,849)
(171)
4,875
(5,347)
(472)
Income and expenses from real estate activities
2,769
(1,891)
878
2,867
(1,974)
893
Income and expenses from leasing transactions
125
(112)
13
128
(110)
18
Income and expenses from investment property
278
(99)
179
244
(120)
124
Share of joint ventures
39
(31)
8
59
(70)
(11)
Transfers of expenses and income
18
(7)
11
14
(17)
(3)
1,221
(694)
527
1,916
(1,038)
878
Other operating income and expenses
Additions to and reversals from provisions to other operating income
and expenses
Other banking income and expenses
TOTAL INCOME AND EXPENSES FROM OTHER ACTIVITIES
Income and expenses on insurance activities
The statement below provides a transition between the financial statements
of insurance companies included in the scope of consolidation and their
translation into the financial statements of Groupe BPCE in accordance with
the presentation applicable to banks.
(1)
256
Excluding insurance securities, given the deferred profit-sharing mechanism.
72
(178)
(106)
84
(93)
(9)
1,350
(910)
440
2,073
(1,218)
855
10,200
(8,861)
1,339
10,187
(8,769)
1,418
The Group’s consolidated companies that present their financial statements
based on the insurance company model are Natixis Assurances, BPCE Assurances,
Muracef, Surassur, Prépar Vie, Prépar Iard and Coface.
FINANCIAL REPORT
Banking format 2013
Net banking
income
Earned premiums
Revenues or income from other activities
Other operating income
Net financial income before finance costs
Total revenues
General
operating
expenses
Gross
operating
income
Cost of risk
Insurance
format 2013
Insurance
format 2012
6,561
6,561
6,561
5,522
250
250
250
258
14
1
15
2,139
(11)
2,128
1
1
15
16
2,129
2,183
8,964
(10)
8,954
8,955
7,979
Claims and benefits expenses
(6,566)
(96)
(6,662)
(6,662)
(6,007)
Expenses from other activities
(216)
(216)
(216)
50
50
25
Policy acquisition costs
Net income from reinsurance disposals
(534)
50
(204)
(738)
(738)
(659)
Administrative expenses
(580)
(519)
(243)
(337)
(580)
Other operating income and expenses/recurring
(62)
(203)
(265)
4
(261)
(343)
Total other recurring income and expenses
(7,571)
(840)
(8,411)
4
(8,407)
(7,503)
OPERATING INCOME
1,393
(850)
543
5
548
476
Income and expenses recognized for insurance policies are included under the
“Income from other activities” and “Expenses from other activities” components
of net banking income.
Other components of the operating income of insurance entities of a banking
nature (interest and commissions) are reclassified under these items of net
banking income.
6.6
OPERATING EXPENSES
Payroll costs
Taxes other than on income
External services
Other expenses
Other administrative costs
TOTAL OPERATING EXPENSES
The breakdown of payroll costs is provided in note 8.1.
6.7
COST OF RISK
This item records net impairment charges for credit risks, regardless of whether
the impairment is calculated on an individual or collective basis for a portfolio
of similar receivables.
5
5
5
Operating expenses include mainly payroll costs (wages and salaries net of
rebilled amounts), social security charges, and employee benefit expenses
such as pension costs. Operating expenses also include the full amount of
administrative expenses and other external services costs.
5
The main reclassifications relate to the charging of general operating expenses
by nature whereas they are charged by function in the insurance presentation.
5
Fiscal year 2013
Fiscal year 2012
(9,862)
(9,643)
(668)
(689)
(4,679)
(4,687)
0
(1)
(5,347)
(5,377)
(15,209)
(15,020)
Impairment losses are recognized for both loans and receivables and fixedincome securities when there is a known counterparty risk. Losses related to
other types of instruments (derivatives or securities designated at fair value
through profit or loss) recorded as a result of default by credit institutions are
also included under this item.
5
5
Cost of risk
Net charge to provisions and provisions for impairment
Recoveries of bad debts written off
Irrecoverable loans not covered by provisions for impairment
TOTAL COST OF RISK
Fiscal year 2013
Fiscal year 2012
(1,912)
(1,694)
97
(55)
(227)
(450)
(2,042)
(2,199)
257
5
5
5
FINANCIAL REPORT
Cost of risk by type of asset
Fiscal year 2013
Fiscal year 2012
Interbank transactions
37
44
(1,797)
(1,607)
TOTAL COST OF RISK
6.8
(282)
(636)
(2,042)
(2,199)
Fiscal year 2013
Fiscal year 2012
166
156
0
(21)
21
17
SHARE IN NET INCOME OF ASSOCIATES
Volksbank International
Equity interests in the Natixis group
Socram Banque
3
3
Other
7
21
Financial sector companies
215
176
Maisons France Confort P-I
3
5
Other
2
5
Non-financial companies
5
10
220
186
SHARE IN NET INCOME OF ASSOCIATES
6.9
NET GAINS OR LOSSES ON OTHER ASSETS
This item includes gains and losses on disposals of property, plant and equipment and intangible assets, as well as gains and losses on disposals of consolidated
investments in associates.
Fiscal year 2013
Fiscal year 2012
Gains or losses on disposals of property, plant and equipment and intangible assets used in operations
42
1
Gains or losses on disposals of consolidated investments
(6)
2
TOTAL GAINS OR LOSSES ON OTHER ASSETS
36
3
Fiscal year 2013
Fiscal year 2012
(12)
(11)
o/w Corporate Data Solutions (CDS, formerly Coface non-core)
(6)
(11)
o/w other activities
(6)
6.10
CHANGE IN THE VALUE OF GOODWILL
Natixis
Nexity
0
Regional banks
(22)
BCP Luxembourg
Other
TOTAL CHANGE IN THE VALUE OF GOODWILL
258
(210)
(7)
(4)
(8)
(16)
(258)
FINANCIAL REPORT
6.11
5
INCOME TAX
Current income tax expense
Deferred tax assets and liabilities
INCOME TAX
BPCE is currently the subject of a tax audit in respect of fiscal years 2010 and
2011. An interim assessment notice was issued before December 31, 2013 to
suspend the statute of limitation for the first fiscal year audited. BPCE plans
to dispute the majority of the temporary adjustments called for by the tax
authority.
Fiscal year 2013
Fiscal year 2012
(2,453)
(1,747)
554
381
(1,899)
(1,366)
The residual risk associated with the adjustments was assessed and an
appropriate provision recorded.
5
5
Reconciliation between the tax charge in the financial statements and the theoretical tax charge
Fiscal year 2013
Share of non-controlling interests in consolidated companies
Income taxes
INCOME BEFORE TAX AND CHANGES IN THE VALUE
OF GOODWILL (A)
Impact of the change in unrecognized deferred tax assets and liabilities
Impact of permanent differences
Reduced rate of tax and tax-exempt activities
Difference in tax rates on income taxed outside France
Temporary step-up of corporate tax
(1)
Tax on prior periods, tax credits and other tax
Other items(2)
INCOME TAX EXPENSE (INCOME) RECOGNIZED
EFFECTIVE TAX RATE (INCOME TAX EXPENSE DIVIDED
BY TAXABLE INCOME)
16
258
321
230
(220)
(186)
1,899
1,366
4,685
5
3,815
(1,613)
(3)
Tax rate
2,147
34.4%
(1,315)
0.1%
(97)
2.5%
(98)
2.1%
50
(1.3%)
(0)
0.0%
14
(0.4%)
(33)
0.7%
(29)
0.8%
(173)
3.7%
(21)
0.6%
(122)
2.6%
(33)
0.9%
144
(3.1%)
66
(1.7%)
(1,899)
(1,366)
40.5%
5
5
35.8%
O/w: - €74 million for a 3% tax on earnings distributed under the CIC buyback transaction and -€118 million (excl. additional contribution) for an impairment on a past loss on the France tax consolidation group
at Natixis.
O/w: +€108 million (excl. additional contribution) from the offset of previously unrecognized tax losses at Natixis.
Note 7
7.1
34.4%
Theoretical income tax expense (income) at the tax rate
applicable in France (AxB)
(2)
Tax rate
2,669
Standard income tax rate in France (B)
(1)
Fiscal year 2012
5
Risk exposure and regulatory ratios
CAPITAL MANAGEMENT AND REGULATORY
CAPITAL REQUIREMENTS
The Group is required to comply with prudential rules established by French
regulatory authorities, pursuant to the transposition into French law of the
European directives on the capital adequacy of investment firms and credit
institutions and on financial conglomerates.
Since January 1, 2008, the Order of February 20, 2007, issued by the
French Ministry of the Economy and Industry, has defined the method for
calculating the Basel II capital adequacy ratio as the ratio between total
regulatory capital and the sum of:
• regulatory capital requirements for credit risk using the standardized approach
or internal ratings-based approach according to the Group entity in question;
5
• capital requirements for the prudential monitoring of market risk and
operational risk.
259
5
5
FINANCIAL REPORT
Regulatory capital is determined in accordance with CRBF regulation 90-02 of February 23, 1990 relating to capital.
12/31/2013
12/31/2012
51,339
50,554
5,656
2,565
Issues of hybrid Tier-1 instruments
5,336
5,647
(13,237)
(10,671)
49,094
48,095
7,712
7,655
Capital deductions
(3,610)
(8,047)
of which deductions from Tier-1 capital
(1,805)
(1,588)
of which deductions from Tier-2 capital
(1,805)
(1,588)
53,195
47,703
Prudential restatements (including goodwill and intangible assets)
of which deductions from total capital
(4,871)
REGULATORY CAPITAL
Regulatory capital is divided into two categories, each of which involves a
certain number of deductions.
Core (or Tier-1) capital corresponds to the Group’s consolidated equity,
excluding filtered unrealized or deferred gains or losses, plus non-controlling
interests and issues of hybrid Tier-1 instruments (chiefly perpetual subordinated
notes), less goodwill and intangible assets.
Specific ceilings have been established for certain components of Tier-1 capital.
In particular, hybrid instruments and non-controlling interests taken together
may not account for more than 50% of Tier-1 capital.
Supplementary (or Tier-2) capital is divided into two sub-categories:
• upper Tier-2 capital, which comprises perpetual subordinated debt and certain
other financial instruments;
• lower Tier-2 capital, which notably includes long-term subordinated debt and
some preference shares. A discount of 20% is applied to all subordinated debt
instruments with a maturity of less than five years.
Tier-2 capital is taken into account only up to a limit of 100% of the amount
of Tier-1 capital. The total amount of lower Tier-2 capital that may be included
in Tier-2 capital may not exceed 50% of Tier-1 capital.
Deductions made to determine regulatory capital mainly consist of equity items
(Equity interests and subordinated loans) at banking sector entities in which
the Group holds more than 10% of share capital or investments in the banking
sector accounted for using the equity method. Equal amounts are deducted
from Tier-1 and Tier-2 capital.
