Registration document and annual financial report

Transcription

Registration document
and annual financial report
2013
This document is a free translation into English of the Registration Document (Document de
Référence) issued in French. Only the French version of the Registration Document has been
submitted to the AMF. It is therefore the only version legally binding.
The original document was filed with the AMF (French Securities Regulator) on April 28, 2014,
in accordance with article 212-13 of its General Regulation. As such, it may be used to support a
financial transaction if accompanied by a prospectus duly approved by the AMF. This document was
produced by the issuer and is binding upon its signatory.
2
Group Crédit du Nord - Registration document and annual financial report 2013
CONTENTS
Corporate Governance as at December 31, 2013 .............................................................................................4
1
Activity_____________________________________________________ 5
2
Consolidated financial statements ______________________________ 12
3
4
Key figures as at December 31, 2013 ................................................................................................................6
2013 highlights ...................................................................................................................................................8
Group structure ................................................................................................................................................11
Management Report.........................................................................................................................................13
Chairman’s report on the preparation and organisation of the Board’s activities
and on internal control and risk management ...................................................................................................27
Statutory auditors’ report on the report prepared by
the chairman of the board of directors of Crédit du Nord .................................................................................40
Consolidated balance sheet .............................................................................................................................42
Consolidated income statement .......................................................................................................................44
Change in shareholders’ equity ........................................................................................................................46
Statement of cash flows ...................................................................................................................................48
Notes to the consolidated financial statements.................................................................................................49
Statutory Auditors’ report on the consolidated financial statements................................................................133
Basel II Capital Adequacy Ratio Information under Pillar 3 ..............................................................................135
Individual financial statements ________________________________ 137
2013 Management Report .............................................................................................................................138
Five-year financial summary............................................................................................................................140
Individual balance sheet at December 31 .......................................................................................................141
Income statement...........................................................................................................................................143
Notes to the individual financial statements ....................................................................................................144
Information on the Corporate Officers.............................................................................................................180
Statutory auditors’ report on the financial statements .....................................................................................191
Statutory auditors’ report on related party agreements and commitments......................................................193
Draft Resolutions: General Meeting of Shareholders of May 28, 2014 ............................................................195
Additional information _______________________________________ 197
General description of Crédit du Nord ............................................................................................................198
Group activity .................................................................................................................................................201
Corporate Social Responsibility (CSR) Report.................................................................................................203
Independent verifier’s report on consolidated social, environmental and societal information
presented in the management report..............................................................................................................218
Responsibility for the Registration Document and audit ..................................................................................220
Cross Reference tables ..................................................................................................................................221
3
Corporate Governance as at December 31, 2013
Board of Directors
Date of first
appointment (1)
Term of office expires
at the Shareholders’ Meeting
in May
Chairman of the Board of Directors
Jean-François SAMMARCELLI
January 1, 2010
2017
January 7, 2010
2016
Directors
Didier ALIX
(2)
January 11, 2012
2015
Christophe BONDUELLE
May 6, 2011
2015
Séverin CABANNES
February 21, 2007
2016
Philippe AYMERICH
Patrick DAHER
September 15, 2005
2017
Thierry DIGOUTTE (3)
July 26, 2013
2015
April 28, 1997
2015
Bruno FLICHY
(3)
December 4, 2012
2015
Anne MARION-BOUCHACOURT
May 16, 2013
2017
Thierry MULLIEZ
May 6, 2011
2015
December 4, 2012
2015
May 3, 2001
2015
Marie-Chantal JACQUOT
Annie PRIGENT
(3)
Patrick SUET
(1) Term of office: 4 years.
(2) Chief Executive Officer.
(3) Employee representative.
The Board of Directors met four times in 2013 to discuss changes in the Board; examine the budget, yearly and half-yearly
financial statements; and analyse and discuss important strategic decisions concerning commercial, organisational
and investment policies.
The Compensation Committee, consisting of Jean-François SAMMARCELLI and Patrick SUET, met to submit a proposal
to the Board of Directors concerning fixed and performance-based compensation, including benefits, for corporate
officers.
Executive Committee
Philippe AYMERICH, Chief Executive Officer,
Philippe AMESTOY, Deputy Chief Executive Officer - Head of Marketing,
Gilles RENAUDIN, Deputy Chief Executive Officer - Head of the Central Risk Division,
François ORAIN, Head of Business Customers,
Yves BLAVET, Head of Information Systems, Projects and Banking Operations,
Philippe CALMELS, Head of Human Resources,
Frédéric FIGER, Chief Financial Officer,
Odile THOMAZEAU, Corporate Secretary,
Eric l’HOTE, Head of Communications (attends Executive Committee meetings).
4
Activity
1
Corporate Governance as at December 31, 2013 ______________________________ 4
2013 highlights ____________________________________________________________ 8
Group structure ___________________________________________________________ 11
5
1
Activity
Key figures as at December 31, 2013
Key figures as at December 31, 2013
Group: consolidated figures
Balance Sheet
% change
2013/2012
IAS/IFRS
31/12/2013
IAS/IFRS (1)
31/12/2012
IAS/IFRS (1)
Customer deposits
30,894.4
29,554.7
Customer loans
35,480.2
35,642.4
-0.5
2,786.5
2,671.8
+4.3
(in EUR millions)
Shareholders’ equity (2)
Doubtful loans (gross)
Impairments of individually impaired loans
TOTAL BALANCE SHEET
ASSETS UNDER MANAGEMENT (off-balance sheet)
+4.5
2,479.7
2,190.7
+13.2
-1,241.5
-1,162.6
+6.8
56,739.2
56,774.1
-0.1
25,390.3
24,838.0
+2.2
Income Statement
(in EUR millions)
% change
2013/2012
IAS/IFRS
31/12/2013
IAS/IFRS (1)
31/12/2012
IAS/IFRS (1)
1,939.4
1,917.0
+1.2
711.7
676.9
+5.1
Net banking income
Gross operating income
Operating income before corporation tax
566.3
486.4
+16.4
Consolidated net income
368.9
308.3
+19.7
(1) Amounts restated relative to the financial statements published in 2012, following the entry into force of the amendments to IAS19R, with retrospective application.
(2) Including income in progress.
6
1
Activity
Key figures as at December 31, 2013
Ratios
31/12/2013
31/12/2012
Cost of risk/Outstanding loans
0.54%
0.52%
Shareholders’ equity/Total balance sheet
4.91%
4.75%
Tier 1 Equity (1)/Total Basel 2 risk-weighted exposure
8.52%
9.00%
31/12/2013
31/12/2012
A-1
A-1
(1) Including income in progress, net of forecasted dividend payout.
Ratings
Standard and Poor’s
Fitch
ST
LT
A
A
ST
F1
F1 +
A
A+
bbb+
bbb+
LT
*
Intrinsic
*
The intrinsic rating is Crédit du Nord Group’s individual rating as determined by the rating agency, i.e. separate from Societe Generale Group.
7
1
Activity
2013 highlights
2013 highlights
2013 was a major event-filled year
SEPA*
Over the course of 2013, Crédit du Nord Group implemented a series of initiatives to help its customers make a
smooth transition to SEPA. These included regular communications across all customer markets, breakfast briefings
with business customers, and meetings with corporate and professional issuers.
* Single Euro Payments Area.
March
Launch of Antarius Prévoyance Madelin
August
Enhancement of the smartphone application
This collective life insurance policy provides nonagricultural non-salaried workers with supplementary
personal protection coverage alongside the mandatory
schemes.
New services are available on the individual and
professional customer markets:
May
Expansion of the Club Norplus offer
Club Norplus now provides new benefits and a
differentiated offer depending on the package chosen
(Norplus Visa or Norplus Premier).
June
Launch of mobile offer for professional customers
Professional customers now have their own smartphone
application (for Android and iPhone) that allows them to
access all of their professional and private accounts in
real time. They can view their accounts and details of
their transactions, enter credit transfers, “click to call” to
directly contact their advisor, run credit simulations, locate
branches and look up contact numbers for cancellations.
Launch of Etoile Multi Gestion (EMG) France: a
multi-fund manager and multi-style approach
This new fund in the EMG range offers investors access
to a wide selection of renowned fund managers on
the French equities market and thus an opportunity to
diversify their securities portfolio, personal equity plan or
life insurance policies on this market, with the objective of
outperforming the CAC 40.
8
• the “Going abroad” module offers a wealth of practical
advice and tools (currency converter, assistance
including document scan, etc.);
• the “Business expenses” module makes it easy
to enter, monitor and reimburse business expenses.
September
Launch of Etoile Multi Gestion USA
After EMG France, the Etoile Multi Gestion USA fund
was added to the Bank’s funds of funds range, opening
the door for its customers to capture the momentum
of the North American equities markets.
October
Communication
Crédit du Nord Group took to the media again with a
communication campaign designed by Fred & Farid.
The Bank took this opportunity to reaffirm its fundamental
relationship-banking values - linked to its extended
regional roots - and commitment to providing the highest
quality of service. The Group also adopted a new slogan:
“Etre à vos côtés” (Standing by your side).
Launch of Santé Madelin policy
This insurance policy covers the healthcare expenditures
of non-salaried professionals and their families.
It supplements the reimbursements of the mandatory
health plan under the tax framework of the Madelin Act.
1
Activity
2013 highlights
Electronic payment instruments
Crédit du Nord joined Transactis, the electronic billing and
payment solution created in 2008 by Societe Generale
and La Banque Postale for the purpose of pooling the
management of their electronic payment system.
November
Development of Etoile Validation
For business customers offering their products or services
online, the Etoile Validation service has been expanded
to include a “Double Validation” functionality. With this
functionality, customers can set up double validation for
discounts exceeding a given amount, thus strengthening
their payment security system.
December
Launch of the home insurance range
Crédit du Nord Group offers a comprehensive range of
home insurance policies, in partnership with Sogessur (a
subsidiary of Societe Generale). Customers can sign up
directly with their advisor and use a dedicated smartphone
application to simplify their formalities and get the help
they need either upon subscription or for the management
of a claim.
Awards and Distinctions
February
QualiWeb Awards
June
Le Revenu Awards
Crédit du Nord Group was recognised at the QualiWeb
customer relationship management awards, in the
“Banking & Finance” category.
Le Revenu magazine awarded five trophies to the Etoile
Multi Gestion range of funds:
Organised by Cocedal Conseil, the QualiWeb Awards
acknowledge the quality, relevance and expedience of
answers submitted by webmaster teams to e-mails sent
in by existing and prospective customers on websites.
Each year, the QualiWeb survey tests over 300 websites in 17 different
business sectors.
• Gold Trophy for “best range of sector-based funds over
3 years”,
• Gold Trophy for “best range of SICAVs (open-end
mutual funds) and international equity funds over 3
years”,
• Silver Trophy for “overall performances by the fund
range over 3 years”,
March
Antarius Sélection recognised by Le Revenu
• Silver Trophy for “best diversified fund over 3 years”
going to Etoile Multi Gestion A,
Le Revenu awarded the Silver Trophy to Antarius Sélection
for life insurance policies in the diversified multi-vehicle
category offering 16 to 50 funds.
• Silver Trophy for “best range of diversified funds over
3 years”.
May
CSA customer satisfaction surveys
Crédit du Nord Group ranked No. 2 in terms of overall
satisfaction on the individual, professional and business
customer markets according to the 2013 competition
surveys conducted by polling institute CSA.
Competition surveys carried out by polling institute CSA on a representative
sample of more than 10,000 individual, professional and business customers
of the top ten banks in the French marketplace (participants surveyed from
March 3, 2013 to April 6, 2013).
September
Mieux Vivre Votre Argent Awards
Crédit du Nord received the top award for the best
performance over 5 years by its range of profiled funds,
Etoile Multi Gestion.
December
EnterNext and Nyse Euronext
Two financial deals carried out by Gilbert Dupont were
recognised by EnterNext and Nyse Euronext:
• IPO of the Year Award for MND on NYSE Euronext;
• Deal of the Year Award for Global Bioénergies on NYSE
Alternext Paris.
9
1
Activity
2013 highlights
Sponsorship
Eugène Boudin Exhibition
Marseille-Provence 2013
Crédit du Nord sponsored the Eugène Boudin Exhibition
in 2013.
Société Marseillaise de Crédit (SMC) was the official
partner of Marseille-Provence 2013, European Capital of
Culture. Through this international-scale partnership, SMC
reaffirmed its role as a leading contributor to the promotion
of the region’s economic and cultural development.
The exhibition took place in Paris at the Jacquemart André
Museum from March 22 to July 22, 2013 and featured
around 60 different works by Norman painter Eugène
Boudin, acknowledged as one of the forerunners of the
impressionist movement.
10
Activity
Group structure
1
Group structure
The diagram below shows the links between the main Crédit du Nord Group entities. Direct shareholdings are listed as
well as the overall percentage of capital directly or indirectly held by the Group.
The consolidation scope is presented in its entirety in Note 2.
CREDIT DU NORD
94.48%
100%
BANQUE
COURTOIS
94.03%
5.52%
5.97%
100%
SOCIETE
MARSEILLAISE
DE CREDIT
78.44%
100%
93.29%
99.99%
5.14%
1.56%
BANQUE
RHONE-ALPES
63.19%
96.82%
3.18%
100%
BANQUE
LAYDERNIER
1.51%
99.87%
64.70%
100%
KOLB
INVESTISSEMENT
BANQUE
KOLB
BANQUE
NUGER
BANQUE
TARNEAUD
100%
50 %
35 %
100%
NORBAIL
IMMOBILIER
ANTARIUS
BANQUE
POUYANNE
SDB
GILBERT DUPONT
21.43%
99.80%
100%
100%
100%
100%
ETOILE ID
STAR LEASE
NORIMMO
NORBAIL
SOFERGIE
0.20%
99.96%
100%
S.F.A.G.
0.04%
100%
100%
100%
CREDINORD
CIDIZE
PARTIRA
FCT BLUE
STAR GHL
11
Consolidated
financial
statements
2
Management Report ___________________________________________________________ 13
Chairman’s report on the preparation and organisation of the Board’s activities
and on internal control and risk management ______________________________________ 27
Statutory auditors’ report on the report prepared
by the chairman of the board of directors of Crédit du Nord _________________________ 40
Consolidated balance sheet ____________________________________________________ 42
Consolidated income statement _________________________________________________ 44
Change in shareholders’ equity __________________________________________________ 46
Statement of cash flows ________________________________________________________ 48
Notes to the consolidated financial statements ____________________________________ 49
Statutory Auditors’ report on the consolidated financial statements __________________ 133
Basel II Capital Adequacy Ratio Information under Pillar 3 __________________________ 135
12
Consolidated financial statements
Management Report
2
Management Report
Fiscal Year 2013
The French economy still mired
in depression
The global economy in 2013 was driven by the pick-up
in private-sector demand in the US and by growth in
emerging countries, which were nevertheless subject
to turbulence and a slowdown in activity. Japan was
expected to make its way back to the growth track
thanks to an additional fiscal stimulus plan. This
improvement in global macroeconomic conditions
was fragile, however, due to the ongoing deleveraging
process in the public and private sectors of developed
countries.
In Europe, the recovery proved slow, with continued
discrepancies between countries. For example, the
economic recovery was in full swing in Germany but had
yet to make an appearance in France. Activity was as
sluggish as every in Italy, as opposed to Spain, which
returned to growth. The central bank maintained an
accommodative monetary policy in a bid to flood the
economic and financial system with cash. In response to
low inflation, the ECB once again lowered its key rate by
25 bp at year-end to the historically low level of 0.25%.
The increase in long rates seen over the course of 2013,
sparked by the uncertainty surrounding the status quo
on the US monetary policy, which was only temporary.
In December 2013, the 10-year OAT stood at 2.3%, i.e.
also close to its record low.
France was no exception in Europe, posting GDP
growth of just +0.2% over the year in line with the
stagnation trend of the past two years. Businesses
and households alike were subject to strict income
constraints, as illustrated by their low margins and
decreased purchasing power. Consumption also decline,
and the number of bankruptcies hit a 20-year peak. The
job market was in an especially poor state, with the
unemployment rate sitting at approximately 11%.
The prospects for an economic recovery in the coming
years were what fuelled the financial markets in 2013.
The markets posted considerable gains, with many
financial indices even returning to “pre-crisis” levels.
Closing at 4,296 points on December 31, 2013, the
CAC 40 recorded a gain of 18% for the year.
In an economically challenging environment,
Crédit du Nord Group delivered a very robust
financial and commercial performance.
Crédit du Nord’s consolidated NBI amounted to
€1,939.4 million at December 31, 2013 (+1.2%). The
Group kept its operating expenses under control at
€1,227.7 million (-1.0%) and cost of risk picked up
+3.1% to €197.8 million during the year. Operating
income rose by +5.9% to €513.9 million. Operating
income before corporation tax came to €566.3 million,
including a capital gain of €52.5 million on the sale of
Crédit du Nord Group’s stake in Amundi to Societe
Generale.
Consolidated net income increased by +19.7% to
€368.9 million. ROE was 13.8% and the Tier 1 ratio
8.52% at December 31, 2013.
These results incorporated the negative impact of the
first application of IFRS13 – Fair Value Measurements
- on the valuation of derivatives (i.e. the Credit Value
Adjustment (CVA) or Debit Value Adjustment (DVA)),
resulting in an expense of €12.2 million under NBI.
Restated for this impact, for changes in PEL and CEL
provisions and for the fair value measurement of its
financial liabilities, the Group’s NBI was up +3.4% and
its net consolidated income up +28.0% in 2013.
The margin on deposits rose by +7.0%, buoyed by a
volume effect on sight deposits and interest-bearing
savings deposits. The negative effect caused by low
interest rates was offset by the drop in the rate of return
on the Livret A savings book during the year.
13
2
Management Report
The margin on loans picked up +5.0%, driven
by restored margins on loans and the increase in
the number of prepaid housing loans generating
penalty fees.
The development of the customer bases, coupled with
continuous efforts to increase the number of products
as well as banking and insurance services sold to
customers, paid off with a +3.1% improvement in net
fee income, driven largely by financial fee income, up
+6.6%.
Société Marseillaise de Crédit: yet again
a major growth driver for the Group
2013 was a year of consolidation, in the wake of the
extensive structural changes carried out in 2012
including SMC’s migration to Crédit du Nord’s IT system
and the reconfiguration of its sales coverage. Overall,
it was a good year, with Société Marseillaise de Crédit
posting an improvement in business activity and
earnings.
It also enjoyed solid momentum when it came to earning
new customers, particularly on the individual and
business customer markets, whose customer bases
grew by +3.5% and +3.0% respectively. The proportion
of wealth management and high-end customers is now
very close to that of the Group. Developments in terms
of products and services sold to customers (revolving
loans, packages, regulated savings on the individual
customers market, etc.) confirmed SMC’s growth
potential.
At the same time, Crédit du Nord has
been gradually adapting its sales system to
better meet its customers’ needs
Over one hundred branches have been opened in highpotential areas spread across mainland France since
2004. These branch openings have enabled a number of
individual customers in large cities, and in particular the
Paris and greater Paris area, to transfer their accounts
to branches closer to their place of residence, thereby
facilitating their banking relations.
By attracting nearly 14% of the Group’s new individual
and professional customers in 2013, these branches
are making significant contributions to Crédit du Nord
Group’s commercial and financial performances.
14
In order to adapt to customer demand, changes have
been made to the sales structure, including reorganised
opening times and a gradual reconfiguration of branch
coverage.
Crédit du Nord has continued its projects
aimed at improving sales efficiency and
customer satisfaction
Crédit du Nord has also continued its efforts to enhance
the workstations in its branches by incorporating new
working situations and new products and services.
In 2013, new functionalities were added to the
workstation for the Antarius Prévoyance insurance policy
for professionals and for easier entry of revolving term
accounts for business and professional customers.
Branches were provided with scanners to help manager
customers’ supporting documents in electronic format:
documents are scanned into the system by advisors
from their workstations and customer documents are
viewed in real time. On the individual and business
customer markets, the bank began rolling out this
project in 2013 and will address the professional
customers market starting in 2014.
On the sales front, the multi-channel offer was further
enhanced in 2013, with the mobile offer expanded to
professional customers and available on all handsets.
Customers can view their accounts and individual credit
transfers and directly call their advisor. For individual
customers, online subscription to the Internet option
will facilitate the use of online functionalities (including
payments and investment decisions on life insurance
policies). The number of online banking contracts
taken out (Internet and mobile) continued to climb
steadily across all markets (over 10% year-on-year) to
nearly 900,000 customers (close to 700,000 individual
customers, including 373,000 regular users (265,000
individual customers).
The digital services offer was also expanded to include
a new smartphone application (android and iPhone) for
professional customers, the ergonomic and graphic
overhaul of the mobile app for individual customers
(easier access to the most often used functions) and the
introduction of new services (helpful tips for customers
travelling abroad and management of business
expenses).
Management Report
Over the summer, which is the ideal season for the use of
nomadic solutions, mobile connections largely exceeded
the symbolic threshold of one million, representing
an increase of more than 40% in 6 months.
Finally, the Convergence project aimed at creating a joint
information system with Societe Generale is in progress.
In 2013, the project covered the mass processing
of SEPA transactions.
The websites of the Group’s regional banks also
moved forward, with the overhaul of institutional
website ergonomics.
Crédit du Nord joined Transactis, the electronic
billing and payment solution created in 2008 by
Societe Generale and La Banque Postale for the
purpose of pooling the management of their electronic
payment systems.
2
15
2
Management Report
Sales activity
The analysis of Crédit du Nord Group’s sales activity
covers the entire scope of the Group’s banks, i.e. Crédit
du Nord and its subsidiary banks.
The indicators shown relate to euro-based businesses,
which account for virtually all of the Group’s activities.
Outstanding loans and growth in customer bases are
based on end-of-period figures (i.e. end- December).
Further development of the individual
customer base
The active Individual customer base added close
to 123,000 new customers in 2013, posting growth
of +2.9%. At December 31, 2013, the customer base
consisted of nearly 2.2 million individual customers.
The expanding customer base drew on the Group’s
efforts to win new customers, notably through
recommendations, the implementation of staff retention
strategies and the contribution from new branches.
Individual customer base
(at December 31)
Number of customers (in thousands) - since 2011 and including SMC
1,702
1,959
2,065
2,158
2010
2011
2012
2013
Growth went hand-in-hand with the sharp pick-up in
the rate of product sales to customers. The number
of customers with six or more products remained at a
high level (47.8%) on the back of robust growth in the
customer base.
The Livret A and Sustainable Development savings
books gained further ground, particularly toward the end
of the year when they were boosted by the increase in
the maximum deposit ceiling. In 2013, 71,000 Livret A
savings books were opened by our customers or their
children, bringing the total number of Livret A savings
books sold by Crédit du Nord to 478,000. At December
31, 2013, savings managed in Livret A and LDD savings
books totalled €4.0 billion.
Life insurance inflows continued to improve, particularly
in the Antarius Selection fund, with 28,000 new policies
sold; gross origination held steady and net inflows were
positive at nearly €450 million.
Personal protection and casualty insurance policies
enjoyed continued success, with over 96,000 policies
sold over the period and especially vigorous growth
in Antarius Protection Famille and Premium policies.
Online banking services increased with 116,000 new
internet contracts opened in 2013.
Development of the Professional customer base
remained a key focus for Crédit du Nord, with new
customers gained at a strong pace. The active customer
base grew 2.2%, an improvement that speaks to the
quality of Crédit du Nord Group’s close-knit network,
with dedicated account managers to deal with both the
private and commercial aspects of banking relations and
a tailored offering.
The number of products and services sold to
professional customers further improved with the
success of the Convention Alliance package, owned by
close to 60% of the customer base. In addition, over
40% of professional customers maintain a business
and private relationship with the bank. The Facilinvest
contract gained another 15,000 subscribers in 2013 and
outstanding contracts rose by 51% year-on-year.
The number of Plans d’Epargne Interentreprises
(intercompany savings plans) created for small
businesses, individual entrepreneurs and independent
professionals posted an increase of +4% year-on-year.
Note: Growth rates are determined based on precise figures and not on the rounded figures shown in the charts. This comment applies to all charts
contained in this report.
16
Management Report
Visits to Crédit du Nord’s Professional Customers
website climbed by +9% compared to 2013,
with 15 million logins.
Professional customer base
(at December 31)
Number of customers (in thousands) - since 2011 and including SMC
2
Launch of new products and customer
satisfaction survey
New products and services were launched in 2013:
• on the individual customer market, with the launch
of guaranteed capital funds Etoile Garantie
Novembre 2021 in May and Etoile Garantie Mai 2022
in September, both eligible for inclusion in life
insurance policies;
• on the professional customer market, with the
renewed focus on the Madelin personal protection,
retirement and healthcare policies, which fall within
the specific scope of the Madelin Act, and the launch
of a 2-month revolving term account;
• on the business customer market, with the
widespread offer of SEPA direct debits based on the
credit transfer or remote transmission offer.
173
205
218
228
2010
2011
2012
2013
The active Business customer base gained 1.2%, with
nearly one out of three business relations established
with companies generating revenue in excess
of €7.5 million.
Almost 90% of active business customers hold an active
internet contract. The Business Customers website
recorded 5 million logins in 2013, up +5% compared
to 2012.
The competition survey (1) measuring customer
satisfaction, which was conducted in spring 2013 on
a representative sample of customers across all three
markets, once again ranked Crédit du Nord among the
leaders on the individual customer market in terms of
overall customer satisfaction, customer relations and
branches. On the professional and business customer
markets, the Group held the leading positions thanks
to its sales system. The results of the survey reflected
the excellent quality of our customer relations, which
are the foundation of our growth model.
Business customer base
(at December 31)
Number of business customers (in thousands) - since 2011
and including SMC
(1) Source: CSA survey institute, May 2013, competition survey
(by telephone).
36
45.3
46.8
47.3
2010
2011
2012
2013
17
2
Management Report
Significant rise in on-balance sheet savings
On-balance sheet savings rose significantly in 2013,
by +9.9% year-on-year.
On the individual customer market, sight deposits
posted substantial growth of +5.9%, as the increase
of maximum deposit ceilings brought an end to the
trend that saw deposits being transferred to the Livret A
savings book. The crisis also encouraged consumers to
hold cash in their sight accounts and short-term savings
accounts, as a precautionary measure.
On the professional and business customer markets,
sight deposits were up +6.9%. These markets were
boosted by outflows from money market funds, which
remained unattractive due to the extremely low level of
interest rates and the wealth of the Group’s bank savings
products.
Household savings deposits increased sharply, driven by
Livret A and LDD savings, up by +10.3% and +9.7%
respectively to €2.3 billion and €1.7 billion at the end
of 2013. Outstanding household savings deposits
gained another +2.7% in 2013 thanks to strong sales
trends.
The savings book for institutional customers and the
term deposit account offering progressive rates of
return remained highly popular with companies, taking
outstandings in institutional customer savings books and
term accounts to €5.1 billion versus €4.4 billion in 2012.
In life insurance, gross inflows were stable compared
to the strong showing in 2012. Net inflows grew
by close to €450 million. The share of unit-linked
accounts picked up slightly to 16.5%. Life insurance
assets under management rose by +7% year-on-year
to EUR 16.6 billion.
Medium- and long-term mutual fund AuM
climbed +0.5% year-on-year to €2 billion.
Short-term mutual fund assets under management
declined by 36% year on year across all customer
bases, as the returns on money market SICAV funds
were severely affected by low short-term money market
rates.
On the whole, on-balance sheet savings and life
insurance inflows helped to offset mutual fund
redemptions, leading to a 5.8% increase in managed
savings deposits (on- and off-balance sheet)
year-on-year.
On-balance sheet savings deposits
Off-balance sheet savings deposits
(at December 31)
(at December 31)
(in EUR billions) - since 2011 and including SMC
22.00
26.9
29.9
32.8
24.7
+9.9%
25.9
24.8
25.4
+2.2%
5.1
7.2
+29.0%
9.3
2.6
2.1
4.2
-0.6%
8.3
8.8
4.3
8.8
2.0
2.5
+0.5%
-36.2%
2.0
1.6
5.3
6.7
+7.0%
11.1
13.5
13.8
2010
2011
2012
Sight deposits
CERS
+6.6%
12.1
14.7
15.5
4.7
4.7
4.9
2010
2011
2012
2013
Other deposits
Other Custody
18
16.6
14.7
Life insurance
ST mutual funds
+7.5%
5.2
2013
MLT mutual funds
Management Report
New loans to individual customers on the
rise, driven by low interest rates
New housing loans totalled €3.8 billion at December
31, up 4.3% overall compared to 2012. New lending
was significantly buoyed by low interest rates, with
substantial debt consolidation and renegotiation activity.
At December 31, outstanding housing loans were up
+2.4%.
Crédit du Nord continued to implement a selective risk
policy, setting thresholds for customer contributions and
reasonable debt ratios, and by offering only fixed- or
adjustable-rate loans limited to terms of under 25 years.
New housing loans
(at December 31)
2
New personal loans
(at December 31)
(in EUR millions) - since 2011 and including SMC
-9.3%
743
825
743
673
2010
2011
2012
2013
The use of revolving loans began to pick up again, with
outstandings up +2.3% year-on-year. This trend can be
attributed to increased activation of existing contracts
and the arrangement of new contracts following an
adjustment period subsequent to the Consumer Finance
Directive.
(in EUR millions) - since 2011 and including SMC
+4.3%
Outstanding loans to Individual customers
(at December 31)
4,261
5,051
3,694
3,852
2010
2011
2012
2013
13.9
18.7
19.8
20.1
+1.7%
New personal loans declined due to the dip in household
consumption. Overall, outstanding loans declined 5.9%
year on year.
0.2
0.2
+0.6%
1.7
-4.8%
+2.4%
1.8
0.2
1.7
0.3
1.6
12.0
16.8
17.9
2010
2011
2012
Housing loans
Consumer loans
18.3
2013
Overdrafts
19
2
Management Report
Crédit du Nord continued to help finance
the French economy in 2013
Crédit du Nord takes an active part in funding the
economy and in the development of SMEs, totalling
disbursements of more than €2.8 billion in investment
loans or leases.
As a result of the crisis, and despite having made up
some lost ground since mid-year 2013, outstanding
loans dipped by 2.5% due to weak demand from
business customers.
Outstanding business loans
(at December 31)
9.6
11.8
12.3
11.9
-3.2%
1.5
1.4
1.7
1.7
1.3
-1.9%
1.5
-8.1%
1.6
-2.5%
8.9
1.3
Short-term loans to business customers were also
down 5.2%, reflecting the low level of business activity
experienced by our customers.
Overall, the loan to deposit ratio (ratio of outstanding
loans to outstanding deposits) improved considerably
to 106%. This balanced performance was generated
by robust on-balance sheet savings deposit inflows.
New equipment leasing activity
7.1
8.7
9.1
2010
2011
2012
2013
Commercial & cash loans
Overdrafts & others
Medium & long-term loans
(at December 31)
(in EUR millions)
New equipment loans
-13.1%
(at December 31)
(in EUR millions)
-6.7%
20
590
680
687
597
2010
2011
2012
2013
2,629
2,274
2,121
2011
2012
2013
Management Report
2
Financial developments
The figures presented below are taken from the Group’s
fully consolidated financial statements.
In order to provide an economic assessment of financial
performance, the following comments were restated
for the effects of the application of IFRS on future
(in EUR millions)
(including the change in the PEL/CEL provision)
Net interest and similar income
Net fee income
NBI
Crédit du Nord Group consolidated book NBI rose
+1.2% in 2013. After restatement for the impact of
PEL and CEL provisions, the fair value measurement
of financial liabilities and the first application of IFRS 13
– Fair Value Measurements – on the valuation of
derivatives, NBI was up +3.4%.
This improvement was underpinned by the development
of sales margins and fee income, despite persistently
challenging market conditions and heavy competitive
constraints.
The sales margin improved by +6.2%, i.e. by
€60.8 million.
The margin on deposits rose +7.0%, i.e. €42.5 million,
thanks to a solid bump in volumes and the drop in the
Livret A savings book interest rate.
commitments related to home savings products, the
measurement of financial liabilities at fair value and the
first application of IFRS 13 – Fair Value Measurements –
on the valuation of derivatives, i.e. Credit Value
Adjustment (CVA) or Debit Value Adjustment (DVA).
31/12/2013
31/12/2012
% change
2013/2012
1,116.5
1,118.7
-0.2
822.9
798.3
+3.1
1,939.4
1,917.0
+1.2
Consolidated financial fee income gained +6.6%, i.e.
€17.9 million.
Fees on life insurance products were up +11.2% on
the back of +39.8% growth in net inflows compared
to 2012. Mutual fund management fees dipped -4.1%,
however, as returns generated by money market SICAVs
were severely impacted by persistently low interest rates
and shrinking volumes.
Net fee income
(at December 31)
Consolidated Group scope - 2011, 2012, 2013 including SMC
(in EUR millions)
740.9
816.0
+10.1%
798.3
-2.2%
822.9
+3.1%
The margin on loans climbed +5.0%, i.e. €18.3 million,
driven by higher margins and a sharp rise in prepayment
penalty fees on housing loans.
Restated for the items presented in the introduction, net
interest and similar income were up +3.6%.
Consolidated net fee income increased by +3.1%.
Consolidated service fee income picked up by +1.3%.
Performance in terms of new customer acquisition and
the number of products and services sold to customers
was offset by the negative impact of the reform on
multilateral interchange fees.
+2.9%
-3.4%
280.3
+6.6%
288.8
270.9
272.5
468.4
+14.4%
2010
Service fee income
535.7
-1.5%
527.4
2011
2012
+1.3%
534.1
2013
Financial fee income
21
2
Management Report
Operating expenses
(in EUR millions)
Personnel expenses
Taxes
Other operating expenses
Depreciation and amortisation
TOTAL OPERATING EXPENSES
% change
2013/2012
31/12/2012 (1)
31/12/2013
-733.3
-752.3
-2.5
-39.7
-38.1
+4.2
-373.6
-365.4
+2.2
-81.1
-84.3
-3.8
-1,227.7
-1,240.1
-1.0
General operating expenses fell by €12.4 million (-1.0%),
with a reduction of €19.0 million in personnel expenses
versus 2012, offset in part by a +2.2% rise in other
operating expenses (+€8.2 million). Taxes increased by
+4.2%.
Operating expenses
(at December 31)
Consolidated Group scope - 2011, 2012, 2013 including SMC (in EUR
millions)
-1.0%
+0.7%
+12.9%
1,090.7
1,231.6
1,240.1
1,227.7
2010
2011
2012
2013
Staff in activity decreased by over 300 units, i.e. -3.6% compared to December 2012.
Pro-rata staff count in activity - Group
22
31/12/2013
31/12/2012
% change
2013/2012
8,208
8,515
-3.6
Management Report
2
NBI
Operating expenses
GOI
% change
2013/2012
31/12/2012 (1)
31/12/2013
(in EUR millions)
1,939.4
1,917.0
+1.2
-1,227.7
-1,240.1
-1.0
711.7
676.9
+5.1
Book GOI rose by +5.1% on 2012 to €711.7 million.
Restated for the impact of PEL and CEL provisions, the
fair value measurement of financial liabilities and the first
application of IFRS 13 – Fair Value Measurements – on
the valuation of derivatives, GOI was up +11.2%.
The book cost-to-income ratio came out at 63.3%,
down 1.4 points versus 2012, reflecting the positive
scissor effect between income growth and reduced
operating expenses.
Cost-to-income ratio
Gross operating income (GOI)
(at December 31)
(at December 31)
Consolidated Group scope - 2011, 2012, 2013 including SMC (as a %)
(in EUR millions)
-3.9%
+24.2%
567.1
2010
704.5
2011
+5.1%
676.9
2012
65.8
63.6
64.7
63.3
2010
2011
2012
2013
711.7
2013
23
2
Management Report
Cost of risk
(in EUR millions)
Cost of risk
Gross outstanding loans
Cost of risk/outstanding loans
31/12/2013
31/12/2012
% change
2013/2012
-197.8
-191.8
+3.1
36,846.3
36,886.5
-0.1
0.54%
0.52%
0.02 pt
Crédit du Nord Group’s consolidated cost of risk (1)
totalled €197.8 million at December 31, 2013 versus
€191.8 million at December 31, 2012. Divided by the
total loans issued by the Group, cost of risk (0.54%) was
up 2 basis points compared to 2012.
The rate of gross outstanding non-performing and
disputed loans as a percentage of total loans came to
6.7% (up 0.8 points versus December 31, 2012), with
outstanding non-performing and disputed loans up
+13.2% and total outstanding loans stagnating.
The economic and financial environment have been
tense since the end of 2012, with no major variation in
cost of risk up to now.
As part of a project developed in conjunction with
Societe Generale, Crédit du Nord Group established
statistical provisions for its individual and professional
customer bases, calculated on the basis of historic
losses. According to these calculations, the coverage
ratio of outstanding non-performing and disputed
loans, net of guarantees received on outstanding nonperforming and disputed loans, stood at 75.1%. It also
furthered its collective provisioning efforts on portfolios
of performing loans.
Crédit du Nord Group’s loan business predominantly
targets French customers. The SME and VSE customer
base continued to suffer the impacts of the crisis that
has gripped Europe since 2009. The improvement seen
in 2010 and 2011 proved to be a temporary respite. The
SME customer base was once again more sensitive to
changes in economic conditions during this period. Cost
of risk linked to individual customers remained low.
(in EUR millions)
Doubtful and disputed loans (gross)
31/12/2013
31/12/2012
% change
2013/2012
2,479.7
2,190.7
+13.2
-1,241.5
-1,162.6
+6.8
Gross doubtful and disputed loans/gross outstanding loans
6.7%
5.9%
0.79 pt
Net doubtful and disputed loans/net outstanding loans
3.5%
2.9%
0.60 pt
75.1%
79.6%
-4.48 pt
Provisioning rate for doubtful and disputed loans net of guarantees
received on doubtful and disputed outstandings
(1) Cost of risk represents the net provisioning charge on banking activities (allocations to provisions less write-backs), plus non-provisioned losses on
irrecoverable loans, less amounts recovered on amortised loans.
24
Management Report
2
Operating income
Taking cost of risk of €197.8 million, Crédit du Nord
Group generated operating income of €513.9 million
in 2013, an increase of +5.9% on 2012. Restated
for the impact of PEL and CEL provisions, the fair
value measurement of financial liabilities and the first
application of IFRS 13 – Fair Value Measurements – on
the valuation of derivatives, operating income was up
+14.3%.
Operating income
(at December 31)
(in EUR millions)
391.1
+29.5%
506.5
-4.2%
485.1
+5.9%
513.9
-176.0
+12.5%
-198.0
-3.1%
-191.8
+3.1%
-197.8
2010
2011
Cost of risks
2012
2013
Operating income
Operating income before corporation tax
(in EUR millions)
GOI
Cost of risk
OPERATING INCOME
Net income from companies accounted for by the equity method
Gains or losses on fixed assets
OPERATING INCOME BEFORE CORPORATION TAX
31/12/2013
31/12/2012 (1)
% change
2013/2012
711.7
676.9
+5.1
-197.8
-191.8
+3.1
513.9
485.1
+5.9
0.8
0.6
+33.3
51.6
0.7
nm
566.3
486.4
+16.4
In December 2013, Crédit du Nord and its subsidiaries
sold their equity investments in Amundi Group, held
via Etoile Gestion Holding, to Societe Generale.
This transaction generated a total capital gain of
€52.5 million booked to net gains on fixed assets.
Net income
At December 31, 2013, consolidated net income amounted to €368.9 million, up +19.7% on 2012.
(in EUR millions)
OPERATING INCOME BEFORE CORPORATION TAX
Corporation tax
Non-controlling interests
CONSOLIDATED NET INCOME AFTER TAXES
31/12/2013
31/12/2012 (1)
% change
2013/2012
566.3
486.4
+16.4
-194.4
-173.4
+12.1
3.0
4.7
-36.2
368.9
308.3
+19.7
25
2
Management Report
Outlook
In a challenging environment, Crédit du Nord Group
remained focused on business development in order
to expand its individual, professional and business
customer bases.
Consolidated net income climbed by +3.4% in 2013,
restated for changes to PEL/CEL provisions, the fair
value measurement of financial liabilities and the negative
adjustment impact stemming from the first application
of IFRS 13 on the valuation of derivatives. General
operating expenses were kept under control, dipping
by -1.0%. Net cost of risk remained limited, increasing
by +3.1%. Overall, restated consolidated net income
improved by +28.0%.
Income was significantly boosted by the sharp rise in
the margin on deposits, with the combined effect of
solid sight deposit inflows across all markets and the
decrease in the Livret A savings book interest rate,
which took place on August 1, 2013.
The margin on loans showed dynamic growth amid
low interest rates; it also benefited from the increase
in penalty fees linked to housing loan prepayments.
Finally, NBI was driven by another gain in financial fee
income, buoyed by the equity market rally.
In 2014, Crédit du Nord will continue to develop its
growth drivers by broadening its range of personal
protection products and expanding its private
26
banking activity. The multi-channel offer will be further
enhanced, with overhauled ergonomics and increased
functionalities in the mobile offer for individual and
professional customers, and the launch of the tablet
PC app. Branches opened in the last decade have
continued to develop and are now making a significant
contribution to the Group’s sales and financial results.
The development of Société Marseillaise de Crédit is
part of this strategy. Drawing on strong regional roots
and a well-known brand, Société Marseillaise de
Crédit has positioned Crédit du Nord as a key player
with substantial market share in the south of France,
a region that holds great potential in terms of business
and demographics. Crédit du Nord will continue tapping
into this powerful brand to ramp up its development
in this region.