In application of the Ministerial Order of February 20, 2007, the Group is required
to maintain a capital adequacy ratio of at least 8% at all times.
In 2013, Groupe BPCE complied with capital adequacy ratio requirements.
260
7.2
CREDIT RISK AND COUNTERPARTY RISK
Certain disclosures relating to risk management required by IFRS 7 are also
provided in the risk management report. They include:
• the breakdown of the loan portfolio by category of gross exposure and
approach;
• the breakdown of gross exposures by category and approach (separation of
credit and counterparty risk);
• the breakdown of gross exposure by geographic region;
• concentration of credit risk by borrower;
• the breakdown of exposure by credit rating.
This information forms an integral part of the financial statements certified by
the Statutory Auditors.
7.2.1
Measurement and management of credit risk
Credit risk arises whenever a counterparty is unable to meet its payment
obligations and may result from a reduction in credit quality or even default
by the counterparty.
Commitments exposed to credit risk consist of existing or potential receivables
and particularly loans, debt securities, equities, performance swaps, performance
bonds, or confirmed or undrawn facilities.
Credit risk management procedures and assessment methods, risk concentration,
the quality of performing financial assets, and the analysis and breakdown of
outstandings are described in the risk management report.
7.2.2
Total exposure to credit risk and counterparty risk
The statement below shows the credit risk exposure for all Groupe BPCE financial
assets. The exposure is calculated on the basis of the carrying amount of the
financial assets without taking into account the impact of any unrecognized
netting or collateral agreements.
FINANCIAL REPORT
Net outstandings
at 12/31/2013
Net outstandings
at 12/31/2012
168,730
186,152
6,643
10,733
Financial assets at fair value through profit or loss (excluding variable-income securities)
Hedging derivatives
Available-for-sale financial assets (excluding variable-income securities)
66,548
71,025
Loans and receivables due from credit institutions on demand
108,038
118,794
578,419
574,855
Exposure to balance sheet commitments
Financial guarantees given(1)
Off-balance sheet commitments
Exposure to off-balance sheet commitments
TOTAL CREDIT AND COUNTERPARTY RISK EXPOSURE
(1)
11,567
11,043
939,945
972,602
46,076
73,341
128,970
124,196
175,046
197,537
1,114,991
1,170,139
5
5
5
Amount at December 31, 2012 restated (see Note 10.1).
7.2.3
Impairment and provisions for credit risk
1/1/2013
Charges
Reversals
Other changes
12/31/2013
226
11
(103)
11
145
Interbank transactions
266
20
(80)
(7)
199
11,623
3,736
(2,992)
(82)
12,285
Impairment losses recognized in assets
Provisions for off-balance sheet commitments
TOTAL IMPAIRMENT AND PROVISIONS FOR CREDIT RISK
7.2.4
Financial assets with past due payments
Assets with past due payments are performing financial assets for which a
payment incident has been recorded.
For example:
• a debt instrument is considered past due if the bond issuer is no longer making
interest payments;
• a loan is considered past due if a payment or installment has been missed
and recorded as such in the financial statements;
4
0
0
0
4
336
117
(157)
(6)
290
12,455
3,884
(3,332)
(84)
12,923
1,126
257
(285)
(42)
1,056
13,581
4,141
(3,617)
(126)
13,979
• a current account overdraft carried in “Loans and advances” is considered
past due if the overdraft period or authorized limit has been exceeded at the
balance sheet date.
The amounts disclosed in the statement below do not include past due payments
resulting from the time delay between the settlement date and the recognition
date.
Debt instruments
Loans and advances
TOTAL AS AT 12/31/2013
≤ 90 days
5
5
Past due loans and receivables (past due principal and accrued interest in the
case of loans and total overdrawn balance in the case of current accounts) can
be broken down by due date as follows:
Non-impaired outstandings showing past due balances
5
> 90 days and
≤ 180 days
> 180 days and
≤ 1 year
> 1 year
Impaired
outstandings
(net value)
Total
outstandings
2
0
0
0
116
118
6,541
530
78
55
12,715
19,919
4
0
1
0
0
5
6,547
530
79
55
12,831
20,042
261
5
5
5
5
FINANCIAL REPORT
Non-impaired outstandings showing past due balances
Debt instruments
≤ 90 days
> 90 days and
≤ 180 days
> 180 days and
≤ 1 year
> 1 year
Impaired
outstandings
(net value)
Total
outstandings
5
0
0
0
149
154
Loans and advances
6,420
488
142
115
12,025
19,190
1
0
0
0
0
1
6,426
488
142
115
12,174
19,345
TOTAL AS AT 12/31/2012
7.2.5
Credit risk mitigation mechanisms: assets obtained by taking possession of collateral
The following statement shows by type the carrying amount of assets (securities, buildings, etc.) obtained by taking possession of collateral or other forms of credit
enhancement.
Fiscal year 2013
Fiscal year 2012
Non-current assets available for sale
4
3
Investment property
5
23
Other
33
28
TOTAL ASSETS OBTAINED BY TAKING POSSESSION OF COLLATERAL
42
54
7.3
MARKET RISK
Market risk refers to the possibility of financial loss due to market trends, such
as:
• interest rates: interest rate risk is the risk that the fair value or future cash
flows of a financial instrument will fluctuate due to changes in market rates
of interest;
The Group’s approach to the management of exchange rate risk is discussed in
the risk management report.
7.5
LIQUIDITY RISK
Liquidity risk is the risk that the Group will be unable to honor its payment
commitments as they fall due and replace funds when they are withdrawn.
• exchange rates;
• prices: market price risk is the risk of a potential loss resulting from changes in
market prices, whether they are caused by factors specific to the instrument
or its issuer, or by factors affecting all market traded instruments. Variableincome securities, equity derivatives and commodity derivatives are exposed
to this type of risk; and
The funding procedures and liquidity risk management arrangements are
disclosed in the risk management report.
• more generally, any market parameter involved in the valuation of portfolios.
Systems for the measurement and monitoring of market risks are presented in
the risk management report.
The table below shows the amounts of financial instrument by contractual
maturity date.
The information provided in the risk management report required under IFRS 7
and relating to the management of market risk comprises:
• VaR for the Groupe BPCE scope;
• stress testing results.
7.4
INTEREST RATE RISK AND EXCHANGE RATE RISK
Interest rate risk is the risk that unfavorable changes in interest rates will
adversely impact the Group’s annual results and net worth. Exchange rate risk
is the risk of losses resulting from changes in exchange rates.
Disclosures relating to the management of liquidity risk required by IFRS 7 are
provided in the risk management report.
Financial instruments by residual maturity
Financial instruments marked to market on the income statement and held in
the trading book, variable-income available-for-sale financial assets, doubtful
loans, hedging derivatives and revaluation differences on portfolios hedged
against interest rate risk are placed in the “Perpetual” column. These financial
instruments are:
• either held for sale or redeemed prior to their contractual maturity;
• or held for sale or redeemed at an undeterminable date (particularly where
they have no contractual maturity;
• or measured on the balance sheet for an amount impacted by revaluation
effects.
Accrued interest not yet due is shown in the “Less than 1 month” column.
The amounts shown are contractual amounts excluding projected interest.
262
FINANCIAL REPORT
Less than
1 month
Over
5 years
Perpetual
Total
6,216
-
-
-
-
60,410
-
-
-
-
-
119,657
119,657
27,023
10,093
10,808
7,424
16,751
14,316
86,415
-
-
-
-
-
6,643
6,643
Hedging derivatives
1 to
5 years
54,194
Financial assets at fair value through profit or loss - trading book
Financial assets at fair value through profit or loss - fair value option
1 to 3 3 months to
months
1 year
2,844
1,425
5,401
21,959
33,969
13,776
79,374
63,365
33,558
3,142
3,541
3,229
1,203
108,038
41,981
20,411
44,566
170,699
288,534
12,228
578,419
-
-
-
-
-
5,060
5,060
160
74
430
4,605
6,288
10
11,567
189,567
71,777
64,347
208,228
348,771
-
-
-
-
-
100,340
100,340
43,385
13,956
7,750
4,379
9,344
678
79,492
-
-
-
-
-
6,185
6,185
24,950
14,641
4,016
26,807
18,030
370
88,814
362,381
10,608
23,835
49,825
11,193
347
458,189
482
95
1,047
4,928
3,514
309
10,375
18,080
25,859
38,182
71,205
53,997
7,331
214,654
FINANCIAL ASSETS BY MATURITY
Financial liabilities at fair value through profit and loss trading book
Financial liabilities at fair value through profit and loss fair value option
Hedging derivatives
Subordinated debt
Debt securities
FINANCIAL LIABILITIES BY MATURITY
-
-
-
-
-
1,238
1,238
449,278
65,159
74,830
157,144
96,078
116,798
959,287
12,725
382
1,597
1,255
596
-
16,555
Financing commitments given to customers
36,914
7,390
19,088
38,554
11,349
89
113,384
49,639
7,772
20,685
39,809
11,945
89
129,939
487
694
1,176
1,021
389
19
3,786
1,657
2,232
4,985
15,511
11,611
4,658
40,654
2,144
2,926
6,161
16,532
12,000
4,677
44,440
Guarantee commitments given to credit institutions
Guarantee commitments given to customers
TOTAL FINANCING COMMITMENTS GIVEN
Note 8
8.1
Employee benefits
5
5
5
5
PAYROLL COSTS
Wages and salaries
Costs of defined-contribution plans
Other social security costs and payroll-based taxes
Profit-sharing and incentive schemes
TOTAL PAYROLL COSTS
The Employment Competitiveness Tax Credit is deducted from payroll costs. It
came to €71 million in respect of fiscal year 2013.
Payroll costs in 2013 included €91 million for Natixis’ Employment Adaptation
Plan.
8.2
5
172,893 1,055,583
Financing commitments given to credit institutions
5
EMPLOYEE BENEFITS
Groupe BPCE grants its staff a variety of employee benefits.
Fiscal year 2013
Fiscal year 2012
(5,918)
(5,744)
(708)
(794)
(2,730)
(2,618)
(506)
(487)
(9,862)
(9,643)
The Banque Populaire banks’ private supplementary pension plan, managed
by Caisse Autonome de Retraite des Banques Populaires (CARBP), covers the
pension benefits deriving from the closure of the banking pension scheme at
December 31, 1993.
The pension plans managed by CARBP are partially covered by an insurance
policy for annuities paid to beneficiaries having passed a reference age and for
obligations related to younger beneficiaries.
5
5
Annuities paid to beneficiaries having passed the reference age are managed
with the insurer’s general pension assets. These general assets are reserved for
263
5
5
FINANCIAL REPORT
this insurer’s pension obligations and their composition is adjusted to longterm and predictable payment schedules. They consist predominantly of bonds
so that the insurer can implement the capital guarantee that it is required to
give on assets of this type. The insurer is responsible for managing the fund’s
assets and liabilities.
Other obligations are managed in a unit-linked diversified fund, i.e. with no
specific guarantee provided by the insurer. The fund is managed according to a
strategic allocation approach, predominantly focused on fixed income products
(60%, with more than 80% of this bucket comprised of government bonds),
but with significant exposure to equities (40%). This allocation is established
with the aim of optimizing the portfolio’s expected performances, subject to
a level of risk overseen and measured using several criteria. The corresponding
asset/liability reviews are performed yearly and presented to the Monitoring
Committee and to the Plan Management Committee. The relatively dynamic
allocation applied is made possible by the time frame in which the amounts
are used and by the regulation mechanisms specific to the financial oversight
of the system. The fund’s assets do not include derivatives.
The private supplementary pension plan, previously managed by Caisse Générale
de Retraite des Caisses d’Epargne (CGRCE), is now incorporated within Caisse
Générale de Prévoyance des Caisses d’Epargne (CGPCE), which is a retained
benefits plan (RMP). The CGR plan has been closed since December 31, 1999,
and the rights crystallized at this date. The strategic guidelines for managing
retained benefits plan funds for the Caisses d’Epargne are decided by the Board
of Directors on the basis of asset/liability reviews. The plan is subject to several
constraints and targets on which strategic choices are based:
• a risk of insufficient assets;
• the aim of being able to revalue pensions at the ARRCO level.
The portion comprised of bonds is predominant (over 90%); in a bid to manage
interest rate risk, the Group matches projected liabilities flows on the assets side
of the balance sheet. In order to be able to interpret risks and forecast returns,
bonds are often held as bonds managed on a line-by-line basis and as bond
funds. Due to liabilities constraints, assets must be held over the long term in
order to have a duration close to that of the corresponding liabilities (over 20
years). The annual revaluation of annuities, whose target is close to the ARRCO
level, is a key objective for which a significant proportion of indexed bonds
are held. Duration constraints combined with cautious choices by the Board
of Directors result in a highly secure portfolio (Investment Grade universe).
The portfolio’s average rating is AA+/AA. Strategic allocations can always be
implemented without using derivatives, which are therefore excluded from the
portfolio.
The CARBP and CGPCE plans are recorded under “Supplementary pension
benefits and other.”
Other employee benefits also include:
• pensions and other post-employment benefits such as retirement indemnities
and other benefits granted to retirees;
• other benefits such as long-service awards and other long-term employee
benefits.
• a risk of a provision in the event of inadequate return on plan assets (provision
for financial risks);
8.2.1
Analysis of assets and liabilities recorded in the balance sheet
Post-employment defined-benefit
plans
Actuarial liabilities
Fair value of plan assets
Effect of ceiling on plan assets
Supplementary
pension benefits
and other
Other long-term employee benefits
End-of-career
awards
Long-service
awards
Other
6,801
751
196
140
7,888
(6,082)
(329)
(9)
0
(6,420)
12/31/2013
87
0
NET AMOUNT REPORTED ON THE BALANCE SHEET
806
422
187
140
1,555
Employee benefit commitments recorded in the balance sheet
818
458
187
140
1,603
12
36
0
0
48
Plan assets recorded in the balance sheet
264
87
FINANCIAL REPORT
8.2.2
5
Change in amounts recognized on the balance sheet
5
Change in actuarial liabilities
plans
ACTUARIAL LIABILITIES AT START OF YEAR
Service cost
Supplementary
pension benefits
and other
End-of-career
awards
Long-service
awards
Other
Fiscal year 2013
6,928
790
205
131
8,054
114
21
45
13
35
Service cost for prior periods
(18)
(22)
(1)
(1)
(42)
Interest cost
198
22
5
1
226
Benefits paid
(179)
(43)
(12)
(31)
(265)
6
4
(7)
7
10
28
6
(2)
11
43
Other
Changes recorded in income
Revaluation differences - Demographic assumptions
(2)
(2)
(4)
Revaluation differences - Financial assumptions
(131)
(37)
(168)
Revaluation differences - Past-experience effect
(16)
(7)
(23)
(149)
(46)
(195)
(7)
0
0
0
1
1
(7)
(2)
(7)
6,801
751
196
140
7,888
Changes recognized directly equity that cannot be reclassified
in income
Other
ACTUARIAL LIABILITIES AT END OF YEAR
5
FAIR VALUE OF PLAN ASSETS AT START OF YEAR
Interest income
Supplementary
pension benefits
and other
End-of-career
awards
Long-service
awards
6,152
304
8
Other
Fiscal year 2013
6,464
182
9
21
11
32
(141)
(18)
(159)
Other
(3)
(1)
(4)
Changes recorded in income
59
1
60
Revaluation differences - Return on plan assets
(118)
23
(95)
Changes recognized directly in equity that cannot be reclassified
in income
(95)
Plan participant contributions
Benefits paid
191
(118)
23
(8)
0
Other
(3)
1
1
(1)
6,082
329
9
6,420
FAIR VALUE OF PLAN ASSETS AT END OF YEAR
5
(7)
Change in plan assets
plans
5
(8)
5
5
5
265
5
5
FINANCIAL REPORT
Revaluation differences on post-employment benefits
Supplementary
pension benefits
and other
End-of-career
awards
TOTAL REVALUATION DIFFERENCES AT START OF PERIOD
323
(18)
305
Revaluation differences generated during the fiscal year
(33)
(68)
(101)
Fiscal year 2013
Adjustments to asset ceiling
(79)
0
(79)
TOTAL REVALUATION DIFFERENCES AT END OF PERIOD
211
(86)
125
Returns on plan assets are calculated by applying the same discount rate as
the one applied to gross liabilities. The difference between the actual return
at the balance sheet date and this financial income is a revaluation difference
recorded for post-employment benefits in equity.
8.2.3
Actuarial expense under defined-benefit plans
The various components of the charge recognized for defined-benefit plans are
included under “Payroll costs”.
Defined-benefit post-employment
plans
Supplementary
pension benefits
and other
End-of-career
awards
Long-service
awards
Other
Fiscal year 2013
(21)
(45)
(13)
(35)
(114)
18
22
1
1
42
(198)
(22)
(5)
(1)
(226)
182
9
0
0
191
Benefits paid
38
25
12
31
106
Plan participant contributions
21
11
0
0
32
(20)
(5)
7
(7)
(25)
20
(5)
2
(11)
6
Service cost
Past service cost
Interest cost
Interest income
Other (o/w asset ceiling)
TOTAL EXPENSE FOR 2013
8.2.4
Other disclosures
Main actuarial assumptions
Fiscal year 2013
Fiscal year 2012
CGPCE
CAR-BP
CGPCE
CAR-BP
Discount rate
3.04%
2.98%
2.96%
3.00%
Inflation rate
1.90%
1.90%
2.00%
2.00%
TGH05/TGF05
TGH05/TGF05
TGH05/TGF05
TGH05/TGF05
22 years
14 years
23 years
16 years
Life tables used
Duration
Sensitivity of actuarial liabilities to changes in main assumptions
At December 31, 2013, a reduction of 1% in the discount rate would have the following impact on actuarial commitments:
in % and millions of euros
CAR-BP
CGP-CE
Variation of +1% in the discount rate
–12.49 %
(99)
–18.10 %
(972)
Variation of -1% in the discount rate
+15.69 %
124
+18.10 %
1,194
Variation of +1% in the inflation rate
+15.69 %
124
+15.82 %
850
Variation de -1% in the inflation rate
–10.93 %
(87)
–16.10 %
(865)
266
FINANCIAL REPORT
5
Payment schedule - (non discounted) benefits paid to beneficiaries
CAR - BP
CGP
N+1 to N+5
187
614
N+6 to N+10
193
793
N+11 to N+15
191
924
N+16 to N+20
179
965
> N+20
523
3,701
5
Breakdown of fair value of plan assets
CAR-BP
CGP
Fair value of plan
assets
Fair value of plan
assets
Weight by category
as a %
Weight by category
as a %
4.76%
114
0.13%
7
Equities
39.06%
93
2.63%
143
Bonds
51.45%
Cash holdings
123
80.50%
4,382
Real estate
0
1.28%
70
Derivatives
0
Investment funds
TOTAL
8.3
5
0
4.73%
11
15.46%
841
100.00%
238
100%
5,443
5
5
SHARE-BASED PAYMENTS
The main equity-settled plans are presented below.
Natixis share subscription option plans
Natixis plans
Number of options
granted
Total number of
options in issue
Strike price
(in euros)
Share price at date
of grant
7,576,800
4,846,798
6.88
10.63
2008 plan
5
No expenses were booked for fiscal year 2013 (nor for 2012).
Nexity share subscription option and bonus share allocation plans
Number of options or
shares granted
Number of options or
shares granted, not
canceled and not
exercised
Share price at date
of grant
December 2009 plan
271,000
-
23.80
May 2010 plan
263,500
-
26.30
December 2010 plan
344,000
317,000
35.50
May 2011 plan
173,000
149,000
36.40
October 2011 plan
356,139
-
21.60
6,000
6,000
20.50
October 2012 plan
174,540
155,070
22.90
December 2012 plan
342,000
336,000
25.80
December 2013 plan no. 1
283,000
283,000
25.00
December 2013 plan no. 2
217,000
217,000
25.00
2,430,179
1,463,070
May 2012 plan
TOTAL
5
5
No expenses were booked for fiscal year 2013 (vs. €10 million for 2012).
267
5
5
FINANCIAL REPORT
Other share-based payment plans for the Natixis group
Each year since 2010, a share-based payment plan has been awarded to certain
categories of staff in accordance with regulations.
Regarding the plans approved in February 2014, as the allocations were not
formally completed on the balance sheet date, the cost assessment was based
Year of plan
Grant date
2009 plan
2/24/2010
2010 plan
2/22/2011
2011 plan
2/22/2012
2012 plan
2/17/2013
2013 plan
2/19/2014
Number of units
granted at
inception
13,990,425
5,360,547
4,821,879
5,275,539
5,245,275
on the best possible estimate of the inputs on the balance sheet date, both in
terms of the share value and dividend assumptions.
Long-term payment plan settled in cash and indexed to the Natixis
share price
Settlement is subject to presence and performance conditions.