Finally, Crédit du Nord will continue to upgrade its
information system. The “Convergence” project,
aimed at building a joint information system for
Societe Generale Group’s retail banks, will see further
convergence of SEPA processing and payment systems
in 2014. On the whole, this project is expected to further
improve the Group’s commercial efficiency and enhance
the range of products and services offered to customers.
Over the long term, this investment will bring greater
operational efficiency.
Chairman’s report on the preparation and organisation of the Board’s activities and on internal control and risk management
2
Chairman’s report on the preparation and organisation
of the Board’s activities and on internal control and risk
management
This report pertains to 2013 and has been prepared in accordance with Article L.225-37 of the French Commercial Code.
Preparation and organisation
of the Board’s activities
The Board of Directors meets at least once per quarter.
A list of the directors is provided in the registration
document.
The Board of Directors comprises 13 members,
including three independent directors selected for their
expertise and commitment to the company.
Crédit du Nord will comply with the law
of January 27, 2011 governing the principle of balanced
representation of women and men on the Board.
The agenda of all Board meetings is set by the Chairman
of the Board after consultation with the Chief Executive
Officer.
For the purposes of setting the agenda, the following
are reviewed:
• items that must be examined by the Board pursuant
to the law;
• business allowing the Board to ascertain that the
company is being efficiently run and that its strategic
choices are being implemented (sales strategy,
organisation, investments, etc.).
The directors are convened no less than 15 days before
the meeting. Their notification includes:
• the agenda of the meeting;
• the draft minutes of the preceding Board meeting;
• an information pack pertaining to the key items on
the agenda.
When the Board meets to approve the annual financial
statements, the following information must also be
provided:
• to each Director: a list of all other company offices
held by the Director, it being the responsibility of each
Director to verify and amend the list as necessary;
• to the Chairman and Statutory Auditors, by virtue of
current regulations, a list of all significant agreements
entered into between Crédit du Nord and its senior
managers and/or those companies with which Crédit
du Nord shares senior managers or shareholders.
In addition to the Directors, the following individuals also
participate in Board meetings:
• members of the Executive Committee and other
company managers, depending on the matters being
discussed;
• the Statutory Auditors;
• the Secretary of the Board;
• the Secretary of the Central Works Council.
Board meetings last approximately three hours.
The agenda items are presented by the Chairman, the
Chief Executive Officer or the person responsible for the
items in question (Chief Financial Officer, Head of Risk,
etc.). A deliberation process ensues during which views
and opinions are expressed. At the end of deliberations,
the Board is asked to vote, where necessary.
The draft minutes of the meeting are prepared by the
Secretary of the Board, who submits the same to the
Chairman, the Chief Executive Officer and the various
participants (for the items concerning them). The draft
minutes are then submitted for the approval of the Board
at the start of the following meeting.
Crédit du Nord applies some of the recommendations
presented in the AFEP/MEDEF corporate governance
code, in particular those related to the remuneration
of Chief Executive Officers. The company also has a
Compensation Committee consisting of two directors.
The Chief Executive Officer’s remuneration is set by
the Board. This compensation is comprised of a fixed
component and a performance-based component
based on the criteria proposed by the Compensation
Committee. Detailed information is provided in the
27
2
section entitled “Information on Corporate Officers”
in the registration document.
The Audit Committee consists of three directors and
is responsible for examining matters related to risk,
compliance and internal control; it met in March and
October 2013. It reports to the Board on its work twice
a year.
A Board regulation specifies the conditions under which
directors can participate in meetings through video
conferencing or other telecommunication methods. This
regulation can be consulted on the bank’s website under
“Vie de l’Entreprise”.
Due to its chosen business mix, Crédit du Nord Group
has limited exposure to risks related to international
and real estate activities.
Internal Control at Crédit du Nord Group is based
on a system that draws a distinction between Permanent
Control and Periodic Control (III).
General Meetings of Shareholders are convened in
accordance with all currently applicable laws and
regulations. All shareholders and the Statutory Auditors
receive a meeting notice.
As regards accounting and financial management,
a pooled information system is shared by virtually
all the companies in the Group, and in particular the
banking subsidiaries. This system provides the means
to enforce Crédit du Nord’s rules and procedures while
allowing the bank to centralise all the data needed
to monitor the results and activities of Group companies
in real time (IV).
Limits to the powers of the Chief Executive
Officer
I. A secure framework
The duties of Chairman of the Board and Chief Executive
Officer were split on January 1, 2010.
1- Regulatory reporting
Information on holding several corporate offices and
on the independence of directors is provided in the
registration document.
The term of office of the Chief Executive Officer is
determined by the Board of Directors.
The Chief Executive Officer is vested with the broadest
powers to act under all circumstances on behalf of the
company. The Chief Executive Officer exercises his
powers within the limits set out in the corporate purpose
and excluding those powers expressly attributed by
law to the Shareholders’ Meetings and the Board of
Directors.
The Chief Executive Officer’s powers in the area of
credit risk are specified in the rules adopted at the
Shareholders’ Meeting of October 25, 2012.
Internal control and risk management
This report discusses the internal control procedures
that apply to all entities within Crédit du Nord Group.
The various units involved in internal control played a role
in preparing the report.
The activities of Crédit du Nord Group take place within
a secure framework guaranteed by banking regulations
and the control system put in place by its majority
shareholder (I).
28
As a network bank with strong regional roots and a
customer base essentially comprised of individuals and
SMEs, Crédit du Nord and its subsidiaries are exposed
to risks, the most significant of which is counterparty
risk (II).
The annual report on internal control and on risk
measurement and oversight, prepared in accordance
with Articles 42 and 43 of CRBF Regulation No. 97-02,
as amended, is transmitted to the Audit Committee,
which reports to the decision-making body. It is also
addressed to the Statutory Auditors and to the majority
shareholder, Societe Generale.
The ACPR (French Prudential Supervisory and
Resolution Authority) receives the individual annual
reports from each Crédit du Nord subsidiary and the
consolidated annual report for Crédit du Nord Group.
Each year, the Group’s RSCIs (Heads of Investment
Service Compliance) provides the AMF (French
securities regulator) with a general report on compliance
with investment service provider requirements and with
reports addressing any specific topics it might request.
These reports are also submitted to each entity’s
decision-making body.
2- Controls performed by the shareholder
As a member of Societe Generale Group since 1997,
Crédit du Nord also benefits from the control system
established by its majority shareholder.
This system focuses primarily on risk exposure, the
accuracy of financial and management accounting data
and the quality of information systems.
Systematic controls are performed by the majority
shareholder as part of a programme of regular
inspections of Group entities aimed at ensuring that
procedures are being applied.
As the majority shareholder is itself a banking
establishment, continuous comparisons between the
two networks facilitate the control of risk.
II. Main banking risks
1- Counterparty risk
The credit policy of Crédit du Nord Group is based
on a set of rules and procedures governing lending,
the delegation of responsibilities, monitoring,
counterparty rating, risk classification and
the identification of impaired risk.
Identifying counterparty risk impairment is the
responsibility of all individuals in charge of managing,
monitoring and controlling risks, i.e. the sales function,
risk monitoring function, risk management department
and periodic control department.
Risk Management is organised on two levels:
• The Central Risk Division (DCR), which reports
directly to Crédit du Nord’s Chief Executive Officer
and reports functionally to Societe Generale’s Risk
Division, assists with the definition of lending policies,
oversees the implementation of these policies
and participates in the credit approval process.
Responsible for identifying and classifying risks,
DCR participates in the risk control system, the
determination of the appropriate level of provisioning
and collection of doubtful loans. In 2013, a statistical
provisioning system for doubtful and disputed loans
2
was set up in order to harmonise practices with
Societe Generale concerning counterparties on the
individual and professional customer markets.
• The Regional and Subsidiary Risk Departments,
which report directly to the Regional Manager or
the Subsidiary Chairman and functionally to Crédit
du Nord’s Central Risk Division, are responsible for
implementing the Group’s credit policy and managing
risks within their scope.
• Specifically, they play a role in the credit approval
process, the monitoring and classification of risks and
the collection of doubtful and disputed loans.
Specialised committees and systems
In order to monitor and manage risk, the following
have been instituted at the Group and the regional/
subsidiary level:
• a Risk Committee, chaired by the Chief Executive
Officer, which meets once a month. A member of the
majority shareholder’s Risk Division also sits on this
committee;
• a Regional Risk Strategy Committee that meets once
a year in each region and at each subsidiary. This
committee is chaired by the Chief Executive Officer
of Crédit du Nord;
• a review of impaired risks is conducted every six
months by DCR’s Control and Provisioning Committee.
In the Group’s main customer markets, risk monitoring
and control structures have been strengthened using
risk modelling systems developed to determine the
Basel II capital adequacy ratio.
These structures regularly contribute to the definition and
implementation of risk policy, the review of significant
risks, the monitoring of impaired risks, recognition of
provisions for such risks and overall risk analysis.
Crédit du Nord also prepares a quarterly report on major
regulatory risks for its majority shareholder, which is then
consolidated and submitted to the French Prudential
Supervisory and Resolution Authority. Every quarter, it
also reports the main risk events to the Societe Generale
Risk Division using a pre-defined format.
29
2
2- Interest rate, exchange rate and liquidity
risks (excluding market activities)
With regard to overall risk management, Crédit du Nord
Group draws a distinction between structural balance
sheet risks (Asset and Liability Management or ALM) and
risks related to trading activities.
• the daily short term interest rate position, which is
subject to limits;
2-1 Asset and liability management (ALM)
• short rate risk exposure tolerance arising out of all
balance sheet transactions, also subject to limits.
Reporting directly to the Finance Division of Crédit du
Nord (DGF), the ALM unit comes under the authority
Crédit du Nord’s Chief Financial Officer.
The Weekly Cash Flow Committee makes sure these
limits are observed.
The ALM unit is responsible for monitoring and analysing
Crédit du Nord Group’s exposure to mismatched interest
rate and liquidity positions.
An ALM Committee, chaired by the Chief Executive
Officer, meets once a month to make decisions on
managing mismatched interest rate and liquidity
positions arising out of the Group’s business activities.
A member of the majority shareholder’s Finance Division
also sits on this committee.
Liquidity risk
The ALM unit monitors the outstandings and regulatory
ratios of Crédit du Nord and its subsidiaries. Short-term
liquidity management is delegated to each subsidiary
as part of its cash management activities and is subject
to certain limits requiring the subsidiary to remain
sufficiently liquid.
Changes in the structure of the balance sheet and its
run-off are managed by the ALM unit and monitored
by the ALM Committee, which in turn determines
the refinancing requirements of the Group’s entities.
A monthly report on liquidity risk is submitted to the
majority shareholder.
Since the end of 2011, Crédit du Nord Group has
been creating dedicated tools for establishing Basel III
liquidity ratios. This work will allow the Group to meet
future regulatory requirements and is already providing
the necessary tools for learning how to navigate the
business in this future restrictive environment.
Interest rate risk
All assets and liabilities of Group banks, excluding those
related to trading activities, are subject to an identical set
of rules governing interest rate risk management.
30
The ALM Committee delegates the management of
short-term interest rate risk to the Weekly Cash Flow
Committee. This risk is managed using the following two
indicators:
The blanket interest rate risk of Crédit du Nord Group
is subject to risk exposure tolerance limits in euros
and in foreign currencies. Observation of these limits is
verified within the framework of a report submitted to the
Crédit du Nord Group enforces a consistent hedging
policy against ALM risks by instituting the appropriate
hedges to reduce the exposure of Group entities to
interest rate fluctuations.
The hedging activities of the ALM unit cover all
Crédit du Nord Group entities.
Each Group entity is monitored individually and hedged
on an ad hoc basis.
The Group uses an ALM application known as Almonde.
This application is used to generate the Weekly Cash
Flow Committee’s reports, the ALM Committee
indicators and the quarterly report to the majority
shareholder. Hedge effectiveness assessments required
under IFRS are carried out using market valuations
calculated by Evolan (an application used by the Treasury
and Foreign Exchange department) which provides an
accurate representation of all positions, given that all
asset-liability mismatches are identified and calculated
as a monthly average.
2-2 Trading activity
Barring exceptions, transactions involving derivatives
linked to customer transactions are hedged by
Crédit du Nord’s majority shareholder, given that Crédit
du Nord maintains only limited proprietary positions
in such products.
Controls of limits assigned to these trading activities
by the General Management are monitored by
the Treasury and Foreign Exchange Department
in accordance with the standards adopted by the
The results of these activities are checked by the
appropriate control teams (see “Market risks” below).
The division uses a network of Operational Risk Officers
working at the head office as well as the various regional
entities and subsidiaries.
3- Market risks linked to customer-driven
transactions
Monitoring and oversight of Crédit du Nord Group’s
operational risks fall within the remit of the Internal
Coordination and Control Committee (CCCI
cf. infra chap. III). This Committee reviews the
operating losses, main flaws, operational risk mapping,
and the BCP and crisis
Crédit du Nord consistently collateralises customer
orders, mainly through its majority shareholder, thus
significantly reducing its exposure to market risks.
A specialised unit of the Treasury and Foreign Exchange
Department monitors market and counterparty risks on
market transactions.
These risks are calculated on a daily basis and compared
with the limits. Any breaches are examined by the heads
of the Treasury and Foreign Exchange Department.
A breach control report is submitted to the majority
shareholder once every day. The Chief Financial Officer
receives a weekly status report on results and limits and
a monthly report on changes in limits from the Treasury
and Foreign Exchange Department. The Chief Executive
Officer also receives a quarterly report on changes
in limits from the Treasury and Foreign Exchange
Department.
4- Operational risks
The businesses of the various Group entities are
exposed to a series of risks (administrative, accounting,
legal, IT, etc.) combined under the heading “Operational
risks”.
In accordance with the recommendations of the Basel
Committee, and in consultation with the majority
shareholder, operational risks are classified. Above a
threshold of EUR 10,000 set by Crédit du Nord Group,
losses are systematically logged.
The main projects are monitored at Steering Committee
meetings, and in the case of the most important
projects, the CEO participates in these meetings.
Within the Central Risk Division, the Operational Risk
Management Department steers and coordinates the
different procedures rolled out group-wide in respect
of Operational Risks, Business Continuity Plans, crisis
management and management of IT authorisations.
2
An Operational Risk Review is conducted
on IT projects. This meeting is attended by the Heads
of Internal Control, the Head of Information Security
and Systems and the Head of Operational Risks and
is held prior to each delivery of IT applications or a new
version of existing applications when major changes are
made, in order to verify the associated risks in terms
of availability, integrity, confidentiality, evidence and
controls.
With the transfer of the IT security function to an entity
shared by Societe Generale’s French Retail Banking
activity, Crédit du Nord’s IT Security function is now
overseen by the head of this entity’s IT Security. An IT
Security Committee, chaired by the Head of IT System
Security (RSSI), deals with all aspects of IT system
security.
Under the Crisis Plan it is possible to assemble a crisis
unit at any time at one or more designated locations.
This unit combines a core of essential functions, which
are automatically mobilised irrespective of the type
of crisis, under the supervision of a crisis manager who
oversees progression of the crisis and reports to General
Management. This unit can request the presence
of any executives, managers and experts directly
concerned by the event.
The strategic Head Office entities, for which it is crucial
to ensure service continuity, have prepared a Business
Continuity Plan that supplements the procedures
designed to ensure uninterrupted services across
the network.
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2
5- Non-compliance risk
In accordance with the rules applicable to credit
institutions, special procedures were developed
to address non-compliance risk, defined by the
consequences (penalties, financial losses, reputational
damage) likely to result from failure to comply with
regulations governing banking and financial activities.
At Crédit du Nord and in each corporate entity of the
Group governed by banking and financial regulations,
there is a Head of Compliance whose name is
transmitted to the French Prudential Supervisory and
Resolution Authority.
Crédit du Nord’s Head of Compliance reports to
the executive body whenever necessary and serves
as liaison to the Compliance Committee of Societe
Generale Group, on which he sits.
Crédit du Nord’s Head of Compliance is assigned the
following duties:
• ensuring the effectiveness and consistency of the
organisation and procedures relating to compliance;
• identifying new risks related to non-compliance and
ensuring that the necessary measures are taken to
control them;
• monitoring the deficiencies identified via the Group’s
incident reporting system and assessing the
effectiveness of corrective measures.
Crédit du Nord Group’s Management Committee, on
which the heads of the main subsidiaries sit, periodically
reviews compliance issues.
Before being launched, all new products and key
product transformations are subject to an examination
by the Products Committee, in which the Head
of Compliance, the Head of Investment Services
Compliance and Ethics, the Head of Marketing, the
Corporate Secretary and the Central Risk Manager
participate. The purpose is to check that all risks are
correctly identified and addressed. The Committee’s
work gives rise to a written opinion provided by the Head
of Compliance, who also examines internal instructions
and commercial documents related to new products.
32
Management and the internal control teams are
responsible for controlling compliance.
Compliance Officers ensure that all employees receive
the necessary directives on complying with regulations.
They also see to it that appropriate compliance training
programmes are in place.
Finally, internal guidelines set forth the rules applicable
to outsourced banking and financial services. Qualified
essential services are subject to special monitoring,
under the joint supervision of the Compliance and
Operational Risk departments.
III. Organisation of internal control
Reporting functionally to Societe Generale’s Periodic
Control Department (DCPE), Crédit du Nord’s Head of
Periodic Control reports directly to the Chief Executive
Officer, who guarantees the independence of this office.
As a member of the Executive Committee, the
Corporate Secretary supervises the Permanent Control,
Compliance, Investment Services Compliance (RCSI),
Ethics, Anti-Money Laundering, Corporate Office and
Legal Affairs and Disputes divisions.
An Internal Control Coordination Committee (CCCI) is
chaired by the Chief Executive Officer, and is comprised
of the members of the Executive Committee and
the Heads of Periodic Control, Permanent Control,
Compliance, Operational Risks, Information System
Security and Ethics-Investment Services Compliance,
which is also in charge of Anti-Money Laundering. This
committee met five times in 2013.
Finally, the instructions stemming from incident alerts
comply with the regulation stating that the Boardof
Directors and the French Prudential Supervisory and
Resolution Authority must be informed of key incidents.
1- Periodic Control System
2- Permanent Control
Crédit du Nord Group’s Periodic Control system
covers all Crédit du Nord Group activities. Its role is to
assess the compliance of transactions carried out, the
level of risk incurred, observation of procedures and
the efficiency and suitability of the permanent control
system. It also performs any special analyses requested
by Crédit du Nord’s General Management. Periodic
Control is staffed by recent university graduates and
experienced managers with a background in the banking
or audit field. An inspector specialising in IT conducts
special audits on payment instruments and provides
support on assignments involving aspects related to
information systems.
The head of each entity must perform a Level One
control of transactions carried out within his scope.
Branch and Business Centre managers must adhere
to a predefined plan (detailing frequency and risks
tobe controlled) and must record and report on certain
controls performed; specialised supervisory staff also
assist the branches with the day-to-day monitoring of
accounts.
This unit is an integral part of Societe Generale’s internal
control structure. The majority shareholder’s audit teams
or combined teams also regularly conduct periodic
controls of Crédit du Nord Group.
The annual audit plan is prepared based on the regular
and methodical identification of the risk areas to which
the Bank and its Subsidiaries are exposed. The plan
is approved by Crédit du Nord’s General Management
based on the proposal of Crédit du Nord’s Inspector
General, in conjunction with the Societe Generale’s
Periodic Control department.
Periodic Control assignments include an evaluation
phase, aimed at identifying the risk areas calling for
investigation in the scope of audit, plus an on-site
audit and a reporting phase. Crédit du Nord Inspector
General submits the resulting report directly to General
Management at the end of the assignment. Periodic
Control directly monitors the application of the
recommendations contained in the report.
A review of the work performed and observations
made by Periodic Control, and the application of its
recommendations, are monitored by Crédit du Nord
Group’s Periodic Control Committee and Internal Control
Coordination Committee.
Furthermore, the Inspector General reports on his
work to the Crédit du Nord Board of Directors’ Audit
Committee. He also participates in meetings of Crédit
du Nord’s Internal Audit Committee, with the support of
Societe Generale’s Periodic Control department.
2
A Level Two control is conducted by dedicated
personnel, who report directly to the head of local
control (Region, Subsidiary or Operating Division), who in
turn reports directly to the Regional or subsidiary director
and functionally to Crédit du Nord’s Head of Permanent
Control.
On an exceptional basis, the heads of control covering
investment services compliance (DAF, DTC, DPGA,
brokerage firm Gilbert Dupont) report hierarchically to
RCSI.
The scheduling and details of these controls are
determined for each of these entities.
The Head of Permanent Control reports on his activities
to the General Management of Crédit du Nord.
2-1 Regional and subsidiary Level One and Two
administrative and accounting controls
The Line Management Control Manual sets out both the
requirement for vigilance (day-to-day security: reception,
opening of mail, filing, etc.) and a limited number of
controls to be formalised by the hierarchy (recognition
of value at branches, sensitive procedures such as antimoney laundering, compliance with the MIFdirective,
etc.). These controls may be delegated on the condition
that each delegation of power is subject to supervisory
control.
Level Two controls are performed by dedicated
personnel using control forms prepared together with
the Head of Permanent Control and a predefined plan
which specifies the frequency of controls based on the
degree of risk that the process or transaction represents.
33
2
Whenever an on-site control of a procedure is
performed, the procedure is rated for its degree of
compliance with applicable rules using a software tool.
This allows the Head of Permanent Control to map
procedural compliance at both the local and national
level.
downgrading or reclassifying them if necessary. They
oversee the proper application of rules relating to ratings.
For each assignment, the Periodic Control department
writes up an assessment of the Permanent Control
conducted for each area being audited.
During on-site controls, Risk Controllers are required to
use sampling techniques to assess the quality of risk
management by operational staff, with special attention
given to standing procedures and compliance with Level
One control obligations.
2-2 Level One and Two risk controls of regions
and banking subsidiaries
Level One control at a regional and subsidiary level is
carried out by sales management and by the Risk
Department of the region or subsidiary.
The Line Management Control Manual assigns
responsibility to the Branch or Business Centre
Manager for ensuring that delegated tasks are carried
out and that the lending decisions taken by subordinate
staff (customer advisors, etc.) who report to them are
suitable; furthermore they are responsible for any credit
limit breaches by the entity they supervise. These
controls are performed monthly, are formalised and may
not be delegated.
As a line manager, the Group Director receives a copy
of the on-site auditing reports on Level Two controls.
He assists the branches in preparing a response to
these reports and supervises the implementation of the
Controllers’ recommendations.
Regional or subsidiary Risk Divisions are responsible
for supervising limit breaches. They also supervise the
appropriate classification of risks. They may decide to
classify loans as “performing loans under watch” or to
downgrade them to “doubtful” when renewal of such
loans is sought or amendments requested or when
monitoring breaches.
Level Two controls are performed by regional or
subsidiary Risk Controllers reporting to the regional or
subsidiary Head of Control.
Regional or Subsidiary Risk Controllers carry out
checks to ensure that “performing” loans merit this
status. They examine and monitor “performing loans
under watch” and “doubtful loans” for the purpose of
34
The majority of the Risk Controller’s work is carried
out with the help of computer tools and the monthly
delegated limit reports. These tasks can be performed
on site or remotely.
2-3 Special controls conducted at Head office
level on the network entities
2-3-1 Central Risk Division
The Control and Provisioning Division performs the
following risk control and monitoring duties:
• On-site audits to monitor the application of Crédit
du Nord Group’s procedures by the Regional and
Subsidiary Risk Divisions and their correct application
of the Group’s credit policy, which is defined in the
Credit Manual;
• Permanent and remote risk monitoring through
centralised control of the most significant breaches
at Group level and of shortfalls in SRD (deferred
settlement service);
• Quarterly analysis of downgraded loans, in particular
“performing loans under watch” and “doubtful” loans
and interim reviews of “doubtful” loans considered
“special affairs”.
2-3-2 Ethics and Investment Service Compliance
This division conducts annual on-site audits on the
application of standard practices and procedures by
discretionary portfolio managers and on private banking
activities at the regional entities and subsidiaries.
2-3-3 Housing Loans Division
The Housing Loans Division holds a management
meeting every quarter at each of the Group’s regional
mortgage lending centre to review existing loans and
oversee compliance with the Group’s policies in this
area.
2-3-4 Legal Affairs and Disputes Division
The Legal Affairs and Disputes Division conducts an
on-site audit every two years of disputes at regional and
subsidiary level.
2-3-5 Human Resources Division
The Human Resources Division began on-site audits of
the HR departments of the banking subsidiaries in 2013.
These audits will be performed once every two years.
2-4 Level One and Two controls of functional
divisions and specialised subsidiaries
The heads of Level Two permanent control for the
Head Office divisions and some specialised subsidiaries
report directly either to the Head of Permanent Control
(Banking Operations Division, central control in charge
of other functional departments) or to the Investment
Services Compliance Officer (DPGA, DTC, DAF and
Société de Bourse Gilbert Dupont).
Due to the smaller size of some specialised subsidiaries,
sometimes their senior director carries out these controls
(e.g. Norbail Immobilier and Norbail Sofergie).
In other cases, Internal Control is partly outsourced:
Starlease to Franfinance and Antarius to Aviva.
3 – Ethics and Investment Service Compliance
Under the authority of Corporate Secretary, this Division
ensures that the rules of good conduct governing
relations between the Bank, its employees and its
customers are well defined, understood and observed.
Banking and finance ethics guidelines, which all staff
must observe, are outlined in an appendix to the
company’s internal rules, which are distributed to all
staff. Added to these principles are a number of specific
measures relating to certain activities (e.g. discretionary
portfolio managers).
In addition to compliance with AMF regulations, and in
particular the principles of organisation and rules of good
conduct defined in the General Regulations of the AMF,
this entity is also in charge of anti-money laundering
and anti-terrorism financing efforts.
2
Anti-money laundering and anti-terrorism financing
is essentially based on knowledge of the Bank’s
customers, vigilance in the processing of transactions
(blacklists of countries and individuals), monitoring
of certain payment instruments (cheques, electronic
payments, international transfers), and the flagging and
analysis of customer transactions.
Internal directives have been tailored to meet the
requirements of the 3rd European Anti-Money Laundering
and Terrorism Financing Directive; all relevant staff have
been given training on this regulation, which emphasises
a risk-based approach (customers and/or operations).
Each of the Group’s legal entities has a Tracfin officer
in charge of preparing drafts suspicious activity reports
for the entity in question, and an Investment Services
Compliance Officer, who moreover usually tends to be
the Permanent Control Manager.
In 2013, draft reports by the Subsidiaries were validated
prior to delivery by the Crédit du Nord parent company
declaring parties, in the interest of harmonising the
Group’s reporting policy.
IV. Production and control of
financial and accounting data
The Chief Financial Officer, who reports to the Chief
Executive Officer, is responsible for the production and
control of financial and accounting data.
As such, he oversees the proper application of
applicable accounting rules and guidelines, and monitors
recommendations issued by the Statutory Auditors.
Applicable accounting standards are French standards
for the preparation of parent company financial
statements and the standards formulated by Societe
Generale Group’s Finance Division for the preparation
of the consolidated financial statements, which are
based on IFRS accounting standards as adopted by the
European Union.
35
2
Pursuant to European Regulation No. 1606/2002
of July 19, 2002, Crédit du Nord Group is required
to prepare its consolidated financial statements in
compliance with IFRS.
In addition, Crédit du Nord Group is also required to
publish the regulatory reports (SURFI, COREP, FINREP,
etc.) submitted to the national supervisory authorities
(ACPR and Banque de France).
1- Production of accounting data
1-1 Role of the Accounting and Summary
Information Department (DCIS)
This department, under the authority of the CFO, carries
out two major tasks:
• organisation and accounting procedures:
definition of a set of accounting rules for the whole
of the Group that comply with current accounting
regulations (definition of accounting frameworks and
procedures, management of the internal chart of
accounts, definition of reporting requirements, etc.);
• production and analysis of accounting and
financial statements: preparation of the individual
and consolidated financial statements of Crédit du
Nord Group and of other statements required by the
regulatory authorities.
• prepare the different regulatory reports (SURFI,
COREP, FINREP, etc.);
• provide data for risk drivers in the Basel II ratio
determination process, thus ensuring “native”
accounting consistency.
This unified information system is instrumental in
ensuring accounting consistency and regularity
among the banks of the Group, with DCIS overseeing
the definition and validity of accounting rules and
procedures, as well as the flow of accounting information
from input to output:
• the accounting treatment of Group-wide transactions
is based on automated procedures. Regardless of
whether the accounting frameworks are defined at
the accounting user level (over two-thirds of book
entries) or defined automatically by operating system
software, all accounting procedures have been
defined, tested and approved by DCIS;
• manual entries, which are on the decline, are subject
to Group control procedures;
• accounting databases are interfaced to automatically
input data into the consolidation packages and
reports intended for the French Prudential Supervisory
and Resolution Authority (ACPR) and the Banque de
France.
1-3 Production of accounting data
1-2 Accounting information system
Crédit du Nord’s information system is a multi-bank
network, i.e. all Group banks are managed on the same
information network. As such, they share the same
processing systems for banking transactions and the
same summary reporting systems.
For accounting purposes, the summary accounting
system comprises the reference summary database,
“Base de Synthèse de Référence” (BSR), into which the
accounting entries of the different operating systems
are entered on a daily basis. This database integrates
extra-accounting details to form the enriched reference
summary database, “Base de Synthèse de Référence
Enrichie” (BSRE).
At the hub of Crédit du Nord Group’s summary system,
the BSRE is notably used to:
• provide data for all accounting and tax-related
reports;
36
Preparation of individual financial statements and
individual consolidation packages
The figures presented in regulatory reports and individual
consolidation packages are pre-estimated using
parameters managed centrally by DCIS.
Each entity, using the same accounting information
system, then records all non-automated items at the
balance sheet date (representing a very low volume of
entries).
Finally, each entity controls, analyses and records, where
applicable, the adjustment accounting entries for all
financial reports.
Once approved, the entities transmit the regulatory
reports to the supervisory authorities and the individual
financial statements are published.
In addition, all other entities, having their own accounting
information systems, transmit, above and beyond
the regulatory reports forwarded to the supervisory
authorities, a separate consolidation package generated
by their internal accounting application, compliant with
Group regulations and procedures.
2-2 At the Head Office division level
The consistent application of accounting principles
and methods is ensured via meetings organised by
DCIS with the accounting managers of the Group’s
companies.
Level Two controls are performed annually by the head
office division Permanent Control departments.
Account consolidation process
This phase culminates with the production of the
consolidated financial statements used in managing
the Group, legal and regulatory publications as well as
reports to the shareholders.
During this phase, individual consolidation packages
from Group companies are verified and approved, and
consolidation and intercompany entries are booked. The
consolidated financial statements are then analysed and
validated before being published internally and externally.
The majority of these operations are performed on a
monthly basis, which increases the reliability of the
process. Group tax consolidation and reporting are also
carried out during this phase.
2- Internal accounting control
2-1 At the network branch level
Day-to-day monitoring of accounts is carried out within
the Finance function by accounting staff who report to
Crédit du Nord’s Regional Steering Divisions and to the
Accounting Division at the subsidiaries.
They use a day-to-day account monitoring application
developed and maintained by DCIS, which identifies
accounts requiring further examination (balance or
directional anomaly, failure to comply with regulatory
thresholds, manual entries).
The documented and reported Level One control to
ensure that this monitoring is properly performed is
formalised and carried out by the Line Manager of the
staff in charge of monitoring the accounts.
The Level Two control is conducted quarterly by the
regional and subsidiary Permanent Control departments.
2
The monitoring of the accounts of the Functional
Divisions is centralised and performed daily by
specialised staff, who also use the day-to-day account
monitoring application. A documented Level One control
is also performed by line management.
2-3 Control of the preparation of individual
and consolidated financial statements
The process of consolidating accounting data and
preparing consolidated financial statements is subject to
several types of control:
Data controls
The software used to generate the consolidated reports
includes configurable data consistency tests.
As long as the reporting company has not satisfied
control requirements, it may not transmit accounting
information to DCIS.
Once received, the consolidated reporting packages
sent in by each consolidated company are analysed,
corrected as necessary, and approved, notably
via controls of consistency with previous monthly
consolidated reporting packages, available budgets and
unusual events for the month.
Entries specific to consolidation are then recorded.
Finally, DCIS performs controls of consolidated data
output and analyses variations, particularly those relating
to changes in shareholders’ equity.
Controls on consolidation tools
A Group chart of accounts specific to consolidation
is managed by DCIS and aids in breaking down
information to improve analysis.
The configuration of the Group consolidation system
is monitored and the various automated consolidation
processes are verified and approved.
Lastly, the automation of the monthly consolidated
reporting process in itself helps to control changes in
data over time by detecting any problems as they arise.
All of these controls help guarantee the quality of
accounting documents.
37
2
Accounting controls
The purpose is to ensure the quality of accounting
document preparation by setting up a certification
process.
In this regard, Societe Generale implemented an
accounting control process based on a SarbannesOxley (SOX) approach.
The aim of this approach is to provide Societe Generale
Group with a consolidated view of accounting controls
in order to:
The tools used by Crédit du Nord Group include:
• a query tool ranging from Event Reports (CREs)
to accounting entries, with an audit trail at the
accounting user level;
• strengthen the accounting control system;
• accounting database query tools (accounting flows
and balances);
• ensure the quality of the financial statement
preparation process and of the accounting and
financial information published (certification process);
• query tools that work within data output applications
(regulatory reporting software packages, consolidation
software packages, etc.).
• meet requests from the Group’s Audit Committee.
Furthermore, the accounting documents used to monitor
and control accounting operations are retained for the
lengths of time specified by laws and agreements.
In 2013, Crédit du Nord Group (parent company and
banking subsidiaries) participated in the quarterly
certification of Societe Generale Group based on key
controls, indicators, real accounting control data and the
quality of the accounting control system implemented.
During the same period, Crédit du Nord Group rolled out
this certification system to its leasing subsidiaries.
2-4 Structure established to guarantee the
quality and reliability of the audit trail
Each Crédit du Nord Group bank has an end-to-end
audit trail of the information chain. Given the complexity
of the different banking systems and data production
channels, this trail is comprised of various tools
interconnected by references which are representative
of search keys.
It is defined by procedures established at each phase of
the data production process.
The audit trail is organised to be able to optimally
respond to different types of queries.
38
In fact, a different tool is used depending on whether
the user wishes to locate a specific event or to recreate
a regulatory filing comprised of a large number of
accounting entries and requiring the tracking of
reference tables.
2-5 Isolation and monitoring of assets held for
third parties
As an investment service provider, Crédit du Nord is
required to:
• protect the rights of its customers to the financial
instruments belonging to them;
• prevent the use of said financial instruments for
proprietary purposes, except with the customer’s
consent.
Assets held for third parties are segregated from assets
held for proprietary activities and are managed by
separate departments and accounts.
IT authorisations for the applications used for both
activities are restricted and separate, thus facilitating
their separate management.
The Statutory Auditors issue an annual report on the
measures taken by the Group to ensure the protection
of customer assets.
3- Preparation and control of financial and
management accounting data
3-1 Production of financial and management
accounting data
Crédit du Nord Group bases its financial management
upon financial accounting data.
Analytical accounting data needed for the financial
management of Crédit du Nord Group are generated
by the accounting information system and operating
systems, which are able to break down data by item
and by entity. This information is stored in a unified
management database, which covers the scope of
Crédit du Nord and its banking subsidiaries.
The Financial Management Division (DGF), under the
authority of the CFO, manages the allocation of general
accounting data to the various cost accounting line
items. On the basis of the rules defined by the Group
ALM unit regarding the match-funding of assets and
liabilities, the analytical accounting system allows users
to switch from an interest paid/received accounting view
to an analytical approach in terms of margins on notional
match-funding.
Information from the management database is available
from the branch level up to the Group level and is
identical from one level to the next. As a result, the data
can be used by all Crédit du Nord Group control teams:
subsidiaries, regional divisions, functional divisions
and the Financial Management Division, which use
this information in particular to prepare the half-yearly
management report.
2
3-2 Verification of financial and management
information
This information is checked during the monthly data
entry process by verifying the cost accounting category
to which the collected data is assigned, the income
statement, the balance sheet and operating procedures,
and by systematic analysis of variations in totals and
significant changes. A monthly reconciliation is also
performed by comparing the financial accounting figures
with the management reporting figures for the main
intermediate balances.
Budgets are monitored twice a year in the presence
of the General Management: in the first half of the
year at the Regional and Subsidiary Meetings and in
the second half at the annual budget meeting. During
these meetings, changes in NBI, operating expenses,
investments and key risk indicators are systematically
reviewed.
A Cost Control Committee, which includes the Chief
Executive Officer, meets four times a year. It reviews
changes in network operating expenses and in general
expenses at all of the head office divisions.
Chairman of the Board of Directors
39
2
Statutory auditors’ report on the report prepared by the chairman of the board of directors of Crédit du Nord
Statutory auditors’ report on the report prepared by
the chairman of the board of directors of Crédit du Nord
Year ended December 31, 2013
Statutory auditors’ report, prepared in accordance with article L. 225-235 of the French
Commercial Code (Code de commerce), on the report prepared by the chairman of the board of
directors of Crédit du Nord
This is a free translation into English of a report issued in French and it is provided solely for the convenience of
English-speaking users. This report should be read in conjunction with, and construed in accordance with, French law
and professional standards applicable in France.
To the Shareholders,
In our capacity as statutory auditors of Crédit du Nord and in accordance with article L. 225-235 of the French
Commercial Code (Code de commerce), we hereby report on the report prepared by the chairman of your company
in accordance with article L. 225-37 of the French Commercial Code (Code de commerce) for the year ended
December 31, 2013.
It is the chairman’s responsibility to prepare and submit for the board of directors’ approval a report on internal
control and risk management procedures implemented by the company and to provide the other information required
by article L. 225-37 of the French Commercial Code (Code de commerce) relating to matters such as corporate
governance.
Our role is to:
• report on any matters as to the information contained in the chairman’s report in respect of the internal control and
risk management procedures relating to the preparation and processing of the accounting and financial information,
and
• confirm that the report also includes the other information required by article L. 225-37 of the French Commercial
Code (Code de commerce). It should be noted that our role is not to verify the fairness of this other information
We conducted our work in accordance with professional standards applicable in France.
Information on internal control and risk management procedures relating to the preparation and
processing of accounting and financial information
The professional standards require that we perform the necessary procedures to assess the fairness of the information
provided in the chairman’s report in respect of the internal control and risk management procedures relating to the
preparation and processing of the accounting and financial information. These procedures consist mainly in:
• obtaining an understanding of the internal control and risk management procedures relating to the preparation and
processing of the accounting and financial information on which the information presented in the chairman’s report
is based and of the existing documentation;
40
Statutory auditors’ report on the report prepared by the chairman of the board of directors of Crédit du Nord
2
• obtaining an understanding of the work involved in the preparation of this information and of the existing
documentation;
• determining if any material weaknesses in the internal control procedures relating to the preparation and processing
of the accounting and financial information that we would have noted in the course of our work are properly
disclosed in the chairman’s report.
On the basis of our work, we have no matters to report on the information relating to the company’s internal control and
risk management procedures relating to the preparation and processing of the accounting and financial information
contained in the report prepared by the Chairman of the Board of Directors in accordance with article L. 225-37 of the
French Commercial Code (Code de commerce).
Other information
We confirm that the report prepared by the chairman of the board of directors also contains the other information
required by article L. 225-37 of the French Commercial Code (Code de commerce).
Neuilly-sur-Seine et Paris-La Défense, April 14, 2014
The statutory auditors
French original signed by
DELOITTE & ASSOCIES
Jean-Marc MICKELER
ERNST & YOUNG et Autres
Bernard HELLER
41
2
Consolidated balance sheet
Assets
(in EUR millions)
Notes
31/12/2013
31/12/2012 (1)
Cash, due from central banks
4
738.0
2,077.1
Financial assets at fair value through profit or loss
5
1,725.8
1,561.9
Hedging derivatives
6
844.8
1,234.2
Available-for-sale financial assets
7
11,363.0
8,128.2
Due from banks
8
4,628.5
5,946.7
9
33,027.7
32,968.2
11
2,126.8
2,174.4
Customer loans
Lease financing and similar agreements
Revaluation differences on portfolios hedged against interest rate risk
325.7
499.8
Held-to-maturity financial assets
12
2.1
26.0
Tax assets
13
383.0
556.0
Other assets
14
485.0
481.2
Non-current assets held for sale
10
1.6
-
9.7
9.1
569.5
603.3
Investments in subsidiaries and affiliates accounted for by the equity method
Tangible and intangible fixed assets
15
Goodwill
16
TOTAL
508.0
508.0
56,739.2
56,774.1
(1) Amounts restated relative to the financial statements published in 2012, following the entry into force of the amendments to IAS 19, with retrospective application. The items
impacted were “Tax assets” for €14.2 million and “Other assets” for -€0.7 million.
42
2
Liabilities
(in EUR millions)
31/12/2013
-
0.4
5
2,474.8
1,393.5
Due to central banks
Financial liabilities at fair value through profit or loss
Hedging derivatives
31/12/2012 (1)
Notes
6
422.9
565.7
Due to banks
18
1,445.3
7,754.8
Customer deposits
19
30,310.6
28,617.0
Debt securities
20
10,391.8
6,717.6
583.8
937.7
Tax liabilities
13
768.6
898.2
Other liabilities
14
1,100.8
1,140.0
Underwriting reserves of insurance companies
24
5,628.7
5,188.4
Provisions
17
163.2
216.6
Subordinated debt
23
TOTAL DEBT
Common stock
Equity instruments and associated reserves
Retained earnings
Net income
Sub-total
Gains and losses booked directly to equity
Sub-total, equity, Group share
TOTAL SHAREHOLDERS’ EQUITY
TOTAL
662.2
672.4
53,952.7
54,102.3
890.3
890.3
170.8
158.3
1,309.0
1,216.9
368.9
308.3
2,739.0
2,573.8
24.0
70.2
2,763.0
2,644.0
23.5
27.8
2,786.5
2,671.8
56,739.2
56,774.1
(1) Amounts restated relative to the financial statements published in 2012, following the entry into force of the amendments to IAS 19, with retrospective application. The impacted
items were “Provisions” for €40.6 million, “Retained earnings” for -€27.0 million and “Net income” for -€0.1 million. Consequently, an adjustment of -€27.1 million was made to total
shareholders’ equity.
43
2
Consolidated income statement
Notes
2013
2012 (1)
Interest and similar income
30
1,897.4
1,919.1 (2)
Interest and similar expenses
30
-769.3
-819.4 (2)
19.1
12.6
Fee income
31
959.2
955.2
Fee expenses
31
-136.3
-156.9
-41.0
0.4
(in EUR millions)
Dividends on equity securities
Net income from financial transactions
o/w net gains and losses on financial instruments at fair value through profit or loss
32
-44.6
1.0
o/w net gains or losses on available-for-sale financial assets
33
3.6
-0.6
Income from other activities
34
30.9
25.8
Expenses due to other activities
34
-20.6
-19.8
1,939.4
1,917.0
-733.3
-752.3
-39.7
-38.1
-373.6
-365.4
-81.1
-84.3
-1,227.7
-1,240.1
711.7
676.9
-197.8
-191.8
513.9
485.1
Net banking income
Personnel expenses
35
Taxes
Other expenses
Amortisation and depreciation expense on intangible and tangible fixed assets
Total operating expenses
Cost of risk
37
Operating income
Share of net income of companies accounted for by the equity method
0.8
Net gains or losses on other assets
51.6
Goodwill impairment
-
Earnings before tax
0.6
(3)
0.7
-
566.3
486.4
-194.4
-173.4
371.9
313.0
3.0
4.7
368.9
308.3
Earnings per ordinary share (in euros)
3.31
2.77
Diluted earnings per ordinary share (in euros)
3.31
2.77
111,282,906
111,282,906
Income tax
Consolidated net income
38
CONSOLIDATED NET INCOME AFTER TAXES
Number of shares comprising the share capital
(1) Amounts restated relative to the financial statements published in 2012, following the entry into force of the amendments to IAS 19, with retrospective application. The items
impacted were “Personnel expenses” for -€0.2 million and “Income tax” for €0.1 million.
(2) Net of income from lease financing transactions relative to the financial statements published in 2012.
(3) In December 2013, Crédit du Nord Group sold its stake in Amundi Group, held via Etoile Gestion Holding, to Societe Generale for €52.5 million.
44
2
Statement of net income and gains and losses booked directly to equity
2013
(in EUR millions)
Net income
2012 (1)
371.9
313.0
-
-
-48.1
74.6
Revaluation difference over the period
13.2
63.1
Reclassified in the income statement
-61.3
11.5
-
-
Translation gain (loss)
Revaluation difference for the period
Hedging derivatives
Reclassified in the income statement
Share of gains and losses booked directly to equity from companies accounted for
by the equity method that will be subsequently reclassified in the income statement
Taxes on items that will be subsequently reclassified in the income statement (2)
Gains and losses booked directly to equity that will be subsequently reclassified
in the income statement
Actuarial gains or losses on post-employment benefits
Share of gains and losses booked directly to equity from companies accounted
for by the equity method that will not be subsequently reclassified in the income
statement
-
-
0.8
-23.4
-47.3
51.2
10.5
-12.0
10.5
-12.0
-
-
-3.6
4.1
Taxes on items that will not be subsequently reclassified in the income statement (2)
Gains and losses booked directly to equity that will not be subsequently
reclassified in the income statement
Total gains and losses booked directly to equity
NET INCOME AND GAINS AND LOSSES BOOKED DIRECTLY TO EQUITY
of which Group share
o/w share attributable to non-controlling interests
6.9
-7.9
-40.4
43.3
331.5
356.3
329.6
351.5
1.9
4.8
(1) Amounts restated relative to the financial statements published in 2012, following the entry into force of the amendments to IAS 19, with retrospective application.
(2) See Note 13 “Tax assets and liabilities”
45
2
Change in shareholders’ equity
Gains and losses booked
directly to equity that will
be subsequently reclassified in the income
statement (net of tax)
Capital and associated
reserves
(in EUR millions)
SHAREHOLDERS’ EQUITY
AT DECEMBER 31, 2011
Equity instruments and Elimination
Common
associated of treasury
stock
stock
reserves
1,157.5
314.8
Distribution of earnings
314.8
-314.8
Impact of adoption of
IAS 19 (revised)
-19.1
RESTATED SHAREHOLDERS’
EQUITY AT JANUARY 1, 2012
890.3
890.3
147.2
-
-
-
65.5
2,594.4
-
-
-
-19.1
-
-19.1
65.5
2,575.3
-
-
Elimination of treasury
stock
-
-
-
Issuance of equity
instruments
-
-
-
8.8
2012 dividends paid
Impact of acquisitions
and disposals of noncontrolling interests
-
8.8
-
8.8
-
8.8
-222.6
-222.6
-3.8
-226.4
-3.5
-3.5
-38.7
-42.2 (1)
-217.3
-42.5
-259.8
51.1
0.1
51.2
-
-
-
-226.1
-
directly to equity
-
-
51.1
2.3
Other changes
-2.3
Impact of retrospective
application of IAS 19
(revised) (2)
-7.9
2012 net income
-0.1
-8.0
-
-8.0
308.4
308.4
4.7
313.1
351.5
4.8
356.3
-
2.3
-
-10.2
308.3
51.1
-
-
-
-
-
-
-
-
-
-
-
-
-
-
890.3
158.3
-
1,216.9
308.3
70.2
-
2,644.0
27.8
2,671.8
308.3
-308.3
-
-
-
Changes in value of
financial instruments
having an impact on
shareholders’ equity
Sub-total
46
2,528.9
-
Sub-total
19.1
-
Total
2,509.8
Sub-total of changes
linked to relations with
shareholders
1,453.2
19.1
NonGroup controlling
share interests
Capital increase
Equity component of
share-based payment
plans
147.2
-
Retained
earnings
Consolidated shareholders’ equity
Change in Change in
Conso- fair value of fair value
lidated net available-for- of hedging
income sale assets derivatives
directly to equity that will
be subsequently reclassified in the income
statement (net of tax)
Capital and associated
reserves
(in EUR millions)
AT JANUARY 1, 2013
Equity instruments and Elimination
Common
associated of treasury
stock
stock
reserves
890.3
-
70.2
-
Total
2,671.8
Capital increase
-
-
-
Elimination of treasury
stock
-
-
-
Issuance of equity
instruments
-
-
-
12.2
-
12.2
-222.6
-222.6
-0.7
-223.3
-0.2
-0.2
-5.5
-5.7 (1)
12.2
2013 dividends paid
Impact of acquisitions
and disposals of noncontrolling interests
-
12.2
-
directly to equity
-222.8
-
6.9
0.3
Other changes
-
-
-210.6
-6.2
-216.8
-46.3
0.1
-39.3
-1.1
-40.4
-0.3
368.9
2013 net income
Sub-total
-
NonGroup controlling
share interests
27.8
Sub-total of changes
linked to relations with
shareholders
1,525.2
Consolidated shareholders’ equity
Change in Change in
Conso- fair value of fair value
lidated net available-for- of hedging
income sale assets derivatives
2,644.0
Equity component of
share-based payment
plans
158.3
Retained
earnings
-
-
-
368.9
3.0
371.9
329.6
1.9
331.5
-
0.3
-
6.6
368.9
-46.3
0.1
-
-
-
-
-
-
-
-
-
-
-
-
-
890.3
170.8
-
1,309.0
368.9
23.9
0.1
2,763.0
23.5
2,786.5
Changes in value of
financial instruments
having an impact on
shareholders’ equity
Sub-total
2
(1) Impacts of acquisitions on non-controlling interests following the buyout of the shares held by the minority shareholders of Banque Tarneaud (Simplified Public Offer launched
from November 30 to December 20, 2012, followed by a Public Buyout Offer launched in January 2013).
(2) Actuarial gains or losses on post-employment defined-benefit plans, net of tax, are transferred directly to “Retained earnings” at year-end.
At December 31, 2013, Crédit du Nord SA’s fully paid-up share capital amounted to €890,263,248 and consisted of
111,282,906 shares each with a par value of €8.
47
2
Statement of cash flows
Statement of cash flows
31/12/2013
(in EUR millions)
31/12/2012 (1)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income after tax (I)
Amortisation and depreciation expense on tangible and intangible fixed assets
Impairment of goodwill and other fixed assets
Net allocation to provisions and write-downs (including underwriting reserves of insurance
companies)
Net income/loss from companies accounted for by the equity method
371.9
313.0
82.1
85.6
-
-0.3
487.6
456.3
-0.8
-0.6
Deferred taxes
-39.2
-2.1
Net income from the sale of long-term available-for-sale assets and consolidated subsidiaries
-52.4
-1.0
-4.9
0.7
3.4
1.7
Change in deferred income
Change in prepaid expenses
Change in accrued income
Change in accrued expenses
Other changes
Non-monetary items included in net income and other adjustments (not including income on
financial instruments measured at fair value through profit or loss) (II)
Net income on financial instruments measured at fair value through profit or loss
(2)
(III)
Interbank transactions
-25.8
21.8
-157.4
25.9
472.3
217.3
764.9
805.3
44.6
-1.0
-6,576.1
3,625.2
Transactions with customers
1,541.2
-505.5
Transactions related to other financial assets and liabilities
1,116.0
-3,346.0
Transactions related to other non-financial assets and liabilities
-113.4
-80.3
Net increase/decrease in cash related to operating assets and liabilities (IV)
-4,032.3
-306.6
NET CASH FLOW FROM OPERATING ACTIVITIES (A)=(I)+(II)+(III)+(IV)
-2,850.9
810.7
NET CASH FLOW FROM INVESTING ACTIVITIES
Cash flows from the acquisition and disposal of financial assets and long-term investments
111.2
-44.7
-44.6
-79.1
66.6
-123.8
-223.3
-226.4
NET CASH FLOW FROM INVESTING ACTIVITIES (B)
NET CASH FLOW FROM FINANCING ACTIVITIES
Cash flow from/to shareholders
Other net cash flows from financing activities
NET CASH FLOW FROM FINANCING ACTIVITIES (C)
IMPACT OF CHANGE IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS (D)
NET FLOW OF CASH AND CASH EQUIVALENTS (A) + (B) + (C) + (D)
-
-
-223.3
-226.4
-
-
-3,007.6
460.5
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the start of the year
Net balance of cash accounts and accounts with central banks (excluding related receivables)
2,075.6
1,988.0
Net balance of accounts, demand deposits and loans with banks
1,807.6
1,434.7
Net balance of cash accounts and accounts with central banks (excluding related receivables)
737.0
2,075.6
Net balance of accounts, demand deposits and loans with banks
138.6
1,807.6
-3,007.6
460.5
Cash and cash equivalents at the close of the year
NET FLOWS OF CASH AND CASH EQUIVALENTS
(2) The net income on financial instruments measured at fair value through profit or loss includes realised and unrealised income.
48
Notes to the consolidated financial statements
2
Notes to the consolidated financial statements
These consolidated financial statements were approved by the Board of Directors on February 19, 2014.
Note 1
Main valuation and presentation rules
for the consolidated financial statements
50
Note 21
PEL/CEL home savings accounts
107
Note 2
Scope of consolidation
74
Note 22
Employee benefits
108
Note 3
Risk management
76
Note 23
Subordinated debt
112
Note 4
Cash, due from central banks
87
Note 24
Insurance activities
112
Note 5
Financial liabilities at fair value through
profit or loss
Note 25
Assets pledged and received as collateral
115
88
Note 26
Transferred financial assets
116
Note 6
Hedging derivatives
91
Note 27
Assets and liabilities by period
remaining to expiration
117
Note 7
Available-for-sale financial assets
91
Note 28
Commitments
118
Note 8
Due from banks
93
Note 29
Foreign exchange transactions
120
Note 9
Customer loans
94
Note 30
Interest income and expense
120
Note 10
Non-current assets held for sale and
associated liabilities
95
Note 31
Fee income and expense
121
Note 11
Lease financing and similar agreements
96
Note 32
Note 12
Held-to-maturity financial assets
97
Net gains/losses on financial
instruments at fair value through profit
or loss
122
Note 13
Tax assets and liabilities
98
Note 14
Other assets and liabilities
99
Net gains/losses on available-for-sale
financial assets
122
Note 15
Fixed assets
100
Note 34
Income and expenses from other activities
123
Note 16
Goodwill
102
Note 35
Personnel expenses
124
Note 17
Impairments and provisions
103
Note 36
Share-based payment plans
124
Note 18
Due to banks
104
Note 37
Cost of risk
128
Note 19
Customer deposits
105
Note 38
Income tax
129
Note 20
Debt securities
106
Note 39
Transactions with related parties
130
Note 40
Statutory Auditors’ fees
132
Note 33
49
2
NOTE 1 Main valuation and presentation rules for the consolidated financial statements
Introduction
Pursuant to European Regulation No. 1606/2002
of July 19, 2002 on the application of international
accounting standards, Crédit du Nord Group (the
“Group”) has published its consolidated financial
statements for the period ended
December 31, 2013 in compliance with
IFRS (International Financial Reporting Standards) as
adopted by the European Union and applicable at said
date. These standards are available on the European
Commission website at the following address:
http:// ec.europa.eu/internal_market/accounting/ias/
index_fr.htm).
The Group is fully subject to these standards as it
regularly issues redeemable subordinated notes which
are admitted to trading on the primary market.
The IFRS framework includes IFRS (International
Financial Reporting Standards) 1 to 8 and IFRS 13,
IAS (International Accounting Standards) 1 to 41, as well
as the interpretations of these standards as adopted by
the European Union at December 31, 2013.
The Group also continued to use the provisions of
IAS 39, as adopted by the European Union, relating to
macro fair value hedge accounting (IAS 39: “carve out”).
The consolidated financial statements are presented in
euros.
IFRS and IFRIC interpretations applied by the Group from January 1, 2013.
Date published
by IASB
Standards, amendments and interpretations
Amendments to IAS 1 “Presentation of other comprehensive income”
June 16, 2011
June 5, 2012
Amendments to IAS 19 “Employee benefits”
June 16, 2011
June 5, 2012
IFRS 13 “Fair value measurement”
May 12, 2011
December 11, 2012
Amendment to IAS 12 “Deferred tax: recovery of underlying assets”
December 20, 2010
December 11, 2012
Amendments to IFRS 7 “Disclosures - Offsetting financial assets
and financial liabilities”
December 16, 2011
December 13, 2012
May 17, 2012
March 27, 2013
Annual improvements (2009-2011) to IFRS - May 2012
Amendments to IAS 1 “Presentation of other
comprehensive income”
The amendments to IAS 1 “Presentation of other
comprehensive income” modify certain provisions
related to the presentation of gains and losses booked
directly under shareholders’ equity, in order to distinguish
those items that will be subsequently reclassified in the
income statement from those that will not. Furthermore,
the amount before taxes of actuarial gains or losses on
post-employment defined benefit schemes recognised
during the period and which cannot be subsequently
reclassified in the income statement is transferred
directly to “Retained earnings” at the end of the year.
50
Date adopted
by the European Union
Amendments to IAS 19 “Employee benefits”
The amendments to IAS 19 “Employee benefits” make
it mandatory to record actuarial gains or losses on
post-employment defined benefit schemes in “Gains
and losses recognised directly in equity”, stating that
the cannot be subsequently reclassified in the income
statement. Furthermore, in the event the defined
benefit scheme is modified, these amendments call
for the immediate recognition of past service costs in
the income statement, whether or not the benefits
have been vested. These amendments are applied
retrospectively and their impact on previous financial
years has been booked to equity. The opening balance
sheet and comparative data for fiscal year 2012 have
been restated. The amounts of these restatements are
indicated in the footnotes to the consolidated financial
statements.
IFRS 13 “Fair value measurement”
IFRS 13 “Fair value measurement” defines fair value
as the price that would be received on the sale of an
asset or which would be paid to transfer a liability during
a normal market transaction on the valuation date.
IFRS 13 does not alter the fair value scope of application
but specifies the methods to be used to calculate the fair
value of financial and non-financial assets and liabilities
when required or permitted by another IFRS standard
and expands on the information to be disclosed in the
notes to the financial statements. The consequences
of this standard relate primarily to the accounting
of credit risk in the valuation of derivative financial
liabilities (Debt Value Adjustment - DVA). As a result of
the clarifications provided by this standard, the Group
adjusted the conditions for measuring counterparty risk
in the fair value of derivative financial assets (Credit Value
Adjustment - CVA).
As IFRS 13 is applied prospectively from
January 1, 2013, the impacts of this new standard on
the Group’s consolidated financial statements were
recorded in net income for the period (see Note 32).
Amendments to IAS 12 “Deferred tax:
recovery of underlying assets”
The calculation of deferred tax depends on how the
entity wishes to recover the asset, i.e. by using it or
by selling it. The amendment assumes that the asset
is recovered through a sale, unless the entity has a
clear intention of realising it in another manner. This
presumption relates solely to property, plant and
equipment that have been measured or remeasured
at fair value. These amendments had no impact on the
Group’s financial statements.
Amendments to IFRS 7 “Disclosures Offsetting financial assets and financial
liabilities”
This amendment requires the disclosure of information
on rights regarding the offsetting of financial instruments
and similar corresponding agreements. The new
information is required for all financial instruments
which are offset in the balance sheet in accordance
with IAS 32 (gross, offset and net amounts related to
the offset financial assets and liabilities to be presented
on the balance sheet). Additional information must also
be provided on financial instruments that are the subject
2
of a global binding offsetting agreement or similar
agreement, even if they are not offset in the balance
sheet in accordance with IAS 32.
Annual improvements (2009-2011) to IFRS May 2012
As part of the annual process of improving International
Financial Reporting Standards, the IASB published
six minor amendments to existing standards. These
amendments had no material impact on the Group’s
financial statements.
The principal valuation and presentation rules applied
during the preparation of the consolidated financial
statements are indicated below.
These accounting principles and methods were applied
consistently in fiscal years 2012 and 2013.
Use of estimates
In drawing up the consolidated financial statements,
the application of the accounting principles and
methods described below led Management to develop
assumptions and make estimates which may have
an impact on the amounts booked to the income
statement, on the valuation of balance sheet assets and
liabilities, and on the disclosures presented in the notes
to the consolidated financial statements.
In order to make these estimates and develop these
assumptions, Management uses data available at the
date on which the consolidated accounts are prepared
and may be called upon to use its own judgement. By
nature, the valuations based on these estimates contain
risks and uncertainties as to whether they will materialise
in the future. Consequently, the final future results of the
transactions in question may differ from these estimates
and therefore have a significant impact on the financial
statements.
The use of estimates primarily concerns the following
valuations:
• the fair value as reported on the balance sheet of
financial instruments that are not listed on an active
market is recognised under the headings “Financial
assets or liabilities at fair value through profit or
loss”, “Hedging instruments” and “Available-for-sale
financial assets” (see paragraph 2 and Notes 5 to 7),
as well as the fair value of instruments for which such
information must be presented in the notes;
51
2
• amounts recognised as impairments of financial
assets (Loans and receivables, Available for-sale
financial assets, and Held-to-maturity financial
assets), finance lease transactions and related
transactions, tangible and intangible assets, and
goodwill (see paragraph 2 and Notes 3, 16 and 17);
• provisions recognised on the liabilities side of the
balance sheet, including provisions for employee
benefits, underwriting reserves of insurance
companies and the share of unrealised gains and
losses recorded on the balance sheet (see paragraph
2 and Notes 17, 21, 22 and 24);
• the amount of deferred tax assets recognised on the
balance sheet (see paragraph 2 and Note 13);
• the initial value of goodwill recognised for business
combinations (see paragraph 1 and Notes 2 and 16);
• the fair value used to revalue the equity interest retained
by the Group in an entity when it gives up control of a
consolidated subsidiary (see paragraph 1).
1. Principles of consolidation
The consolidated financial statements include the
accounts of Crédit du Nord and of the main companies
in Crédit du Nord Group.
Methods of consolidation
The consolidated financial statements are established
using the individual financial statements of all significant
subsidiaries controlled by the Group.
Companies that do not qualify as significant under the
Group’s accounting standards have been excluded
from the consolidation scope. In order to qualify as
not significant, Group companies must meet the three
following conditions for two consecutive fiscal years:
• total assets of less than EUR 10 million;
• net income of less than EUR 1 million;
• no equity interest in a consolidated company.
Where applicable, the financial statements of
consolidated companies are restated according to
Group accounting principles.
52
All significant balances, profit and transactions between
Group companies are eliminated.
The voting rights taken into consideration in order
to determine the Group’s degree of control over an
entity and the corresponding consolidation method
include potential voting rights where these can be freely
exercised or converted at the time the assessment is
made. Potential voting rights are instruments such as
call options on ordinary shares outstanding in the market
or rights to convert bonds into new ordinary shares.
The following consolidation methods are used:
Full consolidation
This method applies to wholly-owned companies.
Exclusive control of a subsidiary is understood as the
power to govern the company’s financial and operating
policies so as to obtain benefits from its activities.
Control is presumed to exist when there is:
• direct or indirect ownership of the majority of the
voting rights in the subsidiary;
• power to appoint or remove the majority of the
members of the subsidiary’s administrative,
management or supervisory bodies, or to command
the majority of the voting rights at meetings of these
bodies;
• power to exercise significant influence over a
subsidiary by virtue of a contractual arrangement or
under a clause in the company’s by-laws.
Proportionate consolidation
Companies that are jointly owned and controlled by
Crédit du Nord Group are consolidated proportionately.
Joint control is the sharing of control over a subsidiary
that is jointly operated by a limited number of partners or
shareholders such that financial and operating decisions
require the consent of the parties sharing control.
A contractual arrangement must specify that the
unanimous consent of all partners or shareholders is
required for exercising control over the economic activity
of the subsidiary and for all strategic decisions.
Equity method
Companies in which the Group holds a significant
influence are consolidated using the equity method.
Significant influence is defined as the power to participate
in the financial and operating policy decisions of a
subsidiary without exercising control over those policies.
This can result from representation on governing or
supervisory bodies, participation in strategic decisions,
the existence of major inter-company transactions,
interchange of managerial personnel, or the provision of
essential technical information. The Group is presumed
to exercise significant influence on a subsidiary’s financial
and operational policies if it directly or indirectly holds
at least 20% of the voting rights.
Specific treatment of special purpose entities
Separate legal structures created specifically to manage
a transaction or set of similar transactions (special
purpose entities or SPEs) are consolidated if they are
substantially controlled by the Group, even in the
absence of capital ties.
The following main criteria are used on a non-cumulative
basis to assess whether a special purpose entity is
controlled by another entity:
• the SPE’s activities are being conducted solely on
behalf of the Group so that the Group obtains benefits
from the SPE’s operation;
• the Group has decision-making and management
powers over the entity’s ordinary operations or over
the assets comprising the entity; such powers may
have been delegated through the implementation of
an autopilot mechanism;
• the Group is entitled to receive the majority of the
benefits of the SPE;
• the Group retains the majority of the risks related to
the SPE.
When consolidating SPEs controlled in substance by
the Group, the portion of the SPEs that is not held by
the Group is recognised as a debt instrument on the
balance sheet.
2
A c c o u n t i n g t re a t m e n t o f a c q u i s i t i o n s
and goodwill
Crédit du Nord Group uses the acquisition method
to account for its business combinations. Acquisition
cost is measured based on the total of the acquisitiondate fair value of the identifiable assets acquired, the
liabilities assumed and the equity instruments issued
in the exchange for the acquired entity. Costs directly
associated with business combinations are recognised
in profit or loss for the period.
Earn-out is subsumed into the acquisition cost at fair
value at the acquisition date even where said earn-out
is of a contingent nature. This item is accounted for as
an asset or a liability based on the manner in which
such earn-out is settled. If earn-out is qualified as a debt
instrument, subsequent adjustments to such earn-out
are recognised in profit or loss for financial liabilities
covered by IAS 39 and, for liabilities not addressed by
IAS 39, in accordance with the standards that apply;
if earn-out is qualified as an equity instrument, these
adjustments are not recognised.
In line with IFRS 3, “Business Combinations”, identifiable
assets, liabilities, off-balance sheet items and contingent
liabilities of the acquired entity are measured individually
at their fair value, at the acquisition date, regardless of
their purpose. The analyses and appraisals necessary
for the initial measurement of such items, and any
corrections to the value based on new information, must
be carried out within 12 months of the acquisition date.
Any positive difference between the acquisition cost
of the acquired entity and the acquired portion of
remeasured net assets is recognised on the asset side of
the balance sheet as “Goodwill”; any negative difference
is directly recognised in profit or loss. Non-controlling
interests are then measured at their proportion of the
fair value of identifiable assets and liabilities in the
acquired entity. However, the Group may also elect, for
each business combination, to measure non-controlling
interests at fair value, with a fraction of such goodwill
then being allocated.
53
2
Goodwill is carried on the balance sheet at historical
cost.
At the date control of the acquired entity is obtained, the
Group remeasures its pre-combination equity interest in
the acquired entity at its acquisition-date fair value and
recognises the resulting gain or loss, if any, in profit or
loss. For business combinations achieved in stages,
goodwill is determined by reference to fair value at the
date control of the acquire entity is obtained.
If the Group increases its equity interest in an entity
that was exclusively controlled before the combination,
the difference between the acquisition cost of the
additional equity interest and the acquired portion of
the acquired entity’s net assets at that date is recorded
under “Consolidated reserves, Group share”. Likewise,
if the Group reduces its equity interest in an acquired
entity that remains exclusively controlled, the difference
between the sale price and the book value of the sold
portion of the assets is recognised under “Consolidated
reserves, Group share”. The related costs are booked
directly to shareholders’ equity. When the control of
a consolidated subsidiary is lost, any equity interest
retained by the Group is remeasured at fair value
simultaneously with the recognition of the gain or loss
on disposal under “Net gains/losses on other assets” in
the consolidated income statement.
Goodwill is regularly reviewed by the Group and tested
for impairment annually and whenever there is an
indication of impairment. At the acquisition date, each
item of goodwill is allocated to one or more CashGenerating Units (CGUs) expected to benefit from the
synergies of combination. Impairment of goodwill is
calculated by comparing the carrying amount of the unit
with the recoverable amount of the unit to which the
goodwill was allocated. At present, the Group has only
defined one CGU: retail banking.
When the recoverable amount of the CGU is less than
its carrying amount, an irreversible impairment loss is
recognised in the consolidated income statement for the
period under “Impairment of goodwill”.
Goodwill on companies accounted for using the
equity method is recognised under “Investments in
affiliates accounted for using the equity method” in
the consolidated balance sheet and impairments of
these investments are recorded under “Net income
54
from companies accounted for by the equity method”
in the consolidated income statement. Capital gains or
losses generated during the sale of equity affiliates are
recognised under “Net gains/losses on other assets”.
Segment reporting
Given the non-materiality of the insurance and
intermediation businesses compared to banking
operations, Crédit du Nord Group reports exclusively on
the latter sector of activity. It is on this basis that the
Group’s activities are monitored by its key operational
decision-makers. Similarly, in considering that Crédit du
Nord Group represents a major national banking group,
it focuses on a single geographic area.
Fiscal year-end
The consolidated financial statements were prepared
on the basis of the separate financial statements for
the period ended December 31, 2013 for all of the
consolidated companies.
2. Accounting principles and valuation
methods
At the year-end date, monetary assets and liabilities
denominated in foreign currencies are converted into
euros (Crédit du Nord Group’s operating currency) at
the prevailing spot rate. Realised or unrealised foreign
exchange losses or gains are recognised in profit or loss.
Forward contracts are valued at fair value using the
forward exchange rate for the remaining maturity. Spot
contracts are valued at the official spot rate of the
balance sheet date. Resulting valuation differences are
recorded in the income statement.
Measuring the fair value of financial
instruments
Fair value is the amount for which an asset can be
exchanged, or a liability settled, between knowledgeable,
willing parties in an arm’s length transaction.
The fair value used to measure a financial instrument
is, firstly, the listed price where the financial instrument
is listed on an active market. In the absence
of an active market, fair value is determined using
valuation techniques.
A financial instrument is regarded as quoted in an active
market if quoted prices are readily and regularly available
from an exchange, dealer, broker, pricing service or
regulatory agency, and those prices represent real
actual and regularly occurring transactions on an arm’s
length basis.
A market is considered to be inactive on the basis
of indicators such as a significant decline in trading
volumes and the level of activity on the market, high
disparity between prices available over time and
between the different market operators mentioned
above, or how much time has transpired since the most
recent transactions took place on the market on an
arm’s length basis.
Where the financial instrument is traded on different
markets and the Group has immediate access to
these markets, the financial instrument’s fair value is
represented by the most beneficial market price. Where
there is no listing for a given financial instrument, but
the components of the instrument are listed, fair value
is equal to the sum of the listed prices of the various
components of the financial instrument and including the
buy or sell price of the net position, given the direction
of the transaction.
If the market for a financial instrument is not active
or is no longer thought to be active, fair value is
established by using valuation techniques (internal
pricing models). Depending on the financial instrument,
these include the use of data derived from recent
transactions, fair values of substantially similar
instruments, discounted cash flow models, option
valuation models and valuation parameter models.
Where broadly used valuation techniques exist on the
market for these instruments, and where it has been
demonstrated that these techniques produce reliable
estimates of prices obtained in transactions on the
real market, the Group may use these techniques.
The use of internal assumptions concerning future
cash flows and discount rates correctly adjusted
2
for risks that any market participant would take into
account is authorised. These adjustments are applied
reasonably and appropriately after examination of the
available information. Internal assumptions notably
take into account the counterparty risk, the risk of nonperformance, the liquidity risk and the model risk, where
appropriate.
Transactions related to a compulsory sale are not
generally taken into account when assessing the market
price. Where observable market data are used as the
basis for measurement, fair value is deemed to be the
market price, and the difference between the transaction
price and the value arrived at using the in-house pricing
model, representative of sales margin, is directly
recognised in profit or loss. However, where the valuation
criteria are not observable or the pricing models are not
recognised by the market, the financial instrument’s fair
value at the time of the transaction is deemed to be
the transaction price and the sales margin is generally
recognised on the income statement over the expected
life of the instrument, except where held to maturity or
where sold prior to maturity for some instruments owing
to their complexity. For issued instruments subject to a
high number of redemptions on a secondary market and
instruments for which there are quoted market prices,
the sales margin is recognised on the income statement
in accordance with the method used to determine the
price of the instrument. Where an instrument’s valuation
criteria become observable, the part of the sales margin
not yet booked is recognised on the income statement.
Financial assets and liabilities
Regardless of their category (held-to-maturity, availablefor-sale, fair value through profit or loss), sales and
purchases of non-derivative securities are recognised
in the balance sheet at their settlement-delivery date,
while derivative financial instruments are recorded at the
trading date. Fair value variations between the trading
date and the settlement-delivery date are recorded
under profit or loss or under shareholders’ equity
depending on the accounting category of the financial
assets in question. Loans and receivables are recorded
in the balance sheet at the date of disbursement or the
date on which the services billed expire.
55
2
If the fair value is based on observable market
data, the difference between this fair value and the
transaction price, representative of sales margin, is
directly recognised in profit or loss. However, where
the valuation criteria used are not observable or the
pricing models are not recognised by the market, the
financial instrument’s initial fair value is deemed to be
the transaction price and the sales margin is generally
recognised on the income statement over the expected
life of the instrument, except where held to maturity or
where sold prior to maturity for some instruments owing
to their complexity. For issued instruments subject to a
high number of redemptions on a secondary market and
instruments for which there are quoted market prices,
the sales margin is recognised on the income statement
in accordance with the method used to determine the
price of the instrument. Where an instrument’s valuation
criteria become observable, the part of the sales margin
not yet booked is recognised on the income statement.
On initial recognition, financial assets and liabilities are
measured at fair value including acquisition costs (with
the exception of financial instruments recognised at fair
value through profit or loss) and are classified in one of
the following financial categories.
Loans and receivables
Loans and receivables include non-derivative fixed- or
determinable-income financial assets which are not
listed on an active market and which are not held for
trading purposes or held for sale from the time of their
acquisition or issuance. Loans and receivables are
presented on the balance sheet under the line item “Due
from banks” or “Customer loans”, depending on the
counterparty. They are valued after their initial recognition
at their amortised cost, based on the effective interest
rate, and may be subject to impairment if appropriate.
Financial assets and liabilities at fair value
through profit or loss
This category covers financial assets and liabilities
held for trading purposes. They are measured at fair
value at the balance sheet date and recorded on the
balance sheet under “Financial assets and liabilities at
fair value through profit or loss”. Changes in fair value
are recognised on the income statement for the period
under “Net gains or losses on financial instruments at fair
value through profit or loss”.
56
In addition to financial assets and liabilities held for
trading, this category includes non-derivative financial
assets and liabilities that the Group has designated at
fair value through profit or loss, in accordance with the
option provided by IAS 39. The Group uses this option
in the following cases:
• on the one hand to eliminate or significantly reduce
discrepancies in the accounting treatment of certain
financial assets and liabilities.
The Group thus recognises at fair value through profit
or loss certain structured bond issues. These bonds
are exclusively for commercial purposes, the risks of
which are covered by market reversals using financial
instruments in transaction portfolios. The fair value
option guarantees consistency between the accounting
treatment of these issues and that of the derivative
financial instruments used to hedge the market
risks caused by the latter and which must be valued
at fair value.
The Group also recognises at fair value through profit
or loss the financial assets held to guarantee unit-linked
policies of its life insurance subsidiaries to ensure their
financial treatment matches that of the corresponding
insurance liabilities. Under IFRS 4, insurance liabilities
have to be recognised according to local accounting
principles. Revaluations of underwriting reserves on unitlinked policies, which are directly linked to revaluations
of the financial assets underlying their policies, are
accordingly recognised in profit or loss. The fair value
option thus allows the Group to record changes in the
fair value of the financial assets through profit or loss so
that they match fluctuations in the value of the insurance
liabilities associated with these unit linked policies.
• on the other hand to measure certain compound
instruments at fair value and thereby avoid the need
to separate out embedded derivatives that would
otherwise have to be booked separately. These
notably concern Group-owned bonds convertible
into shares.
This category includes non-derivative fixed- or
determinable-income assets with a fixed maturity, which
are listed on an active market and which the Group has
the intention and ability to hold to maturity. They are
valued after their acquisition at their amortised cost and
may be subject to impairment if appropriate. Amortised
cost includes account premiums, discounts and
transaction costs. These financial assets are recorded
on the balance sheet under “Held-to-maturity financial
assets”.
This category covers non-derivative financial assets held
for an indefinite period and which the Group may sell at
any time. By default, these are financial assets which are
not classified in one of the three above categories. They
are booked in the balance sheet under “Available-forsale financial assets” and are measured at fair value at
the balance sheet date. Accrued or earned income on
fixed-income securities is recorded in profit or loss under
“Interest and similar income - Trading in fixed-income
financial instruments” based on the effective interest
rate, while changes in fair value excluding income are
recorded on a separate line under shareholders’ equity
entitled “Gains and losses booked directly to equity”.
Changes in fair value are only recognised in profit and
loss, under “Net gains or losses on available-for-sale
financial assets”, when the asset is sold or sustainably
impaired. Write-downs affecting equity securities
classified as available-for-sale assets may not be
reversed. Income from these securities is booked to
profit or loss under “Dividend income”.
Temporary acquisition and sale of securities
Securities that are borrowed or lent under a repurchased
agreement remain booked under their original heading
under assets in the Group’s balance sheet. For borrowed
securities, the obligation to recover disbursed amounts
is recorded under “Liabilities” in the balance sheet, with
the exception of transactions conducted as part of
trading activities which are recorded under “Financial
liabilities at fair value through profit and loss”.
2
Securities that have been purchased as part of a resale
agreement are not recorded in the Group’s balance
sheet. Nevertheless, in the event that borrowed
securities are subsequently sold, an obligation to
return these securities to their lender is recorded under
“Financial liabilities at fair value through profit and loss”
in the Group’s balance sheet. For securities purchased
under resale agreements, the amounts delivered by the
Group are recorded under “Loans and receivables” on
the assets side of the balance sheet, with the exception
of transactions conducted as part of trading activities
which are recorded under “Financial assets at fair value
through profit and loss”.
Cash-backed securities lending and borrowing is treated
in the same way as repurchase agreements and is
recorded and recognised as such in the balance sheet.
Reclassification of financial assets
After initial recognition on the Group’s balance sheet,
financial assets may not be reclassified as “Financial
assets at fair value through profit or loss”.
A non-derivative financial asset initially reported on
the balance sheet under “Financial assets at fair value
through profit or loss” may be reclassified to a different
category under the following circumstances:
• if a fixed- or determinable-income financial asset held
for trading purposes can no longer be traded on an
active market following its acquisition, and the Group
has the intention and the ability to hold the asset for
the foreseeable future or to maturity, then this financial
asset may be reclassified in “Loans and receivables”,
subject to meeting the applicable eligibility criteria;
• if rare circumstances lead to a change in holding
strategy for non-derivative financial assets or equity
investments initially held for trading, these assets may
be reclassified either as “Available-for-sale financial
assets” or as “Held-to-maturity financial assets”,
subject to meeting the applicable eligibility criteria.
Under no circumstances may derivative financial
instruments or financial assets using the fair value option
be reclassified in a category other than “Financial assets
and liabilities at fair value through profit or loss”.
57
2
Financial assets initially recorded as “Available-forsale financial assets” may be transferred to “Heldto-maturity financial assets”, subject to meeting the
appropriate eligibility criteria. Furthermore, if a fixed- or
determinable-income financial asset initially recorded
under “Available-for-sale financial assets” is no longer
available for sale following its acquisition, and the Group
has the intention and the ability to hold the asset for the
foreseeable future or to maturity, then this financial asset
may be reclassified in “Loans and receivables”, subject
to meeting the applicable eligibility criteria.
Reclassified financial assets are transferred to their new
category at their fair value at the date of reclassification,
after which they are valued in accordance with the
provisions applicable to the new category. The amortised
cost of financial assets reclassified from “Financial assets
at fair value through profit or loss” or “Available-for-sale
financial assets” to “Loans and receivables”, as well as
the amortised cost of financial assets reclassified from
“Financial assets at fair value through profit or loss” to
“Available-for-sale financial asset”, are determined on the
basis of estimated future cash flows made on the date
of reclassification. The estimate of expected future cash
flows must be revised at each balance sheet date; in the
event of an increase in estimated future inflows following
a rise in their recoverability, the effective interest rate is
adjusted on a forward-looking basis; however, where
there is objective evidence of impairment resulting from
an event which took place after the reclassification of
the financial assets in question, and this event has a
negative impact on initially expected future cash flows, a
write-down on the asset in question is booked to “Cost
of risk” in the income statement.
Liabilities
Group borrowings that are not classified as “Financial
liabilities measured at fair value through profit or loss”
are initially booked at cost, corresponding to the fair
value of the sums borrowed net of transaction costs.
This debt is valued at amortised cost at the end of the
financial period, using the effective interest method
and is recorded in the balance sheet under “Due to
banks”, “Amounts due to customer deposits” or “Debt
securities”.
58
Amounts due to banks, customer deposits
Amounts due to banks and customer deposits are
classified according to their initial duration and type
into: demand (deposits, current accounts) and term
accounts in the case of banks; and special savings
accounts and other deposits in the case of customers.
This debt includes pension transactions, in the form
of securitised debt payables, carried out with these
economic operators.
Accrued interest on this debt, which is calculated at the
effective interest rate, is recorded as related payables
through profit or loss.
Debt securities
Debt securities are classified by type of security:
short-term notes, money market and negotiable debt
securities, fixed-income and similar securities, excluding
subordinated securities classified under “Subordinated
debt”.
Interest accrued on these securities, calculated at the
effective interest rate, is booked as related payables
through profit or loss. Bond issue and redemption
premiums are amortised using the effective interest rate
method over the duration of the bonds in question. The
resulting charge is recorded as interest expenses in
profit or loss.
Subordinated debt
This item includes all dated or undated subordinated
borrowings, which, in the event of the liquidation of the
borrower, may only be redeemed after all other creditors
have been paid. Interest accrued and payable in respect
of subordinated debt, if any, is shown with the underlying
abilities as related payables.
Derecognition of financial assets and liabilities
The Group derecognises all or part of a financial asset
(or group of similar assets) when the contractual rights
to the cash flows on the asset expire or when the Group
has transferred the contractual rights to receive the cash
flows and substantially all of the risks and rewards of
ownership of the asset.