Fair value of indexed cash
unit at valuation date
Vesting date
Number of units vested by
the beneficiaries
March 2011
4,165,734
-
March 2012
3,422,976
-
March 2013
3,745,942
-
(in euros)
September 2012
1,322,038
-
September 2013
1,087,387
3.98
September 2014
-
-
September 2013
1,376,149
-
September 2014
-
3.81
-
October 2015
-
September 2014
-
-
October 2015
-
3.63
October 2016
-
-
October 2015
-
-
October 2016
-
3.48
October 2017
-
-
Short-term cash-settled payment plans indexed to the Natixis share
Valuation of
indexed cash unit
Year of plan
Grant date
Vesting date
(in euros)
2013 plan
2/19/2014
9/1/2014
4.27
Number of indexed Number of probable
cash units granted indexed cash units
at inception
at vesting date
4,774,061
4,629,682
Fair value of
indexed cash unit
at valuation date
(in euros)
4.14
The expense associated with the short-term plan, estimated based on the probability of the presence condition being met, is fully recognized in the 2013 financial
statements in the amount of €39 million (€28 million for 2012).
268
FINANCIAL REPORT
5
Share-based payment plans
Payments under these plans are subject to presence and performance criteria.
Year of plan
Grant date
Number of shares
granted at
inception
2009 plan
2/24/2010
6,858,237
2010 plan
2/22/2011
2011 plan
2/22/2012
2012 plan
2/17/2013
6,459,081
6,095,058
1,656,630
Vesting dates
Number of units Bonus share price at
vested by the
date of grant
beneficiaries
(in euros)
March 2011
2,082,623
March 2012
1,787,988
Fair value of bonus
share at valuation
date (in euros)
5
3.63
-
March 2013
2,006,301
February 2012
1,887,473
-
February 2013
1,804,135
February 2014
1,727,057
-
March 2013
1,912,194
-
March 2014
-
March 2015
-
March 2014
-
March 2015
-
March 2016
-
4.13
2.89
2.34
5
1.83
-
2.84
2.19
-
5
Expense for the period for retention and performance plans
Fiscal year 2013
Plans settled in
shares
Plans settled in cash
indexed to Natixis
shares
Total
Fiscal year 2012
Prior loyalty plans
6
34
40
22
Loyalty plans from the fiscal year
1
4
5
6
TOTAL
7
38
45
28
5
Valuation inputs used to assess the expense relative to these plans
Share price as at December 31, 2013
€4.27
Risk-free interest rate
0.15%
Dividend pay-out ratio
4.21%
Loss of rights rate
4.48%
Note 9
Segment reporting
The accounting conventions used to prepare the financial statements for fiscal
year 2013 are described in Note 3 “Consolidation principles and methods”.
Groupe BPCE is structured around its two core businesses:
• Insurance, International and the Other networks, chiefly comprising the
Group’s interest in CNP Assurances, BPCE Assurances, the international and
overseas subsidiaries (including BPCE IOM) and Banque Palatine.
Commercial Banking and Insurance, including:
encompass Natixis’ core businesses:
• the Banque Populaire network, comprised of 19 Banque Populaire banks
and their subsidiaries, Crédit Maritime Mutuel, and the mutual guarantee
companies;
• Wholesale Banking, which has now established itself as BPCE’s bank serving
large corporate and institutional customers;
• the Caisse d’Epargne network consisting of the 17 Caisses d’Epargne;
• Real Estate Financing, the results of which predominantly reflect the
contribution of the Crédit Foncier group;
• Investment Solutions, with asset management, life insurance and private
banking and the private equity business;
5
5
5
• Specialized Financial Services, which includes factoring, lease financing,
consumer credit, sureties and guarantees, employee benefits planning,
payments and securities services.
269
5
5
FINANCIAL REPORT
Equity interests is the third business segment, consisting of the Group’s stakes
in Nexity and Volksbank România, along with Natixis’ interests in Coface and
the Natixis Private Equity activity.
• revaluation of own debt;
• the impacts of the dynamic management of Crédit Foncier’s balance sheet
(disposals of securities and redemptions of liabilities);
Workout portfolio management and Other businesses encompasses:
• items related to goodwill impairment and the amortization of valuation
differences, as these items form part of the Group’s acquisition and investment
strategy.
• the contribution of Natixis’ Workout portfolio management business and the
run-off management of the former CNCE’s proprietary trading and delegated
management businesses;
• the contribution made by the Group’s central institution and holding
companies, and of the activities sold (MeilleurTaux) or in the process of
being sold;
It should be noted that the 2012 segment reporting data shown have
been restated in particular for the reclassification, following the disposal
of MeilleurTaux, from the Equity interests sector to the Workout portfolio
management and Other businesses sector.
• an impairment loss on Greek government bonds;
9.1
SEGMENT ANALYSIS OF THE CONSOLIDATED INCOME STATEMENT
Results by division
Commercial Banking
and Insurance
Net banking income
Operating expenses
Wholesale Banking,
Investment
Solutions and SFS
Core businesses
Workout portfolio
management and
Other businesses
Equity Interests
Groupe BPCE
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
15,378
14,780
6,398
6,093
21,776
20,873
1,653
1,711
(603)
(638)
22,826
21,946
(10,103) (10,064)
(4,152)
(4,037) (14,255) (14,101)
(1,395)
(1,396)
(485)
5,275
4,716
2,246
2,056
7,521
6,772
258
315
(1,088)
(1,076)
6,691
6,011
Cost/income ratio
65.7%
68.1%
64.9%
66.3%
65.5%
67.6%
84.4%
81.6%
ns
ns
70.7%
72.6%
Cost of risk
(1,574)
(1,447)
(380)
(341)
(1,954)
(1,788)
2
(5)
(90)
(406)
(2,042)
(2,199)
3,927
3,472
1,884
1,730
5,811
5,202
233
285
(1,155)
(1,744)
4,889
3,743
(1,478)
(1,195)
(606)
(540)
(2,084)
(1,735)
(106)
(138)
291
507
(1,899)
(1,366)
(41)
(44)
(364)
(361)
(405)
(405)
(82)
(81)
166
256
(321)
(230)
2,408
2,233
914
829
3,322
3,062
45
66
(698)
(981)
2,669
2,147
Income before tax
Income tax
THE PARENT
(438) (16,135) (15,935)
Results of the Commercial Banking and Insurance sub-division
Banque Populaire
banks
Caisses d’Epargne
Real Estate
Financing Services
Insurance,
International and
Other networks
Commercial Banking
and Insurance
2013
2012
2013
2012
2013
2012
2013
2012
2013
2012
Net banking income
6,390
6,033
6,997
6,756
777
808
1,214
1,183
15,378
14,780
Operating expenses
(4,205)
(4,185)
(4,562)
(4,518)
(546)
(586)
(790)
2,185
1,848
2,435
2,238
231
222
424
408
5,275
4,716
Cost/income ratio
65.8%
69.4%
65.2%
66.9%
70.3%
72.5%
65.1%
65.5%
65.7%
68.1%
Cost of risk
Income before tax
Income tax
270
(775) (10,103) (10,064)
(685)
(747)
(529)
(441)
(250)
(132)
(110)
(127)
(1,574)
(1,447)
1,525
1,126
1,904
1,797
0
105
498
444
3,927
3,472
(571)
(388)
(780)
(650)
2
(41)
(129)
(116)
(1,478)
(1,195)
(6)
(7)
0
0
(2)
(1)
(33)
(36)
(41)
(44)
948
731
1,124
1,147
0
63
336
292
2,408
2,233
T
FINANCIAL REPORT
5
Results of the Wholesale Banking, Investment Solutions and Specialized Financial Services sub-divisions
Investment
Solutions
Wholesale Banking
Wholesale Banking,
Investment
Solutions and SFS
Specialized
Financial Services
2013
2012
2013
2012
2013
2012
2013
2012
Net banking income
2,867
2,836
2,259
2,065
1,272
1,192
6,398
6,093
Operating expenses
(1,657)
(1,719)
(1,662)
(1,528)
(833)
(790)
(4,152)
(4,037)
1,210
1,117
597
537
439
402
2,246
2,056
Cost/income ratio
57.8%
60.6%
73.6%
74.0%
65.5%
66.3%
64.9%
66.3%
(312)
(265)
12
0
(80)
(76)
(380)
(341)
899
852
627
552
358
326
1,884
1,730
Income tax
(323)
(306)
(159)
(123)
(124)
(111)
(606)
(540)
(161)
(152)
(136)
(145)
(67)
(64)
(364)
(361)
415
394
332
284
167
151
914
829
Cost of risk
Income before tax
9.2
Wholesale Banking,
and SFS
Equity Interests
Workout portfolio
management and Other
businesses
Groupe BPCE
12/31/2013
12/31/2012
12/31/2013
12/31/2012
12/31/2013
12/31/2012
12/31/2013
12/31/2012
12/31/2013
12/31/2012
Segment assets
699,553
679,751
434,827
373,017
6,201
6,911
(17,061)
87,842
1,123,520
1,147,521
Segment liabilities(1)
575,090
553,956
405,304
354,685
3,633
3,671
19,411
114,208
1,003,439
1,026,520
Caisses d’Epargne
Real Estate Financing
Services
Insurance, International
and Other networks
Commercial Banking
and Insurance
12/31/2013
12/31/2012
12/31/2013
12/31/2012
12/31/2013
12/31/2012
12/31/2013
12/31/2012
12/31/2013
12/31/2012
Segment assets
225,852
213,011
318,934
309,639
131,754
134,355
23,013
22,747
699,553
679,752
Segment liabilities(1)
196,349
187,381
281,738
273,020
119,703
116,522
(22,700)
(22,966)
575,090
553,957
Wholesale Banking
Wholesale Banking,
and SFS
Services
12/31/2013
12/31/2012
12/31/2013
12/31/2012
12/31/2013
12/31/2012
12/31/2013
12/31/2012
Segment assets
357,542
295,244
55,536
55,325
21,749
22,448
434,827
373,017
339,854
289,274
47,897
47,576
17,553
17,835
405,304
354,685
(1)
Segment liabilities
(1)
5
5
SEGMENT ANALYSIS OF THE CONSOLIDATED BALANCE SHEET
Commercial Banking and
Insurance
5
5
5
Segment liabilities represent the liabilities restated for equity and other liabilities (notably including tax liabilities and other liabilities and provisions).
9.3
5
SEGMENT REPORTING BY GEOGRAPHIC REGION
The geographic analysis of segment assets and results is based on the location where business activities are accounted for.
Net banking income
Fiscal year 2013
Fiscal year 2012
19,151
18,543
Rest of Europe
1,053
1,094
North America
1,828
1,528
794
781
22,826
21,946
France
ROW
TOTAL
271
5
5
5
FINANCIAL REPORT
Total segment assets
12/31/2013
12/31/2012
France
1,019,861
1,056,759
Rest of Europe
28,298
28,492
North America
55,734
45,333
ROW
19,627
16,937
1,123,520
1,147,521
12/31/2013
12/31/2012
16,555
10,552
TOTAL
Note 10
10.1
Commitments
FINANCING AND GUARANTEE COMMITMENTS
The amounts shown correspond to the nominal value of commitments given.