Where the Group has transferred the cash flows of a
financial asset but has neither transferred nor retained
substantially all the risks and rewards of its ownership
and has not retained control of the financial asset, the
Group derecognises it and recognises separately an
asset or liability representing any rights and obligations
created or retained as a result of the asset’s transfer. If
the Group has retained control of the asset, it continues
to recognise it in the balance sheet to the extent of its
continuing involvement in that asset.
When a financial asset is derecognised in its entirety,
a gain or loss on disposal is recorded in the income
statement for the difference between the carrying value
of the asset and the payment received for it, adjusted
where necessary for any unrealised profit or loss
previously recognised directly in equity.
The Group only derecognises all or part of a financial
liability when it is extinguished, i.e. when the obligation
specified in the contract is discharged, cancelled or
expires.
Derivatives and hedging
All derivative financial instruments are recognised at
their fair value under financial assets or liabilities on the
balance sheet. With the exception of financial derivatives
classified as cash flow hedges for accounting purposes
(see below), changes in the fair value of derivative
financial instruments are recorded in the income
statement for the period.
Derivative instruments are divided into two categories:
Trading financial derivatives
Financial derivative instruments are considered to be
trading financial derivatives by default, unless they are
designated as hedging instruments for accounting
purposes. They are booked in the balance sheet under
“Financial assets or liabilities at fair value through profit
or loss”. Changes in fair value are booked on the income
statement under the heading “Net gains or losses on
financial instruments at fair value through profit or loss.”
2
Changes in fair value of derivative contracts entered into
with counterparties which end up defaulting are booked
under “Net gains or losses on financial instruments at fair
value through profit or loss” until the date the instruments
are cancelled and recognised on the balance sheet, for
the fair value at this same date of the receivable or debt
vis-à-vis the counterparties in question. Any subsequent
impairment on these receivables is recorded under “Cost
of risk” on the income statement.
Derivative hedging instruments
As soon as a hedge is established, Crédit du Nord
Group produces documentation indicating: the asset,
liability or future transaction hedged, the risk to be
hedged, the type of financial derivative used and the
evaluation method applied to measure the effectiveness
of the hedge. The hedge must be highly effective,
such that changes in the fair value or cash flows are
offset. This effectiveness is measured when the hedge
is first set up and throughout its life. Derivative hedging
instruments are recognised in the balance sheet under
“Hedging derivatives”.
Depending on the type of risk hedged, the Group defines
the derivative financial instrument as a fair value hedge,
a macro fair value hedge, a cash flow hedge or a net
investment hedge.
Fair value hedges
In fair value hedges, the gains or losses on the hedged
item attributable to the hedged risk adjust the carrying
amount of the hedged item and are recognised in
profit or loss under “Net gains or losses on financial
instruments at fair value through profit or loss”. Insofar
as the hedging relationship is highly effective, variations
in the fair value of the hedged item are symmetrical
to variations in the fair value of the derivative hedging
instrument. For interest rate derivatives, accrued interest
income or expenses on the hedging derivative are
booked to profit or loss under the same line item, at the
same time as the interest income or expense related to
the hedged item.
59
2
The Group discontinues the hedge, on a forwardlooking basis, if the effectiveness criteria for the hedging
instrument are no longer met, or the financial derivative
is sold or terminated. As a result, the balance sheet
value of the hedged item is no longer adjusted to take
into account changes in value, and cumulative gains
or losses on the previously hedged item are amortised
over the remaining life of the item. Hedging is also
discontinued if the hedged item is sold before maturity
or terminated early.
Macro hedging at fair value
In this type of hedge, interest rate derivatives are used
to hedge the Group’s overall structural interest rate risk.
Crédit du Nord Group has elected to use the carve-out
provisions of IAS 39 as adopted by the European Union,
which facilitates:
• the use of fair value hedge accounting for macro
hedges used in Asset & Liability Management,
including customer demand deposits in the fixed-rate
positions being hedged;
• the application of the effectiveness test required by
IAS 39, adopted in the European Union.
The accounting treatment of financial derivatives used for
macro fair value hedges is similar to that of derivatives
used in fair value hedges. Changes in the fair value of the
macro-hedged portfolio are booked in the balance sheet
under “Revaluation differences on portfolios hedged
against interest rate risk” through profit or loss.
Hedges of a net investment
Crédit du Nord Group has no financial instruments in its
balance sheet classified as hedges of a net investment.
60
Cash-flow hedge
For cash flow hedges (which include hedges of highly
probable future transactions), the effective portion of fair
value changes in the value of the derivative is recorded
on a specific equity line, while the ineffective portion is
recognised under “Net gains and losses on financial
instruments at fair value through profit or loss” in the
income statement.
Amounts booked to equity related to cash flow hedges
are recorded under “Interest income and expense” in the
income statement at the same rate as the hedged cash
flows. The corresponding accrued interest income or
expenses on the hedging derivative are booked to profit
or loss under the same line item, at the same time as the
interest income or expense related to the hedged item.
The Group discontinues the hedge, on a forwardlooking basis, if the effectiveness criteria for the hedging
instrument are no longer met, or the financial derivative is
sold or terminated. Amounts previously booked to equity
are reclassified under “Interest income and expense” in
the income statement during the periods in which the
interest margin is impacted by the variability of cash
flows arising from the hedged item. If the hedged item
is sold or repaid prior to the projected maturity or if the
hedged future transaction is no longer highly probable,
the unrealised gains and losses booked to equity are
immediately reclassified in the income statement.
Embedded derivatives
An embedded derivative is a component of a hybrid
instrument. While hybrid instruments are not measured
at fair value through profit or loss, the Group does
separate embedded derivatives from their host
instrument where, on initiation of the transaction, the
economic characteristics and risks associated with
the embedded derivatives are not closely linked to the
characteristics and risks of the host instrument and
where they meet the definition of a derivative financial
instrument. Once separated, the derivative financial
instrument is booked at fair value on the balance sheet
under “Financial assets and liabilities at fair value through
profit or loss” under the terms described above. The
host contract is classified and measured based on its
category.
Impairment of financial assets
Financial assets carried at amortised cost
The criteria for determining whether the credit risk on
an individual loan is identified are similar to those used
under French regulations to determine whether a loan is
doubtful.
At each balance-sheet date, the Group determines
whether there is objective evidence that any asset or
group of individually assessed financial assets has been
impaired as a result of one or more events occurring
since they were initially recognised (“a loss generating
event”) that has (have) an impact on the estimated future
cash flows of the asset or group of financial assets
which can be reliably estimated.
The Group first determines if there is objective evidence
of impairment in any individually significant financial
assets, and similarly, whether individually or collectively,
in financial assets which are not individually significant.
Notwithstanding the existence of a guarantee, the
criteria used to determine probable credit risk on
individual outstanding loans include the occurrence of
one or more payments at least over 90 days due (six
months for real estate and property loans and nine
months for municipal loans), or, even in the absence of
missed payments, the existence of probable credit risk
or the presence of procedures to contest the loan.
In the event there is no objective evidence of impairment
for a financial asset, whether considered individually
significant or not, the Group includes this financial asset
in a group of financial assets presenting similar credit
risk and collectively subjects them to an impairment test.
If a loan is considered to carry an identified credit risk
which makes it probable that the Group will be unable
to recover all or part of the amount owed by the
counterparty under the initial terms and conditions of the
loan agreement, notwithstanding any loan guarantees,
an impairment loss is booked for the loan in question,
and deducted directly from the value of the asset.
The amount of the impairment loss is equal to the
difference between the carrying value of the asset and
the present value, discounted at the original effective
interest rate, of the total estimated recoverable sum,
taking into account the value of any guarantees. The
impaired receivable subsequently generates interest
2
income, calculated by applying the effective interest rate
to the net carrying value of the receivable. Impairment
allowances and reversals, losses on non-recoverable
loans and amounts recovered on impaired loans are
booked under “Cost of risk”.
In a homogeneous portfolio, as soon as a credit
risk is incurred on a group of receivables, collective
impairment loss is recognised without waiting for the
risk to individually affect one or more receivables. This
impairment loss is directly deducted from the value of
the loans/receivables in the balance sheet. The collective
impairment losses cover, on the one hand, the credit
risk incurred on a portfolio of counterparties which are
sensitive or on the watch-list, and, on the other hand,
sector risk exposure.
Performing loans under watch (“3S”)
Within the “Performing loan” risk category, the Group
has created a subcategory called “Performing loans
under watch” to cover loans/receivables requiring closer
supervision. This category includes loans/receivables
where certain evidence of deterioration has appeared
since they were granted.
The Group conducts historical analyses to determine
the rate of classification of these loans/receivables as
doubtful and the impairment ratio, and updates these
analyses on a regular basis. It then applies these figures
to similar groups of receivables in order to determine the
amount of impairment.
Impairment due to sector credit risk
The Group’s Central Risk Division regularly lists the
business sectors that it considers represent a high
probability of default in the short-term due to recent
events that may have caused lasting damage to the
sector. A rate of classification as doubtful loans is
then applied to the total outstanding in these sectors
in order to determine the volume of doubtful loans.
Impairments are then booked for the overall amount of
these outstanding loans, using impairment ratios which
are determined according to the historical average
impairment rates of doubtful customers, adjusted to
take into account an analysis of each sector by an
independent expert on the basis of the economic
environment.
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2
When there is evidence of lasting impairment to an
available-for-sale financial asset, then an impairment
loss is booked to profit or loss. When a non-permanent
unrealised capital loss has been directly booked to
shareholders’ equity and subsequently objective
evidence of lasting impairment emerges, the Group
recognises the total accumulated unrealised loss
previously booked to shareholders’ equity in profit or
loss:
• under “Cost of risk” for debt instruments (fixedincome securities);
The impairment criteria for debt instruments are similar
to those applied for the impairment of financial assets
measured at amortised cost.
• under “Net gains or losses on available-for-sale
financial assets” for equity instruments (equity
securities).
There are two categories of leases: finance leases, which
transfer substantially all the risks and rewards incidental
to ownership of an asset. Otherwise they are qualified as
operating leases.
The sum of the cumulated loss is calculated as the
difference between the acquisition cost of the security
(net of any repayments of principal and amortisation)
and its current fair value, minus, if necessary, any loss
of value on the security previously booked through profit
or loss.
Finance lease receivables are recognised in the balance
sheet under “Finance lease receivables” and represent
the Group’s net investment in the lease, calculated as
the present value of the minimum lease payments to be
received from the lessee, plus any unguaranteed residual
value, discounted at the interest rate implicit in the lease.
For listed equity instruments, a significant or prolonged
decline in share price to a value below the acquisition
cost constitutes objective evidence of impairment. The
Group believes this is particularly the case for listed
equities which present, at the balance sheet date,
unrealised losses exceeding 50% of their acquisition
cost, as well as for listed equities posting unrealised
losses for a continuous period of 24 months or more
prior to the balance sheet date. Other factors, such
as the issuer’s financial position or its development
prospects, may lead the Group to conclude that it may
not recover its investment even if the above-mentioned
criteria were not met. In such cases, an impairment loss
is recorded on the income statement for the difference
between the share’s listed price at the balance sheet
date and its acquisition cost.
Interest included in the lease payments is booked under
“Interest and similar income” in the income statement
such that the lease generates a constant periodic rate
of return on the lessor’s net investment. In the event
of a decline in unguaranteed residual value, used in
calculating the lessor’s gross investment in the lease
financing contract, the discounted value of this decline is
booked to “Expenses from other activities” in the income
statement, offset by a reduction in the lease receivable
on the asset side of the balance sheet.
For unlisted equity instruments, the impairment criteria
used are the same as those described above.
Impairment losses recognised through profit or loss on
equity instruments considered as available-for-sale are
62
not reversed until the financial instrument is sold. Once
an equity instrument has been impaired, any further
loss of value is booked as an additional impairment
loss. However, losses of value on debt instruments
are reversed through profit or loss if the instruments
subsequently appreciate in value.
Fixed assets held in relation to operating lease
transactions are shown on the balance sheet under
“Tangible and intangible assets.” Buildings in particular
are classified in “Investment property”. Income from rent
is recognised in the income statement on a straight-line
basis over the life of the lease under “Income from other
activities”. Furthermore, the purpose of the accounting
treatment of income invoiced on maintenance services
related to operating lease activities is to reflect a
constant margin between this income and the expenses
incurred over the life of the lease.
Operating and investment fixed assets are booked on
the balance sheet at cost. Borrowing expenses incurred
to fund a lengthy construction period for the fixed assets
are included in the acquisition cost, along with other
directly attributable expenses. Investment subsidies
received are deducted from the cost of the relevant
assets.
Software developed in-house is capitalised at the direct
development cost, which includes external hardware
and service costs and personnel expenses directly
attributable to the production and preparation of the
software application in order to use it.
As soon as they are fit for use, fixed assets are
depreciated over their useful life. Any residual value of
the asset is deducted from its depreciable amount. In the
event of a subsequent reduction or increase in the initially
recorded residual value, adjustments are made to the
depreciable amount with a view to making prospective
changes to the asset’s depreciation schedule.
Depreciation is recorded in the income statement under
“Amortisation and depreciation expense on intangible
and tangible fixed assets”.
Where one or several components of a fixed asset are
used for different purposes or to generate economic
benefits over a different time period from the asset
considered as a whole, these components are
depreciated over their own useful life.
The Group has applied this approach to its operating
and investment property, breaking down its assets into at
least the following components, with their corresponding
depreciation periods:
Infrastructures
Major structures
50 years
Doors and windows, roofing
20 years
Frontages
30 years
Elevators
Electrical installations
Electricity generators
Technical
installations
Air conditioning, smoke
extraction
Technical cables
10 to 30
years
2
Depreciation periods for other categories of fixed assets
depend on their useful life, usually estimated in the
following ranges:
Safety and advertising equipment
5 years
Transport
4 years
Furniture
10 years
IT and office equipment
3 to 5 years
Software, developed or acquired
3 to 5 years
Franchises, patents and licenses
5 to 20 years
Fixed assets are subject to impairment tests whenever
there is an indication that their value may have
diminished. Evidence of a loss in value is assessed at
each balance sheet date. Impairment tests are carried
out on assets grouped by cash-generating units. Where
a loss is established, an impairment loss is booked to
the income statement under “Provisions, impairment
and depreciation of tangible and intangible assets”,
which may be reversed if there is an improvement in
the conditions that initially led to its recognition. The
impairment loss reduces the depreciable amount of
the asset and thus also affects its future depreciation
schedule.
Capital gains and losses on the sale of operating fixed
assets are recorded under “Net gains or losses on
other assets”, while income on investment property is
classified as net banking income and booked under
“Income from other activities”.
Non-current assets held for sale and
discontinued operations
A non-current asset (or disposal group) is considered
as held for sale if its carrying amount will be recovered
principally through a sale transaction rather than through
continuing use. For this to be the case, the asset (or
disposal group) must be available for immediate sale and
its sale within 12 months must be highly probable.
The Group must have undertaken a plan to dispose
of the asset or group of assets and liabilities and must
be actively seeking a buyer; furthermore, the asset or
disposal group must be sold at a reasonable price in
relation to its present fair value.
Security and surveillance
installations
Plumbing
Fire safety equipment
Fixtures & fittings
Finishings, surroundings
10 years
63
2
Assets and liabilities falling under this category are
reclassified as “Non-current assets held for sale” and
“Liabilities directly associated with non-current assets
classified as held for sale”, with no netting.
Any negative differences between the fair value less
costs to sell of non-current assets and groups of assets
held for sale and their net carrying value is recognised as
an impairment loss in profit or loss. Further, non-current
assets held for sale are no longer amortised as from their
reclassification.
An operation is classified as discontinued when
the criteria for classification as held for sale have
been satisfied or when the Group has disposed of it.
Discontinued operations are disclosed on a single line
item of the income statement for the period, including
net earnings after tax from the discontinued operations
until the disposal date and the gain or loss after taxes
recognised on the disposal or on the measurement at
fair value, less selling costs, of the assets and liabilities
comprising the discontinued operations. Similarly, cash
flows attributable to discontinued operations are booked
as a separate item in the cash flow statement for the
period.
Provisions
Provisions (see Note 17), excluding those related to
employee benefits and credit risks, represent liabilities,
the timing or amount of which cannot be precisely
determined. Provisions are booked where the Group has
a commitment to a third party which makes it probable
or certain that it will never incur an outflow of resources
to this third party without expecting to receive at least an
equivalent value in exchange from said third party.
The estimated amount of the expected outflow is then
discounted to present value to determine the size of
the provision, where this discounting has a significant
impact. Allocations to and write-backs of provisions
are booked through profit or loss under the items
corresponding to the future expense.
At Crédit du Nord Group, provisions are made up of
provisions for disputes and provisions for general risks.
64
Commitments under home savings accounts
Home savings accounts and plans are savings schemes
for individual customers (in accordance with Law No.
65-554 of July 10, 1965), which combine an initial
deposit phase in the form of an interest-earning savings
account with a lending phase where the deposits are
used to provide property loans. By regulation, this latter
phase is subject to the previous existence of the savings
phase and is therefore inseparable from it. The deposits
collected and loans granted are booked at amortised
cost.
These instruments generate two types of commitments
for the Group: the obligation to subsequently lend to the
customer at an interest rate established upon the signing
of the agreement, and the obligation to pay interest on
the customer’s savings in the future at an interest rate
set upon the signing of the agreement, for an indefinite
period.
Commitments with future adverse effects for the Group
are subject to provisions booked as balance-sheet
liabilities, any changes in which are recorded on the
interest margin line under “Net banking income”. These
provisions relate exclusively to commitments under
home savings accounts and schemes existing at the
date of the provision’s calculation.
Provisions are calculated for each generation of home
savings schemes, on the one hand, with no netting
between the different generations of schemes, and
for all home savings accounts taken together, which
constitutes a single all-encompassing generation, on
the other hand.
During the savings phase, provisions are calculated
according to the difference between average expected
outstanding savings and minimum expected outstanding
savings, both of which are determined statistically based
on historic observations of actual customer behaviour.
During the lending phase, provisions are calculated
according to loans already issued but not yet due at the
balance sheet date, as well as future loans considered
as statistically probable on the basis of customer savings
deposits on the balance sheet at the date of calculation
and on historic observations of actual customer
behaviour.
A provision is booked if the discounted value of expected
future earnings for a given generation of home savings
products is negative. These results are measured on the
basis of interest rates available to individual customers
for equivalent savings and loan instruments, with similar
estimated life and date of inception.
Loan commitments
Loan commitments which are not considered financial
derivative instruments are initially booked at their fair
value. Subsequently, provisions are recognised for these
commitments in accordance with generally accepted
accounting principles on “Provisions”.
Financial commitments given
The Group initially recognises financial guarantees given
as non-derivative financial instruments at their fair value
in the balance sheet; the guarantees are subsequently
measured at the higher of the best estimate of the
obligation and the amount initially recognised less, where
appropriate, amortisation of the guarantee commission.
Where there is objective evidence of impairment,
financial guarantees given are provisioned as balance
sheet liabilities.
Distinction between debt and equity
The financial instruments issued by the Group are fully
or partially qualified as debt or equity instruments based
on whether or not the issuer has an obligation to deliver
cash to securities holders.
“Non-controlling interests” correspond to equity interests
in fully-consolidated subsidiaries that are not owned,
directly or indirectly, by the Group. They include equity
instruments issued by these subsidiaries but not owned
by the Group.
2
Interest income and expenses
Interest income and expenses are booked to the
income statement for all financial instruments valued at
amortised cost using the effective interest rate method.
The effective interest rate is taken to be the rate that
discounts the future cash inflows and outflows over
the expected life of the instrument to the book value
of the financial asset or liability. The rate is calculated
using the estimated cash flows based on the contractual
provisions of the financial instrument without taking
account of possible future loan losses. The calculation
includes commission paid or received between the
parties where these can be assimilated to interest,
transaction costs and all types of premiums and
discounts.
When a financial asset or a group of similar financial
assets has been impaired following a loss of value,
subsequent interest income is booked in the income
statement under “Interest and similar income” using
the same interest rate that was used to discount the
future cash flows when measuring the loss of value. In
addition, provisions that are booked as balance sheet
liabilities, except for those related to employee benefits,
generate interest expenses for accounting purposes.
This expense is calculated using the same interest rate
used to discount to present value the expected outflow
of resources that gave rise to the provision.
Net fee income
Crédit du Nord Group books its fee income and
expenses in the income statement according to the type
of transaction for which the fees are charged.
Fees for ongoing services, such as payment services,
custody fees, or online subscriptions, are spread out
over the duration of the service.
Fees for one-off services, such as fund transfer fees, fees
on contributions received, arbitrage fees and penalties
for payment incidents are fully booked to income when
the service is provided.
65
2
Personnel expenses
“Personnel expenses” include all employee-related
expenses, notably profit-sharing and bonus incentive
amounts booked for the period, charges related to the
Group’s various pension plans and charges related to
Societe Generale share-based payments.
Employee benefits
Group companies can pay their employees/
• post-employment benefits, such as pension plans
and severance pay;
• long-term benefits, such as deferred variable
remuneration, long-service awards or flexible working
provisions;
• employment termination benefits.
Post-employment benefits
Pension plans can be defined contribution or defined
benefit plans.
Defined contribution plans limit the Group’s liability to the
contributions paid to the plan but do not commit the
Group to a specific level of future benefits. Contributions
paid are booked as an expense for the year in question.
Defined benefit plans commit the Group, on a formal or
implied basis, to pay a certain amount or level of future
benefits and the Group therefore bears the medium-and
long-term risk.
Said plans cover several types of benefits, notably any
residual complementary benefits afforded by specialist
pension funds.
Since January 1, 1994, pursuant to an agreement signed
by all French banks on September 13, 1993, the banking
institutions of the Group, excluding Crédit du Nord, are
no longer affiliated with specialist pension funds and are
henceforth affiliated with the ARRCO-AGIRC funds of
the general system. This agreement gave rise to residual
commitments with respect to current retirees and active
employees (for periods of employment within the Group
prior to December 31, 1993).
66
For Crédit du Nord, following the Branche agreement of
February 25, 2005, which provided for the amendment
of the provisions relating to complementary benefits, and
in light of the negative balance of its pension fund, an
internal agreement was signed in 2006 setting out the
following provisions:
• for beneficiaries of complementary benefits still
employed with Crédit du Nord, the value of the
complementary benefits was transferred to a
supplementary savings plan outsourced to an insurer;
• retirees and beneficiaries of a survivor’s pension
were given a choice of opting for a single lump-sum
payment of their complementary benefits.
Any residual complementary benefits are therefore linked
to retirees and beneficiaries of a survivor’s pension who
did not opt for a single lump-sum payment of their
complementary benefits, on the one hand, and to
beneficiaries no longer employed with Crédit du Nord,
on the other hand.
A provision is recorded on the liabilities side of the
balance sheet under “Provisions” to cover all of the
above pension commitments It is valued on a regular
basis by independent actuaries using the projected
credit unit method. This valuation method takes account
of assumptions on demographics, early retirement,
wage increases, discount rates and inflation.
Where these plans are financed using external funds
meeting the definition of plan assets, the fair value
of these funds is deducted from the amount of the
provision recorded to cover the related commitments.
Differences arising from changes in the calculation
method (early retirement, discount rate, etc.) or between
actuarial assumptions and actual figures (return on
hedging assets, etc.) constitute actuarial differences
(gains or losses).
These actuarial gains or losses, as well as the return on
plan assets, from which the amount already expensed
for net interest on net liabilities (or assets) is deducted,
and the change in the asset ceiling are items used to
re-estimate (or re-measure) net liabilities (or net assets).
They are immediately booked in full to “Gains and losses
booked directly to equity”. These items cannot be
subsequently reclassified in the income statement.
In the Group’s consolidated financial statements,
these items which cannot be subsequently reclassified
in the income statement, are shown on a separate
line of the “Statement of net income and gains and
losses booked directly to equity”, but are transferred
to retained earnings in the statement of “Change in
shareholders’ equity” so that they are recorded directly
under “Retained earnings” on the liabilities side of the
balance sheet.
Where a new or amended plan comes into force the
cost of past services is spread over the remaining period
until vesting.
The annual expense recognised as personnel expenses
for defined benefit plans includes:
• additional entitlements vested by each employee
(current service cost);
• the interest cost corresponding to the increase
in the present value of a defined benefit obligation;
• the expected return on any plan assets (gross yield);
• the amortisation of actuarial gains and losses
and past service cost;
• the effect of any plan curtailments or settlements.
Long-term benefits
Long-term benefits are employee benefits that do
not fall due wholly within the twelve months after the
end of the period in which the employees render the
related services. Long-term benefits are measured in the
same way as post-employment benefits, except for the
treatment of actuarial gains and losses and past service
costs which are booked immediately to the income
statement.
Share-based payments
As the Group does not issue listed shares, its employees
are entitled to the equity instruments of the shareholder.
Share-based payments involve a systematic entry of a
personnel expense under “Employee compensation”,
as described below.
2
Employee shareholder structure
Under the employee shareholder scheme, all the Group’s
current and former staff are entitled to participate in the
parent company’s annual capital increase reserved for
employees.
New shares are proposed at a discount on the basis of a
five-year lock-up period. The related benefit is recorded
as an expense for the period under “Personnel expenses
- Profit sharing, contributions and discounting”. The
benefit is measured as the difference between the fair
value of the shares acquired and the acquisition price
paid by the employee, multiplied by the actual number
of shares subscribed. The fair value of the acquired
securities is calculated by taking into account the cost of
the associated legal obligatory holding period, estimated
using interest rates available to beneficiaries to estimate
the free disposal ability.
Other share-based payments
Societe Generale Group may offer certain employees
of Crédit du Nord Group the option of purchasing or
subscribing for Societe Generale shares or free shares.
The options are valued at their fair value on the date
on which the employee is notified of the award, without
waiting for the conditions that trigger the award to be
met, or for the beneficiaries to exercise their options.
If the Group has adequate statistics on the behaviour
of option beneficiaries, Group stock option plans are
valued by using a binomial model, failing which the
Black-Scholes or Monte-Carlo model is used. This is
conducted by an independent actuary.
For share-based payments unwound through equity
instruments (free shares and options to purchase or
subscribe to Societe Generale shares), the fair value of
these instruments, as calculated at the notification date,
is spread out over the vesting period as a charge to
shareholders’ equity, offsetting “Equity instruments and
associated reserves”. At each period-end, the number
of instruments is revised to take account of conditions
of performance and presence, and to adjust the overall
cost of the original plan; the cost from the beginning of
the plan, booked under “Employee compensation”, is
consequently adjusted.
67
2
For share-based payments unwound through cash
settlement (remuneration indexed to Societe Generale’s
share price), the fair value of amounts payable is
expensed under “Employee compensation” over the
vesting period with an offsetting entry on the liabilities
side of the balance sheet under “Other liabilities Expenses payable on employee benefits”. This liability is
remeasured at its fair value through profit or loss until it is
settled. For hedging derivatives, the change in their value
is recorded on the same line of the income statement in
the amount of the effective portion.
regime of parent companies and subsidiaries, dividends
received from companies in which the equity investment
is at least 5% are tax-exempt (with the exception of a
share for fees and expenses equivalent to 5% of the
dividends paid).
Tax credit arising in respect of revenues from receivables
and security portfolios, when they are used for the
settlement of corporate tax due for the fiscal year,
are booked under the same line item as the revenues
to which they relate. The corresponding income tax
expense is recognised under “Income Tax” in the income
statement.
Cost of risk
The figure shown under “Cost of Risk” includes net
reversals of impairment losses and provisions for
credit risk, losses on non-recoverable loans, amounts
recovered on impaired loans, and allowances and
reversals for other risks.
Deferred taxes
Income taxes
Deferred taxes are calculated based on a tax rate which
has been approved or almost approved and should
be in effect at the time when the temporary difference
will reverse. These deferred taxes are adjusted in the
event of a change in the tax rate. Their calculation is not
subject to discounting. Deferred tax assets may result
from temporary deductible differences or tax loss carryforwards. Deferred tax assets are only recognised if it is
likely that the tax entity in question has the prospect of
recovering them over a given time period, particularly by
deducting these differences and tax loss carry-forwards
from future profits.
Income tax expense includes:
• current income tax for the fiscal year including
dividend tax credits and tax credits used for tax
settlement purposes. Tax credits are recorded under
the same line item as the income to which they are
related;
• deferred tax.
Current income tax
In France, standard corporate income tax is 33.33%.
In addition, a social security contribution of 3.3% (after
deduction from taxable income of EUR 0.76 million) was
introduced in 2000 and, as from 2013, an additional
10.7% tax for companies generating revenue in excess
of EUR 250 million.
Since January 1, 2007, long-term capital gains on
equity investments in predominantly real estate-oriented
companies have been taxed at 15%, while capital gains
on other equity investments are tax-exempt, subject to
a share for fees and expenses of 12% on the amount
of gross capital gains in the event a net capital gain is
generated over the long term. In addition, under the
68
Deferred taxes are recognised whenever there is a
temporary difference between the book values of assets
and liabilities on the balance sheet and their respective
tax base, where said differences will have an impact on
future tax payments.
Tax loss carry-forwards are subject to an annual review,
taking into account the tax scheme applicable to each
relevant entity and a realistic projection of their taxable
income based on their business development outlook:
deferred tax assets which had previously not been
recognised are then recognised on the balance sheet if
it becomes probable that the entity’s future taxable profit
makes recovery of said assets possible; however, the
book value of deferred tax assets already appearing on
the balance sheet is reduced where there is a risk of
partial or total non-recovery.
Current and deferred tax is recognised as income or
an expense and included in consolidated profit or loss
for the period under “Income Tax”, with the exception
of deferred tax related to gains or losses recognised
directly in equity, which is reported as “Unrealised or
deferred gains and losses” for which the expense or
income is recorded to the same line item in equity.
Since January 1, 2010, Crédit du Nord has been
included in Societe Generale’s tax consolidation scope.
A tax consolidation sub-group was set up between
Crédit du Nord and some of the subsidiaries in which
it holds a direct or indirect ownership interest of at least
95%. The convention adopted is that of neutrality.
General framework
Antarius, a mixed (life and non-life) insurance company,
is the only consolidated insurance company, and is
jointly held with Aviva.
Capitalisation reserve
The capitalisation reserve of insurance companies
consists of capital gains generated on the sale of
obligations and is designed to offset subsequent capital
losses. The capitalisation reserve is split between
technical reserves and shareholders’ equity according
to forecasts of future capital losses and therefore of
the use of reserves. As the recognition of part of the
capitalisation reserve under shareholders’ equity
generates a taxable temporary difference, Credit du Nord
Group records a deferred tax liability in its consolidated
Financial assets and liabilities
The financial assets and liabilities of the Group’s
companies are booked and valued using the methods
described above for the valuation of financial
instruments.
reserves
Under IFRS 4, Insurance Contracts, underwriting
reserves for life and non-life insurance policies are still
measured using the same methods as those required by
local regulations. Embedded derivatives which are not
valued with reserves are booked separately.
Under the “shadow accounting” principles defined in
IFRS 4, an allocation to a provision for deferred profit
sharing is booked in respect of insurance policies
that have a discretionary participation feature. This
provision is calculated to reflect the potential rights of
policyholders to unrealised capital gains on financial
instruments measured at fair value or their potential
liability for unrealised losses.
IFRS 4 also requires that a liability adequacy test be
carried out to assess whether underwriting reserves are
sufficient.
Insurance activity
Underwriting
companies
2
of
insurance
3. Presentation of the financial statements
Use of the banking statement format recommended
by the French National Accounting Standards
Board
In the absence of a model imposed by IFRS, the format
used for the financial reports complies with the format for
financial reports proposed by the Autorité des Normes
Comptables (French accounting standards authority) in
Recommendation No. 2013-04 of November 7, 2013.
Rule on offsetting financial assets and
liabilities
A financial asset and a financial liability are offset and
a net total is presented on the balance sheet when the
Group has a legally enforceable right to offset recognised
amounts and intends either to settle on a net basis, or
to realise the asset and settle the liability simultaneously.
No offsetting was carried out for the 2012 and 2013
fiscal years.
Underwriting reserves are insurance company
commitments to insured parties and policy beneficiaries.
69
2
Transfer of gains and losses booked directly
to equity that will not be subsequently
reclassified in the income statement
Gains and losses booked directly to equity over the
period that will not be subsequently reclassified in
the income statement are shown on a separate line
in the statement of net income and gains and losses
booked directly to equity. At the end of the period, they
are transferred directly to “Retained earnings” on the
liabilities side of the consolidated balance sheet in the
statement of change in shareholders’ equity.
Cash and cash equivalents
For the purpose of preparing the cash flow statement,
cash and cash equivalents include cash accounts,
demand deposits and demand loans and borrowings
from central banks and credit institutions.
Earnings per share
Earnings per share are calculated by dividing net
earnings attributable to ordinary equity holders by
the weighted average number of ordinary shares
outstanding during the period.
4. Account standards and
interpretations that the Group will
apply in the future
The IASB has published standards and interpretations
that were not all adopted by the European Union as at
December 31, 2013. Application of these standards and
interpretation shall only be mandatory as of January 1,
2014 at the earliest, or upon their adoption by the
European Union. Consequently, they will not be applied
by the Group at December 31, 2013.
Accounting standards, amendments and interpretations adopted by the European Union
Amendments to IAS 32 “Presentation - Offsetting financial assets
and liabilities”
Application dates:
fiscal years beginning from
December 13, 2012
January 1, 2014
IFRS 10 “Consolidated financial statements”
December 11, 2012
January 1, 2014
IFRS 11 “Joint arrangements”
December 11, 2012
January 1, 2014
IFRS 12 “Disclosure of interests in other entities”
December 11, 2012
January 1, 2014
Amendments to IAS 27 “Separate financial statements”
December 11, 2012
January 1, 2014
Amendments to IAS 28 “Investments in associates and joint ventures”
December 11, 2012
January 1, 2014
April 4, 2013
January 1, 2014
Investment entities (amendments to international financial disclosure standards
IFRS 10, IFRS 12 and IAS 27)
November 20, 2013
January 1, 2014
Amendments to IAS 36 “Recoverable amount disclosures for non-financial assets”
December 19, 2013
January 1, 2014
Amendments to IAS 39 “Novation of derivatives and continuation of hedge accounting”
December 19, 2013
January 1, 2014
Amendments to IFRS 10, IFRS 11 and IFRS 12 on transition provisions
70
Date adopted
by the European Union
Amendments to IAS 32 “Presentation Offsetting financial assets and liabilities”
Amendments to IAS 27 “Separate financial
statements”
These amendments clarify the rules for offsetting
financial assets and liabilities: offsetting is compulsory
only if the relevant entity has an unconditional and
legally binding right in any circumstances to offset the
amounts in the accounts and if it intends either to settle
the asset and liability on a net basis or to realise the
asset and liability on a net basis, or to realise the asset
and settle the liability simultaneously. An analysis of the
potential impact of these amendments on the Group’s
consolidated financial statements is underway.
The amendments specify the methods to be used when
entering equity interests in the accounts of the individual
IFRS 10 “Consolidated financial statements”
Amendments to IAS 28 “Investments
in associates and joint ventures”
These amendments take account of the changes
introduced by the publication of IFRS 10 and IFRS 11
regarding investments in associates and joint ventures.
Amendments to the transitional provisions
of IFRS 10, IFRS 11 and IFRS 12
This new standard redefines the notion of control, and
places greater emphasis on managements’ use of
judgement. The new definition takes the following into
account: the power exercised by the consolidating
group over the entity, its exposure or rights to the entity’s
variable returns, and the capacity to use one’s power to
influence the entity’s returns. The consequences of this
new standard are currently being analysed.
These amendments limit the restated comparative
data to the comparative period immediately preceding
the application of IFRS 10, 11 and 12, and remove the
need to publish restated comparative information for
unconsolidated structured entities in the first year of
application of IFRS 12.
IFRS 11 “Joint arrangements”
These amendments exempt investment entities from
having to consolidate the entities they control, instead
they are accounted for at fair value through profit or loss.
This standard makes a distinction between two types of
joint control agreements (joint operation or joint venture)
depending on the partners’ rights and obligations,
and it removes the option to apply the proportionate
consolidation method. Joint ventures must now be
consolidated using the equity method.
2
Investment entities (amendments to IFRS 10,
IFRS 12 and IAS 27)
They also clarify the information to be disclosed by
investment companies in the notes to the financial
statements.
IFRS 12 “Disclosure of interests in other
entities”
This standard defines all of the information that must be
presented in the notes on all subsidiaries, partnerships,
associates and structured entities (whether consolidated
or not). It means the Group will have to develop the
notes to the consolidated financial statements for any
fiscal years pending as of January 1, 2014.
71
2
Amendments to IAS 36 “Recoverable amount
disclosures for non-financial assets”
Under these amendments, disclosure obligations
on the recoverable value and conditions for fair value
measurement (less disposal costs) of a cash-generating
unit including goodwill or intangible assets with an
indefinite useful life are limited exclusively to impaired
assets.
Amendments to IAS 39 “Novation of
derivatives and continuation of hedge
accounting”
These amendments make it possible to maintain
hedging relationships in the event the counterparties
of the hedging instrument are required by regulation
(such as EMIR in the European Union) or law to novate
the hedging instrument to a clearing house without the
terms of the instrument being otherwise amended.
Accounting standards, amendments and interpretations not yet adopted by the European Union
at December 31, 2013
Date published
by the IASB
November 12, 2009,
October 28, 2010,
December 16, 2011
and November 19, 2013
Undetermined
May 20, 2013
January 1, 2014
IFRS 9 “Financial Instruments – Phase 3: Hedge Accounting” and amendments
to IFRS 9, IFRS 7 and IAS 39
November 19, 2013
Undetermined
Amendments to IAS 19 “Defined Benefit Plans: Employee Contributions”
November 21, 2013
July 1, 2014
Annual improvements (2010-2012 and 2011-2013) to IFRS - December 2013
December 12, 2013
July 1, 2014
IFRS 9, “Financial Instruments: Phase I -Classification and Measurement”
IFRIC 21 “Levies”
IFRS 9, “Financial Instruments: Phase I Classification and Measurement”
The purpose of IFRS 9 is to overhaul IAS 39. IFRS 9
- Phase 1 defines the new rules for classifying and
measuring financial assets and liabilities. There will
also be two additional phases on the impairment
methodology for credit risk associated with financial
assets (IFRS 9 - Phase 2 currently being drafted by
the IASB) and on the accounting treatment of hedging
transactions (IFRS 9 - Phase 3, see below).
Financial assets will be classified in three categories
(amortised cost, fair value through profit and loss,
and fair value through other comprehensive income)
depending on the details of their contractual flows and
the way the entity manages its financial instruments
(business model).
Debt instruments (loans, receivables or debt securities)
shall be recorded at their amortised cost, provided that
they are held for the purpose of receiving contractual
cash flows and they present standard characteristics
72
Application dates:
fiscal years beginning from
(the cash flows must be solely payments of principle
and interest on the principal outstanding). All other debt
instruments are measured at fair value through profit or
loss.
Equity instruments will be recognised at fair value
through profit or loss unless there is an irrevocable
option to measure them at fair value through equity
(only if these instruments are not held for trading and
classified as such under financial assets measured at fair
value through profit or loss) without subsequent removal
from equity followed by reclassification in the income
statement.
Embedded derivatives shall no longer be booked
separately from the financial host instruments, where
they are financial assets within the scope of IFRS 9.
Instead the hybrid assets in their entirety are measured
at fair value through profit or loss.
The rules for classifying and measuring financial liabilities
addressed by IAS 39 are retained without modification in
IFRS 9, with the exception of financial assets which the
entity has elected to measure at fair value through profit
or loss (fair value option) for which revaluation differences
associated with changes in the entity’s own credit risk
will be recognised as gains and losses taken directly to
equity without subsequent removal from equity followed
by recognition under profit or loss.
The provisions of IAS 39 regarding derecognition of
financial assets and liabilities will be retained without
modification in IFRS 9.
It should be noted that the provisions of IFRS 9 - Phase
1 are the subject of proposed amendments concerning
the classification and measurement of financial assets,
for which the IASB published an exposure draft
on November 28, 2012 entitled “Classification and
measurement: limited amendments to IFRS 9”. The final
provisions are currently being drafted by the IASB and
may differ from the items presented above.
IFRIC 21 “Levies”
This interpretation of IAS 37 “Provisions, contingent
liabilities and contingent assets” lays down the
conditions for recognising a liability related to taxes
levied by a public authority. An entity is only required to
recognised this liability if the triggering event, as provided
for by law, takes place. If the obligation to pay the tax
arises from the gradual realisation of the activity, it must
be recorded gradually over the same period. Finally, if
the obligation to pay is generated by reaching a given
threshold, the liability associated with this tax is only
recorded once the threshold is reached.
2
To this end, the standard expands the scope of nonderivative financial instruments able to be qualified as
hedging instruments. Similarly, the scope of items
able to be qualified as hedging items is expanded to
include components of non-financial instruments. The
standard also amends the conditions for assessing
the effectiveness of hedges. Furthermore, additional
disclosures are required in the notes to describe the
risk management and hedging strategy as well as
the impacts of hedge accounting on the financial
statements.
IFRS 9 does not address the accounting treatment of
macro-hedging transactions, for which a separate draft
standard is currently being prepared by the IASB.
Amendments to IAS 19 “Defined Benefit
Plans: Employee Contributions”
These amendments concern employee contributions
to defined-benefit plans. Their aim is to simplify
the recognition of employee contributions that are
independent of the number of years worked.
Annual improvements (2010-2012 and 20112013) to IFRS - December 2013
As part of the annual process of improving International
Financial Reporting Standards, the IASB published a
series of amendments to existing standards.