Financing commitments
Financing commitments given to:
credit institutions
customers
113,384
114,674
– credit facilities granted
92,202
90,603
– other commitments
21,182
24,071
129,939
125,226
credit institutions
65,510
54,672
customers
12,031
15,611
77,541
70,283
Financing commitments received from:
TOTAL FINANCING COMMITMENTS RECEIVED
Natixis sets up securitization transactions on behalf of its customers and
investors using specific conduits. Natixis extends liquidity lines to two ABCP
conduits (Versailles and Magenta). At December 31, 2013, these lines totaled
€5 billion.
Natixis also granted a total amount of €627 million in liquidity lines to several
funds arranged by third parties at December 31, 2013.
Guarantee commitments
12/31/2013
12/31/2012
Guarantee commitments given to:
credit institutions
customers(1)
other securities pledged as collateral
3,786
12,426
40,654
61,951
134,331
173,962
178,771
248,339
credit institutions
15,368
15,322
customers
85,486
74,348
other securities received as collateral
91,248
91,353
192,102
181,023
TOTAL GUARANTEE COMMITMENTS GIVEN
Guarantee commitments received from:
GUARANTEE COMMITMENTS RECEIVED
(1)
The guarantees given by CEGC (a subsidiary of Natixis) in connection with its activity are treated as insurance policies for accounting purposes, in accordance with IFRS 4 «Insurance contracts» and are recorded on the
liabilities side of the balance sheet. The nominal amount of these guarantees at December 31, 2013 is not included in guarantees given to customers shown in the table above. The amount of guarantees given to
customers was restated at December 31, 2012 for the amount of guarantees given by CEGC outside the Group in the amount of €9,372 million.
272
FINANCIAL REPORT
Guarantee commitments given include off-balance sheet commitments as well
as financial instruments pledged as collateral.
Note 11
The social housing companies in which the Group is the sole major shareholder
are also covered.
TRANSACTIONS WITH CONSOLIDATED COMPANIES
All intercompany transactions carried out during the period and balances
outstanding at the end of the period with fully consolidated companies are
eliminated in full on consolidation.
The statement below only provides data on intercompany transactions
concerning:
Short-term benefits
Short-term benefits paid out to company directors amounted to €4 million
in 2013 (vs. €5 million in 2012).
Share-based payments
Since 2009, company directors have not received any allotment of stock
subscription or purchase options or bonus shares.
Post-employment benefit commitments, long-term benefits
and termination benefits
The post-employment benefits, long-term benefits and termination benefits
of BPCE’s company directors are described in paragraph 2.4.4 of Chapter 2 on
Corporate governance. The amount of the provision in respect of retirement
bonuses came to €3 million in 2013.
• entities over which the Group exercises significant influence and which are
equity-accounted (associates): the Group received fees and commissions from
Groupe CNP Assurances of €848 million in 2013 (€834 million in 2012).
11.3
A list of fully consolidated subsidiaries is presented in the scope of consolidation
section (see Note 16).
TRANSACTIONS WITH COMPANY DIRECTORS
The Group’s company directors are the members of the Management Board and
Supervisory Board of BPCE.
5
These include remuneration, directors’ attendance fees and benefits paid
to members of the Management Board and Supervisory Board.
• companies over which the Group exercises joint control (proportionately
consolidated) in respect of the non-eliminated portion (joint ventures): no
significant transactions were identified in this category;
11.2
5
Related-party transactions
For Groupe BPCE, related parties are considered to be all consolidated companies,
including companies carried under the equity method, local savings companies,
BPCE, Natixis, IT centers and the Group’s key management personnel.
11.1
Financial instruments pledged as collateral particularly include receivables
allocated as collateral under funding arrangements. Detailed information on
these instruments and on the related mechanisms is presented in Note 12.
5
RELATIONS WITH SOCIAL HOUSING COMPANIES
Groupe BPCE is a longstanding partner in the HLM social housing movement in
France and a key player in the social housing production process. The Group acts
as an operator (the leading privately owned bank involved in the construction of
social housing which it finances in particular through Livret A passbook savings
account deposits) and is one of the main distributors of state-sponsored rental
accommodation loans and intermediate rental loans. The Group is also the sole
major shareholder in certain social housing companies.
In view of the economic substance of the Group’s dealings with the social
housing sector, where organizations are subject to specific regulations, some
social housing companies have been classified as related parties.
5
5
5
Banking transactions with social housing companies
Loans outstanding
12/31/2013
12/31/2012
1,144
1,358
Commitments given
194
193
Deposit account balances
394
457
8
10
Outstanding financial investments (UCITS and securities)
5
Fiscal year 2013
Fiscal year 2012
Interest income from loans
34
43
Interest expense on bank deposits
11
14
0
0
5
273
5
Financial expense on investments (UCITS and securities)
5
FINANCIAL REPORT
Note 12
12.1
Transferred financial assets, other financial assets pledged as collateral and assets
received as collateral that can be sold or repledged
TRANSFERRED FINANCIAL ASSETS NOT FULLY DERECOGNIZED AND OTHER FINANCIAL ASSETS PLEDGED AS
COLLATERAL
Carrying amount
Outright
securities
lending
Repurchase
agreements
Assets
transferred or
pledged as
collateral
Securitizations
12/31/2013
31,193
Financial assets pledged as collateral
262
29,353
567
1,010
Financial assets designated at fair value through profit or loss
1,426
246
274
0
1,946
1,378
12,705
12,564
123
26,770
544
447
102,499
3,279
106,769
Held-to-maturity assets
172
3,884
121
0
4,177
3,783
46,635
116,025
4,412
170,854
o/w transferred financial assets not fully derecognized
3,783
46,635
86,005
4,412
140,834
The amount of liabilities associated with financial assets pledged as collateral
for repurchase agreements came to €44,090 million.
The Group in fact has an implicit contractual obligation to transfer to outside
investors the cash flow from assets transferred to the securitization fund
(although these assets are included in the Group’s balance sheet through the
consolidation of the fund).
TOTAL FINANCIAL ASSETS PLEDGED AS COLLATERAL
The fair value of securitizations pledged as collateral not fully derecognized was
€4,412 million at December 31, 2013.
In accordance with French law, the intrinsic guarantees attached to issues of
covered bonds are not recognized under guarantee commitments given. The
covered bonds issued by BPCE SFH and Compagnie de Financement Foncier
benefit from a legal privilege comprised of eligible assets.
12.1.1 Comments on transferred financial assets:
12.1.2 Financial assets pledged as collateral but not transferred
Financial assets provided as collateral but not transferred are generally pledged.
The main mechanisms involved are Banques Populaires Covered Bonds, GCE
Covered Bonds, BPCE Home Loans FCT, the CRH (Caisse de refinancement
de l’habitat), the SFEF (Société de financement de l’économie française), and
securities pledged as collateral for ECB refinancing operations.
Securities repurchasing and lending
Groupe BPCE repurchases and loans securities.
Under the terms of the agreements, the securities may be sold on by the
purchaser throughout the duration of the repurchase or lending operation. The
purchaser must nevertheless return them to the vendor at the transaction’s
maturity. The cash flows generated by the securities are also transmitted to
the vendor.
The Group believes that it has retained almost all of the risks and benefits of the
securities repurchased or loaned. They have therefore not been derecognized.
Financing has been recorded in liabilities for the repurchasing or lending of
financed securities.
Sales of receivables
Groupe BPCE sells receivables as security (Articles L. 211(38) or L. 313(23) et
seq. of the French Monetary and Financial Code) under guaranteed refinancing
operations, particularly with the central bank. This type of disposal for security
involves the legal transfer of the associated contractual rights, and therefore
the “transfer of assets” within the meaning of the amendment to IFRS 7. The
Group nevertheless remains exposed to virtually all the risks and benefits, and
as such the receivables are maintained on the balance sheet.
Securitizations consolidated with outside investors
Securitizations consolidated with outside investors constitute an asset transfer
according to the amendment to IFRS 7.
274
12.1.3 Financial assets received as collateral that can be sold or
repledged
This heading covers financial assets received as security under financial
guarantee agreements with the right to reuse the assets in the absence of any
default on the part of the owner of the guarantee.
The fair value of the financial assets received as collateral that Groupe BPCE may
sell or repledge amounted to €114 billion at December 31, 2013.
12.2
FULLY DERECOGNIZED FINANCIAL ASSETS
FOR WHICH THE GROUP RETAINS AN ONGOING
COMMITMENT
Fully derecognized transferred financial assets for which the Group retains on
ongoing commitment consist of asset disposals to a deconsolidated securitization
vehicle in which the Group has an interest or an obligation, although the latter
do not call into question the transfer of almost all of the benefits and risks
relating to the assets transferred.
The ongoing commitments retained by the Group in relation to securitization
vehicles were as follows as December 31, 2013:
• €40 million in a securitization vehicle versus €130 million at December 31,
2012;
FINANCIAL REPORT
• €108 million in liquidity lines granted that have been drawn down (versus
€129 million at December 31, 2012). These transactions are recorded on the
balance sheet under “Customer loans and receivables”;
• €34 million in liquidity lines granted that have not yet been drawn down
(versus €65 million at December 31, 2012). These lines are recorded under
“Financing commitments.”
Note 13
Ongoing commitments following the deconsolidation of previous consolidated
entities were as follows at December 31, 2013:
• €345 million in securities held;
• €8 million for other assets;
• €59 million for borrowings.
• the Group has the legally enforceable right to offset the recorded amounts;
and
• it has the intention either to settle the net amount or to simultaneously realize
the asset and settle the liability.
Within Groupe BPCE, most offset amounts are the result of repurchase
agreements and derivatives transactions carried out by Natixis with clearing
houses.
The gross amounts offset comprise derivatives and repurchase agreements
carried out with clearing houses for which the IAS 32 criteria were met:
• for derivatives, it is the currency offset between asset valuations and liability
valuations of the derivatives processed through the “LCH Clearnet Ltd”
clearing house via the “Swapclear” clearing system;
• for repurchase agreements, it is the repurchase agreements carried out with
the clearing houses LCH Clearnet Ltd (Repoclear), LCH Clearnet SA, Eurex AG
and Fixed Income Clearing Corporation (FICC). Natixis records on its balance
sheet the net value of repurchase and reverse repurchase agreements that:
- are carried out with the same clearing house,
- have the same maturity date,
5
Income generated from all of these transactions totaled €8 million at
December 31, 2013.
5
Offsetting financial assets and financial liabilities
Financial assets and liabilities were offset on the balance sheet according to the
criteria set forth in IAS 32. Under this standard, a financial asset and a financial
liability are offset and a net balance is shown on the balance sheet if and only if:
5
- relate to the same security and the same custodian,
- are denominated in the same currency.
Financial assets and liabilities “under netting agreements not offset on the
balance sheet” comprise transactions under netting agreements or similar, but
that do not meet the restrictive netting criteria set by IAS 32. This is particularly
the case for derivatives or repurchase agreements subject to master agreements
under which the net settlement criteria or realization of a simultaneous
settlement of the asset and liability cannot be demonstrated or for which the
offsetting right can only be exercised in the event of default, insolvency or
bankruptcy by one of the parties to the agreement.
For these instruments, the “Related financial assets and financial instruments
received as collateral” and “Related financial liabilities and financial instruments
pledged as collateral” columns include in particular:
• for repurchase agreements:
- loans or borrowings resulting from reverse repurchase agreements with the
same counterparty, and securities pledged or received as collateral (for the
fair value of said securities),
5
5
- margin calls in the form of securities (for the fair value of said securities);
• for derivatives, the fair values of the reverse transactions with the same
counterparty, as well as the margin calls in the form of securities.
Margin calls received or paid in cash are shown in “Margin calls received (cash
collateral)” and “Margin calls paid (cash collateral).”
5
5
5
275
5
5
13.1
FINANCIAL REPORT
FINANCIAL ASSETS
Financial assets under netting agreements offset in the balance sheet
12/31/2013
Derivatives (trading and hedging)
Financial assets at fair value
12/31/2012
Gross amount of
financial
Gross amount of liabilities offset in
financial assets the balance sheet
91,693
Net amount of
financial assets
recognized in the
balance sheet
29,618
62,075
Gross amount of
financial
Gross amount of liabilities offset in
financial assets the balance sheet
110,523
Net amount of
financial assets
recognized in the
balance sheet
45,912
64,611
62,330
419
61,911
68,398
-
68,398
154,023
30,037
123,986
178,921
45,912
133,009
26,253
1,666
24,587
32,808
-
32,808
Other
108,038
-
108,038
118,794
-
118,794
134,291
1,666
132,625
151,602
-
151,602
288,314
31,703
256,611
330,523
45,912
284,611
TOTAL
Financial assets under netting agreements not offset in the balance sheet
12/31/2013
Related
Net amount
financial
of financial
liabilities
assets and financial
recognized in instruments
the balance
received as
sheet
collateral
12/31/2012
Margin calls
received
(cash
collateral) Net exposure
Net amount
Related
of financial
financial
assets
liabilities
recognized and financial
in the instruments
balance
received as
sheet
collateral
Margin calls
received
(cash
collateral) Net exposure
Derivatives
62,075
35,806
7,716
18,553
64,611
47,567
10,789
6,255
86,498
70,114
56
16,328
101,205
87,687
2
13,516
Other assets
TOTAL FINANCIAL ASSETS
13.2
108,038
30
0
108,008
118,794
30
0
118,764
256,611
105,950
7,772
142,889
284,611
135,284
10,791
138,535
Financial liabilities under netting agreements offset in the balance sheet
12/31/2013
Gross amount of
financial liabilities
12/31/2012
Net amount of
Gross amount of
financial assets financial liabilities
offset in the recognized in the
Gross amount of
balance sheet
balance sheet financial liabilities
Gross amount of
Net amount of
financial assets financial liabilities
offset in the recognized in the
balance sheet
balance sheet
Derivatives (trading and hedging)
93,026
29,618
63,408
113,518
45,912
67,606
64,292
419
63,873
73,571
-
73,571
141,177
Financial liabilities designated at fair value
157,318
30,037
127,281
187,089
45,912
40,126
1,666
38,460
44,771
-
44,771
Other
88,814
-
88,814
111,399
-
111,399
Debt
TOTAL
276
128,940
1,666
127,274
156,170
-
156,170
286,258
31,703
254,555
343,259
45,912
297,347
FINANCIAL REPORT
5
Financial liabilities under netting agreements not offset in the balance sheet
12/31/2013
Derivatives
Other liabilities
TOTAL LIABILITIES
Note 14
5
12/31/2012
Net amount of
financial
liabilities
recognized in
the balance
sheet
Related
financial
assets and
financial
instruments
pledged as
collateral
collateral)
63,408
36,437
10,512
102,332
78,062
20
Net exposure
Net amount of
financial
liabilities
recognized in
the balance
sheet
Related
financial
assets and
financial
instruments
pledged as
collateral
16,459
67,606
47,434
15,732
4,439
24,250
118,342
84,767
49
33,526
Margin calls
paid (cash
Margin calls
paid (cash
collateral)
Net exposure
88,814
30
-
88,784
111,399
31
-
111,368
254,555
114,529
10,532
129,493
297,347
132,202
15,781
149,364
Fair value of financial assets and liabilities at amortized cost
For financial instruments not measured at fair value on the balance sheet, fair
value calculations are provided for information purposes and must only be
interpreted as estimates.
In most cases, the values indicated are not liable to be realized and generally
may not be realized in practice.
These fair values are thus only calculated for information purposes in the notes
to the financial statements. They are not indicators used in the interest of
overseeing commercial banking activities, for which the management model is
based on collection of contractual cash flows.
The simplified assumptions used to measure the fair value of instruments at
amortized costs are presented in Note 4.1.6.
12/31/2013
12/31/2012
Measurement
techniques using
observable data
(Level 2)
Measurement
techniques using
unobservable data
(Level 3)
Fair value
Fair value
Price quoted in an
active market
(Level 1)
108,422
901
18,176
89,345
118,441
591,259
595,870
5,777
82,568
507,525
12,310
11,713
456
141
12,163
87,966
0
68,175
19,791
111,402
459,161
0
218,255
240,906
431,620
Debt securities
218,147
243
119,049
98,855
233,042
11,202
0
11,170
32
11,725
Subordinated debt
Note 15
5
5
5
5
Sovereign risk
Several euro zone countries are facing economic difficulties and a crisis of
confidence concerning their debt. Against this backdrop, in cooperation with
the International Monetary Fund, the European Union has developed support
5
mechanisms to aid Greece, Ireland, Portugal and Cyprus. The risk premiums of
other European countries including Spain, Hungary and Italy have increased
significantly since 2011.
5
277
5
5
FINANCIAL REPORT
EXPOSURE RELATED TO BANKING AND TRADING ACTIVITIES
Banking book
Trading book
Loans and
receivables
Available-forsale financial
assets
Held-tomaturity
financial
assets
12/31/2013
12/31/2012
Cyprus
58
0
0
0
0
0
58
60
Spain
3
5
0
16
(2)
(6)
16
225
Greece
0
11
0
8
0
0
19
14
Hungary
40
0
0
1
54
(33)
62
8
0
185
0
6
1
0
192
179
1,414
2,116
50
11
567
18
4,176
4,053
Accounting classification
in millions d’euros
Ireland
Italy
Portugal
TOTAL NET EXPOSURES
Financial
assets
designated at
fair value
Direct
exposures
Indirect
exposures
0
49
0
6
10
0
65
137
1,515
2,366
50
48
630
(21)
4,588
4,676
The maturity dates of net exposures in the banking book at December 31, 2013 are as follows:
Remaining maturity
Cyprus
Spain
Greece
Hungary
Ireland
Italy
1 year
2 years
3 years
5 years
10 years
> 10 years
Total
exposure
57
0
0
0
0
57
0
(39)
27
63
(300)
351
(86)
16
2
0
0
0
0
17
19
(49)
(30)
89
18
21
13
62
26
0
7
0
0
159
192
428
(367)
(1,156)
548
1,906
2,818
4,177
Portugal
41
0
2
1
19
2
65
TOTAL
409
(370)
(995)
267
2,354
2,923
4,588
EXPOSURE RELATED TO INSURANCE ACTIVITIES
The exposure of the Group’s insurance activities to the sovereign risk of these countries was as follows at December 31, 2013 and December 31, 2012:
12/31/2013
12/31/2012
Spain
552
404
Ireland
12
19
1,498
1,245
Italy
Portugal
TOTAL GROSS EXPOSURES
278
58
98
2,120
1,766
FINANCIAL REPORT
Note 16
16.1
Consolidation scope
CHANGES IN SCOPE OF CONSOLIDATION DURING
FISCAL YEAR 2013
16.2
5
SECURITIZATION TRANSACTIONS
Change in the percentage of the Group’s interest in Natixis
Securitization is a financial engineering technique that aims to enhance balance
sheet liquidity. From a technical perspective, assets to be securitized are grouped
according to the quality of the associated collateral or guarantees, and sold
to special purpose entities that finance their acquisition by issuing securities
underwritten by investors.
Subsequent to the option exercised by BPCE to receive the Natixis dividend in
new shares, the Group had a 71.96% equity interest in Natixis at December 31,
2013 (compared to 72.3% at December 31, 2012).
Entities created specifically for this purpose are not consolidated when the
Group does not exercise control. Control is assessed based on the interpretation
provided in SIC 12.
Disposal of MeilleurTaux
The following statement lists the securitization transactions carried out by
the Commercial Banking and Insurance entities without (total or partial)
derecognition:
The main changes in the scope of consolidation during 2013 are presented
below:
In April 2013, Oterom Holding, a wholly-owned subsidiary of BPCE, sold its
entire stake in MeilleurTaux to Equistone Partners.
This disposal had a positive impact of €23 million on consolidated income,
recorded under “Gains and losses on other assets”.
5
Type of assets
Year of inception
Residential mortgage loans
6/11/2003
July 2021
987
138
Partimmo 11/2003
11/12/2003
March 2029
1,045
Expected maturity Nominal at inception
158
2,032
296
October 2031
1,173
178
Partimmo sub-total
Zèbre 1
11/25/2004
Zèbre two
10/28/2005
July 2024
739
168
Zèbre 2006-1
11/28/2006
January 2046
689
224
2,601
570
Elide 2007
Residential real estate loans
6/27/2007
May 2035
1,251
407
Elide 2008
12/16/2008
October 2036
985
404
Elide 2011
4/6/2011
May 2039
1,089
697
Elide 2012
6/26/2012
October 2040
1,190
966
4,515
2,474
Zèbre sub-total
Elide sub-total
Eridan
Other loans
12/16/2010
November 2033
880
431
Patrimab
Other loans
5/25/2011
May 2014
62
1
Mabimmo
Real estate loans
10/25/2011
October 2021
52
33
Consomab
Consumer loans
9/17/2012
September 2017
271
91
Real estate loans
12/1/2004
October 2015
1,795
246
Other sub-total
TOTAL
The securitization transactions by the Crédit Foncier group (“Partimmo” and
“Zèbre” transactions) are initiated for its own account as part of its asset-liability
management activities in order to obtain funding on the market on favorable
terms. This funding is carried out through the two specialized subsidiaries
Compagnie de Financement Foncier and Vauban Mobilisation Garanties. During
the fiscal year, the Partimmo 07/2002 and Partimmo 10/2002 securitization
funds were wound up and deconsolidated.