IFRS 9, “Financial Instruments: Phase 3 Hedge Accounting” and amendments to
IFRS 9, IFRS 7 and IAS 39
The purpose of this new standard is to better align
hedge accounting with the entity’s management of its
financial and non-financial risks.
73
2
NOTE 2 Scope of consolidation
31/12/2013
Consolidation
method
Crédit du Nord
28, place Rihour
59800 Lille
Full
Banque Rhône-Alpes
20-22, boulevard Edouard Rey
38000 Grenoble
31/12/2012
Ownership
interest
Controlling
interest
Consolidation
method
Consolidating company
Full
Ownership
interest
Controlling
interest
Consolidating company
Full
99.99
99.99
Full
99.99
99.99
Full
100.00
100.00
Full
97.57
97.57
Banque Courtois
33, rue de Rémusat
31000 Toulouse
Full
100.00
100.00
Full
100.00
100.00
Banque Kolb
1-3, place du Général-de-Gaulle
88500 Mirecourt
Full
99.87
99.87
Full
99.87
99.87
Banque Laydernier
10, avenue du Rhône
74000 Annecy
Full
100.00
100.00
Full
100.00
100.00
Banque Nuger
5, place Michel-de-L’Hospital
63000 Clermont-Ferrand
Full
64.70
64.70
Full
64.70
64.70
Société Marseillaise de Crédit
75, rue Paradis
13006 Marseille
Full
100.00
100.00
Full
100.00
100.00
Norbail Immobilier
50, rue d’Anjou
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Star Lease
59, boulevard Haussmann
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Etoile ID
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Société de Bourse Gilbert Dupont
50, rue d’Anjou
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Norimmo
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
-
-
-
Full
98.99
100.00
Banque Tarneaud
2-6, rue Turgot
87000 Limoges
(1)
(2)
Etoile Gestion Holding
75008 Paris
(1) As a result of the buyout offer launched in January 2013, Crédit du Nord holds 100% of the shares in Banque Tarneaud.
(2) Entity sold to Societe Generale in December 2013.
74
31/12/2013
31/12/2012
Consolidation method
Ownership
interest
Controlling
interest
Consolidation method
Ownership
interest
Controlling
interest
Anna Purna
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Nice Broc
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Nice Carros
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Kolb Investissement
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
-
-
-
Full
100.00
100.00
Norbail Sofergie
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Sfag
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Partira
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Crédinord Cidize
75008 Paris
Full
100.00
100.00
Full
100.00
100.00
Equity
35.00
35.00
Equity
35.00
35.00
Proportionate
50.00
50.00
Proportionate
50.00
50.00
Full
100.00
100.00
Full
100.00
100.00
-
-
-
Full
100.00
100.00
-
-
-
Full
100.00
100.00
Nord Assurances Courtage (3)
28, place Rihour
59800 Lille
Banque Pouyanne
12, place d’armes
64300 Orthez
2
(4)
Antarius
75008 Paris
Fct Blue Star Guaranteed Home
Loans
17, cours Valmy
92972 Paris La Défense
Fct BS CDN PPI (5)
17, cours Valmy
(5)
Fct BS CDN ENT
17, cours Valmy
(3) Removed from the consolidated scope in October 2013 after the whole of its assets were transferred to Crédit du Nord parent company.
(4) Including sub-consolidated insurance mutual funds.
(5) Securitisation funds BS CDN PPI and BS CDN ENT were consolidated by Crédit du Nord Group in December 2013.
The following companies, in which the Group owns
stakes of between 40% and 100%, were not included
in the consolidation scope: Starvingt, Starvingt trois,
Starvingt six, Starvingt huit, Snc Obbola, Snc Wav II,
Immovalor service, Scem Expansion, Snc Hedin, Snc
Legazpi, Snc Nordenskiöld and Snc Verthema.
75
2
NOTE 3 Risk management
This note describes the main risks incurred on the
Group’s banking activities, i.e.:
• It defines or validates methods and procedures for
analysing, approving and monitoring risk.
• credit risk: the risk of losses stemming from the
inability of a counterparty to meet its financial
commitments;
• It contributes to the independent assessment of credit
risk during the loan approval process by giving an
opinion on the transactions put forward by the sales
function.
• structural interest rate and exchange rate risk:
the risk of loss or residual impairment of balance
sheet items arising from changes in interest rates or
exchange rates;
• liquidity risk: the risk that the Group may not be able
to meet its financial commitments when they mature;
• market risk: the risk of loss resulting from changes
in market rates and prices, in correlations between
these market rates and prices, and in their volatility.
Credit risk
The provision of loans makes a significant contribution
to Crédit du Nord Group’s development and results.
However, it also exposes the Group to credit and
counterparty risk, that is to the risk of partial or complete
default on the part of the borrower.
For this reason, all lending activities are monitored and
controlled by a dedicated organisational structure,
the Risk Division, which is independent from the sales
function and coordinated by the Central Risk Division
(DCR), and are subject to a body of rules and procedures
governing the granting of loans, approval of loans,
monitoring of risks, rating and classification of risks,
identification of downgrade risk and loan impairment.
Organisation
The Central Risk Division, which reports directly to the
Chief Executive Officer of Crédit du Nord, contributes
to the development and profitability of the Group by
ensuring that the risk management framework in place
is both sound and effective.
To this end, it ensures that a consistent approach to risk
assessment and monitoring is applied at the Group level.
• It helps define the Group’s credit policy and oversees
its implementation.
76
• It takes part in risk monitoring and provisioning, and is
responsible for the collection of undisputed doubtful
loans.
• It identifies all Group risks.
• It monitors the consistency and adequacy of the risk
management information system.
The Central Risk Division reports on its activities and
general changes in the Group’s risk exposure to the
General Management at the monthly Risk Committee
meeting. The Risk Committee takes decisions on the
main strategic issues: risk-taking policies, measurement
methods, analyses of portfolios and cost of risk,
detection of credit concentrations, etc.
Each region of Crédit du Nord parent company and
each Crédit du Nord banking subsidiary has a Risk
Department which reports to the Regional Manager or
Subsidiary Chairman and is responsible for implementing
the Group’s credit policy and managing risk exposure
within the region or subsidiary in question. The Risk
Departments report functionally to the Central Risk
Division.
Procedures and methods
Loan approval
The Group enforces a strict procedure for the provision
of loans to counterparties:
• a preliminary examination is conducted of all
applications for loans to ensure full information has
been obtained before any risk is incurred;
• support for the decision-making process is provided
via the establishment of counterparty and loan
ratings, as well as approval scores based on these
ratings for small, straightforward loans;
• analysis and decision-making within the sales
units and risk units at the most appropriate level of
authority in respect of the risk involved;
• decisions to grant loans must be formally set out in a
dated and signed written or electronic document that
specifies the limits of the commitment and the period
of validity of the approval;
• the concept of the Group incorporated in risk
assessment and an internal lead manager is
designated for each Group identified, who is
responsible for presenting a consolidated credit
application.
The lending procedure also complies with a number of
the core principles of the Group’s credit policy which are
designed to limit counterparty risk:
• loans are mainly provided for the financing of
operations and customers in mainland France.
However, loans may be provided to certain
neighbouring countries or OECD member countries,
under specific conditions;
• division and distribution of risk;
• counter-guarantees must be sought from specialised
companies such as Crédit Logement for residential
property loans and BPI for loans to professionals and
businesses;
• wherever possible, loans provided to finance a
business’s operating cycle should be secured with
customer receivables;
• investments in equipment and property by
professional and business customers should
preferably be funded through lease finance
agreements;
• guarantees and collateral are systematically sought.
The Finance unit within the Risk Division of the Treasury
and Foreign Exchange Department is responsible for
counterparty risk linked to market transactions.
Counterparty limits for market transactions are attributed
as follows:
• where the counterparty is a customer, the manager
in charge of the account requests limits from the
Regional and Subsidiary Risk Divisions. These limits
allocated for the products are then fed into the
monitoring systems;
2
• where the counterparty is a bank or financial
institution, the Treasury and Foreign Exchange
Department works with the Accounting Flows
and External Operations Department to open an
application for each counterparty, recording the
details of credit line applications, by product and
duration. The application is then submitted to the
relevant Risk Division teams at Societe Generale. The
allocated limits are entered into the daily monitoring
and reporting systems.
• for the sovereign loan book, an application is put
together by the Treasury and Foreign Exchange
Department and is submitted to the relevant Risk
Division teams at Societe Generale for approval and
validation. The limits attributed for the products are
communicated and are subject to a monitoring report
submitted to Societe Generale’s Risk Division.
Internal risk measurement systems
For several years, the Group has used internal
quantitative models for measuring credit risk as a tool in
the loan approval process. These models have gradually
been expanded to include the main customer markets in
which the Group operates.
Beginning in 2005, these internal rating models (some of
which were based on Societe Generale Group models)
were amended to take account of new regulatory
requirements. There are three pillars to the Group’s
internal rating system for the business customer market:
• internal rating models drawing on:
– the counterparty rating (debtor’s probability of
default at one year);
– the loan rating (loss given default);
• a body of procedures which covers banking principles
and the rules for using the models (scope, frequency
of rating revision, approval procedure, etc.);
• the human appraisal of those involved in the ratings
process who apply the models in compliance with
the relevant banking principles and whose expertise
is invaluable in drawing up the final ratings.
The Rating Systems Governance unit, created in
2007, oversees the adequacy of ratings models and
their rules of use, and monitors compliance with rating
procedures.
77
2
Across all of its operating markets, the Group has
gradually adapted its credit risk management, control
and supervision policy and now includes ratings in its
day-to-day operations.
Risk management and control
All employees of the sales and risk functions are
responsible for risk management within the Group. It is
incumbent upon all employees to observe the limits and
terms of loan decisions, show vigilance and respond
quickly in detecting the deterioration of a counterparty’s
financial situation, and take the necessary measures to
reduce the risk incurred by the Bank. Loan decisions are
addressed in a monthly report.
The purpose of risk control is to continuously verify the
quality of counterparty risks to which Crédit du Nord
Group is exposed through its lending operations, and
to make sure that its commitments are classified in the
appropriate risk categories. This is an integral part of
the processes defined by the Group’s three-level control
system (supervisory, permanent and periodic controls).
The Central Risk Division and the Corporate Secretariat
have developed risk analysis tools with a view to
optimising risk controls: these tools are updated on a
regular basis, notably to adjust to regulatory changes.
Management of undisputed doubtful loans is usually
assigned to dedicated teams (out-of-court collection of
individual customer loans, special affairs, etc.). Where
doubtful (non-performing) loans become disputed,
however, they are handed over to teams specialising in
the collection of disputed loans.
78
Provisions for impairment
A counterparty is deemed to be in default where any of
the following takes place:
• significant deterioration in the counterparty’s financial
situation creates a strong probability that it will not
be able to meet all of its commitments and thus
represents a risk of loss for the bank;
• one or more instalments have gone unpaid for at least
90 days and/or a collections procedure has been
initiated (180 days for housing loans);
• a proceeding such as bankruptcy, compulsory
liquidation or legal protection is in progress.
Once reclassified, doubtful loans are usually reviewed
to determine the possibilities of recovering the Bank’s
funds. This analysis takes into account the financial
position of the counterparty, its economic prospects and
the guarantees called up or which may be called up.
The collection flows thus determined are discounted to
calculate the appropriate level of provisioning.
These provisions are subject to a quarterly review by the
Central Risk Division to assess their appropriateness.
Crédit du Nord Group also books collective impairment
losses for identified credit risks on similar groups of
loans in its portfolio, without waiting for the impairment
to individually affect identified counterparties.
2
Exposure to credit risk
The chart below shows the exposure to credit risk of the Group’s financial assets before the impact of unrecognised
netting agreements and collateral (in particular cash, financial and non-financial assets received as guarantees and
guarantees from legal entities).
31/12/2013
(in EUR millions)
31/12/2012
Assets at fair value through profit or loss (excluding equity securities)
240.3
170.8
Hedging derivatives
844.8
1,234.2
Available-for-sale financial assets (excluding equity securities)
11,033.0
7,644.2
Due from banks
4,628.5
5,946.7
Customer loans
33,027.7
32.968.2
Exposure of balance sheet commitments, net of impairment
325.7
499.8
2,126.8
2,174.4
2.1
26.0
52,228.9
50,664.3
Loan commitments given
3,590.0
3,547.4
Guarantee commitments given
8,324.5
17,604.6
-17.9
-51.4
Provisions for off-balance sheet commitments
Exposure of off-balance sheet commitments, net of impairment
TOTAL
Additional analysis of the loan portfolio (IFRS 7)
This analysis covers concentration risk as well as unpaid
or impaired loans.
Disclosures relating to risk concentration
Crédit du Nord Group’s core business is Retail Banking
in France, which naturally ensures diversification of
risks. Concentration risks are monitored with respect to
counterparties and economic sectors.
• Counterparty concentration risk is reviewed during
the loan approval phase, during which the Group’s
commitments are systematically summarised: it is
also subject to a special half-yearly review (along with
sector concentration risk). At September 30, 2013,
commitments linked to the top 10 counterparties
11,896.6
21,100.6
64,125.5
71,764.9
accounted for 11.2% of outstandings for Crédit du
Nord Group’s business and professional customers
(excluding lease finance and disputed loans). Of these
counterparties, the top three were major construction
companies with commitments primarily in the form
of guarantees on very diversified markets (with low
historical risk levels).
• Sector concentration risk is reviewed on a halfyearly basis (at March 31 and September 30). At
September 30, 2013, two sectors accounted for over
10% of outstandings for the Group’s business and
professional customers: construction, with a relatively
favourable positioning in terms of type of risk (see
above). The second sector was wholesale trade (9%),
comprised of highly differentiated outstandings.
79
2
Breakdown of loan outstandings
2013/2012 change
Gross outstandings
(in EUR millions)
31/12/2013 31/12/2012 in value
as a %
34,192.5
34,541.5
-349.0
-1.0%
92.8%
93.7%
174.1
154.3
19.8
-12.8%
289.0
13.2%
-40.2
-0.1%
Performing loans, neither unpaid nor impaired
As a % of total gross outstandings
Unpaid but not impaired
Impaired
0.5%
0.4%
2,479.7
2,190.7
TOTAL GROSS OUTSTANDINGS
6.7%
5.9%
36,846.3
36,886.5
Given the continuous deterioration in the general economic environment, the relative weight of impaired outstandings
increased in 2013. At December 31, 2013, impaired outstandings accounted for 6.7% of total loans, compared with
5.9% at end-2012.
Non-impaired outstandings with past due amounts
> 1 year
TOTAL
0.7
0.0
0.2
19.7
0.1
0.1
0.1
34.4
8.5
5.4
0.0
0.1
86.5
1.9
1.8
0.1
0.0
33.5
15.4
8.0
0.2
0.4
174.1
30-59 days
Businesses and other non-retail customer loans
16.1
0.8
1.9
Very small company & property company loans
22.4
8.6
3.1
Mortgage lending
51.8
20.7
Other individual consumer loans
25.5
4.2
115.8
34.3
TOTAL
The amounts presented in the table above refer to the
total amounts of loans (remaining principal, interest and
unpaid portions) with past due amounts. These loans
primarily relate to delinquencies of less than 90 days.
When payments are more than 90 days overdue
(180 days for property loans), the loans are reclassified
as “doubtful loans”. A small number of customers may,
on an exceptional basis, be kept in the performing loans
category where they agree to rectify their payment
status.
Non-impaired outstandings with past due amounts
st o o d a t € 1 74. 1 mi l l i on a t th e e n d of 2 0 1 3 ,
representing an increase of 12.8% in relation to 2012).
The deterioration affected all our customer segments.
The total amount nevertheless remained low (0.5%
of outstanding loans).
Impaired loans reclassified as performing
loans after renegotiation
“Renegotiated” loans cover all customer groups.
Renegotiated loans are loans that have been
restructured (in terms of principal and/or interest
80
180 days
- 1 year
0-29 days
(in EUR millions)
60-89 days 90-179 days
rates and/or maturities) due to the probability that the
counterparty will be unable to meet its commitments in
the absence of such a restructuring.
This does not include commercial renegotiations freely
entered into by the Bank in order to maintain the quality
of its relations with a customer.
These loans are identified from automated data.
They correspond to loans restructured between
October 1, 2012 and December 31, 2013, when they
were in default, and for which their post-restructuring
status qualified them for reclassification as performing
loans during the period.
On these bases, the amount of loans restructured since
October 1, 2011 was insignificant (€5.3 million) at the
end of 2013. The majority of the loans restructured
over the period were still identified as being in default at
December 31, 2013. Crédit du Nord Group’s banking
practices require renegotiated loans to be maintained
in the “impaired loans” category as long as the bank
remains uncertain of the customers’ ability to meet their
future commitments (definition of default under Basel II).
Guarantees on impaired loans or loans with
missed payments
Since 2008, Crédit du Nord’s risk management systems
have drawn data from an IT application used to manage
guarantees received by the Bank. Data for Société
Marseillaise de Crédit are now included in these reports.
The following method was used to calculate the rate of
loans covered by guarantees: the amount of guarantees
was capped at the amount of the loan guaranteed, on
a loan by loan basis. As a result, certain guarantees
were not included, such as guarantees on loans already
backed by an intrinsic guarantee (e.g. those linked to the
mobilisation of customer receivables).
• Individual customers (natural persons and
related property investment companies): housing
loans (secured by mortgage or against a home loan
guarantee) were considered as fully secured; for other
medium and long-term loans to property investment
2
partnerships, guarantees were noted at their carrying
amount in the database. By default, all other loans
were considered to be unsecured.
• Other customers: short-term loans were considered
as unsecured, with the exception of receivablebacked loans, which were considered as fully
secured.
Mortgages and finance lease outstandings were deemed
to be fully secured; equipment leasing outstandings
were considered unsecured.
For medium-term loans, guarantees were maintained at
their recorded value in the database.
Some guarantees were not counted because their real
value, should the guarantees be called up, is difficult to
estimate (particularly for pledges of unlisted securities,
personal sureties, etc.).
Guarantees on impaired outstandings at December 31, 2013
(in EUR millions)
Undisputed
non-performing loans
Coverage rate Disputed loans
Coverage rate
287.4
30.7%
545.7
13.4%
267.0
55.2%
600.4
22.8%
Mortgage lending
249.0
100.0%
164.0
100.0%
127.7
-
240.1
-
931.1
52.0%
1,550.2
24.1%
TOTAL
Hedging rates did not change significantly from 2012 to
2013. The rate was lower for disputed loans (guaranteed
outstandings often repaid more quickly, mainly by
activating the associated guarantee). The provisioning
rate (67%) covered the bulk of the portion not covered
by the guarantee.
Guarantees on non-impaired outstandings at December 31, 2013
(in EUR millions)
Due amounts on loans
Coverage rate
19.7
24.6%
34.4
67.6%
Mortgage lending
88.2
100.0%
31.9
-
174.1
66.8%
TOTAL
For business customers, the Risk Function validates
procedures governing the periodic revaluation of
guarantees, which is notably performed during
annual loan reviews and systematically when a loan is
reclassified as doubtful.
81
2
Structural interest rate and exchange
rate risks
With regard to the Group’s structural risk management,
Crédit du Nord Group distinguishes between the
management of structural balance sheet risks (Asset and
Liability Management or ALM) and the management of
risks related to trading activities.
• Structural interest rate and exchange rate risks are
incurred on customer-driven and proprietary activities
(transactions involving shareholders’ equity and
investments):
All decisions concerning the management of any interest
rate and/or liquidity mismatch positions generated by the
Group’s customer-driven activities are made by the ALM
Committee, which meets on a monthly basis under the
chairmanship of the Chief Executive Officer. A member
of the Finance Division at the shareholder also sits on
this committee.
– wherever possible, customer-driven transactions
are hedged against interest rate and exchange
rate risks. This is provided through macro hedging
(blanket hedging of portfolios of similar sales
transactions) or through micro-hedging (individual
hedging of each sales transaction);
It should be noted that the ALM Committee delegates
the management of short-term interest rate risk to
the Treasury and Foreign Exchange Department. This
department is responsible for approving hedging
transactions with an initial maturity of less than one year,
needed to limit short-term interest rate exposure.
– interest rate risks on proprietary trading must
also be hedged as far as possible. There is no
exchange rate risk on these transactions at Crédit
du Nord.
The Weekly Cash Flow Committee monitors this exposure
by examining the following indicators each week:
The general aim is to reduce positions exposed to
interest rate and exchange rate risk as much as possible
by regularly implementing appropriate hedges.
Consequently, structural interest rate and exchange rate
risks are only incurred on residual positions.
• Management of interest rate and exchange rate
risks associated with market activities is addressed
in the section entitled “Market risks linked to trading
activities”.
Organisation of the management of structural
interest rate and exchange rate risks
The principles and standards for managing these risks are
defined and overseen by the shareholder. However, each
entity is primarily responsible for managing these risks.
Crédit du Nord Group therefore develops its own
models, measures its risks and sets up hedges on an
ad hoc basis, within the framework defined by these risk
management standards.
The shareholder’s ALM Department carries out a Level
Two control on the risk management performed by the
entities.
82
At Crédit du Nord, the ALM division, which reports
directly to the Finance Division and comes under the
authority of the Financial Management Division, is
responsible for monitoring and analysing global, interest
rate, liquidity and maturity mismatch risk.
• the short-term fixed interest rate position. In absolute
value terms, this position must remain under €1,500
million;
• exposure to short rates incurred by all transactions,
which is limited to €3 million.
Structural interest rate risk
Structural interest rate risk arises from residual positions
(surplus or deficit) in fixed-rate positions with future
maturities. All assets and liabilities of Group banks,
excluding those related to trading activities, are subject
to an identical set of rules governing interest rate risk
management.
The Group’s principal aim is to reduce each entity’s
exposure to interest rate risk as much as possible, once
the transformation policy has been defined.
Consequently, Crédit du Nord Group follows a policy of
systematically hedging structural interest rate risk and,
where applicable, implements the hedges needed to
reduce the exposure of Group entities to interest rate
movements.
To this end, the overall interest rate risk of Crédit du
Nord Group is subject to exposure limits set by the
shareholder’s Finance Committee. Sensitivity is defined
as the variation in the net present value of future
(maturities of up to 20 years) residual fixed-rate positions
(surplus or deficits on assets and liabilities) for a 1%
parallel shift in the yield curve. Observation of these
limits is verified within the framework of a regular report
submitted to the shareholder. Crédit du Nord Group’s
overall limit is €63.3 million (representing around 3.3% of
prudential shareholders’ equity).
Measurement and monitoring of structural
interest rate risks
In order to quantify its exposure to structural interest
rate risks, the Group analyses all fixed-rate assets and
liabilities with future maturities to identify gaps. These
positions come from operations remunerated or charged
at fixed rates and from their maturities.
A s s e t s a n d l i a b i l i t i e s a re g e n e r a l l y a n a l y s e d
independently without any a priori matching. Maturities
on outstandings are determined on the basis of the
contractual terms governing transactions or based
on adopted conventions. These conventions are the
result of models of customer behaviour patterns based
on historical observations (special savings accounts,
prepayment rates, etc.) as well as conventional
assumptions relating to certain aggregates (principally
shareholders’ equity and demand deposits).
Stress tests consisting of an immediate parallel shift of
+1% and -1% in the yield curve are also carried out.
The analysis of structural interest rate risks at Crédit du
Nord revealed that:
• All on- and off-balance sheet transactions are matchfunded according to their specific characteristics
(maturity, interest rate, explicit or implicit options). A
model developed by the ALM unit (“notional balance
sheet” model) is used to monitor interest rate risk
management indicators, in particular a fixed-rate limit,
as well as the risks associated with options appearing
on the balance sheets of Group entities;
• options risk is also subject to regular monitoring and
the implementation of appropriate hedges (purchases
of caps or swaps);
• demand deposits and regulated savings products
are subject to specific modelling to lock in medium-
2
and long-term yields. The conservative nature of the
models has enabled the Group’s banks to maintain
their interest margin.
Structural exchange rate risks
The overall foreign exchange position is kept within
conservative limits and remains small relative to the
bank’s net shareholders’ equity.
Hedging of interest rate and exchange rate
risks
In order to manage its exposure to certain market risks,
Crédit du Nord Group uses hedges designated as fair
value hedges for accounting purposes.
It also manages the exposure of its fixed-rate financial
assets and liabilities (mainly loans/borrowings, security
issues and fixed-rate securities) to risks of fluctuations in
long-term interest rates, by setting up hedges qualified
as fair value hedges for accounting purposes, principally
using interest rate swaps and caps.
In order for these transactions to qualify as hedges,
the Group documents the hedging relationship in
detail from inception, specifying the risk hedged, the
risk management strategy and the way in which the
effectiveness of the relationship will be documented.
The purpose is to avoid the reclassification of hedging
derivative portfolios in the accounts to cover the bank
against unfavourable variations in the fair value of an item
which, as long as the hedging relationship is efficient,
has no impact on profit or loss, but could affect it if the
item were eliminated from the balance sheet.
Tests are regularly carried out to ascertain the hedging
relationship and measure its effectiveness. These tests
are both forward-looking and retrospective.
The future effectiveness of the hedge is calculated using
a sensitivity analysis that integrates probable scenarios
for changes in market parameters.
Retrospective effectiveness is assessed by comparing
the variations in fair value of the hedging instrument with
the variations in fair value of the hedged item. The hedge
is deemed effective if changes in the fair value of the
83
2
hedged item are almost fully offset by the changes in fair
value of the hedging instrument, i.e. the ratio between
the two changes is in the 80%-125% range (sliding
quarter-on-quarter changes).
Effectiveness is measured prospectively each quarter
(expected effectiveness over future periods) and
retrospectively (actual effectiveness).
Liquidity risk
Organisation of liquidity risk management
The guidelines and standards for the management of
liquidity risk are defined by the shareholder. As Crédit
du Nord is nevertheless responsible for managing its
liquidity and complying with regulatory restrictions, it
develops its own models, measures its liquidity positions
and finances its activities or reinvests surplus cash in
accordance with the standards defined at the Group
level.
Measurement and monitoring of liquidity risk
Crédit du Nord acts as the central refinancing unit of
the Group’s banks and financial subsidiaries. The
monitoring of outstandings by subsidiary and regulatory
ratios is carried out by the ALM unit. Short-term liquidity
management is delegated to each subsidiary as part of
its cash management activities and is subject to certain
limits.
Until May 31, 2010, Crédit du Nord applied CRBF
Regulation 88-01 as the basis for monitoring liquidity.
Since the June 30, 2010 mid-year balance sheet date,
Crédit du Nord has opted for the standard liquidity risk
management method defined in CB Instruction 2009-05.
Crédit du Nord’s short-term liquidity ratio was 242% on
average for 2013, a ratio higher than that required.
Since 2011, Crédit du Nord has participated in its
shareholder’s liquidity programme, the aim of which is
to produce specific indicators, notably LCR (short-term
ratio < 1 month) and NSFR (average/long term ratio).
84
Mismatch risk
Changes in the structure of the balance sheet are
monitored and managed by the ALM unit in order to
determine and adjust the refinancing requirements of the
Group’s various entities.
Measurement of the Group’s long-term financing
requirements is based on budget estimates and
results of past transactions, making it possible to plan
appropriate financing solutions.
Crédit du Nord Group has had no trouble securing its
financing, mainly thanks to its substantial, diversified
deposits, which account for a large portion of its short-,
medium- and long-term resources.
A special quarterly report on maturity mismatch risk is
submitted to the shareholder.
Market risk
All capital market activities carried out by Crédit du Nord
Group are customer-driven. In terms of both products
and regions, Crédit du Nord Group only conducts
transactions on its own behalf in business segments
where it has significant customer interests. The primary
purpose of its activities in this area is to maintain a
regular presence on the financial markets in order to be
able to offer its customers competitive prices.
As part of this fundamental strategy:
• Crédit du Nord holds very few positions on derivatives
markets and regularly matches customer orders
through its shareholder, thereby significantly reducing
its exposure to market and counterparty risks;
• with regard to other instruments, the trading limits
imposed on the cash position in terms of geographic
regions, authorised volumes and the duration of
open positions are determined jointly with the Bank’s
shareholder and are kept at low levels given Crédit du
Nord’s consolidated equity.
Although primary responsibility for risk management
naturally rests with the front office managers,
responsibility for supervision lies with a special unit
which is part of the Treasury and Foreign Exchange
Department. Specifically, this unit carries out the
following functions:
The method used is the “historical simulation” method. It
is based on the following principles:
• permanent monitoring of positions and results, in
collaboration with the front office;
• the creation of a database containing historical
information on the main risk factors which are
representative of Societe Generale Group’s positions
(interest rates, share prices, exchange rates,
commodity prices, volatility, credit spreads, etc.). VaR
is therefore calculated using a database of several
thousand risk factors;
• verification of the market criteria used to calculate
risks and results;
• daily calculation of market risk, using a formal and
secure procedure;
• daily limit monitoring for each activity.
Methods used to measure market risks
• the definition of 260 scenarios, corresponding to
one-day variations in these market parameters over
a sliding one-year period;
Market risk is assessed using three main indicators
which are used to define exposure limits:
• the application of these 260 scenarios to the daily
market parameters;
• the 99% Value-at-Risk method, in accordance with
the regulatory internal model, a composite indicator
for day-to-day monitoring of market risks incurred by
the bank, in particular in its trading activities;
• the revaluation of daily positions, on the basis of the
adjusted daily market conditions, and on the basis of
a revaluation taking into account the non-linearity of
positions.
• stress test measurements, based on the 10-year
shock-type indicator, are established by Societe
Generale and transmitted to Crédit du Nord so
that it can incorporate them into its limit monitoring
methods;
The 99% Value at Risk is the largest loss that would
be incurred after eliminating the top 1% of the most
unfavourable occurrences: over one year, or 260
scenarios, it corresponds to the average of the second
and third largest losses observed.
• complementary limits (sensitivity, nominal, holding
periods, etc.) which ensure consistency between the
total risk limits and the operational limits used by the
front office. These limits also enable risks only partially
detected by VaR or stress-test measurements to be
controlled (as is the case for options).
Since June 30, 1998, Crédit du Nord has used an
application developed by Societe Generale known as
TRAAB (gross annual actuarial rate of return), used
by the Treasury and Foreign Exchange Department,
which incorporates the data required to calculate risk
profiles on a daily basis. This information is also used
by Societe Generale for its own consolidated risk
monitoring. The model is based on a historical data
series of daily movements in interest rate or exchange
rate instruments, which are applied to daily positions in
order to measure risk with a 99% confidence interval
and sensitivity to 10 basis points.
Value at Risk (VaR) method
This method was introduced at the end of 1996. It is
constantly being improved with the addition of new risk
factors and the extension of the scope covered. The
new risk parameters and changes in the scope of the
portfolios are incorporated by Societe Generale into the
TRAAB application, and Crédit du Nord then receives
the new, updated versions. Societe Generale then uses
files sent back by Crédit du Nord in TRAAB format to
calculate the VaR.
2
The chart below shows the change in the Group’s 99%
Value at Risk (VaR) over the course of 2013; the values
indicated present the following characteristics:
• change in the portfolio over a 1-day holding period;
• a confidence interval of 99%;
• historical data considered for the last 260 business
days.
85
2
Trading Value-at-Risk: breakdown by risk factor
1 Day - 99%/FY 2013
(in EUR thousands)
02/01/2013
Forex
Treasury
currency
Securities and off-balance
sheet interest rate
Netting
effect
-31
-17
-484
56
Overall
-476
(1)
-422
-1,004
Minimum
-12
-11
-412
NS
Maximum
-227
-44
-979
NS (1)
Average
-34
-28
-543
51
31/12/2013
-52
-14
-848
48
LIMITS
-1,000
-554
-866
-1,000
(1) Immaterial netting effect: potential min/max losses do not occur simultaneously.
A confidence interval of 99% means that over a one day
period there is a 99% probability that a potential loss will
not exceed the defined value.
Netting is defined as the difference between the total
VaR and the sum of VaR per risk factor. Its size reflects
the more or less high degree of offsetting between the
different type of risks (interest rate, treasury exchange
rate, securities and off-balance sheet rates) among one
another.
Value at Risk (1 day - 99%)
(in EUR thousands)
-1,200
-1,000
-800
-600
-400
-200
0
02/01/13
02/03/13
02/05/13
Limits of the VaR calculation
The VaR assessment is based on a conventional model
and assumptions. The main methodological limitations
therein are as follows:
• the use of “1-day” shocks assumes that all positions
can be unwound or hedged within one day, which is
not the case for some products and in some crisis
situations;
• the use of the 99% confidence interval does not take
into account any losses arising beyond this interval;
the VaR is therefore an indicator of losses under
86
02/07/13
02/09/13
02/11/13
normal market conditions and does not take into
account exceptionally large fluctuations;
• VaR is calculated using closing prices, so intra-day
fluctuations are not taken into account;
• there are a number of approximations in the VaR
calculation. For example, benchmark indices are
used instead of certain risk factors and, in the case of
some activities, not all of the relevant risk factors are
taken into account, which may be due to difficulties
in obtaining daily data, and options held in the trading
portfolio are not taken into account.
Crédit du Nord controls the limitations of the
VaR model by:
• systematically assessing the appropriateness of the
model by back-testing to verify that the number of
days for which the negative result exceeds the VaR
complies with the 99% confidence interval;
• supplementing the VaR system with stress test
measurements. Note that, given today’s dislocated
markets, the historical 99% 1-day VaR seems less
appropriate than other risk indicators, such as stress
tests.
Allocation of market risk limits and
organisation of limit monitoring
2
Once a final opinion has been received, the limits are
sent by Societe Generale to the CEO’s office and are
then compiled and integrated into the daily monitoring
and reporting system. The last notification occurred in
June 2012.
A monitoring report is submitted daily to Societe
Generale, in which any breaches are reported.
The Finance Department is notified each week by the
Treasury and Foreign Exchange Department via a results
and limits monitoring report, and monthly via a report
covering changes in risks and results. The CEO and
CFO also receive a quarterly report on changes in risk
from the Treasury and Foreign Exchange Department.
Capital market exposure limits are allocated annually as
follows: a proposal is drawn up internally and presented
to the Executive Committee. If approved, it is transmitted
to the Risk Control Division of Societe Generale (the
market risk monitoring team) for its opinion.
NOTE 4 Cash, due from central banks
(in EUR millions)
31/12/2013
31/12/2012
Cash
183.6
174.6
553.4
1,901.4
Related receivables
TOTAL
1.0
1.1
738.0
2,077.1
87
2
NOTE 5 Financial liabilities at fair value through profit or loss
31/12/2013
(in EUR millions)
Valuation
Valuation
determined
determined
using prices using observable
quoted data other than
on active quoted market
markets
prices
(L1)
(L2)
31/12/2012
Valuation
determined
mainly
using nonobservable
market data
(L3)
Valuation
Valuation
determined
determined
markets
prices
Total
(L1)
(L2)
Valuation
determined
mainly
using nonobservable
market data
(L3)
Total
ASSETS
TRADING PORTFOLIO
Bonds and other fixed-income
securities
0.6
-
-
0.6
2.2
-
-
2.2
13.8
-
-
13.8
17.8
-
-
17.8
-
-
-
-
-
-
-
-
14.4
-
-
14.4
20.0
-
-
20.0
114.9
123.0
1.8
239.7
60.8
105.8
2.0
168.6
0.4
1,385.9
- 1,386.3
0.1
1,236.6
-
-
-
-
-
115.3
1,508.9
1.8 1,626.0
60.9
1,342.4
-
-
-
-
-
-
-
-
Interest rate instruments
-
48.3
-
48.3
-
97.7
-
97.7
Firm transactions
-
43.2
-
43.2
-
85.4
-
85.4
Swaps
-
43.2
-
43.2
-
85.4
-
85.4
FRAs
-
-
-
-
-
-
-
-
Options
-
5.1
-
5.1
-
12.3
-
12.3
Shares and other equity securities
Other financial assets
SUB-TOTAL ASSETS HELD FOR
TRADING
FINANCIAL ASSETS MEASURED
UNDER THE FAIR VALUE OPTION
RECOGNISED IN PROFIT OR
LOSS
securities
Shares and other equity securities (1)
Other financial assets
SUB-TOTAL FINANCIAL ASSETS
MEASURED UNDER THE FAIR
VALUE OPTION RECOGNISED
IN PROFIT AND LOSS
SUB-TOTAL SEPARATE ASSETS
RELATING TO EMPLOYEE
BENEFITS
-
- 1,236.7
-
-
2.0 1,405.3
TRADING DERIVATIVES
Options on organised markets
-
-
-
-
-
-
-
-
OTC options
-
-
-
-
-
-
-
-
Caps, floors, collars
12.3
-
5.1
-
5.1
-
12.3
-
Foreign exchange instruments
-
37.1
-
37.1
-
38.9
-
38.9
Firm transactions
-
29.3
-
29.3
-
31.2
-
31.2
Options
-
7.8
-
7.8
-
7.7
-
7.7
Equity and index instruments
-
-
-
-
-
-
-
-
Other forward financial instruments
-
-
-
-
-
-
-
-
Instruments on organised markets
-
-
-
-
-
-
-
-
OTC instruments
SUB-TOTAL TRADING
DERIVATIVES
-
-
-
-
-
-
-
-
-
85.4
-
85.4
-
136.6
-
136.6
129.7
1,594.3
1.8 1,725.8
80.9
1,479.0
TOTAL FINANCIAL ASSETS AT FAIR
VALUE THROUGH PROFIT OR LOSS (1)
(1) Including UCITS.
88
2.0 1,561.9
2
Changes in financial assets at fair value through profit or loss determined using non-observable
parameters (third level)
Financial assets using fair value option
through profit or loss
Trading portfolio
(in EUR millions)
Bonds and
Bonds and
other fixed- Shares and
Other other fixed- Shares and
income secu- other equity financial
income other equity
rities securities
assets securities
securities
Balance at January 1, 2013
-
-
2.0
-
Trading financial derivatives
Other Interest
Foreign Equity and
financial rate deri- exchange index deriassets vatives derivatives
vatives
-
-
-
-
Other Total finanforward cial assets
Credit financial at fair value
Commodity derivainstruthrough
derivatives
tives
ments profit or loss
-
-
-
2.0
Acquisitions
Disposals/
redemptions
-
Transfer to Level 2
-
Transfer to Level 1
Transfer from
Level 2
Transfer from
Level 1
Gains and losses
for the period
Foreign exchange
differences
Changes in scope
and other changes
BALANCE AT DECEMBER 31, 2013
-
-
-0.2
-0.2
-
-
-
1.8
-
-
-
-
-
-
-
-
1.8
89
2
31/12/2013
(in EUR millions)
Valuation
Valuation
determined
determined
markets
prices
(L1)
(L2)
31/12/2012
Valuation
determined
mainly
using nonobservable
market data
(L3)
Valuation
Valuation
determined
determined
markets
prices
Total
(L1)
(L2)
Valuation
determined
mainly
using nonobservable
market data
(L3)
Total
LIABILITIES
TRADING PORTFOLIO
Debt securities
Amounts payable on borrowed
securities
securities sold short
sold short
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
0.1
-
-
0.1
0.2
-
-
0.2
-
-
-
-
-
-
-
-
0.1
-
-
0.1
0.2
-
-
0.2
-
55.5
-
55.5
-
98.3
-
98.3
Firm transactions
Other financial liabilities
SUB-TOTAL TRADING
PORTFOLIO
TRADING DERIVATIVES
-
52.1
-
52.1
-
94.2
-
94.2
Swaps
-
52.1
-
52.1
-
94.2
-
94.2
FRAs
-
-
-
-
-
-
-
-
Options
-
3.4
-
3.4
-
4.1
-
4.1
Options on organised markets
-
-
-
-
-
-
-
-
OTC options
-
-
-
-
-
-
-
-
-
3.4
-
3.4
-
4.1
-
4.1
-
37.1
-
37.1
-
38.4
-
38.4
Firm transactions
-
28.5
-
28.5
-
29.7
-
29.7
Options
-
8.6
-
8.6
-
8.7
-
8.7
Equity and index instruments
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
OTC instruments
SUB-TOTAL TRADING
DERIVATIVES
SUB-TOTAL FINANCIAL
LIABILITIES AT FAIR VALUE
THROUGH PROFIT OR LOSS (2)
-
-
-
-
-
-
-
-
-
92.6
-
92.6
-
136.7
-
136.7
-
2,382.1
- 2,382.1
-
1,256.6
- 1,256.6
0.1
2,474.7
- 2,474.8
0.2
1,393.3
- 1,393.5
TOTAL FINANCIAL LIABILITIES AT FAIR
VALUE THROUGH PROFIT OR LOSS
31/12/2013
(in EUR millions)
TOTAL FINANCIAL LIABILITIES AT FAIR
VALUE THROUGH PROFIT OR LOSS (2)
Amount repayable
Fair value
at maturity
2,382.1
31/12/2012
Difference between
fair value and amount
repayable at maturity
2,364.6
17.5
Amount repayable
Fair value
at maturity
1,256.6
1,270.0
Difference between
fair value and amount
repayable at maturity
-13.4
(2) The change in fair value attributable to own credit risk generated an expense of -€43.5 million at December 31, 2013. Revaluation differences linked to the Group’s issuer credit
risk are measured using models incorporating the Group’s most recent actual refinancing terms and conditions on the markets and the residual maturity of the relevant liabilities.