These entities are consolidated as the Group has a controlling stake in respect
of SIC 12 criteria.
At December 31, 2013, a new special purpose entity derived from Wholesale
Banking, Investment Solutions and Specialized Financial Services was
consolidated within Groupe BPCE: the “NECA” securitization fund, which is
used to refinance an export credit portfolio.
5
Balance at
12/31/2013
Partimmo 05/2003
Amaren
5
16.3
3,060
802
12,208
4,142
5
5
5
GAURANTEED UCITS
Guaranteed UCITS are designed to reach a specific amount at the end of a
given period, determined by applying a predefined calculation formula based
on financial market indicators and, where appropriate, to distribute revenues
derived from the investments as determined using the same methods. The
portfolio management targets of these funds are guaranteed by a credit
institution.
Based on an analysis of the substance of these funds in accordance with SIC 12,
the Group cannot be regarded as holding substantially all the risks and rewards
of ownership. Consequently, these entities are not consolidated.
279
5
5
5
16.4
FINANCIAL REPORT
SCOPE OF CONSOLIDATION AT DECEMBER 31, 2013
Only those subsidiaries providing a material contribution are consolidated.
Materiality is assessed for consolidated entities based on the principle of
ascending materiality. In other words, any entity included at a sub-consolidation
level is included at all higher consolidation levels, even if it is not material at
those levels.
Location(a)
Percentage interest
Consolidation
method(b)
Banque Populaire d’Alsace
FR
100.00%
FC
Banque Populaire Aquitaine Centre Atlantique
FR
100.00%
FC
Banque Populaire Atlantique
FR
100.00%
FC
Banque Populaire Bourgogne Franche-Comté
FR
100.00%
FC
Banque Populaire Côte d’Azur
FR
100.00%
FC
Companies
I) CONSOLIDATING ENTITY
I-1 Banque Populaire banks
Banque Populaire de Loire et Lyonnais
FR
100.00%
FC
Banque Populaire de l’Ouest
FR
100.00%
FC
Banque Populaire des Alpes
FR
100.00%
FC
Banque Populaire du Massif Central
FR
100.00%
FC
Banque Populaire du Nord
FR
100.00%
FC
Banque Populaire du Sud
FR
100.00%
FC
Banque Populaire Lorraine Champagne
FR
100.00%
FC
FR
100.00%
FC
Banque Populaire Provençale et Corse
FR
100.00%
FC
FR
100.00%
FC
Banque Populaire Val de France
FR
100.00%
FC
BRED - Banque Populaire
FR
100.00%
FC
CASDEN - Banque Populaire
FR
100.00%
FC
Crédit Coopératif
FR
100.00%
FC
Caisse d’Epargne Aquitaine Poitou-Charentes
FR
100.00%
FC
Caisse d’Epargne Bretagne Pays de Loire
FR
100.00%
FC
Caisse d’Epargne Côte d’Azur
FR
100.00%
FC
Caisse d’Epargne Alsace
FR
100.00%
FC
Caisse d’Epargne d’Auvergne et du Limousin
FR
100.00%
FC
Caisse d’Epargne Bourgogne Franche-Comté
FR
100.00%
FC
Caisse d’Epargne Lorraine Champagne-Ardennes
FR
100.00%
FC
Caisse d’Epargne de Midi-Pyrénées
FR
100.00%
FC
Caisse d’Epargne Picardie
FR
100.00%
FC
Caisse d’Epargne Île-de-France
FR
100.00%
FC
Caisse d’Epargne Languedoc-Roussillon
FR
100.00%
FC
Caisse d’Epargne Loire-Centre
FR
100.00%
FC
Caisse d’Epargne Loire Drôme Ardèche
FR
100.00%
FC
Caisse d’Epargne Nord France Europe
FR
100.00%
FC
FC
I-2 Caisses d’Epargne
Caisse d’Epargne Normandie
FR
100.00%
Caisse d’Epargne Provence-Alpes-Corse
FR
100.00%
FC
Caisse d’Epargne Rhône-Alpes
FR
100.00%
FC
I-3 BPCE
BPCE
FR
FC
FR
FC
I-4 Mutual Guarantee Companies
52 Mutual Guarantee Companies
280
FINANCIAL REPORT
Location(a)
Percentage interest
Consolidation
method(b)
Caisse Régionale Crédit Maritime Bretagne Normandie
FR
100.00%
FC
Caisse Régionale Crédit Maritime Atlantique
FR
100.00%
FC
Caisse Régionale Crédit Maritime de Méditerranée
FR
100.00%
FC
Caisse Régionale Crédit Maritime Région Nord
FR
100.00%
FC
Caisse Régionale Crédit Maritime Sud-Ouest
FR
100.00%
FC
Crédit Maritime Outre Mer
FR
100.00%
FC
C.M.G.M.
FR
4.61%
FC
Edel
FR
33.94%
FC
Gedex Distribution
FR
0.00%
FC
Moninfo
FR
33.91%
FC
Companies
I-5 Affiliated institutions
II) “ASSOCIATED” INSTITUTIONS
Nord Financement
FR
0.73%
FC
Société Financière de la NEF
FR
2.23%
FC
Socorec
FR
0.00%
FC
Sofigard
FR
0.25%
FC
Sofindi
FR
3.07%
FC
Sofirif
FR
14.97%
FC
Sofiscop
FR
1.02%
FC
Sofiscop Sud Est
FR
3.53%
FC
Somudimec
FR
0.14%
FC
Somupaca
FR
1.25%
FC
KH
12.25%
EQ
Atlantique Plus
FR
100.00%
FC
Aurora
BE
100.00%
EQ
EQ
III) SUBSIDIARIES
5
5
5
5
5
III-1 Subsidiaries of the Banque Populaire banks
Acleda
Banque Calédonienne d’Investissement
FR
49.90%
Banque Chaix
FR
100.00%
FC
Banque de Savoie
FR
99.98%
FC
Banque Dupuy de Parseval
FR
100.00%
FC
Banque Franco Lao
LA
54.00%
FC
Banque Marze
FR
100.00%
FC
Banque Monétaire et Financière
FR
100.00%
FC
BP Développement(1)
FR
89.06%
FC
Bati Lease
FR
94.89%
FC
Bati Lease Invest
FR
94.89%
FC
BCI Mer Rouge
DJ
51.00%
FC
BCEL
LA
10.00%
EQ
Bercy Gestion Finance
FR
99.99%
FC
Bercy Patrimoine
FR
100.00%
FC
BGF+
FR
100.00%
FC
BIC BRED
FR
99.95%
FC
BPA Atouts Participations
FR
100.00%
FC
BRD China Ltd
CN
100.00%
FC
BRED Cofilease
FR
100.00%
FC
BRED Bank Fiji Ltd
FJ
100.00%
FC
BRED Gestion
FR
100.00%
FC
BRED IT
TH
100.00%
FC
281
5
5
5
5
5
FINANCIAL REPORT
Location(a)
Percentage interest
Consolidation
method(b)
BRED Vanuatu
VA
85.00%
FC
BTP Banque
FR
99.96%
FC
BTP Capital Conseil
FR
99.96%
FC
BTP Capital Investissement
FR
73.27%
FC
Cadec
FR
40.30%
EQ
Caisse de Garantie Immobilière du Bâtiment
FR
33.39%
EQ
Caisse Solidaire
FR
63.24%
FC
CAPI Court Terme n°1
FR
99.99%
FC
Click and Trust
FR
100.00%
FC
Companies
(1)
Codeis
FR
89.06%
FC
Cofeg
FR
100.00%
FC
Cofibred
FR
100.00%
FC
Coopest
BE
33.05%
EQ
Crédit Commercial du Sud-Ouest
FR
100.00%
FC
Creponord
FR
100.00%
FC
De Portzamparc
FR
23.53%
EQ
Ecofi Investissement
FR
99.98%
FC
EPBF
BE
100.00%
FC
Esfin
FR
38.09%
EQ
Euro Capital
FR
62.67%
FC
Expansinvest
FR
100.00%
FC
FCC Amaren II
FR
100.00%
FC
FCC Elide
FR
100.00%
FC
FCT Eridan
FR
100.00%
FC
SAS Financière de Champlain
FR
99.98%
FC
Financière de la BP Occitane
FR
100.00%
FC
Financière Participation BPS
FR
100.00%
FC
Fipromer
FR
100.00%
FC
Foncière du Vanuatu
VA
100.00%
FC
Foncière Victor Hugo
FR
100.00%
FC
France Active Garantie
FR
33.60%
EQ
Garibaldi Capital Développement
FR
100.00%
FC
Union des Sociétés du Crédit Coopératif (GIE)
FR
99.65%
FC
Groupement de Fait
FR
100.00%
FC
IBP Investissement
FR
99.74%
FC
Immocarso SNC
FR
100.00%
FC
Informatique Banques Populaires
FR
100.00%
FC
Ingénierie et Développement
FR
99.99%
FC
Intercoop
FR
98.38%
FC
Intercoop Location
FR
90.83%
FC
IRD Nord Pas de Calais
FR
17.38%
EQ
FC
IRR Invest
BE
100.00%
LFI4
FR
100.00%
FC
Ludovic de Besse
FR
100.00%
FC
Lux Equip Bail
LU
100.00%
FC
Multicroissance SAS
FR
100.00%
FC
Naxicap Rendement 2018(1)
FR
89.06%
FC
NJR Finance BV
NL
100.00%
FC
NJR Invest
BE
100.00%
FC
282
FINANCIAL REPORT
Companies
Location(a)
Percentage interest
Consolidation
method(b)
Ouest Croissance SCR
FR
99.68%
FC
Parnasse Finances
FR
100.00%
FC
Participations BPSO
FR
100.00%
FC
Plusexpansion
FR
100.00%
FC
Prepar Courtage
FR
99.80%
FC
Prepar-Iard
FR
100.00%
FC
Prepar-Vie
FR
99.91%
FC
Promepar Gestion
FR
100.00%
FC
SAS Alpes Développement Durable Investissement
FR
100.00%
FC
Esfin Gestion
FR
60.00%
FC
Perspectives et Participations
FR
100.00%
FC
Sociétariat BP Lorraine Champagne
FR
100.00%
FC
SAS Tasta
FR
69.97%
FC
SASU BFC Croissance
FR
100.00%
FC
Savoisienne
FR
100.00%
FC
SBE
FR
100.00%
FC
SCI BPSO
FR
100.00%
FC
SCI du Crédit Coopératif de Saint-Denis
FR
100.00%
FC
SCI Faidherbe
FR
100.00%
FC
SCI Pytheas Prado 1
FR
100.00%
FC
SCI Pytheas Prado 2
FR
100.00%