90
2
NOTE 6 Hedging derivatives
31/12/2013
31/12/2012
(in EUR millions)
Assets
Liabilities
Assets
Liabilities
Fair value hedge (1)
844.6
422.9
1,234.2
565.7
842.9
422.9
1,233.1
565.7
842.9
422.9
1,233.1
565.7
1.7
-
1.1
-
1.7
-
1.1
-
Firm transactions
Swaps
Options
Cash flow hedge
TOTAL
0.2
-
-
-
844.8
422.9
1,234.2
565.7
(1) Including Macro Fair Value Hedge derivatives
NOTE 7 Available-for-sale financial assets
31/12/2013
(in EUR millions)
Valuation
Valuation
determined
determined
using
using prices
observable
markets
prices
(L1)
(L2)
31/12/2012
Valuation
determined
mainly
using nonobservable
market data
(L3)
Total
-
3,042.7
Valuation
Valuation
determined
determined
using
using prices
observable
markets
prices
(L1)
(L2)
Valuation
determined
mainly
using nonobservable
market data
(L3)
Total
-
689.3
CURRENT ASSETS
Treasury notes and similar
securities
3,042.7
-
o/w related receivables
o/w impairments
securities
2,640.8
5,349.5
-
o/w impairments
Shares and other equity
securities(1)
-
92.4
5.3
o/w impairments
SUB-TOTAL
Long-term investment securities
5,683.5
5,441.9
-
14.9
217.4
o/w loaned securities
5.6
-
-
7,990.3
2,634.3
4,320.6
- 6,954.9
67.5
63.4
-21.0
-14.3
97.7
0.9
8.1
5.2
-
-3.4
232.3
3,324.5
4,328.7
-
-
5.2 7,658.4
469.8
14.9
5,683.5
5,456.8
-
-
217.4
-3.8
232.3
222.7 11,363.0
-
469.8
0.1
-2.9
-
14.2
-3.3
-
o/w impairments
TOTAL AVAILABLE-FOR-SALE
FINANCIAL ASSETS
-
12.7
5.3 11,130.7
SUB-TOTAL
689.3
-
-
-
3,324.5
4,328.7
-
-
469.8
469.8
475.0 8,128.2
-
-
(1) Including UCITS.
91
2
Activity in available-for-sale financial assets
2013
2012
8,128.2
6,668.3
(in EUR millions)
Acquisitions
Disposals/redemptions/mergers
6,728.0
3,480.3
-3,233.9
-2,313.2
Reclassifications and changes in scope
Gains and losses on changes in fair value booked to equity
-206.9 (2)
-41.0
(3)
334.9
-57.5
Change in impairment of fixed-income securities booked to profit or loss
-6.8
Change in impairment of equity instruments booked to profit or loss
Change in related receivables
Foreign exchange differences
-
1.0
0.9
11.2
-1.9
-0.3
-0.1
11,363.0
8,128.2
(2) The amounts reported as “reclassifications and changes in scope” can be attributed to the conversion of Antarius shares into available-for-sale securities and the conversion of
convertible bonds into shares, previously measured at fair value through profit or loss.
(3) The difference in relation to “Revaluation of available-for-sale assets” under shareholders’ equity relates mainly to €69.7 million for “Insurance - net allowances for deferred profit
sharing” and -€50.5 million for “Unrealised gains or losses on available-or-sale securities”.
Change in inventory of available-for-sale assets whose valuation is not based on market parameters
(in EUR millions)
Treasury notes
and similar
securities
Bonds and other fixed- Shares and other
income securities equity securities
-
-
5.2
Acquisitions
Disposals/redemptions
-0.1
Transfers to Level 2
Long-term investment
securities
Total
469.8
475.0
0.1
0.1
-242.9
-243.0
-8.8
-8.8
Transfers from Level 1
-
Gains and losses for the period booked
to equity
0.2
-0.6
Change in impairment of fixed-income
securities booked to profit or loss
o/w:
-0.4
-
increase
-
write-back
-
Impairment of equity instruments booked
to profit or loss
-0.2
-0.2
Change in related receivables
-
Foreign exchange differences
-
Changes in scope and other changes
92
-
-
5.3
217.4
222.7
2
NOTE 8 Due from banks
(in EUR millions)
Current accounts
Overnight deposits and loans and others
Loans secured by overnight notes
Related receivables
31/12/2013
31/12/2012
502.9
2,180.5
1,801.7
7.0
-
-
0.4
0.2
TOTAL - DEMAND AND OVERNIGHTS
2,305.0
2,187.7
Term deposits and loans
2,192.6
3,658.2
Loans secured by notes and securities
-
-
Securities received under term repurchase agreements
-
-
101.6
95.5
29.8
5.8
Subordinated loans and participating securities
Related receivables
Total - term receivables
TOTAL GROSS
Provisions for impairment
TOTAL NET
Fair value of amounts due from banks (1)
2,324.0
3,759.5
4,629.0
5,947.2
-0.5
-0.5
4,628.5
5,946.7
4,628.5
5,946.7
It should also be noted that, of the total amount due from banks at December 31, 2013, €2,549.4 million represented
transactions with Societe Generale Group (€3,766.8 million at December 31, 2012).
(1) Breakdown of the fair value of amounts due from banks by level:
31/12/2013
(in EUR millions)
Level 1
Valuation determined using prices quoted on active markets
Level 2
Valuation determined using observable data other than quoted market prices
Level 3
Valuation determined mainly using non-observable market data
TOTAL GROSS
4,628.5
4,628.5
93
2
NOTE 9 Customer loans
(in EUR millions)
Trade notes
31/12/2013
31/12/2012
541.5
620.8
0.5
0.6
542.0
621.4
2,018.8
2,148.2
Related receivables
TOTAL TRADE NOTES
Other customer loans
Short-term loans
Export loans
Equipment loans
Housing loans
Other loans
56.6
67.1
6,394.7
6,552.1
18,666.5
18,150.1
4,476.2
4,324.0
Related receivables
TOTAL - OTHER CUSTOMER LOANS
Overdrafts
52.1
56.2
31,664.9
31,297.7
2,081.4
2,197.3
23.8
23.8
2,105.2
2,221.1
34,312.1
34,140.2
-1,162.4
-1,094.0
Related receivables
TOTAL - OVERDRAFTS
TOTAL GROSS
(1)
Impairments of groups of homogeneous assets
-122.0
-78.0
IMPAIRMENTS
-1,284.4
-1,172.0
NET AMOUNT
33,027.7
32,968.2
Securities purchased under resale agreements (including related receivables)
-
-
TOTAL - CUSTOMER LOANS
33,027.7
32,968.2
Fair value of customer loans (2)
33,580.7
33,403.2
(1) At December 31, 2013, individual loans with a probable risk of loss amounted to €2,267.4 million versus €2,021.1 million at December 31, 2012.
The provisioning ratio for doubtful and disputed loans net of guarantees received is 75.2%.
The guarantees taken into account do not include guarantees on finance lease outstandings.
(2) Breakdown of the fair value of customer loans by level:
(in EUR millions)
Level 1
-
Level 2
-
Level 3
TOTAL GROSS
94
31/12/2013
33,580.7
33,580.7
2
Breakdown of other customer loans
(in EUR millions)
31/12/2013
31/12/2012
Non-financial customers
31,611.9
31,239.8
Business customers
13,175.0
13,231.5
Individual customers
17,185.9
16,656.5
Local authorities
Professional customers
Governments and central administrations
Others
Financial customers
TOTAL - BREAKDOWN OF OTHER CUSTOMER LOANS
Related receivables
TOTAL - OTHER CUSTOMER LOANS
12.6
19.4
1,108.2
1,131.6
2.3
52.8
127.9
148.0
0.9
1.7
31,612.8
31,241.5
52.1
56.2
31,664.9
31,297.7
NOTE 10 Non-current assets held for sale and associated liabilities
(in EUR millions)
31/12/2013
31/12/2012
ASSETS
Fixed assets and goodwill
1.6
-
Financial assets
-
-
Loans
-
-
Due from banks
-
-
Customer loans
-
-
Other loans
-
-
-
-
1.6
-
Provisions
-
-
Liabilities
-
-
Due to banks
-
-
Customer deposits
-
-
Other debts
-
-
Other assets
TOTAL ASSETS
LIABILITIES
Other liabilities
TOTAL LIABILITIES
-
-
-
-
95
2
NOTE 11 Lease financing and similar agreements
31/12/2013
31/12/2012
1,616.0
1,665.3
587.6
581.7
5.8
0.2
2,209.4
2,247.2
-79.0
-68.7
Impairments of lease financing assets
-0.9
-0.6
Impairments of groups of homogeneous assets
-2.7
-3.5
SUB-TOTAL
-82.6
-72.8
TOTAL NET
2,126.8
2,174.4
2,183.0
2,175.5
(in EUR millions)
Non-real estate lease financing agreements
Real estate lease financing agreements
Related receivables
SUB-TOTAL
Fair value of receivables on lease financing and similar assets (1)
The activities of Star Lease, the equipment leasing subsidiary, break down as follows: 56% industrial equipment,
38% transport equipment, 4% IT hardware and 2% office equipment.
(1) Breakdown of the fair value of lease financing and similar transactions by level:
31/12/2013
(in EUR millions)
Level 1
-
Level 2
-
Level 3
2,183.0
TOTAL GROSS
2,183.0
Breakdown of lease financing outstandings (excluding doubtful outstandings)
(in EUR millions)
Gross investment
Less than one year
1-5 years
More than five years
Present value of minimum payments receivable
Less than one year
1-5 years
More than five years
Unearned financial income
Non-guaranteed residual values receivable by the lessor
96
31/12/2013
31/12/2012
2,424.4
2,363.6
755.3
718.9
1,292.0
1,277.2
377.1
367.5
2,124.5
2,176.7
714.5
694.3
1,104.2
1,138.9
305.8
343.5
216.0
117.0
83.9
69.8
2
NOTE 12 Held-to-maturity financial assets
31/12/2013
31/12/2012
-
-
Listed
-
-
Unlisted
-
-
Related receivables
-
-
(in EUR millions)
Treasury notes and similar securities
Bonds and other fixed-income securities
Listed
Unlisted
Related receivables
Impairments
TOTAL HELD-TO-MATURITY FINANCIAL ASSETS
Fair value of held-to-maturity financial assets (1)
2.1
26.0
-
24.5
3.1
4.6
-
-
-1.0
-3.1
2.1
26.0
2.1
26.1
(1) Breakdown of the fair value of held-to-maturity financial assets by level:
31/12/2013
(in EUR millions)
Level 1
-
Level 2
-
Level 3
TOTAL GROSS
2.1
2.1
97
2
NOTE 13 Tax assets and liabilities
(in EUR millions)
31/12/2013
31/12/2012 (1)
Current tax assets
90.8
221.0
Deferred tax assets
292.2
335.0
TOTAL TAX ASSETS
383.0
556.0
Current tax liabilities
231.2
280.8
Deferred tax liabilities
537.4
617.4
768.6
898.2
TOTAL TAX LIABILITIES
Deferred taxes on items debited or credited directly to equity can be broken down as follows:
31/12/2013
31/12/2012
On items subsequently reclassified in the income statement
-0.6
-1.4
-0.6
-1.4
-
-
(in EUR millions)
Hedging derivatives
Share of gains or losses booked directly to equity on companies accounted
for by the equity method and that will be subsequently reclassified in the income
statement
-
-
On items not subsequently reclassified in the income statement
10.6
-
Actuarial gains or losses on post-employment benefits
10.6
-
-
-
10.0
-1.4
Share of gains or losses booked directly to equity on companies accounted
for by the equity method and that will not be subsequently reclassified
in the income statement
TOTAL
(2)
(2) o/w €10.6 million at December 31, 2013 included in deferred tax assets and €0.6 million in deferred tax liabilities versus €1.4 million included in deferred tax assets
at December 31, 2012.
98
2
NOTE 14 Other assets and liabilities
(in EUR millions)
31/12/2013
31/12/2012 (1)
OTHER ASSETS
Securities transactions
1.0
1.2
Guarantee deposits paid (2)
38.5
33.3
Other sundry receivables
76.8
68.6
Prepaid expenses and deferred income
95.5
108.7
Impairments
-1.0
-0.6
Other insurance assets
274.2
270.0
TOTAL OTHER ASSETS
485.0
481.2
154.9
168.3
OTHER LIABILITIES
Accounts payable after collection
17.1
66.5
Guarantee deposits received (3)
34.8
52.3
Expenses payable on employee benefits
157.1
148.8
Other sundry payables
448.2
378.3
Accrued expenses and deferred income
278.9
315.5
Other insurance liabilities
TOTAL OTHER LIABILITIES
9.8
10.3
1,100.8
1,140.0
(2) Primarily security deposits paid on financial instruments.
(3) Primarily security deposits received on financial instruments.
99
2
NOTE 15 Fixed assets
(in EUR millions)
Gross value at
31/12/2012
Inflows
Outflows
Change in scope
and reclassifications
263.7
25.1
-34.3
-
Intangible assets
Software created
Software purchased
88.9
0.4
-
-0.4
122.5
1.3
-0.5
-0.4
475.1
26.8
-34.8
-0.8
Land and buildings
324.5
6.2
-1.4
-8.4
IT hardware
137.7
1.8
-0.9
-5.1
Other tangible assets
486.2
33.7
-0.2
-36.8
Real estate leasing
1.7
-
-
-
Equipment leasing
-
-
-
-
950.1
41.7
-2.5
-50.3
21.1
0.9
-25.1
10.1
Other intangible assets
SUB-TOTAL INTANGIBLE ASSETS
Operating tangible assets
SUB-TOTAL OPERATING TANGIBLE ASSETS
Investment property
Land and buildings
Fixed-assets in progress
SUB-TOTAL INVESTMENT PROPERTY
TOTAL - TANGIBLE AND INTANGIBLE FIXED ASSETS
100
-
-
-
-
21.1
0.9
-25.1
10.1
1,446.3
69.4
-62.4
-41.0
Gross value
at 31/12/2013
Cumulated
amortisation and
depreciation
at 31/12/2012
Allocations
254.5
-175.8
-22.8
-
2
Amortisation and depreciation for the year
Change in scope
and reclassifications
Net value at
31/12/2013
Net value at
31/12/2012
33.3
-
89.2
87.9
Impairments Write-backs
88.9
-86.1
-1.9
-
-
0.4
1.3
2.8
122.9
-11.6
-3.6
-
-
-
107.7
110.9
466.3
-273.5
-28.3
-
33.3
0.4
198.2
201.6
320.9
-84.9
-12.6
-
0.5
3.9
227.8
239.6
133.5
-125.3
-5.5
-
0.9
4.5
8.1
12.4
482.9
-347.2
-34.5
-0.5
-0.4
31.2
131.5
139.0
1.7
-1.6
-
-
-
-
0.1
0.1
-
-
-
-
-
-
-
-
939.0
-559.0
-52.6
-0.5
1.0
39.6
367.5
391.1
7.0
-10.5
-0.7
-
7.1
0.9
3.8
10.6
-
-
-
-
-
-
-
-
7.0
-10.5
-0.7
-
7.1
0.9
3.8
10.6
1,412.3
-843.0
-81.6
-0.5
41.4
40.9
569.5
603.3
101
2
NOTE 16 Goodwill
(in EUR millions)
Gross value at 31/12/2012
508.0
Acquisitions and other increases
-
Disposals and other decreases
-
GROSS VALUE AT 31/12/2013
508.0
Impairment of goodwill at 31/12/2012
-
Impairment losses
-
IMPAIRMENT OF GOODWILL AT 31/12/2013
Net value at 31/12/2012
NET VALUE AT 31/12/2013
508.0
508.0
Main sources of net goodwill at December 31, 2013
(in EUR millions)
10.2
Banque Laydernier
12.8
Banque Kolb
22.3
Banque Tarneaud
Fortis branches
NET VALUE AT 31/12/2013
102
Banque Courtois
3.3
454.2
5.2
508.0
2
NOTE 17 Impairments and provisions
Impairments
Note
(in EUR millions)
Asset
impairments
at 31/12/2012
Allocations
Write-backs
available
Write-backs
used
Others
Asset
impairments
at 31/12/2013
Banks
8
0.5
-
-
-
-
0.5
Loans to customers
9
1,094.0
424.2
-252.7
-103.1
-
1,162.4
11
68.7
49.5
-34.5
-4.7
-
79.0
Provisions for homogeneous assets
9
81.5
44.2
-1.0
-
-
124.7
Available-for-sale assets
7
21.5
0.5
-0.1
-
5.3 (1)
27.2
Held-to-maturity assets
12
3.0
-
-2.0
-
-
1.0
Fixed assets
15
0.8
0.5
-
-
-
1.3
Others
TOTAL IMPAIRMENTS
0.6
0.6
-
-0.3
-
0.9
1,270.6
519.5
-290.3
-108.1
5.3
1,397.0
(1) Permanent impairment recognised by Antarius, for which the risk of loss is borne by policyholders.
Provisions
Provisions at
31/12/2012 (2) Allocations
(in EUR millions)
Provisions for employee benefits
Provisions for property risks
(3)
Provisions for disputes
Provisions for off-balance sheet
commitments with credit institutions
commitments with customers
Tax provisions
Other provisions (4)
TOTAL PROVISIONS
128.9
15.2
Write-backs
available
Write-backs
used
Effect
of discounting
Others
Provisions at
31/12/2013
-1.7
-15.1
-10.5
0.2
117.0
0.3
-
-
-
-
-
0.3
14.7
3.1
-3.8
-3.1
-
-
10.9
-
-
-
-
-
-
-
51.4
8.6
-42.1
-
-
-
17.9
3.1
-
-0.3
-2.8
-
-
18.2
1.0
-0.4
-1.8
-
0.1
216.6
27.9
-48.3
-22.8
-10.5
0.3
17.1 (5)
163.2
(3) Provisions for property risks cover termination losses relative to investments in property programmes.
(4) The other provisions have no effect on the cost of risk.
(5) Home savings provisions totalled €15.3 million at December 31, 2013, in line with December 31, 2012 (see Note 21).
103
2
NOTE 18 Due to banks
(in EUR millions)
Current accounts
Overnight deposits and borrowings
31/12/2013
31/12/2012
227.4
250.9
93.4
163.8
Borrowings secured by overnight notes
-
-
Securities loaned under overnight repurchase agreements
-
-
Related payables
TOTAL DEMAND DEPOSITS
Term deposits and borrowings
Borrowings secured by notes and securities
Securities sold under term repurchase agreements
Related payables
TOTAL TERM DEPOSITS
Revaluation of hedged items
TOTAL
Fair value of amounts due to banks (1)
0.1
0.1
320.9
414.8
1,001.6
7,215.9
53.3
-
-
-
6.1
32.4
1,061.0
7,248.3
63.4
91.7
1,445.3
7,754.8
1,445.3
7,754.8
It should also be noted that, at December 31, 2013, €771 million of the total amount due to banks represented
transactions with Societe Generale Group (€3,701.5 million at December 31, 2012).
(1) Breakdown of the fair value of amounts due to banks by level:
(in EUR millions)
Level 1
Level 2
Level 3
TOTAL GROSS
104
31/12/2013
1,445.3
-
1,445.3
2
NOTE 19 Customer deposits
31/12/2013
31/12/2012
Demand regulated savings accounts
9,289.5
8,904.0
Term regulated savings accounts
2,013.0
1,952.3
Demand and overnight accounts
15,751.3
14,792.9
(in EUR millions)
Companies and individual entrepreneurs
9,445.7
8,834.2
5,563.8
5,189.9
Financial customers
10.6
5.2
731.2 (1)
Others
Term accounts
763.6
3,060.9
2,720.4
2,768.5
2,346.1
135.5
194.4
Financial customers
-
Others
156.9
Borrowings secured by notes and securities
Securities sold under overnight repurchase agreements
(2)
179.9
-
-
42.5
-
Securities sold under term repurchase agreements
93.5
73.9
Related payables
58.3
172.1
Guarantee deposits
TOTAL
Fair value of customer deposits (3)
1.6
1.4
30,310.6
28,617.0
30,310.6
28,616.9
(1) Of which €170.5 million associated with governments and central administrations.
(2) Of which €7.2 million associated with governments and central administrations.
(3) Breakdown of the fair value of customer deposits by level:
31/12/2013
(in EUR millions)
Level 1
Level 2
Level 3
TOTAL GROSS
30,310.6
-
30,310.6
105
2
NOTE 20 Debt securities
31/12/2013
31/12/2012
8.0
9.3
Money market and negotiable debt securities
8,333.4
5,982.8
Bonds
2,018.6
699.6
31.8
25.9
10,391.8
6,717.6
-
-
10,391.8
6,717.6
9,644.3
5,058.3
10,443.3
6,784.7
(in EUR millions)
Savings certificates
Related payables
SUB-TOTAL
TOTAL
o/w amount of variable-rate debt
Fair value of debt securities
(1)
(1) Breakdown of the fair value of debt securities by level:
(in EUR millions)
Level 1
Level 2
Level 3
TOTAL GROSS
106
31/12/2013
10,443.3
-
10,443.3
2
NOTE 21 PEL/CEL home savings accounts
A. Outstanding deposits in PEL/CEL accounts
31/12/2013
31/12/2012
Less than 4 years old
730.2
601.3
Between 4 and 10 years old
341.1
375.0
More than 10 years old
668.7
679.8
1,740.0
1,656.1
280.5
305.2
2,020.5
1,961.3
31/12/2013
31/12/2012
13.6
23.1
14.3
13.3
1.9
2.0
29.8
38.4
31/12/2013
31/12/2012
-
5.9
-
0.8
13.1
3.3
SUB-TOTAL
13.1
10.0
1.4
4.3
(in EUR millions)
PEL accounts
SUB-TOTAL
CEL accounts
TOTAL
B. Outstanding housing loans granted in respect of PEL/CEL accounts
(in EUR millions)
TOTAL
C. Provisions for commitments linked to PEL/CEL accounts (1)
(in EUR millions)
PEL accounts
CEL accounts
Drawn-down loans
TOTAL
0.8
1.0
15.3
15.3
(1) These provisions are booked as “Provisions for general risk and commitments” (see Note 17).
D. Methods used to establish the parameters for valuing provisions
The parameters used to estimate future customer
behaviour are derived from historical observations of
customer behaviour patterns over long periods (over ten
years). The value of these parameters can be adjusted if
any changes are subsequently made to regulations with
the potential to undermine the reliability of past data as
an indicator of future customer behaviour.
The values of the different market parameters used,
notably interest rates and margins, are calculated on
the basis of observable data and constitute a best
estimate, at the date of valuation, of the future value of
these elements for the period concerned, in line with
the retail banking division’s policy of interest rate risk
management.
The discount rates used are derived from zero coupon
swaps vs. the Euribor yield curve at the date of valuation,
averaged over a 12-month period
107
2
NOTE 22 Employee benefits
1.
Post-employment defined contribution plans
Defined contribution plans limit the Group’s liability to the
contributions paid to the plan but do not commit the
Group to a specific level of future benefits.
2.
The main defined contribution plans provided to
employees of the Group are based in France. They
include State pension plans and national retirement
plans such as ARRCO and AGIRC, pension schemes
for which the only commitment is to pay annual
contributions (PERCO) and multi-employer plans.
Post-employment defined benefit plans
2.1 Reconciliation of assets and liabilities recorded in the balance sheet
31/12/2013
31/12/2012
Present value of defined benefit obligations (A)
119.2
134.0
Fair value of plan assets (B)
-90.3
-93.4
Actuarial deficit (C) = (A) + (B)
28.9
40.6
Present value of unfunded obligations (D)
37.2
37.7
Effect of asset ceiling (E)
-
-
Separate assets (F)
-
-
66.1
78.3
(in EUR millions)
NET BALANCE RECORDED ON THE BALANCE SHEET (C + D - E - F)
Notes:
1. Post-employment retirement plans include plans offering pre- and post-retirement benefits in the form of annuities and
termination benefits. Pension benefit annuities are paid additionally to State pension plans.
2. The present value of defined benefit obligations have been valued by independent qualified actuaries.
108
2.2
2
Components of the cost of defined benefits
31/12/2013
31/12/2012
6.7
5.4
Employee contributions
-
-
Past service cost/reductions
-
-
Impact of settlements
-
-5.0
2.2
3.2
-
-
(in EUR millions)
Current service cost for the year, including social security contributions
Net interest
Transfers of unrecognised assets
Changes in consolidation scope and other adjustments for the period
-
-0.5
8.9
3.1
-5.5
-8.1
-0.1
-0.2
Actuarial gains and losses due to changes in economic and financial assumptions
-3.1
24.8
Experience gains and losses
-1.8
-4.5
-
-
Components recognised in the income statement
Actuarial gains and losses related to assets
(1)
Actuarial gains and losses due to changes in demographic assumptions
Impact of asset ceiling
Components recognised in gains and losses booked directly to equity
TOTAL COMPONENTS OF COST OF DEFINED BENEFITS
-10.5
12.0
-1.6
15.1
(1) Return on plan assets, from which the amount of interest already expensed is deducted.
2.3
Changes in net liabilities of post-employment plans recognised in the balance sheet
2.3.1
Changes in the present value of defined benefit obligations
2013
(in EUR millions)
VALUE AT JANUARY 1
2012
171.8
159.7
6.7
5.4
-
-
Past service cost/reductions
-
-
Impact of settlements
-
-
4.5
6.4
Net interest
Actuarial gains and losses due to changes in demographic assumptions
-0.1
-0.2
Actuarial gains and losses due to changes in economic and financial assumptions
-3.2
24.7
Experience gains and losses
-1.8
-4.5
-
-
-21.5
-14.3
-
-
Foreign currency exchange adjustment
Benefit payments
Acquisition of subsidiaries
Transfers and others
VALUE AT DECEMBER 31
-
-5.5
156.4
171.7
109
2
2.3.2
Changes in fair value of plan assets and separate assets
(in EUR millions)
2013
2012
VALUE AT JANUARY 1
93.4
77.2
2.3
3.2
-
-
5.5
8.1
-
-
Interest expenses related to plan assets
Interest expenses related to separate assets
Actuarial gains and losses related to assets
-
-
Employer contributions
8.4
16.2
Benefit payments
-19.3
-11.3
-
-
Transfers, settlements and others
-
-
90.3
93.4
2.4
Information on funding of pension plans and plan funding conditions
2.4.1 General information on funding assets (composition, all plans combined and future contributions)
The fair value of plan assets is comprised of 24.3%
bonds, 57.9% equities and 17.8% other assets.
Surplus plan assets totalled €0.2 million.
The employer contributions for the defined benefit postemployment plans in 2014 will be determined after the
year-end evaluations.
Overall, 58% of plans are hedged, but depending on
the entity and the plan, hedging rates range from 0%
to 107%.
2.4.2
Actual returns on funding assets
Actual returns on plan assets and separate assets were:
(in EUR millions)
Plan assets
2013
2012
7.8
11.3
-
-
Separate assets
2.5
Main assumptions for post-employment plans
(in EUR millions)
Future salary increase (including inflation)
2013
3.5%
2012
(1)
3.5%
(1) Except for Société Marsellaise de Crédit.
The discount rate used depends on the term of
each plan (1.1% at 3 years/1.5% at 5 years/2.7% at
10 years/3.4% at 15 years and 3.6% at 20 years).
It depends on the yield curves for AA-rated corporate
bonds (source Merrill Lynch).
110
The average remaining lifetime is established individually
by benefit for each Group entity and is calculated taking
into account turnover assumptions.
The same inflation rate is used for all plans (1.9%).
2.6
2
Sensitivity analysis of post-employment defined benefit plan obligations to changes
in the main actuarial assumptions
(as % of the item measured)
2013
2012
-9.2%
-8.9%
10.8%
10.5%
8.5%
8.4%
Variation of +1% in discount rate
Impact on present value of defined benefit obligations at December 31, N
Variation of +1% in long-term inflation rate
Variation of +1% in future salary increases net of inflation
3.
Other long-term benefits
Other long-term benefits granted to Group employees
include deferred bonuses, such as flexible working
provisions and long-service awards. Other benefits
besides post-employment benefits and end-of-career
benefits are not due in full in the 12 months following the
end of the year in which the members of staff provided
the corresponding services.
The total amount of expenses on other long-term
benefits was €3.3 million.
The net balance of other long-term benefits was
€43.8 million.
111
2
NOTE 23 Subordinated debt
(in EUR millions)
31/12/2013
31/12/2012
-
-
631.0
631.0
-
-
Equity investments
Redeemable subordinated notes
Undated subordinated notes
Related payables
TOTAL
Fair value of subordinated debt
(1)
4.9
5.0
26.3
36.4
662.2
672.4
640.1
636.0
(1) Breakdown of the fair value of subordinated debt:
31/12/2013
(in EUR millions)
Level 1
-
Level 2
Level 3
640.1
-
TOTAL GROSS
640.1
Schedule of redeemable subordinated notes
2014
2015
2016
2017
2018
Others
Outstanding at
31/12/2013
Outstanding at
31/12/2012
-
100.0
115.0
-
66.0
350.0
631.0
631.0
Subordinated debt
NOTE 24 Insurance activities
Underwriting reserves of insurance companies
31/12/2013
31/12/2012
Underwriting reserves for unit-linked life insurance policies
1,082.0
962.0
Life insurance underwriting reserves
4,251.9
3,898.5
4.5
3.6
290.3
324.3
5,628.7
5,188.4
-
-
-244.5
-245.6
5,384.2
4,942.8
(in EUR millions)
Non-life insurance underwriting reserves
Deferred profit sharing - liabilities
TOTAL
Deferred profit sharing - assets
Underwriters’ share
Underwriting reserves of insurance companies (including deferred profit sharing)
net of underwriters’ share
112
2
Statement of changes in underwriting reserves of insurance companies
(in EUR millions)
Underwriting reserves for
unit-linked policies
Life insurance
underwriting reserves
Non-life insurance
underwriting reserves
962.0
3,898.5
3.6
24.4
333.4
0.9
106.9
-
-
Reserves at January 1, 2013 (excluding deferred profit-sharing)
Allocation to insurance reserves
Revaluation of unit-linked life policies
Charges deducted from unit-linked policies
Transfers and arbitrage
9.9
-
-
-21.2
20.4
-
New customers
-
-
-
Profit-sharing
-
-0.4
-
Others
-
-
-
1,082.0
4,251.9
4.5
RESERVES AT DECEMBER 31, 2013
(excluding deferred profit sharing)
In line with IFRS and Group principles,
the Liability Adequacy Test (LAT) was carried out at
December 31, 2013. The purpose of this test is to
determine whether recognised insurance liabilities are
adequate, using current estimates of future cash flows
generated by insurance policies.
It is carried out based on consistent stochastic models
using a Market Consistent Embedded Value approach.
Net investments by insurance companies (1)
(in EUR millions)
Debt instruments
Due from banks
Debt instruments
31/12/2013
31/12/2012
1,623.8
1,402.8
237.5
166.1
1,386.3
1,236.7
-
-
4,336.6
4,013.1
4,249.5
4,003.7 (2)
87.1
9.4 (2)
-
-
Investment property
-
-
5,960.4
5,415.9
TOTAL
(1) This table shows net insurance company investments before elimination of intra-group transactions.
(2) Amount adjusted in regard to financial statements published on December 31, 2012.
113
2
Underwriting income from insurance companies
(in EUR millions)
Earned premiums
Cost of benefits (including changes in reserves)
Net income from investments
Other net underwriting income/expense
CONTRIBUTION TO OPERATING INCOME BEFORE ELIMINATION
OF INTRA-GROUP TRANSACTIONS
Elimination of intra-group transactions
CONTRIBUTION TO OPERATING INCOME AFTER ELIMINATION
OF INTRA-GROUP TRANSACTIONS
2013
2012
788.8
746.5
-913.1
-840.6 (3)
149.2
119.0
11.3
7.3 (3)
36.2
32.2
-1.5
-1.5
34.7
30.7
(3) Amount adjusted in regard to financial statements published on December 31, 2012.
Net fee income (4)
2013
2012
Acquisition fees
14.4
13.9
Management fees
47.7
42.6
0.1
0.1
Acquisition fees
-13.2
-13.0
Management fees
-14.6
-13.4
-2.4
-2.3
32.0
27.9
(in EUR millions)
Fees received
Others
Fees paid
Others
TOTAL FEES
(4) This table shows income from fees before the elimination of intra-group transactions.
114
2
NOTE 25 Assets pledged and received as collateral
1. Assets pledged as collateral
(in EUR millions)
Net book value of assets pledged as collateral for liabilities
(1)
Net book value of assets pledged as collateral for securities transactions (2)
Net book value of assets pledged as collateral for off-balance sheet commitments
TOTAL
31/12/2013
31/12/2012
4,400.1
10,474.1
38.5
33.3
-
-
4,438.6
10,507.4
31/12/2013
31/12/2012
-
-
(1) The assets pledged as warranties mainly correspond to counter guarantees (notably with central banks).
(2) The assets pledged as security for financial transactions mainly correspond to deposits.
2. Assets received as collateral and available to the entity
(in EUR millions)
FAIR VALUE OF SECURITIES PURCHASED UNDER RESALE AGREEMENTS
115
2
NOTE 26 Transferred financial assets
1. Financial assets transferred but not derecognised
Financial assets which have been transferred but remain
fully recognised on the balance sheet include temporary
sales of securities (securities lending and securities with
repurchase or resale options) and certain debt waivers
to consolidated securitisation vehicles.
The accounting treatment of temporary security sales
is set out in Note 1 “Main rules for evaluating and
presenting the consolidated financial statements”.
In the case of temporary security sales, the Group
is exposed to the risk of default by the issuer of the
security (credit risk) and to increases or decreased
in the value of the securities (market risk). Securities
purchased or sold under resale/repurchase agreements
cannot simultaneously be used as collateral for another
transaction.
The temporary sale transactions (securities lending and
securities sold under repurchase agreements) shown
in the tables below relate only to securities recognised
individually under assets in the balance sheet in the
categories mentioned.
1.1 Securities sold under repurchase agreements
31/12/2013
Carrying amount
of assets
(in EUR millions)
Securities available for sale
TOTAL
31/12/2012
Carrying amount
of related debt
Carrying amount
of assets
Carrying amount
of related debt
189.5
189.3
74.0
73.9
189.5
189.3
74.0
73.9
1.2 Securities lending
31/12/2013
(in EUR millions)
31/12/2012
Carrying amount
of assets
Carrying amount
of related debt
Carrying amount
of assets
Carrying amount
of related debt
-
-
-
-
TOTAL
1.3 Securitisation assets for which the recourse of related debt holders is limited solely to the
assets transferred
Data at December 31, 2013
(in EUR millions)
Carrying amount
of assets
Carrying amount
of related debt
Fair value of
transferred assets
Fair value of
related debt
Net position
-
-
-
-
-
Carrying amount
of assets
Carrying amount
of related debt
Fair value of
transferred assets
Fair value of
related debt
Net position
-
-
-
-
-
TOTAL
Data at December 31, 2012
(in EUR millions)
TOTAL
2. Financial assets that have been partially transferred or fully derecognised
The Group has no significant amount of transferred financial assets that are partly or fully derecognised.
116
2
NOTE 27 Assets and liabilities by period remaining to expiration
Contractual maturities of financial liabilities (1)
Less than
3 months
3 months
- 1 year
1-5 years
More than
5 years
Undated
Total
-
-
-
-
-
-
Financial liabilities measured at fair
value through profit or loss excluding
derivatives
160.6
153.0
2,019.1
142.1
-
2,474.8
Due to banks
658.3
275.6
194.4
317.0
-
1,445.3
4,200.9
2,625.2
9,695.1
13,786.2
3.2
30,310.6
835.7
4,303.2
5,080.2
172.7
-
10,391.8
At December 31, 2013
(in EUR millions)
Customer deposits
Debt securities
Subordinated debt
TOTAL LIABILITIES
31.2
-
281.0
350.0
-
662.2
5,886.7
7,357.0
17,269.8
14,768.0
3.2
45,284.7
398.1
757.3
1,483.3
619.0
332.3
3,590.0
5,377.2
406.8
489.0
1,257.8
793.7
8,324.5
TOTAL COMMITMENTS GIVEN
5,775.3
1,164.1
1,972.3
1,876.8
1,126.0
11,914.5
(1) The amounts indicated are the contractual amounts excluding estimated interest.
Underwriting reserves of insurance companies (2)
(in EUR millions)
Underwriting reserves of insurance
companies
Less than
3 months
3 months
- 1 year
1-5 years
More than
5 years
Undated
Total
290.3
-
-
5,338.4
-
5,628.7
(2) Maturities of book amounts.
Notional maturities of commitments in financial derivatives (3)
0-1 year
1-5 years
More than 5 years
Total
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
Assets
Liabilities
9,049.4
9,048.9
13,399.9
13,399.5
11,110.3
11,111.2
33,559.6
33,559.6
-
-
-
-
-
-
-
-
391.9
152.0
1,850.7
542.9
25.9
16.4
2,268.5
711.3
968.8
928.8
447.8
429.3
-
-
1,416.6
1,358.1
-
-
-
-
-
-
-
-
(in EUR millions)
Firm transactions
Swaps
FRAs
Options
Foreign exchange
instruments
Foreign exchange options
Other forward instruments
(3) These items are presented based on the maturities of the financial instruments.
117
2
NOTE 28 Commitments
A. Loan commitments given and received
(in EUR millions)
31/12/2013
31/12/2012
173.4
201.2
3,416.6
3,346.2
227.9
247.9
2,853.0
3,116.0
247.0
213.2
4,996.6
14,027.5
2,555.5
3,316.7
13,070.5
16,191.0
236.2
241.3
50.5
44.6
COMMITMENTS GIVEN
Loan commitments
To banks
To customers
Guarantee commitments
On behalf of banks
On behalf of customers
On behalf of insurance activities
Others
COMMITMENTS RECEIVED
Loan commitments
From banks
From banks
From insurance activities
Others
(1)
(1) o/w €50.5 million in guarantee commitments received from government administrations and local authorities at December 31, 2013 (vs. €44.6 million at December 31, 2012).
Loan commitments and guarantees given to Societe Generale Group amounted to €576.2 million at
December 31, 2013 versus €4,132.0 million at December 31, 2012.
Loan commitments and guarantees received from Societe Generale Group amounted to €200.4 million at
December 31, 2013 versus €3,893.2 million at December 31, 2012.
B. Securities transactions and foreign exchange transactions
31/12/2013
31/12/2012
Securities to be received
1.4
2.7
Securities to be delivered
9.1
15.3
Currency to be received
3,735.3
3,657.7
Currency to be delivered
3,734.7
3,655.7
(in EUR millions)
At December 31, 2013, securities and foreign currency
to be received from Societe Generale Group totalled
€375.5 million while securities and foreign currency to
be delivered to Societe Generale Group amounted to
€389.1 million.
118
At December 31, 2012, securities and foreign currency
to be received from Societe Generale Group stood at
€357.7 million while securities and foreign currency to
be delivered to Societe Generale Group amounted to
€370.9 million.
2
C. Financial derivatives
31/12/2013
(in EUR millions)
31/12/2012
Assets
Liabilities
Assets
Liabilities
9,486.1
9,486.1
12,818.4
12,818.4
-
-
-
-
-
-
-
-
638.5
711.3
1,260.3
956.4
1,416.6
1,358.1
856.6
980.3
-
-
-
-
11,541.2
11,555.5
14,935.3
14,755.1
24,073.5
24,073.5
21,436.3
21,436.3
TRADING INSTRUMENTS
Firm transactions
Swaps
FRAs
Options
OTC options
Sub-total trading instruments
FAIR VALUE HEDGING INSTRUMENTS (2)
Firm transactions
Swaps
Options
SUB-TOTAL HEDGING INSTRUMENTS
TOTAL
1,630.0
-
1,885.0
-
25,703.5
24,073.5
23,321.3
21,436.3
37,244.7
35,629.0
38,256.6
36,191.4
(2) Including macro hedging derivatives at fair value through profit or loss.
At December 31, 2013, commitments of this nature
with Societe Generale Group stood at €32,966.7 million
compared with €33,861.6 million at December 31, 2012.
Under current regulations, transactions processed on
behalf of and on the order of customers are classified
in the Trading category, while any hedging of these
transactions is classified in “fair value hedging through
profit or loss”.
119
2
NOTE 29 Foreign exchange transactions
31/12/2013
31/12/2012
Assets
Liabilities
Currencies to
be received
Currencies to
be delivered
Assets
Liabilities
EUR
55,693.2
55,859.1
11.2
8.9
56,070.6
56,002.6
42.0
17.0
CHF
466.7
335.2
199.7
1.7
344.4
196.7
167.9
1.9
GBP
50.9
57.8
0.7
0.4
21.9
33.2
1.7
1.6
USD
449.6
456.0
48.0
318.8
245.1
476.0
100.9
241.3
JPY
4.6
3.8
-
0.7
5.0
2.4
0.7
0.1
74.2
27.3
112.4
41.3
73.6
49.7
72.8
123.9
56,739.2
56,739.2
372.0
371.8
56,760.6
56,760.6
386.0
385.8
(in EUR millions)
Other currencies
TOTAL
Currencies to Currencies to
be received be delivered
NOTE 30 Interest income and expense
(in EUR millions)
2013
2012
Transactions with banks
69.0
110.6
1,275.6
1,308.5
466.3
406.6
205.4
188.6
0.1
0.5
Transactions in financial instruments
Securities lending
Hedging derivatives
217.5
86.5
93.4 (1)
Real estate lease financing agreements
21.0
22.7 (1)
Non-real estate lease financing agreements
65.5
70.7 (1)
Finance leases
Other interest and similar income
TOTAL INTEREST INCOME
Debt securities
Subordinated and convertible debt
Securities borrowing
Hedging derivatives
Other interest and similar expenses
TOTAL INTEREST EXPENSES
TOTAL INTEREST AND SIMILAR INCOME
o/w interest income related to impaired financial assets
(1) Net of income from lease financing transactions relative to the financial statements published in 2012.