FC
SCI Saint-Denis
FR
100.00%
FC
Segimlor
FR
100.00%
FC
SGTI
FR
100.00%
FC
SI Equinoxe
FR
100.00%
FC
SIMC
FR
100.00%
FC
SMI
FR
100.00%
FC
Sociétariat BP Aquitaine Centre Atlantique
FR
100.00%
FC
Sociétariat BP Bourgogne Franche-Comté
FR
100.00%
FC
Sociétariat BP Côte d’azur
FR
100.00%
FC
Sociétariat BP d’Alsace
FR
100.00%
FC
Sociétariat BP de l’Ouest
FR
99.99%
FC
Sociétariat BP des Alpes
FR
100.00%
FC
Sociétariat BP du Nord
FR
100.00%
FC
Sociétariat BP Loire et Lyonnais
FR
100.00%
FC
Sociétariat BP du Massif Central
FR
100.00%
FC
Sociétariat BP Occitane
FR
100.00%
FC
Sociétariat BP Provençale et Corse
FR
100.00%
FC
Sociétariat BP Rives de Paris
FR
100.00%
FC
Sociétariat BP du Sud
FR
100.00%
FC
Sociétariat BP Val de France
FR
100.00%
FC
Sociétariat Crédit Coopératif Banque Populaire
FR
98.38%
FC
Société Centrale du Crédit Maritime Mutuel
FR
99.92%
FC
Société d’Expansion Bourgogne Franche-Comté
FR
100.00%
FC
Société Immobilière Provençale et Corse
FR
100.00%
FC
Socredo
FP
15.00%
EQ
Sofiag
FR
100.00%
FC
Sofider
FR
100.00%
FC
SPGRES
FR
100.00%
FC
283
5
5
5
5
5
5
5
5
5
5
FINANCIAL REPORT
Location(a)
Percentage interest
Consolidation
method(b)
SPIG
FR
100.00%
FC
Sud Participation
FR
100.00%
FC
Tise
PL
100.00%
FC
Transimmo
FR
100.00%
FC
Vecteur
FR
100.00%
FC
Vialink
FR
100.00%
FC
Banque BCP SAS
FR
80.10%
FC
Batimap
FR
92.63%
FC
Batimur
FR
97.05%
FC
Batiroc Bretagne Pays de Loire
FR
99.97%
FC
Beaulieu Immo
FR
100.00%
FC
Capitole Finance
FR
100.00%
FC
Cebim
FR
100.00%
FC
Celimmo SARL
FR
100.00%
FC
Centre de Relation Client Direct Ecureuil Bourgogne Franche-Comté
FR
100.00%
FC
Companies
III-2 Caisses d’Epargne subsidiaries
Expanso
FR
91.16%
FC
Expanso Capital
FR
91.16%
FC
Expanso Investissements
FR
99.55%
FC
FCPR Fideppp
FR
91.49%
FC
Gie CE Syndication Risques
FR
100.00%
FC
IT-CE
FR
100.00%
FC
Midi Foncière
FR
100.00%
FC
Muracef
FR
100.00%
FC
Opci Immo d’Exploitation
FR
100.00%
FC
Philae SAS
FR
100.00%
FC
SAS Foncière des Caisses d’Epargne
FR
100.00%
FC
SAS Foncière Ecureuil
FR
100.00%
FC
SAS Foncière Ecureuil II
FR
76.81%
FC
SCI Foncière 1
FR
100.00%
FC
SCI Tournon
FR
100.00%
FC
SNC Ecureuil 5 rue Masseran
FR
100.00%
FC
Sodero
FR
100.00%
FC
Sppicav AEW Foncière Ecureuil
FR
100.00%
FC
Surassur
LU
98.07%
FC
Triton
FR
100.00%
FC
Vivalis Investissements
FR
100.00%
FC
Actifs Immobiliers d’Exploitation
FR
100.00%
FC
Albiant-IT
FR
99.72%
FC
BP Covered Bonds
FR
100.00%
FC
BPCE Achats
FR
96.80%
FC
BPCE APS
FR
79.95%
FC
BPCE Assurances
FR
60.00%
FC
BPCE Home Loans
FR
85.98%
FC
BPCE Immobilier Exploitation
FR
100.00%
FC
BPCE SFH
FR
100.00%
FC
III-3 BPCE subsidiaries
BPCE Services Financiers (ex CSF-GCE)
FR
98.31%
FC
GCE Capital
FR
100.00%
FC
284
FINANCIAL REPORT
Location(a)
Percentage interest
Consolidation
method(b)
GCE Covered Bonds
FR
100.00%
FC
GCE Participations
FR
100.00%
FC
Companies
Natixis group(c)
FR
71.96%
FC
Semab (Société d’Exploitation MAB)
FR
65.93%
FC
FC
FCT Consomab
FR
65.93%
FCT Patrimab
FR
65.93%
FC
FCT Mabimmo
FR
65.93%
FC
Mifcos
FR
100.00%
FC
SAS GCE P.AV Immobilier
FR
100.00%
FC
Socram Banque
FR
33.42%
EQ
VBI Beteiligung
AT
24.50%
EQ
EQ
5
5
5
Holassure group
FR
16.11%
Holassure
FR
100.00%
FC
Sopassure
FR
49.98%
PC
Al Mansour Palace Maroc
MA
40.00%
EQ
Arab International Lease
TN
57.00%
FC
Banque de La Réunion
FR
88.90%
FC
Banque de Nouvelle-Calédonie
NC
96.82%
FC
Banque de Tahiti
FP
96.41%
FC
Banque des Antilles Françaises
FR
100.00%
FC
Banque des Îles Saint-Pierre-et-Miquelon
FR
80.60%
FC
Banque des Mascareignes
MU
100.00%
FC
Banque Malgache de l’Océan Indien
MG
71.01%
FC
BPCE International et Outre-mer group
Banque Tuniso-Kowéitienne
TN
60.00%
FC
BCI BQ Commerciale Internationale
CG
100.00%
FC
BCP Luxembourg
LU
100.00%
FC
BICEC
CM
68.49%
FC
BM Madagascar
MG
71.65%
FC
BPCE International et Outre-Mer
FR
100.00%
FC
BPCE Maroc
MA
100.00%
FC
BPCE Maroc Immobilier
MA
100.00%
FC
Fransa Bank
FR
40.01%
EQ
FC
Ingepar
FR
100.00%
Medai SA
TN
66.99%
FC
Océorane
FR
100.00%
FC
Natixis Pramex International
FR
99.99%
FC
Sky Elite Tour Sarl
MA
100.00%
FC
Société du Conseil et de l’Intermédiation Financière
TN
47.98%
FC
El Istifa
TN
60.00%
FC
Société Havraise Calédonienne
NC
89.77%
FC
Société Tunisienne de Promotion des Pôles Immobiliers et Industriels
TN
18.00%
EQ
Tunis Center
TN
13.65%
FC
Univers Invest (Sicar)
TN
52.40%
FC
Univers Participations (Sicaf)
TN
59.87%
FC
Banco Primus
PT
100.00%
FC
Crédit Foncier de France
FR
100.00%
FC
5
5
5
5
5
Crédit Foncier group
285
5
5
FINANCIAL REPORT
Location(a)
Percentage interest
Consolidation
method(b)
CFG Comptoir Financier de Garantie
FR
100.00%
FC
Cofimab
FR
100.00%
FC
Compagnie de Financement Foncier
FR
100.00%
FC
Crédit Foncier Immobilier
FR
100.00%
FC
SCA Ecufoncier
FR
100.00%
FC
Crédit Foncier Expertise
FR
100.00%
FC
Foncier Participations
FR
100.00%
FC
Foncière d’Évreux
FR
100.00%
FC
GCE Coinvest
FR
100.00%
FC
Gramat Balard
FR
100.00%
FC
Locindus
FR
74.49%
FC
Maisons France Confort Prou Investissements
FR
49.00%
EQ
Serexim
FR
100.00%
FC
Société d’Investissement et de Participation Immobilière (SIPARI)
FR
100.00%
FC
Companies
SOCFIM
FR
100.00%
FC
SOCFIM Participations Immobilières
FR
100.00%
FC
Vendôme Investissements
FR
100.00%
FC
Vauban Mobilisations Garanties (VMG)
FR
100.00%
FC
FCT Partimmo 05/2003
FR
100.00%
FC
FCT Partimmo 11/2003
FR
100.00%
FC
FCT Zèbre 1
FR
100.00%
FC
FCT Zèbre Two
FR
100.00%
FC
FCT Zèbre 2006-1
FR
100.00%
FC
Aries Assurances
FR
100.00%
FC
Banque Palatine
FR
100.00%
FC
Conservateur Finance
FR
20.00%
EQ
Palatine Asset Management
FR
100.00%
FC
CE Holding Promotion
FR
100.00%
FC
FR
100.00%
FC
Nexity group(d)
FR
40.84%
FC
Banque Palatine Group
III-4 CE Holding Promotion subsidiaries
Sacogiva
FR
45.00%
EQ
Sogima
FR
55.99%
EQ
FR
100.00%
FC
III-5 Local savings companies
230 Local savings companies
Comments:
(1) Entities previously consolidated at the Natixis consolidation level, now consolidated at the level of Groupe BPCE as they are majority-owned by the Banque Populaire banks.
(a) Country of location:
AT: Austria – BE: Belgium – CG: Congo – CM: Cameroon – FJ: Fiji – FR: France – KH: Cambodia – LA: Laos – LU: Luxembourg – MA: Morocco – MU: Mauritius – MG: Madagascar – NC: New Caledonia –
FP: French Polynesia – PL: Poland – TN: Tunisia – VA: Vanuatu.
(b) Consolidation method:
FC Full consolidation
EQ Equity method
PC Proportionate consolidation
(c) Natixis group:
The Natixis group comprises 324 fully-consolidated entities, 11 entities consolidated using the equity method and 1 proportionately consolidated entity. Its principal subsidiaries are as follows: Coface, Banque
Privée 1818, Natixis Global Asset Management, Natixis North America LLC, Natixis Private Equity and Compagnie Européenne de Garanties et Cautions.
(d) Nexit group:
The Nexity group comprises 1,743 fully-consolidated entities, 150 proportionately consolidated entities and 3 entities consolidated using the equity method.
286
FINANCIAL REPORT
Statutory Auditors’ report on the consolidated financial statements
5
5
For the year ended December 31, 2013
This is a free translation into English of the Statutory Auditors’ report issued in French and is provided solely for the convenience of English speaking readers. The Statutory
Auditors’ report includes information specifically required by French law

registration document and full-year financial report

Transcription

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