120
260.8
-
-
1,897.4
1,919.1
-79.3
-134.2
-374.0
-378.0
-316.0
-307.2
-113.5
-126.0
-18.0
-21.1
-
-
-184.5
-160.1
-
-
-769.3
-819.4
1,128.1
1,099.7
27.1
23.5
2013
2012
-10.3
-23.6
901.6
930.5
121.5
128.1
(in EUR millions)
2
NET INCOME (EXPENSE) FROM
Short-term loans
Export loans
Equipment loans
Housing loans
Others
Finance leases
Others
TOTAL INTEREST AND SIMILAR INCOME
1.1
1.5
170.7
187.1
722.1
736.5
-113.8
-122.7
150.3
99.4
86.5
93.4
-
-
1,128.1
1,099.7
2013
2012
6.3
-
297.0
282.6
7.9
6.8
NOTE 31 Fee income and expense
(in EUR millions)
FEE INCOME
Foreign exchange and financial derivatives transactions
Loan and guarantee commitments
Services
Others
2.1
2.2
33.4
32.5
612.5
631.1
-
-
959.2
955.2
-0.5
-0.4
-5.4
-5.4
Foreign exchange and financial derivatives transactions
-0.3
-0.1
SUB-TOTAL
FEE EXPENSE
-2.0
-1.9
Others
-128.1
-149.1
SUB-TOTAL
-136.3
-156.9
822.9
798.3
- Fee income, excluding EIR (1) linked to financial instruments not measured
at fair value through profit or loss
330.5
315.1
- Fee income relating to trusts or similar activities
132.3
128.3
-2.0
-1.9
-18.6
-18.1
TOTAL NET FEES AND COMMISSIONS
This fee income and expense includes:
(1)
- Fee expense excluding EIR linked to financial instruments not measured
at fair value through profit or loss
- Fee expenses relating to trusts or similar activities
(1) Effective Interest Rate.
121
2
NOTE 32 Net gains/losses on financial instruments at fair value through profit or loss
31/12/2013
31/12/2012
Net gain/loss on non-derivative financial assets held for trading
4.4
4.7
Net gain/loss on financial assets measured using fair value option
1.2
1.3
Net gain/loss on non-derivative financial liabilities held for trading
-
-
-66.0
-34.5
(in EUR millions)
Net gain/loss on financial liabilities measured using fair value option
(1)
8.9 (2)
Gain/loss on derivative financial instruments held for trading
Net gain/loss on hedging instruments/Fair value hedging
-238.7
Revaluation of hedged items attributable to hedged risks
227.1
Ineffective portion of cash flow hedge
Net gain/loss on foreign exchange transactions
TOTAL
(2)
15.6
264.3
-267.3
-
-
18.5
16.9
-44.6
1.0
(1) Including an expense of -€43.5 million related to the Group’s credit spread on the revaluation of the Group’s financial liabilities at December 31, 2013 (versus an expense of
-€12.4 billion at December 31, 2012).
(2) IFRS 13 “Fair value measurement” entered into force on January 1, 2013. The consequences of this standard relate primarily to the accounting of credit risk in the valuation of
derivative financial liabilities (Debt Value Adjustment - DVA). As a result of the clarifications provided by this standard, the Group adjusted the conditions for measuring counterparty
risk in the fair value of derivative financial assets (Credit Value Adjustment - CVA). As IFRS 13 was applied prospectively from January 1, 2013, the effects of this new standard on
the Group’s consolidated financial statements were recorded in the income statement under “Net gains and losses on financial instruments at fair value through profit or loss” for
an amount of -€12.2 million at December 31, 2013, which breaks down into income of €9.4 million in respect of DVA and an expense of -€21.6 million in respect of CVA. DVA for
Societe Generale Group came out at €9.4 million and CVA at -€20.2 million.
Net income on financial assets and liabilities at fair value
through profit or loss is determined using valuation
techniques based on observable inputs, where available,
or using valuation techniques not based on market data.
At December 31, 2013, this margin was subject to a
negative impact of -€0.2 million due to the change
in fair value of instruments initially measured using
valuation inputs not based on market data (versus €0 at
December 31, 2012).
NOTE 33 Net gains/losses on available-for-sale financial assets
2013
2012
Gains on sale (1)
5.2
10.6
Losses on sale (2)
-7.9
-8.0
(in EUR millions)
CURRENT ACTIVITIES
Impairment of equity instruments
-
-
Profit sharing, deferred or otherwise, on available-for-sale assets of the insurance
subsidiaries
6.8
-6.0
SUB-TOTAL
4.1
-3.4
Gains on sale
0.1
2.8
Losses on sale
-0.1
-
Impairment of equity instruments
-0.5
-
SUB-TOTAL
-0.5
2.8
3.6
-0.6
LONG-TERM EQUITY INVESTMENTS
TOTAL
(1) Of which €1.1 million due to insurance activities at December 31, 2013 versus €9.7 million at December 31, 2012.
(2) Of which -€7.9 million due to insurance activities at December 31, 2013 versus -€3.7 million at December 31, 2012.
122
2
NOTE 34 Income and expenses from other activities
(in EUR millions)
2013
2012
-
-
10.8
4.4
INCOME FROM OTHER ACTIVITIES
Real estate development
Real estate leasing
(1)
Equipment leasing
1.4
1.2
(2)
20.2 (3)
Other activities
18.7
SUB-TOTAL
30.9
25.8
Real estate development
-0.1
-0.1
Real estate leasing
-2.4
-3.3
Equipment leasing
-0.1
-0.1
Other activities
-18.0
-16.3
SUB-TOTAL
-20.6
-19.8
TOTAL NET
10.3
6.0
EXPENSES DUE TO OTHER ACTIVITIES
(1) o/w rent on investment property: €2.6 million at December 31, 2013 and €2.8 million at December 31, 2012.
(2) o/w net income on insurance business: €5.4 million at December 31, 2013, which breaks down into income of €940.0 million and expenses of €934.6 million.
(3) o/w net income on insurance business: €6.5 million at December 31, 2012, which breaks down into income of €871.7 million and expenses of €865.2 million.
123
2
NOTE 35 Personnel expenses
A. Personnel expenses
2013
(in EUR millions)
2012 (1)
Employee compensation
-426.0
-446.5
Social security charges and payroll taxes
-164.7
-172.1 (2)
Net retirement expenses - defined contribution plans
-70.5
-67.3
Net retirement expenses - defined benefit plans
-2.5
-1.4
Other social security charges and taxes
-4.3
-4.0 (2)
Employee profit-sharing and incentives
-66.5
-61.9
1.2
0.9
-733.3
-752.3
Transfer of charges
TOTAL
(2) Amount adjusted in regard to financial statements published in 2012.
Performance-based compensation paid in 2013 in respect of 2012 totalled €22.5 million.
B. Headcount (3)
2013
2012
Registered workforce (4)
9,323
9,689
Average staff count in activity
9,057
9,377
8,430
8,733
627
644
Average staff count in activity directly compensated by Crédit du Nord Group
Maternity leave, qualification/apprenticeship contracts
(3) Excluding staff at Banque Pouyanne.
(4) Excluding staff seconded to Societe Generale Group.
NOTE 36 Share-based payment plans
Expenses recorded in the income statement
2013
(in EUR millions)
Portion settled
in cash
Portion settled
in shares
Total plans
Portion settled
in cash
Portion settled
in shares
Total plans
-
-4.6
-4.6
-
-
-
-0.3
-6.8
-7.1
-
-8.8
-8.8
-0.3
-11.4
-11.7
-
-8.8
-8.8
Net expenses from stock option purchase
plans (1)
Net expenses from stock option and free share
allocation plans
TOTAL
2012
(1) See paragraph on the allocation of Societe Generale shares with a discount.
The expense indicated above relates to equity-settled stock-option plans and to cash-settled plans.
124
2
Main characteristics of stock option and free share allocation plans
Equity-settled stock option plans for Crédit du Nord Group employees for the year ended December 31, 2013 are
briefly described below.
Stock options
There is less information for the 2006 to 2008 plans due to their current situation.
Issuer: Societe Generale
Type of plan
2010
2009
Subscription
options
Subscription
options
Shareholders’ agreement
27/05/2008
27/05/2008
Board of Directors’ decision
09/03/2010
09/03/2009
Number of stock options granted
(2)
Term of validity of options
Settlement
Vesting period
44,422
58,068
7 years
7 years
SG shares
SG shares
09/03/2010 31/03/2014
09/03/2009 31/03/2012
Performance-based (3)
yes
yes
Conditions linked to departure from Group
lost
lost
Conditions linked to dismissal
Conditions linked to retirement
In event of death
Share price at grant date (in euros) (2) (4)
Discount
Exercise price (in euros) (2)
lost
lost
maintained
maintained
maintained
6 months
maintained
6 months
43.64
23.18
Not applicable
0%
41.20
23.18
Options authorised but not awarded
-
-
Options exercised at December 31, 2013
-
5,047
Options lost at December 31, 2013
22,602
32,284
Options outstanding at December 31, 2013
21,820
20,737
Number of shares reserved at December 31, 2013
-
-
Share price of shares reserved (in euros)
-
-
Total value of shares reserved (in EUR millions)
-
-
31/03/2014
31/03/2013
-
1 year
First authorised date for selling the shares
Lock-in period
Fair value (% of the share price at grant date)
Valuation method used
26% (5)
Monte-Carlo
2008
2007
2006
21/03/2008
19/01/2007
18/01/2006
7 years
7 years
7 years
63.60
115.60
93.03
28,589
44,583
0
27%
Monte-Carlo
(2) In accordance with IAS 33, as a result of the detachment of Societe Generale share preferential subscription rights, the historical share data have been adjusted for the coefficient
given by Euronext, which reflects the portion attributable to the share after detachment following the capital increase which took place in the fourth quarter of 2009.
(3) The performance conditions are described in the section on Corporate Governance in Societe Generale Group’s registration document. The performance conditions
(arithmetic mean of 2009-2011 EPS) on which the 2009 stock option awards were based were not met.
(4) Average of the 20 last market prices for the 2009 plan and the closing price for the award under the 2010 plan.
(5) As the ROE condition was not met, the fair value of the options subject to performance conditions incorporates the TSR condition, i.e. 7%.
125
2
Free shares
Issuer: Societe Generale
2013
2012
2011
2010
2009
Free
shares
Free shares
Free shares
Free shares
Free shares
Shareholders’ agreement
22/05/2012
25/05/2010
25/05/2010
27/05/2008
27/05/2008
Board of Directors’ decision
14/03/2013
02/03/2012
07/03/2011
09/03/2010
20/01/2009
Type of plan
Number of stock options
granted (6)
Settlement
Vesting period
145,916
184,788
89,011
87,709
123,732
SG shares
SG shares
SG shares
SG shares
SG shares
14/03/2013 31/03/2015
02/03/2012 31/03/2014
07/03/2011 31/03/2013
sub-plan No.
1 09/03/2010 31/03/2013
20/01/2009 31/03/2012
yes
lost
Performance-based (7)
yes
yes
yes
Performance
conditions for a
list of awardees
Conditions linked to departure
from Group
lost
lost
lost
lost
Conditions linked to dismissal
lost
lost
lost
lost
lost
Conditions linked to retirement
maintained
maintained
maintained
maintained
maintained
In event of death
maintained
6 months
maintained
6 months
maintained
6 months
maintained
6 months
maintained
6 months
30.50
25.39
46.55
43.64
23.36
Share price at grant date (in
euros) (6)
Shares delivered at December
31, 2013
-
759
86,673
84,131
118,450
400
1,243
2,338
3,578
5,282
Shares outstanding at December
31, 2013
145,516
182,786
-
-
-
Number of shares reserved at
December 31, 2013
145,516
182,786
-
-
-
18.94
29.75
45.67
47.71
59.70
2.8
5.4
-
-
-
01/04/2017
01/04/2016
31/03/2015
31/03/2015
31/03/2014
2 years
2 years
2 years
2 years
2 years
86%
86%
86%(8)
82%(9)
78%
Arbitrage
Arbitrage
Arbitrage
Shares lost at December 31, 2013
Share price of shares reserved (in
euros)
Total value of shares reserved (in
EUR millions)
First authorised date for selling
the shares
Lock-in period
Fair value (% of the share price at
grant date)
Valuation method used
Arbitrage
Arbitrage
(6) In accordance with IAS 33, as a result of the detachment of Societe Generale share preferential subscription rights, the historical share data have been adjusted for the coefficient given
by Euronext, which reflects the portion attributable to the share after detachment following the capital increase which took place in the fourth quarter of 2009.
(7) The performance conditions are described in the section on Corporate Governance in Societe Generale Group’s registration document. The performance conditions (arithmetic mean
of 2009-2011 EPS) on which the 2009 shares were based were not met.
(8) As the ROE and EPS conditions were not met, the fair value of the shares subject to performance conditions incorporates the TSR condition, i.e. 31% and 68%, respectively.
(9) As the ROE condition was not met, the fair value of the shares subject to performance conditions incorporates the TSR condition, i.e. 16%.
126
2
Statistics concerning stock-option plans
The stock option plans offered to Crédit du Nord Group employees for the year ended December 31, 2013 are
described below:
Options
outstanding at
January 1, 2013
Options
granted
during
the period
Options
lost
during
the period
Options
exercised
during
the period
Options
Options
expired
outstanding
during at December 31,
the period
2013
Exercisable
options at
December 31,
2013
granted (2009)
25,784
-
-
5,047
-
20,737
20,737
granted (2010)
43,632
-
21,812
-
-
21,820
-
Weighted average remaining
contractual life
-
-
-
-
-
16 months
-
Weighted average fair value
at grant date (in euros)
-
-
-
-
-
14.93
-
Weighted average share price
at exercise date (euros)
-
-
-
Exercise price range (in euros)
-
-
-
33.40
31.12 - 37.48
-
-
-
-
-
-
Main assumptions used to value Societe Generale stock-option plans
2010
2009
Risk-free interest rate
2.9%
3.0%
Future share volatility
29.0%
55.0%
0%
0%
Forfeited rights rate
Dividends (% of exercise price)
Expected life
1.3%
3.5%
5 years
5 years
Future volatility was estimated using the implied volatility of the Group, which, over 5-year share options traded OTC
(TOTEM database), was around 29% in 2010. This implied volatility more accurately reflects future volatility.
Overview of the free share allocation programme benefiting all Societe Generale Group
employees
In order to give all employees of Societe Generale
Group a stake in the success of the Ambition
SG2015 programme, its Board of Directors allocated
40 free shares to each staff member at its meeting
of November 2, 2010. These shares are wholly
contingent on presence and performance conditions.
The vesting period extends from November 2, 2010
to March 29, 2013 for the first tranche, i.e. 16 shares,
and from November 2, 2010 to March 31, 2014
for the second tranche, i.e. 24 shares. The shares
will then be subject to a two-year lock-in period.
The performance conditions are described in the
“Human Resources” section of the Registration
Document filed by Societe Generale Group
Because it is a bonus issue, there were no reserved
shares at December 31, 2013.
The issue price, in euros, is €42.10. The method used
to determine fair value is the bid-ask spread approach.
Fair value (as a % of the equity instrument granted) is
set at 85% for the first tranche, and 82% for the second
tranche.
127
2
An annual staff turnover assumption was made to
determine the cost of the plan; it stands at an average
of 3.5% per year for the employees eligible for the plan.
Allocation of SG shares with a discount
Under the Group’s employee shareholding policy, on
April 16, 2013, Societe Generale offered its employees
the opportunity to subscribe for a reserved capital
increase at a share price of €21.33, with a discount
of 20% to the average price of the Societe Generale
share for the 20 last quoted market prices prior to the
offering date.
658,415 shares were subscribed, representing an
expense of €4.6 million for Crédit du Nord Group
in 2013, after taking into account the legal lock-up
period of 5 years. The valuation model used, which
complies with the recommendations of the French
National Accounting Board on the accounting treatment
of company savings plans, compares the gain that
employees would have obtained if they had been able
to sell the shares immediately with the notional cost that
the 5-year holding period represents to the employee.
This notional 5-year lock-up period cost is valued as the
net cost of the Societe Generale shares cash purchase
financed by a non-affected and non-revolving five-year
credit facility and by a forward sale of these same shares
with a 5-year maturity. The main market inputs used to
value this notional 5-year lock-up cost at the grant date,
are:
• average Societe Generale share price: €31.328;
• interest rate of an unassigned 5-year credit facility
applicable to market players receiving nontransferable shares: 6.93%
The notional 5-year lock-up period is valued at 9.2% of
Societe Generale’s share price at the grant date.
NOTE 37 Cost of risk
(in EUR millions)
2013
2012
-194.9
-186.5
-8.7
-10.1
6.7
7.0
-196.9
-189.6
COUNTERPARTY RISK
Net allocation for impairment
Losses not covered by provisions
Amounts recovered on amortised receivables
SUB-TOTAL
OTHER RISKS
Net allowance for other provisions for contingent liability items
SUB-TOTAL
TOTAL
128
0.8
-0.9
-1.7
-1.3
-0.9
-2.2
-197.8
-191.8
2
NOTE 38 Income tax
(in EUR millions)
2013
Current taxes
-233.6
-175.5
39.2
2.1
-194.4
-173.4
Deferred taxes
TOTAL
2012 (1)
Reconciliation of the difference between the Group’s normative tax rate and its effective tax rate is presented below:
2013
(in EUR millions)
Earnings before tax and net income from companies accounted for by the equity method
2012 (1)
565.5
485.8
Normal tax rate applicable to French companies (including the 3.3% contribution)
34.43%
34.43%
Permanent differences
-2.03%
1.12%
0.01%
-0.07%
Differential on items taxed at reduced rate
Tax differential on profits taxed outside France
0.29%
-0.82%
-0.03%
-0.33%
Adjustments and dividend tax credits
0.01%
-0.20%
Change in tax rate and exceptional contribution
2.85%
1.29%
Gain due to tax consolidation
Other items
-1.15%
0.27%
Group effective tax rate
34.38%
35.69%
In addition, companies pay a Social Security Contribution
of 3.3% (after a deduction from taxable income
of €0.76 million), introduced in 2000, in addition to
an Exceptional Contribution of 5% instituted for fiscal
years 2011 and 2012, and 10.7% for 2013, on all
profitable companies generating revenue of more than
€250 million.
In addition, under the regime of parent companies
and subsidiaries, dividends received from companies
in which the equity investment is at least 5% are taxexempt, subject to taxation at the standard rate of 5%
for a share of fees and expenses.
The standard tax rate applicable to French companies to
determine their deferred tax is 34.43% and the reduced
rate is 4.13% given the type of transactions involved.
Long-term capital gains on equity investments are
tax-exempt, subject to taxation of a share for fees and
expenses. As from December 31, 2012, in accordance
with the 2013 Finance Act, this share of fees and
expenses stands at 12% of the gross capital gain versus
10% of the net capital gain previously.
129
2
NOTE 39 Transactions with related parties
In accordance with IAS 24, Crédit du Nord’s related parties include members of the Board of Directors, corporate
officers (the Chief Executive Officer) and their respective spouses and any children residing in their family home, on the
one hand, and affiliated companies, on the other.
A.
Senior managers
A.1 Remuneration of the Group’s senior managers (1)
This includes amounts effectively paid by Crédit du Nord Group to its directors and corporate officers as remuneration
(including employer charges), and other benefits under IAS 24, paragraph 16, as indicated below.
(in EUR millions)
Short-term benefits
2013
2012
1.0
0.8
-
-
Long-term benefits
-
-
Termination benefits
-
-
Share-based payments
-
-
1.0
0.8
TOTAL
(1) Concerns the Chief Executive Officer, who was the only corporate officer in 2013 and 2012.
A detailed description of the remuneration and benefits of Crédit du Nord’s corporate officers is contained in the
information on the corporate officers.
130
2
A.2. Transactions with related parties (individuals)
Transactions with members of the Board of Directors, corporate officers and members of their families discussed
in this note consist solely of loans and guarantees outstanding at December 31, 2013 and securities transactions.
These transactions are insignificant.
B. Principal subsidiaries and affiliates
Crédit du Nord Group has reported the following companies as affiliated entities: Antarius, consolidated using the
proportionate method, and Societe Generale Group entities with which it carries out transactions
(in EUR millions)
31/12/2013
31/12/2012
13.4
42.5
OUTSTANDING ASSETS WITH RELATED PARTIES
Other assets
4,611.5
6,744.2
4,624.9
6,786.7
31/12/2013
31/12/2012
38.5
72.8
Customer deposits
18.9
0.7
1,608.6
4,727.3
1,666.0
4,800.8
31/12/2013
31/12/2012
68.0
35.9
Fee income
44.7
34.4
-205.6
255.6
-
1.7
-92.9
327.6
31/12/2013
31/12/2012
Foreign exchange transactions and securities to be received
375.5
357.7
Foreign exchange transactions and securities to be delivered
389.1
370.9
Guarantee commitments received
200.4
3,893.2
TOTAL OUTSTANDING ASSETS
(in EUR millions)
OUTSTANDING LIABILITIES WITH RELATED PARTIES
Other liabilities
TOTAL OUTSTANDING LIABILITIES
(in EUR millions)
NET BANKING INCOME FROM RELATED PARTIES
Net income from financial transactions
Net income from other activities
NBI
(in EUR millions)
COMMITMENTS TO RELATED PARTIES
Forward financial instrument commitments
-
-
576.2
4,132.0
32,966.7
33,861.6
131
2
NOTE 40 Statutory Auditors’ fees
DELOITTE
(in EUR thousands)
Statutory Auditors, certification and examination
of individual and consolidated financial statements
Fees relating to other due diligence procedures and
services directly linked to the statutory auditor’s duties
TOTAL
ERNST & YOUNG
OTHER AUDITORS
2013
2012
2013
2012
2013
2012
592.0
581.0
301.0
358.0
195.0
181.0
-2.0
590.0
104.0 (1)
685.0
-
301.0
56.0 (1)
414.0
-
8.0
195.0
189.0
(1) O/w fees of €118,000 for the required certifications of parent company financial statements at June 30, 2013 in respect of the partial asset contributions (Banque Courtois,
Banque Rhône-Alpes, Société Marseillaise de Crédit, Crédit du Nord).
132
Statutory Auditors’ report on the consolidated financial statements
2
Statutory Auditors’ report on the consolidated financial
statements
Year ended 31 December 2013
This is a free translation into English of the statutory auditors’ report on the consolidated financial statements issued in
French and it is provided solely for the convenience of English-speaking users.The statutory auditors’ report includes
information specifically required by French law in such reports, whether modified or not. This information is presented
below the audit opinion on the consolidated financial statements and includes an explanatory paragraph discussing
the auditors’ assessments of certain significant accounting and auditing matters. These assessments were considered
for the purpose of issuing an audit opinion on the consolidated financial statements taken as a whole and not to
provide separate assurance on individual account balances, transactions or disclosures. This report also includes
information relating to the specific verification of information given in the group’s management report. This report
should be read in conjunction with and construed in accordance with French law and professional auditing standards
applicable in France.
In accordance with the assignment entrusted to us by
your annual general meeting, we hereby report to you for
the year ended December 31, 2013 on:
• the audit of the accompanying consolidated financial
statements of Crédit du Nord;
• the justification of our assessments;
• the specific verification required by law.
The consolidated financial statements have been
approved by the board of directors. Our role is to
express an opinion on these consolidated financial
statements, based on our audit.
I. Opinion on the consolidated financial
statements
We conducted our audit in accordance with professional
standards applicable in France; those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated
financial statements are free of material misstatement.
An audit involves performing procedures, using sampling
techniques or other methods of selection, to obtain
audit evidence about the amounts and disclosures in
the consolidated financial statements. An audit also
includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting
estimates made, as well as the overall presentation of
the consolidated financial statements. We believe that
the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements
give a true and fair view of the assets and liabilities and
o f t h e f i n a n c i a l p o s i t i o n o f t h e g ro u p a s a t
December 31, 2013 and of the results of its operations
for the year then ended in accordance with International
Financial Reporting Standards as adopted by the
European Union.
Without qualifying our opinion, we draw your attention to
note 1 “Significant accounting principles - Introduction”
which sets out the consequences of the initial application
of the amendments to IAS 19 “Employee benefits” and
of IFRS 13 “Fair value measurement”.
133
2
II. Justification of our assessments
In accordance with the requirements of article L.823-9
of the French Commercial Code (“Code de commerce”)
relating to the justification of our assessments, we bring
to your attention the following matters:
• For the purpose of preparing the consolidated financial
statements, your company records depreciation
to cover the credit risks inherent to its activities
and performs significant accounting estimates, as
described in note 1 to the consolidated financial
statements, related in particular to the valuation
of goodwill and the assessment of provisions for
employee benefits. We have reviewed and tested
the processes implemented by management, the
underlying assumptions and the valuation parameters,
and we have assessed whether these accounting
estimates are based on documented procedures
consistent with the accounting policies disclosed in
note 1 to the consolidated financial statements.
• As detailed in note 1 to the consolidated financial
statements, your company uses internal models to
measure financial instruments that are not listed on
active markets. Our procedures consisted in reviewing
the control procedures for the models used, assessing
the underlying data and assumptions as well as their
observability, and verifying that the risks generally
expected from the markets were taken into account
in the valuations
• As detailed in note 5 to the consolidated financial
statements, your company assessed the impact
of changes in its own credit risk with respect to the
valuation of certain financial liabilities measured at
fair value through profit or loss. We have verified the
appropriateness of the data used for this purpose.
These assessments were performed as part of our
audit of the consolidated financial statements taken as
a whole, and therefore contributed to the opinion we
formed which is expressed in the first part of this report.
III. Specific verification
As required by law, we have also verified in accordance
with professional standards applicable in France the
information presented in the group’s management report.
We have no matters to report as to its fair presentation
and its consistency with the consolidated financial
statements.
DELOITTE & ASSOCIES
Jean-Marc MICKELER
134
Bernard HELLER
Basel II Capital Adequacy Ratio Information under Pillar 3
2
The Basel Accord of June 2004 established the rules
for calculating minimum capital requirements, while
extending the scope of risks (with the introduction of
a capital charge for operational risk) for the purpose
of gaining a better understanding of the risks to
which banks are exposed. This mechanism (known
as Basel II) was transposed into European law via
the Capital Requirements Directive (CRD I) and
subsequently into French law in 2006. It came into force
on January 1, 2008.
The capital adequacy ratio is determined on a
consolidated “prudential” basis and eliminates the
contribution of insurance companies (Antarius).
The calculation of credit risk-weighted assets was finetuned to better take account of the risk to which banking
operations are exposed. Under Basel II standards, there
are two possible approaches for determining riskweighted assets: the standard method (based on fixed
weightings) and the internal ratings based method (IRB).
IRB relies on internal counterparty risk rating models (IRB
foundation approach), or on internal counterparty and
operational risk rating models (Advanced IRB approach).
In January 2008, the French Banking Commission
authorised Crédit du Nord Group to use advanced
methods on credit risk (IRBA) and on operational risk
(AMA). In compliance with current laws, these models
are subject to regular monitoring and back-testing.
The scope of application of the advanced methods will
continue to be extended at the Crédit du Nord Group
level, and in particular with Societe Marseillaise de
Crédit, which currently uses the standard method.
multiplied by 12.5 for market risks (interest rate risk,
foreign exchange risk, equity risk and commodities risk)
and operational risks.
In respect of prudential capital, Basel II introduced new
deductions, half of which are applicable to core capital
and half to supplementary capital (shareholdings in
companies engaged in financial operations, inadequacy
of provisions).
The Basel II capital adequacy ratio was 11.0% at
December 31, 2013 (with a Basel II Tier 1 ratio of 8.5%).
Prudential capital, comprised of core capital and
supplementary capital, is determined in accordance with
CRBF Regulation No. 90-02, currently in effect. Tier 2
capital is taken into account only within the limit of 100%
of Tier 1 capital.
Furthermore, Tier 2 capital can only be recognised
within the limit of 50% of Tier 1 capital. Regulation
No. 95-02 on prudential market risk management
permits recognition of Tier 3 capital and, accordingly,
issuance of subordinated instruments having an initial
maturity two years or more. Crédit du Nord Group does
not use this option.
As a result, equity, Group share stood at €2,763.0 million
at December 31, 2013 (versus €2,644.0 million
at December 31, 2012, restated in comparison with
the financial statements published in 2012 following the
entry into force of the amendments to IAS 19, applied
retrospectively). After taking account of non-controlling
interests and prudential deductions, prudential Basel II
Tier 1 capital came out at €1,500.3 million and Basel II
risk-weighted assets stood at €17,615.5 million.
In respect of the Basel II capital adequacy ratio,
minimum capital requirements are set at 8% of the sum
of weighted credit risks plus the capital requirement
135
2
Risk-weighted assets can be broken down as follows
by type of risk:
• market risk exposure of €1.1 million was insignificant
at December 31, 2013;
• credit risk exposure of €16,433.1 million, accounting for
93.3% of risk-weighted assets at December 31, 2013;
• operational risk exposure of €1,181.3 million,
accounting for 6.7% of risk-weighted assets
Basel II capital adequacy ratio
(in EUR millions)
Consolidated equity, Group share (IFRS)
31/12/2013
31/12/2012
Published
2,763.0
2,671.1
Non-controlling interests, after estimated dividend payout
31/12/2012
Pro forma
2,644.0 (3)
21.5
23.6
23.6
Intangible assets
-142.4
-144.4
-144.4
Goodwill
-508.0
-508.0
-508.0
Dividends proposed at the Shareholders’ Meeting
-411.7
-222.6
-222.6
Other regulatory adjustments
-108.6
-144.4
-144.4
SUB-TOTAL TIER 1 CAPITAL
1,613.8
1,675.3
1,648.2
-113.5
-102.4
-102.4
1,500.3
1,572.9
1,545.8
542.4
616.7
616.7
-113.5
-102.4
-102.4
-
-157.4
-157.4
428.9
356.9
356.9
Basel II deductions (1)
TOTAL TIER 1 CAPITAL
Tier 2 capital
Basel II deductions
(1)
Equity interests in insurance companies (2)
TOTAL TIER 2 CAPITAL
TOTAL REGULATORY CAPITAL (TIER 1 + TIER 2)
Credit risk-weighted assets
1,929.2
1,929.8
1,902.7
16,433.1
16,537.4
16,537.4
Market risk-weighted assets
Operational risk-weighted assets
TOTAL GROSS OUTSTANDINGS
1.1
2.1
2.1
1,181.3
932.1
932.1
17,615.5
17,471.6
17,471.6
CAPITAL ADEQUACY RATIOS
Tier 1 ratio
Total capital adequacy ratio
8.5%
9.0%
8.8%
11.0%
11.1%
11.0%
(1) 50% of Basel II deductions are applied to Tier 1 capital and 50% to Tier 2 capital.
(2) As of January 1, 2013, it is no longer possible to fully deduct equity interests in insurance companies from Tier 2 capital.
(3) Amount restated relative to the financial statements published in 2012, following the entry into force of the amendments to IAS 19, with retrospective application.
136
Individual
financial
statements
3
2013 Management Report _____________________________________________________ 138
Five-year financial summary ____________________________________________________ 140
Individual balance sheet at December 31 ________________________________________ 141
Income statement ____________________________________________________________ 143
Notes to the individual financial statements _______________________________________ 144
Information on the Corporate Officers ___________________________________________ 180
Statutory auditors’ report on the financial statements ______________________________ 191
Statutory auditors’ report on related party agreements and commitments _____________ 193
Draft Resolutions: General Meeting of Shareholders of May 28, 2014 ________________ 195
137
3
Individual financial statements
2013 Management Report
Although the financial markets were driven in 2013 by the
outlook for an economic recovery in France in the coming
years, the inversion of the main indicators proved slow,
and companies and households alike were subject to
major income restrictions, as reflected in low margin levels
and weaker purchasing power. The number of business
failures hit an all-time high, consumption flagged and job
market conditions remained very poor.
In this economically challenging environment, Crédit
du Nord Group delivered a very robust financial and
commercial performance.
Fiscal year activity
All outstanding customer loans were down slightly in 2013
(-1.1%). Origination of housing loans was buoyed by low
interest rates, with substantial debt consolidation and
renegotiation activity. However, origination of personal
loans declined and the slight drop in equipment loans
pointed to weak demand from business customers.
Regulated savings accounts and sight deposits made
considerable progress (+5.2%) year-on-year. The crisis
led households to keep cash in their current accounts and
short-term savings accounts as a precaution. Meanwhile,
sight deposits by business and professional customers
were further boosted by outflows from money market
funds, which remained unattractive due to exceptionally
low interest rates, and by the wide range of savings
products offered by Crédit du Nord.
2013 net income
Crédit du Nord’s net banking income amounted to
€324.6 million in 2013, up +22.3% on 2012, on the back
of increased income from variable-income securities
138
(dividends paid by subsidiaries: €432.3 million in 2012
versus €187.4 million in 2013) Restated for these items
and for changes in impairment (recorded under “Net
gains on investment portfolio transactions”) recognised
on investment securities purchased in 2008 from the
Etoile Gestion funds (+€9.7 million in 2013 versus
+€39.6 million in 2012), net banking income was up
+3.0%. This increase can be attributed to resilient sales
margins and commissioning in a persistently challenging
and highly competitive environment. Net fee income rose
2.3% to €390.7 million, buoyed by continuous efforts to
increase the number of banking and insurance products
and services sold to customers.
Operating expenses were well-managed, decreasing
by 1.6% to €554.1 million. The reduction in personnel
expenses was offset by an increase in other operating
expenses.
In light of all these factors, gross operating income
amounted to €770.5 million.
Cost of risk came to €87.1 million versus €86.0 million
at December 31, 2012. The economic and financial
environment have been tense since the end of 2012, with
no major variation in cost of risk up to now. As part of a
project developed in conjunction with Societe Generale,
Crédit du Nord established statistical provisions in 2013 for
its individual and professional customer bases, calculated
on the basis of historic losses. These calculations showed
a decline in the coverage rate of doubtful and disputed
loans net of collateral received. Crédit du Nord also
furthered its collective provisioning efforts on portfolios
of performing loans.
Operating income before corporation tax came out at
€733.1 million. After income tax, net income for the period
stood at €619.8 million.
3
products and expanding its multi-channel offer. It will
continue to be driven by the various investments made
in recent years, both in terms of new branch openings as
well as technical and organisational projects.
Outlook
Even in the worsening conditions prevalent in 2013,
Crédit du Nord posted resilient earnings and confirmed
the solidity of its business model.
In 2014, Crédit du Nord will continue to develop its growth
drivers by broadening its range of personal protection
Schedule of trade payables
Payables not yet due
31-60 days
Amount at 31/12/2013
0.9
0.1
-
-
0.1
1.1
Amount at 31/12/2012
1.0
-
-
-
0.2
1.2
The maturity dates correspond to the payment dates
listed on the invoices or to supplier terms and conditions,
independent of their date of receipt.
The Purchasing Department records the invoices and
carries out the payments requested by all of the functional
departments. The network branches have special teams
to process and pay their own invoices.
> 60 days
Payables due
Other scheduled
payments
1-30 days
(in EUR millions)
Total
by the departments which ordered the services. Once
approval is obtained, they are entered into a joint
application, with payments made according to the terms
set by the suppliers.
The “Other scheduled payments” column refers to retention
payments for work which will be paid approximately
6 months after the work is received.
In accordance with Crédit du Nord’s internal control
procedures, invoices are only paid after they are approved
139
3
Five-year financial summary
Five-year financial summary
2013
2012
2011
2010
2009
Capital stock (in EUR)
890,263,248
890,263,248
890,263,248
890,263,248
740,263,248
Shares outstanding
111,282,906
111,282,906
111,282,906
111,282,906
92,532,906
Revenue without tax (1)
1,769,113
1,677,752
1,843,867
1,579,145
1,698,558
Net banking income
1,324,633
1,083,516
1,079,181
1,070,379
1,054,647
870,599
542,248
530,465
463,278
520,679
-113,235
-91,369
-58,458
-46,124
-37,134
619,823
344,903
226,891
256,758
331,356
411,747
222,566
222,566
-
323,865
Earnings after tax, but before depreciation,
amortisation and provisions (3)
6.73
3.97
4.02
3.50
4.98
Income after tax, depreciation, amortisation
and provisions
5.57
3.10
2.04
2.31
3.58
3.70
2.00
2.00
-
3.50
4,620
5,199
5,377
5,300
5,415
240,076
250,814
269,314
265,934
263,915
107,294
111,911
114,816
118,476
113,801
FINANCIAL POSITION AT YEAR-END
RESULTS OF OPERATIONS FOR THE YEAR
(in EUR thousands)
Income before tax, depreciation, amortisation,
provisions and profit-sharing
Income tax
Income after tax, depreciation, amortisation
and provisions
Total dividends
(2)
EARNINGS PER SHARE (in euros)
Dividend per share
(2)
EMPLOYEE DATA
Average headcount (4)
Total payroll (in EUR thousands)
Total benefits (Social Security, corporate benefits, etc.)
(in EUR thousands)
(1) Defined as the sum of bank operating income and other income deducted for interest paid on financial instruments.
(2) In respect of the fiscal year.
(3) Based on the number of outstanding shares at year-end.
(4) Average headcount (amounts for previous years have been corrected with respect to published financial statements).
140
Individual balance sheet at December 31
3
Assets
(in EUR millions)
Notes
31/12/2013
31/12/2012
Cash, due from central banks and postal accounts
2
494.4
1,883.4
Treasury notes and similar securities
5
2,579.1
334.5
Due from banks
3
9,360.4
6,843.7
4
16,486.8
16,663.1
5
5,574.3
9,927.0
5
17.1
0.5
Equity investments and other long-term investment securities
6
89.0
92.3
Investments in subsidiaries and affiliates
6
1,702.5
1,836.1
0.7
1.7
Lease financing and similar transactions
Intangible assets
7
110.2
109.8
Tangible assets
7
183.4
192.4
Other assets
8
236.3
317.9
Accrued expenses
8
294.6
312.7
37,128.8
38,515.1
Notes
31/12/2013
31/12/2012
17
2,950.2
2,791.6
17
2,893.3
3,062.4
TOTAL
Off-balance sheet items
(in EUR millions)
Security commitments given
Forward financial instrument commitments
18
1.6
1.9
3,466.7
3,373.5
48,802.8
42,519.4
141
3
Liabilities
Notes
31/12/2013
-
0.4
9
2,632.1
8,620.7
10
15,800.5
16,578.3
Debt securities
11
14,264.4
9,104.8
Other liabilities
12
246.4
384.4
Accruals
12
818.1
839.2
Provisions
13
154.6
171.8
Subordinated debt
15
671.3
671.3
Shareholders’ equity
16
2,541.4
2,144.2
890.3
890.3
10.4
10.4
(in EUR millions)
Due to central banks, postal accounts
Due to banks
Subscribed capital
Additional paid-in capital
Reserves
31/12/2012
1,019.3
897.4
Regulated provisions
0.8
0.8
Retained earnings
0.8
0.4
Net income
619.8
344.9
37,128.8
38,515.1
Notes
31/12/2013
31/12/2012
Loan commitments received from banks
17
2,555.5
3,316.7
Guarantee commitments received from banks
17
7,455.0
7,373.7
1.0
1.8
3,466.7
3,374.7
TOTAL
Off-balance sheet items
(in EUR millions)
Security commitments received
142
Income statement
3
Income statement
Notes
(in EUR millions)
Interest and similar expenses
2013
2012
838.9
998.5
-359.9
-517.4
Net interest and similar income (expenses)
19
479.0
481.1
Income from equity securities
20
432.3
187.4
450.1
442.0
Fee income
Fee expenses
-59.4
-60.0
Net fee income (expenses)
21
390.7
382.0
Net gains or losses on trading portfolio transactions
22
11.2
-7.7
Net gains or losses on investment portfolio and similar transactions
22
9.7
39.6
11.8
9.1
-10.1
-8.0
Other banking income
Other banking expenses
Net other banking income (expenses)
NET BANKING INCOME
1.7
1.1
1,324.6
1,083.5
Personnel expenses
23
-367.0
-386.8
Other operating expenses
25
-136.2
-121.9
-50.9
-54.2
-554.1
-562.9
770.5
520.6
-87.1
-86.0
683.4
434.6
49.7
1.7
733.1
436.3
-
-
-113.3
-91.4
-
-
619.8
344.9
Depreciation and amortisation expense
Operating expenses, depreciation and amortisation expense
GROSS OPERATING INCOME
Cost of risk
26
OPERATING INCOME
27
PRE-TAX PROFIT
Exceptional income
Income tax
Net allocation to regulated provisions
NET INCOME
28
143
3
Notes to the individual financial statements
Notes to the individual financial statements
NOTE 1 Accounting principles and valuation methods
Main valuation and presentation rules
for the individual financial statements
Crédit du Nord’s individual financial statements were drawn
up in accordance with the provisions of CRB (Banking
Regulation Committee) Regulation No. 91-01 applicable to
credit institutions, and the generally accepted accounting
principles used in the French banking profession. The
presentation of the financial statements complies with the
provisions of CRC (Accounting Regulation Committee)
Regulation No. 2000-03 relating to the individual financial
statements of companies under the authority of the CRBF
(French Banking and Financial Regulation Committee),
amended by CRC Regulation No. 2005-04 of November
3, 2005.
Comparability of financial statements
No change in accounting method was observed in 2013.
Regulatory options exercised
Trading transactions are usually marked to market, with the
exception of loans, borrowings and short-term investment
securities, which are recorded at nominal value. When
instruments are traded on illiquid markets, the market
value used is reduced for reasons of prudence. Moreover,
a reserve is booked to cover valuations established on
the basis of in-house models (Reserve Policy), which is
determined according to the complexity of the model
used and the life of the financial instrument.
Due from banks and customers
• impairment in respect of probable credit risk: the
increase in book value due to the passage of time is
recorded in the interest margin and not in cost of risk
(CNC option).
Amounts due from banks and customers are classified
according to their initial duration or type into: demand
(current accounts and overnight transactions) and term
accounts in the case of banks; customer receivables,
current accounts and other loans in the case of
customers. Amounts due from banks and customers
include outstanding loans and repurchase agreements,
secured by notes and securities, entered into with these
counterparties.
Accounting principles and valuation methods
Accrued interest on these amounts is recorded as related
receivables through profit or loss.
Crédit du Nord applies the following regulatory options:
• securities acquisition costs: the option not to activate
acquisition costs is applied in accordance with CMC
opinion No. 2008-05;
In accordance with the accounting principles applicable
to French credit institutions, for most transactions the
valuation methods take into account the original intention
of said transactions.
144
Transactions carried out for banking intermediation
purposes are held at their historic cost and impaired in the
event of counterparty risk. The results of such transactions
are recorded on a pro rata basis, in accordance with the
principle of separate accounting years. This category
includes transactions in forward financial instruments
aimed at hedging and managing the overall interest rate
risk of banking intermediation activities.
Interest on doubtful loans is calculated using the
discounted net book value of the loan.
Fees received and incremental transaction costs related
to the granting of a loan are comparable to interest and
spread over the effective life of the loan.
Impairment of individual outstanding loans
due to probable credit risk
and amounts recovered on impaired loans are booked
under “Cost of risk”.
In accordance with CRC Regulation No. 2002-03, if a loan
is considered to bear a probable risk that all or part of the
sums owed by the counterparty under the initial terms and
conditions of the loan agreement will not be recovered,
and notwithstanding the existence of loan guarantees,
the loan in question is classified as doubtful. In any event,
outstanding loans are reclassified as doubtful where one
or more payments is at least three months overdue (six
months for real estate and property loans, nine months
for municipal loans), or where, any missed payments
notwithstanding, there is a probable risk of loss or where
a loan is disputed.
For restructured loans, any abandonment of principal or
interest due or accrued is recorded as a loss when the
loan is restructured.
Unauthorised overdrafts are classified as doubtful loans
after a period of no more than three uninterrupted months
during which the account limits are exceeded (limits of
which individual customers are notified; limits resulting
from legal or de facto agreements with other categories
of customers).
Where a given borrower’s loan is classified as a “doubtful
loan”, any other loans and commitments of the same
borrower are also automatically classed as doubtful,
regardless of any guarantees.
Doubtful loans and non-performing loans give rise to
impairment for the probable portion of doubtful and
non-performing loans that will not be recovered, and
are recorded as an asset write-down. The amount of
the impairment loss for doubtful and non-performing
loans is equal to the difference between the gross book
value of the asset and the present value discounted for
estimated recoverable future cash flows, taking into
account the value of any guarantees, discounted at the
original effective interest rate of the loans. Recoverable
amounts are determined on the basis of expert analysis
for the non-retail portfolio and according to a statistical
method for the retail portfolio (individual and professional
customers). The distribution of recoverable amounts over
time follows recovery curves statistically established for
each homogenous group of receivables. Furthermore,
this depreciation may not be less than the full amount
of the accrued interest on the doubtful loan. Impairment
allocations and reversals, losses on irrecoverable loans
3
Doubtful loans can be reclassified as performing loans
once there is no longer any probable credit risk and once
payments have resumed on a regular basis according
to the initial contractual schedule. Moreover, doubtful
loans which have been restructured may be reclassified
as performing.
In the event the creditworthiness of the borrower is such
that after a reasonable period of classification in doubtful
loans, a reclassification to performing loan status is no
longer plausible, the loan is specifically classified as a nonperforming loan. This status is conferred at close-out or
upon cancellation of the loan agreement and, in any event,
one year following classification in doubtful loans, with
the exception of doubtful loans for which the contractual
clauses are respected and/or doubtful loans with valid
enforceable guarantees. Restructured loans for which the
borrower has not respected payment schedules are also
classified as non-performing loans.
Segmentation of outstanding loans
For the purpose of segmenting outstanding loans
(performing, performing under watch, doubtful, nonperforming, irrecoverable), the following system of external
and/or internal ratings is used:
• external ratings: for a given counterparty, a Banque
de France (BDF) rating of 8 or 9 automatically calls for
declassification to doubtful loans, and a P rating calls
for declassification to non-performing loans;
• internal ratings: for the retail portfolio, there is a specific
rating for default. For the corporate portfolio, each
category of loans in default has a specific rating (8 for
doubtful, 9 for undisputed non-performing and 10 for
disputed non-performing). Performing loans with a
rating of 7 in the corporate portfolio are declassified to
3S (similarly, since 2013, the decision to declassify a
loan to 3S results in a rating of 7).
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3
BDF ratings are also used in risk monitoring procedures to
select performing loans that need to be subject to a risk
review as a top priority.
Performing loans under watch (“3S”)
Within the “Performing loan” risk category, Crédit du
Nord has created a subcategory called “Performing loans
under watch”, to cover loans/receivables requiring closer
supervision. This category includes loans/receivables
where certain evidence of deterioration has appeared
since they were granted.
The Group conducts historical analyses to determine the
rate of classification of these loans/receivables as doubtful
and the impairment ratio, and updates these analyses
on a regular basis. It then applies these figures to similar
groups of receivables in order to determine the amount
of impairment.
Impairment due to sector credit risk
This type of impairment is not made on an individual loan
basis, but covers several classes of risk, including regional
sector risk (global risk in sectors of the regional economy
impaired by specific unfavourable business conditions).
Crédit du Nord’s Central Risk Division regularly lists the
business sectors that it considers to represent a high
probability of default in the short term due to recent events
that may have caused lasting damage to the sector. A rate
of classification as doubtful loans is then applied to the
total outstanding in these sectors in order to determine the
volume of doubtful loans. Impairments are then booked
for the overall amount of these outstanding loans, using
impairment ratios which are determined according
to the historical average rates of doubtful customers,
adjusted to take into account an analysis of each sector
by an independent expert on the basis of the economic
environment.
Risk mitigation
Existing guarantees and guarantees to be provided are
listed in a collateral data base. The information contained
in this data base is used to make credit decisions and to
calculate provisions on doubtful loans.
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Securities portfolio
Securities are classified according to:
• their type: public notes (Treasury notes and similar
securities), bonds and other fixed-income securities
(negotiable debt instruments, interbank securities),
shares and other equity securities;
• and the purpose for which they were required:
trading, short-term and long-term investment,
portfolio activities, equity investments, investments in
subsidiaries and affiliates, and other long-term equity
investments.
Sales and purchases of securities are recognised in the
balance sheet at the date of settlement-delivery.
In accordance with the provisions of amended CRB
Regulation No. 90-01 relating to the accounting treatment
of securities transactions, as amended by CRC Regulation
No. 2008-17, the rules for classifying and evaluating each
portfolio category are as follows:
Trading securities
Trading securities are securities initially bought or sold
principally for the purpose of reselling or repurchasing them
in the near-term, or held for the purpose of market-making
activities. These securities are traded in active markets,
and the available market price reflects frequent buying and
selling under normal conditions of competition. Trading
securities also include securities subject to a promise of
sale as part of an arbitrage transaction carried out on an
organised or similar market in financial instruments, and
securities bought or sold for specialised trading portfolio
strategy including forward financial instruments, securities
or other financial instruments managed together and
showing indications of a recent short-term profit-taking
profile.
Trading securities are recorded on the balance sheet at
cost, net of expenses. For fixed-income securities, the
cost includes accrued interest.
They are marked to market at the end of the financial
period.
Net unrealised gains or losses, together with net gains
or losses on disposals, are recognised in the income
statement under “Net income from financial transactions”.
Coupon payments received on fixed-income securities in
the trading portfolio are recorded in the income statement
under “Net interest income from bonds and other fixedincome securities”.
Trading securities no longer held for sale in the short
term, no longer held for market-making purposes, or for
which the specialised portfolio management strategy for
which they are held no longer offers a recent profit-taking
profile in the short term, may be transferred to the “Shortterm Investment Securities” or “Investment Securities”
category if:
• an exceptional market situation requires a change in
holding strategy;
• Or if the fixed-income securities can no longer be
traded on an active market following their acquisition,
and if Crédit du Nord intends and is able to hold them
for the foreseeable future or until their maturity.
Transferred securities are recorded in their new category
at their market value at the date of transfer.
Short-term investment securities
This category includes securities which are not included
with trading securities, investment securities, other
long-term investment securities, equity investments and
subsidiaries, other long-term investment securities or
investments in subsidiaries and affiliates.
Equity securities are carried on the balance sheet at cost
excluding acquisition expenses, or at contribution value.
At year-end, cost is compared to realisable value. For
listed securities, realisable value is defined as the most
recent market price. Unrealised capital gains are not
recognised in the accounts but a depreciation of portfolio
securities is booked to cover unrealised capital losses,
without the said depreciation being offset against any
unrealised capital gains. Income from these securities is
recorded in “Income from equity securities”.
3
These securities are carried at cost excluding acquisition
expenses and, in the case of bonds, excluding interest
accrued and not yet due at the date of purchase. The
positive or negative difference between cost and
redemption value is amortised to income over the life of
the relevant securities and using the actuarial method.
Accrued interest on bonds and other short-term
investment securities is recorded as Related receivables
and under “Net interest income from bonds and other
fixed-income securities” in the income statement.
At year-end, cost is compared to realisable value or, in the
case of listed securities, to their most recent market price.
Unrealised capital gains are not recognised in the accounts
but a depreciation of portfolio securities is booked to cover
unrealised capital losses, after consideration of any gains
made on any related hedging transactions.
Allocations to and reversals of depreciations for losses on
short-term investment securities together with gains and
losses on sales of these securities are recorded under
“Net income from financial transactions” in the income
statement.
Short-term investment securities can be reclassified as
“Investment Securities” if:
• an exceptional market situation requires a change in
holding strategy;
• or if the fixed-income securities can no longer be traded
on an active market following their acquisition, and if
Crédit du Nord intends and is able to hold them for the
foreseeable future or until their maturity.
Long-term investment securities are acquired debt
securities or reclassified short-term investment securities
which Crédit du Nord intends to hold until maturity, where
it has the financial capacity to do so and is not subject to
any legal or other form of constraint that might undermine
its ability to do so.
147
3
Accounting recognition of investment securities is identical
to that of short-term investment securities. Long-term
investments are booked according to the same principles
as short-term investment securities, except that no
depreciation is made for unrealised losses, unless there
is a strong probability that the securities will be sold in the
short term, or unless there is a risk that the issuer will be
unable to redeem them.
Allocations to and reversals of depreciations for losses
on long-term investment securities, together with gains
and losses on sales of these securities, are recorded in
the income statement under “Net income from long-term
investments”.
Equity
investments,
investments
in
subsidiaries and affiliates, and other longterm investments
This category of securities covers “Equity investments
and investments in subsidiaries and affiliates”, when it
is deemed useful to Crédit du Nord’s business to hold
the said shares in the long term. This notably covers
investments that meet the following criteria:
• shares in companies that share directors or senior
managers with Crédit du Nord and where influence
can be exercised over the company in which the shares
are held;
At year-end, investments in consolidated subsidiaries
and affiliates are valued at their value in use, namely the
price the company would accept to pay to obtain the said
securities if it had to acquire them in view of its investment
objective. This value is estimated on the basis of various
criteria, such as shareholders’ equity, profitability, and the
average share price over the last three months. Unrealised
capital gains are not recognised in the accounts but a
depreciation on portfolio securities is booked to cover
unrealised capital losses. Allocations to and reversals
of depreciations as well as any capital gains or losses
realised on the disposal of these securities, including any
profit or loss generated when tendering these securities
to public share exchange offers, are booked under “Net
income from long-term investments”.
Fixed assets
Operating and investment fixed assets are booked on the
balance sheet at cost. Borrowing expenses incurred to
fund a lengthy construction period for fixed assets are
included in the acquisition cost, along with other directly
attributable expenses. Investment subsidies received are
deducted from the cost of the relevant assets.
• shares in companies that belong to the same group
controlled by individuals or legal entities, where the said
persons or entities exercise control over the group and
ensure that decisions are taken in unison;
Software developed in-house is capitalised at the direct
development cost, which includes external hardware and
service costs and personnel expenses directly attributable
to the production and preparation of the software
application in order to use it.
• shares representing more than 10% of the voting rights
in the capital issued by a bank or a company whose
business is directly linked to that of Crédit du Nord.
As soon as they are fit for use, fixed assets are depreciated
over their useful life. Any residual value of the asset is
deducted from its depreciable amount.
This category also includes “Other long-term investment
securities”. These are equity investments made by Crédit
du Nord with the aim of developing special professional
relations with a company over the long term but without
exercising any influence on its management due to the
low proportion of attached voting rights.
Depreciation is calculated mainly using the straight line
method over the specified useful life of the asset.
Investments in consolidated subsidiaries and affiliates,
and other long-term equity investments are recorded at
their purchase price net of acquisition costs. Dividend
148
income earned on these securities is booked in the
income statement under “Income from equity securities”.
Where one or several components of a fixed asset are used
for different purposes or to generate economic benefits
over a different time period from the asset considered as a
whole, these components are depreciated over their own
useful life. Allocations to depreciation and amortisation are
recorded on the income statement under “Amortisation
expense”.
Crédit du Nord has applied this approach Depreciation
periods for other categories of fixed assets depend on
their useful life, usually estimated in the following ranges:
Infrastructures
Major structures
50 years
Doors and windows, roofing
20 years
Frontages
30 years
Elevators
Electrical installations
Electricity generators
Technical
installations
Air conditioning, smoke
extraction
Heating
10-30
years
Security and surveillance
installations
Plumbing
Fire safety equipment
Fixtures & fittings
Finishings, surroundings
10 years
Depreciation periods for other categories of fixed assets
depend on their useful life, usually estimated in the
following ranges:
Plant and equipment
Transport equipment
Furniture
5 years
4 years
10 years
IT and office equipment
3 to 5 years
Software, developed or acquired
3 to 5 years
Francises, patents and licenses
5 to 20 years
3
Debt securities
These liabilities are broken down into medium-term notes,
interbank securities and negotiable debt instruments,
bonds and other fixed-income securities (with the
exception of subordinated notes, which are classified
under subordinated debt).
Interest accrued and payable in respect of these securities
is booked as related payables through profit or loss. Bond
issuance and redemption premiums are amortised using
the straight-line or actuarial method over the life of the
related borrowings. The resulting expense is recorded in
the income statement under “Net income from bonds and
other fixed-income securities”.
Bond issuance costs accrued over the period are booked
as expenses for the period, under “Net income from
bonds and other fixed-income securities” in the income
statement.
Subordinated debt
This item includes all dated or undated subordinated
borrowings, which, in the event of the liquidation of the
borrower, may only be redeemed after all other creditors
have been paid.
Interest accrued and payable in respect of subordinated
debt, if any, is shown with the underlying abilities as related
payables.
Provisions
Amounts due to banks and customer deposits
Amounts due to banks and customer deposits are
classified according to their initial duration and type into:
demand (deposits, current accounts) and term accounts
in the case of banks; and special savings accounts
and other deposits in the case of customers. This debt
includes pension transactions, in the form of securitised
debt payables, carried out with these economic operators.
Accrued interest on these amounts is recorded as related
payables through profit or loss.
Provisions include:
• provisions for commitments;
• provisions for contingencies and disputes.
Provisions for commitments and contingencies are
determined on the basis of expert analysis.
Provisions for disputes are discounted according to the
amount and projected payment date, as determined on
the basis of expert analysis.
The discount rate is the rate of a risk-free investment over
the same period.
149
3
Provisions for contingencies are defined as liabilities with
no precisely defined amount or due date. They are only
booked if the company has an obligation to a third party
that will probably or necessarily lead to a transfer of funds
to the third party, without compensation for at least an
equivalent amount being expected from this third party.
Provisions are presented in Note 13. Information
pertaining to the category and amount of risks involved
is not provided if Crédit du Nord is of the opinion that it
could result in major losses in a legal dispute against third
parties concerning the object of the provision.
Equalisation provisions are classified by type in the
relevant income statement.
Commitments under home savings accounts
Home savings accounts and plans are savings schemes
for individual customers (in accordance with Law
No. 65554 of July 10, 1965), which combine an initial
deposit phase in the form of an interest-earning savings
account with a lending phase where the deposits are used
to provide property loans. The latter phase is subject to the
previous existence of the savings phase and is therefore
inseparable from it. The deposits collected and loans
granted are booked at amortised cost.
These instruments generate two types of commitments for
Crédit du Nord: the obligation to subsequently lend to the
customer at an interest rate established upon the signing
of the agreement, and the obligation to pay interest on
the customer’s savings in the future at an interest rate set
upon the signing of the agreement, for an indefinite period.
Commitments with future adverse effects for Crédit du
Nord are subject to provisions booked as balance-sheet
liabilities, any changes in which are recorded on the
interest margin line under “Net banking income”. These
provisions relate exclusively to commitments under home
savings accounts and schemes existing at the date of the
provision’s calculation.
Provisions are calculated for each generation of home
savings schemes, on the one hand, with no netting
between the different generations of schemes, and for all
home savings accounts taken together, which constitutes
a single all-encompassing generation, on the other hand.
150
During the savings phase, provisions are calculated
according to the difference between average expected
outstanding savings and minimum expected outstanding
savings, both of which are determined statistically based
on historic observations of actual customer behaviour.
During the lending phase, provisions are calculated
according to loans already issued but not yet due at the
balance sheet date, as well as future loans considered as
statistically probable on the basis of customer savings
deposits on the balance sheet at the date of calculation
and on historic observations of actual customer behaviour.
A provision is booked if the discounted value of expected
future earnings for a given generation of home savings
products is negative. These results are measured on the
basis of interest rates available to individual customers
for equivalent savings and loan instruments, with similar
estimated life and date of inception.
Gains and losses arising from ordinary activities in foreign
currencies are booked to the income statement.
In accordance with CRB regulation 89-01, forward foreign
exchange transactions are valued on the basis of the
forward foreign exchange rate of the relevant currency
for the remaining maturity. Spot and other forward foreign
exchange positions are revalued on a monthly basis
using official month-end spot rates. Resulting valuation
differences are regularly recorded in the income statement.
Forward financial instrument transactions
Transactions in forward interest rate, foreign exchange
or equity instruments are accounted for in accordance
with amended CRB Regulations 88-02 and 90-15 and
Directive 94-04 of the French Banking Commission.
Nominal commitments on forward financial instruments
are recorded as a separate off-balance sheet item.
This amount represents the volume of outstanding
transactions and does not represent the potential gain or
loss associated with the market or counterparty risk on
these transactions.
The accounting treatment of income or expenses on these
forward financial instruments depends on the purpose for
which the transaction was concluded, as follows:
Hedging transactions
Income and expenses on forward financial instruments
used as a hedge and assigned from the beginning to an
identifiable item or group of similar items, are recognised
in the income statement in the same manner as revenues
and expenses on the hedged item. Income and expenses
on interest rate instruments are booked as net interest
income in the same interest income or expense account
as the items hedged. Income and expenses on other
instruments are booked as “Net income from financial
transactions”, under “Income from forward financial
instruments”.
Income and expenses on forward financial instruments
used for hedging and management of overall interest rate
risk are recorded in the income statement on a pro rata
basis. They are recognised as “Net income from financial
transactions” under “Income from forward financial
instruments”.
Transactions in open positions
All relative income and expenses are booked to the income
statement on a prorata basis. They are recognised as
“Net income from financial transactions” under “Income
from forward financial instruments”. Unrealised losses,
determined by a book-to-market value comparison, are
provisioned. Unrealised gains are not recorded.
3
Net fee income
Crédit du Nord recognises service fee income and
expenses in different ways depending on the type of
service.
Fees for continuous services, such as certain fees on
payment instruments, custody fees or web-service
subscriptions are booked as income over the life of the
service provided.
Fees for one-off services, such fund activity fees, finder’s
fees received, penalties following payment incidents are
booked to income when the service is provided under
“Fee income – Services and others”.
Personnel expenses
The “Personnel expenses” account includes all expenses
related to personnel, notably the cost of the legal employee
profit-sharing and incentive plans for the year.
Staff benefits
Crédit du Nord grants the following benefits to its
employees:
• post-employment benefits, such as pension plans and
severance pay;
• long-term benefits, such as deferred variable
remuneration, long-service awards or flexible working
provisions;
• employment termination benefits.
Guarantees given and received
Guarantees given at the request of customers or banks are
recorded as off-balance sheet items in the amount of the
commitment. For guarantees received, only those from
lending institutions, States, government administrations
and local authorities are recorded.
Pension plans may be defined contribution or defined
benefit.
Defined contribution plans limit Crédit du Nord’s liability to
the contributions paid to the plan but do not commit Crédit
du Nord to a specific level of future benefits. Contributions
paid are booked as an expense for the year in question.
Off-balance sheet guarantees and endorsements
correspond to irrevocable cash loan commitments and
guarantee commitments which did not give rise to any
fund movements.
Defined benefit plans commit Crédit du Nord, either
formally or implicitly, to pay a certain amount or level of
future benefits and therefore bear the associated medium
or long-term risk.
Where necessary, these financing guarantees and
commitments are subject to provisions.
A provision is recorded on the liability side of the balance
sheet under “Provisions” to cover all of the above retirement
151
3
commitments. This is assessed regularly by independent
actuaries using the projected unit credit method. This
valuation method takes account of assumptions on
demographics, early retirement, wage increases, discount
rates and inflation.
Where these plans are financed using external funds
meeting the definition of plan assets, the fair value of
these funds is deducted from the amount of the provision
recorded to cover the related commitments.
Differences arising from changes in the calculation method
(early retirement, discount rate, etc.) or between actuarial
assumptions and actual figures (return on hedging assets,
etc.) constitute actuarial differences (gains or losses).
These are amortised in the income statement over the
anticipated residual average active life of the employees
participating in the plan concerned if they exceed the
higher of the following two values (corridor method):
• 10% of the discounted value of the defined benefit
commitment;
• 10% of the fair value of the assets at the end of the
previous period.
Where a new plan (or amendment) is being established,
the service expense is spread out over the residual
duration of the employee’s working life.
The annual expense recognised as personnel expenses
for defined benefit plans includes:
• additional entitlements vested by each employee
(current service cost);
• the interest cost corresponding to the increase in the
present value of a defined benefit obligation;
• the expected return on any plan assets (gross yield);
• the amortisation of actuarial gains and losses and past
service cost;
• the effect of any plan curtailments or settlements.
Long-term benefits
Long-term benefits are employee benefits that do not fall
due wholly within the twelve months after the end of the
period in which the employees render the related services.
Long-term benefits are measured in the same way as
post-employment benefits, except for the treatment of
actuarial gains and losses and past service costs which
are booked immediately to the income statement.
Cost of risk
The figure shown under “Cost of Risk” includes net
reversals of impairment losses and provisions for credit
risk, losses on non-recoverable loans, amounts recovered
on impaired loans, and allowances and reversals for other
risks.
This item covers capital gains or losses realised on
disposals, as well as the net allocation to depreciations
for investments in consolidated subsidiaries and affiliates,
long-term investment securities and offices and other
premises. Income from real-estate holdings excluding
offices is booked under “Net banking income”.
Income tax
All taxes (excluding income tax) whose assessment refers
to items for the fiscal year in question are recognised as
expenses for said year, whether or not the tax was actually
paid during the course of the fiscal year.
Current income tax
Since January 1, 2010, Crédit du Nord has been included
in Societe Generale’s tax consolidation scope. A tax
consolidation sub-group was set up between Crédit du
Nord and some of the subsidiaries in which it holds a
direct or indirect ownership interest of at least 95%. The
convention adopted is that of neutrality.
In addition, a social security contribution of 3.3% (after
deduction from taxable income of EUR 0.76 million) was
introduced in 2000 and, as from 2013, an additional
10.7% tax for companies generating revenue in excess
of EUR 250 million.
152
Since January 1, 2007, long-term capital gains on
equity investments in predominantly real estate-oriented
companies have been taxed at 15%, while capital gains
on other equity investments are tax-exempt, subject to
corporation tax on a share for fees and expenses of 12%
on the amount of gross capital gains in the event a net
capital gain is generated over the long term. In addition,
under the regime of parent companies and subsidiaries,
dividends received from companies in which the equity
investment is at least 5% are tax-exempt (with the
exception of a share for fees and expenses equivalent to
5% of the dividends paid).
Tax credit arising in respect of revenues from receivables
and security portfolios, when they are effectively used for
the settlement of corporate tax due for the fiscal year,
are booked under the same line item as the revenues to
which they relate. The corresponding income tax expense
is kept in the income statement under “Income Tax”.
Deferred tax
Crédit du Nord records deferred taxes in its parent
company financial statements.
3
are calculated using the liability method. Accordingly, they
are adjusted whenever there is a change in the tax rate.
The corresponding impact is added to/subtracted from
the deferred tax expense. Net deferred tax assets are
recognised where there is a possibility of recovering over
a given time period.
For 2013 and subsequent fiscal years, the normal tax rate
used to determine deferred tax is 34.43% for earnings
taxed at the normal rate, and the reduced rate is 4.13%
taking into account the nature of the taxed transactions.
Deferred taxes are determined separately for each taxable
entity and are not discounted to present value when the
corresponding effect is not significant or when a precise
timetable has not been drawn up.
Exceptional income
This heading includes income earned and expenses
incurred by Crédit du Nord that are considered to be
exceptional in view of either the amount or the manner in
which they were generated. In most cases, said income
or expenses are the result of events that fall outside the
scope of Crédit du Nord’s activity.
Deferred taxes are recognised in the event a temporary
difference is detected between the restated book values
and the tax values of balance sheet items. Deferred taxes
153
3
NOTE 2 Cash, due from central banks and postal accounts
(in EUR millions)
Cash
Due from central banks
Due from post office accounts
TOTAL
31/12/2013
31/12/2012
95.4
89.7
399.0
1,793.7
-
-
494.4
1,883.4
31/12/2013
31/12/2012
NOTE 3 Due from banks
(in EUR millions)
Demand deposits and loans
Current accounts
Overnight deposits and loans
285.3
1,388.3
2,241.7
362.0
6,706.4
4,983.8
95.7
94.5
Subordinated and participating loans
Loans secured by notes and securities
Related receivables
TOTAL GROSS (1) (2) (3)
Impairments
TOTAL NET
(1) O/w doubtful loans
(2) O/w irrecoverable non-performing loans
(3) O/w transactions with subsidiaries and affiliates
154
0.7
0.2
31.1
15.4
9,360.9
6,844.2
-0.5
-0.5
9,360.4
6,843.7
-
-
0.5
0.5
8,253.5
5,644.3
3
NOTE 4 Transactions with customers
31/12/2013
31/12/2012
199.2
242.0
15,869.0
15,773.6
989.9
1,081.2
33.2
37.9
Capital expenditure loans
3,199.1
3,267.5
Housing loans
9,605.5
9,383.8
Other loans
2,041.3
2,003.2
870.8
1,064.4
(in EUR millions)
Commercial loans
Short-term loans
Export loans
Overdrafts
Related receivables
32.2
34.7
16,971.2
17,114.7
-484.4
-451.6
16,486.8
16,663.1
15,958.2
16,216.8
- Companies and individual entrepreneurs
6,984.9
7,287.1
- Individual customers
8,875.1
8,723.9
- Financial customers
0.8
84.6
97.4
121.2
TOTAL GROSS (1) (2) (3) (4) (5) (6)
Impairments
TOTAL NET
(1) O/w performing loans (excluding related receivables)
- Others
(2) O/w doubtful loans (excluding related receivables)
392.8
331.8
245.0
202.4
146.1
129.1
-
-
1.7
0.3
- Others
(3) O/w non-performing loans
588.0
531.4
402.9
366.5
183.6
163.4
-
-
1.5
1.5
2,104.1
8,109.6
745.0
1,394.5
16.7
205.2
- Others
(4) O/w receivables pledged as collateral for liabilities
(5) O/w receivables eligible as collateral for Banque de France financing
The identification of outstanding restructured loans is in progress and is not complete at present.
Concentration risk is analysed on a half-yearly basis at the consolidated level. Its methods and major trends are provided
in Note 3 to the consolidated financial statements.
155
3
NOTE 5 Treasury notes, bonds and other fixed-income securities, shares and other
equity securities
31/12/2013
(in EUR millions)
Trading portfolio
31/12/2012
Treasury
notes and
similar
securities
Shares and
other equity
securities
Bonds and
other fixedincome
securities
-
-
-
-
-
-
2,576.0
20.2
5,588.6
8,184.8
332.8
3.6
Treasury notes
and similar
Total
securities
Shares and Bonds and other
other equity
fixed-income
securities
securities
-
Total
-
Short-term investment
portfolio (1)
Gross amount
Impairments
9,916.5 10,252.9
-4.8
-3.1
-33.6
-41.5
-
-3.0
2,571.2
17.1
5,555.0
8,143.3
332.8
0.5
Gross amount
-
-
10.5
10.5
-
-
42.3
42.3
Impairments
-
-
-1.8
-1.8
-
-
-3.0
-3.0
Net amount
-44.1
-47.1
9,872.4 10,205.7
Investment portfolio
Net amount
Related receivables
TOTAL (2)
-
-
8.7
8.7
-
-
39.3
39.3
7.9
-
10.6
18.5
1.7
-
15.3
17.0
2,579.1
17.1
5,574.3
8,170.5
334.5
0.5
9,927.0 10,262.0
(1) O/w securities eligible as collateral for Banque de France financing
6,316.8
6,525.0
(2) O/w bonds and other fixed-income securities issued by public
organisations (net of provisions and excluding related receivables)
1,199.4
1,034.2
Additional information on securities
Short-term investment portfolio
(in EUR millions)
31/12/2013
31/12/2012
Estimated value of short-term investment securities
Unrealised capital gains
12.1
6.1
Unrealised capital gains on shares and other equity securities
4.0
4.6
Unrealised capital gains on bonds and other fixed-income securities
8.1
1.5
-61.1
-5.3
16.9
-
2,576.0
332.8
16.8
0.1
1,279.8
362.3
9.1
9.3
Premiums and discounts related to short-term investment securities
(excluding doubtful securities)
Shares of UCITS held
Listed securities in treasury notes and similar securities (net of provisions
and excluding related receivables)
Listed securities in shares and other equity securities (net of provisions
Listed securities in bonds and other fixed-income securities (net of provisions
Subordinated securities (net of provisions and excluding related receivables)
156
3
Investment portfolio
31/12/2013
31/12/2012
Unrealised capital gains
-
-
Premiums and discounts related to long-term investment securities (excluding
doubtful securities)
-
0.2
Listed securities in bonds and other fixed-income securities (net of provisions
-
24.5
(in EUR millions)
Estimated value of long-term investment securities
The investment portfolio is wholly comprised of OBSAARs (bonds with redeemable and/or acquisition warrants): three
partial redemptions were recorded in 2013 for €7.4 million (excluding related receivables) and one OBSAAR was exited
from the portfolio for €24.6 million.
Securities transferred
No securities were transferred from one portfolio to another in 2012 or 2013.
NOTE 6 Equity investments, other long-term investment securities and investments
in subsidiaries and affiliates
Equity investments and other long-term investment securities
(in EUR millions)
Banks
Listed
Unlisted
Others
Listed
31/12/2013
31/12/2012
72.6
73.0
-
-
72.6
73.0
16.6
19.4
-
-
16.6
19.4
TOTAL GROSS
89.2
92.4
Impairments
-0.2
-0.1
TOTAL NET
89.0
92.3
31/12/2013
31/12/2012
1,420.8
1,415.1
Unlisted
Investments in subsidiaries and affiliates
(in EUR millions)
Banks
Listed
Unlisted (1)
Others
Listed
Unlisted
(2)
TOTAL GROSS
Impairments
TOTAL NET
-
-
1,420.8
1,415.1
281.7
421.1
-
-
281.7
421.1
1,702.5
1,836.2
-
-0.1
1,702.5
1,836.1
The main changes for 2013 concern:
(1) The acquisition of Tarneaud shares following the squeeze-out (takeover bid filed by Crédit du Nord on November 13, 2012): +€5.7 million.
(2) The sale of Etoile Gestion Holding shares: -€108.3 million.
(2) The capital reductions carried out by SNC Hedin, Verthema and Nordenskiöld: -€30.6 million.
157
3
NOTE 7 Fixed assets
(in EUR millions)
Gross
value at
31/12/2012 Acquisitions
Disposals
Accumulated
Gross depreciation and
Other
value at
amortisation at Net value at
changes 31/12/2013
31/12/2013 (1) 31/12/2013
Operating fixed assets
Intangible assets
Start-up costs
Software created
-
-
-
-
-
-
-
263.8
25.0
-34.3
-
254.5
-165.3
89.2
Software purchased
82.2
0.2
-
-
82.4
-81.5
0.9
Others
19.7
0.7
-
-0.2
20.2
-0.1
20.1
365.7
25.9
-34.3
-0.2
357.1
-246.9
110.2
Land and buildings
172.6
1.9
-0.2
3.5
177.8
-54.1
123.7
Others
357.8
15.9
-0.9
-24.8
348.0
-292.6
55.4
SUB-TOTAL
530.4
17.8
-1.1
-21.3
525.8
-346.7
179.1
7.0
0.2
-0.3
4.5
11.4
-7.5
3.9
SUB-TOTAL
Tangible assets
Fixed assets (excluding operating
fixed assets)
Tangible assets
Land and buildings
Others
SUB-TOTAL
TOTAL
4.1
-
-
0.1
4.2
-3.8
0.4
11.1
0.2
-0.3
4.6
15.6
-11.3
4.3
907.2
43.9
-35.7
-16.9
898.5
-604.9
293.6
(1) Breakdown of depreciation, amortisation and impairment:
Intangible assets
Operating tangible assets
Software
created
Software
purchased
Others
Land and
buildings
Others
Amount at 31 December 2012
175.9
79.9
0.1
50.9
290.4
7.8
605.0
Depreciation and amortisation
22.7
1.7
-
7.1
19.4
0.3
51.2
(in EUR millions)
Depreciation and amortisation relating
to asset disposals
Total
-33.3
-
-
-0.1
-0.9
-0.3
-34.6
Impairment of fixed assets
-
-
-
-
-
-
-
Reversals
-
-
-
-
-
-
-
Other changes
AMOUNT AT DECEMBER 31, 2013
-
-0.1
-
-3.8
-16.3
3.5
-16.7
165.3
81.5
0.1
54.1
292.6
11.3
604.9
(*) Allocations to depreciation and amortisation of fixed assets (excluding operating fixed assets) are included in “Net banking income”.
158
Non-operating
tangible assets (*)
3
NOTE 8 Accruals and other accounts receivable
(in EUR millions)
31/12/2013
31/12/2012
204.5
273.3
30.8
44.4
0.6
-
Other assets
Sundry debtors
Premiums on options purchased
Settlement accounts on securities transactions
Others
SUB-TOTAL
0.4
0.2
236.3
317.9
5.3
7.8
Accrued expenses
Prepaid expenses
Deferred taxes
Accrued income
Others
SUB-TOTAL
TOTAL (1)
67.6
56.7
166.7
176.2
55.0
72.0
294.6
312.7
530.9
630.6
31/12/2013
31/12/2012
747.6
588.2
0.1
0.1
747.7
588.3
1,876.5
7,999.2
7.9
33.2
1,884.4
8,032.4
2,632.1
8,620.7
2,168.5
4,693.5
(1) At 31/12/2013, none of the components of these items had been pledged.
NOTE 9 Due to banks
(in EUR millions)
Demand accounts
Demand deposits and current accounts
Related payables
SUB-TOTAL
Term accounts
Term deposits and borrowings
Related payables
SUB-TOTAL
TOTAL
(1)
159
3
NOTE 10 Transactions with customers
31/12/2013
31/12/2012
Demand
4,960.3
4,643.7
Term
1,031.5
1,000.5
SUB-TOTAL
5,991.8
5,644.2
(in EUR millions)
Special savings accounts
Other demand deposits
4,757.9
4,697.8
2,992.6
2,666.5
Financial customers
13.8
4.3
Others
SUB-TOTAL
455.8
492.0
8,220.1
7,860.6
1,293.3
1,026.1
Other term deposits
(2)
Financial customers (1)
Others
SUB-TOTAL
Related payables
TOTAL
Securities sold to customers under repurchase agreements
TOTAL
(3)
53.4
75.2
-
1,712.6
81.5
98.1
1,428.2
2,912.0
24.4
87.6
15,664.5
16,504.4
136.0
73.9
15,800.5
16,578.3
(1) Transactions in 2012 with the securitisation funds Blue Star Crédit du Nord Entreprises and Blue Star Crédit du Nord Prêts Personnels Immobiliers.
(2) O/w guarantees
0.6
0.5
68.7
1,757.5
31/12/2013
31/12/2012
6.4
6.8
2,429.2
1,151.2
4.2
3.3
2,439,8
1,161.3
11,793.4
7,919.2
NOTE 11 Debt securities
(in EUR millions)
Short-term notes
Bonds
Related payables
SUB-TOTAL
Money market and negotiable debt securities
Related payables
SUB-TOTAL
TOTAL
Unamortised debit balance of issue premiums on these debt securities
160
31.2
24.3
11,824.6
7,943,5
14,264.4
9,104.8
18.9
15.8
3
NOTE 12 Accruals and other accounts payable
(in EUR millions)
31/12/2013
31/12/2012
223.3
306.1
21.4
27.1
1.4
2.4
Other liabilities
Sundry creditors
Premiums on derivatives sold
Settlement accounts on securities transactions
(1)
0.3
48.8
246.4
384.4
Expenses payable
365.9
371.3
Deferred taxes
216.2
207.4
Other securities transactions
SUB-TOTAL
Accruals
Deferred income
Others
SUB-TOTAL
TOTAL (2)
50.6
54.2
185.4
206.3
818.1
839.2
1,064.5
1,223.6
(1) Main capital increases not fully paid up as of December 31, 2013: Hedin (€7.8 million) - Verthema (€10.5 million) - Nordenskiöld (€25.0 million) - Legazpi (€5.2 million).
(2) None of these amounts relates to items received as pledges or to debts representing borrowed securities.
NOTE 13 Provisions and impairments
(in EUR millions)
31/12/2013
31/12/2012
0.5
0.5
Asset impairments
Banks
Loans to customers
484.4
451.6
SUB-TOTAL (2)
484.9
452.1
Provisions for off-balance sheet commitments
21.2
51.7
Sector-based provisions and others
60.1
40.2
Provisions
Provisions for general risks and commitments
73.3
79.9
SUB-TOTAL (3)
154.6
171.8
TOTAL PROVISIONS AND IMPAIRMENTS (EXCLUDING SECURITIES) (1)
639.5
623.9
43.5
50.3
683.0
674.2
Impairment of securities
TOTAL
161
3
(1) The change in total provisions and impairments breaks down as follows:
Allocations
by cost
of risk
207.1
-
-174.3
-
-
-
484.9
28.8
7.7
-43.0
-10.7
-
-
154.6
235.9
7.7
-217.3
-10.7
-
-
639.5
changes
changes in exchange
in scope
rate
Impairments
at 31/12/2013
by cost
of risk
Impairments (2)
452.1
Provisions (3)
171.8
623.9
TOTAL
Other changes
by other
income
statement
balances
Provisions and
impairments at
31/12/2012
(in EUR millions)
Reversals/Uses
by other
income
statement
balances
changes
changes in exchange
in scope
rate
Provisions and
impairments at
31/12/2013
(2) Analysis of impairments:
Allocations
by cost
of risk
by other
income
statement
balances
-
-
67.0
93.5
Impairments at
31/12/2012
(in EUR millions)
Reversals/Uses
Other changes
by cost
of risk
by other
income
statement
balances
-
-
-
-
-
-
-
-85.6
-
-
-
74.9
Impairments of doubtful loans
Banks
Loans to customers
Impairments of non-performing loans
Banks
Loans to customers
TOTAL
0.5
-
-
-
-
-
-
0.5
384.6
113.6
-
-88.7
-
-
-
409.5
452.1
207.1
-
-174.3
-
-
-
484.9
changes
changes in exchange
in scope
rate
Provisions at
31/12/2013
(3) Analysis of provisions:
Allocations
(in EUR millions)
commitments
Sector-based provisions and others
(*)
Reversals/Uses
Other changes
Provisions at
31/12/2012
by cost
of risk
by other
income
statement
balances
by cost
of risk
by other
income
statement
balances
51.7
7.6
-
-38.1
-
-
-
21.2
40.2
19.9
-
-
-
-
-
60.1
Provisions for employee benefits
54.0
-
6.7
-
-7.5
-
-
53.2
Provisions for disputes with customers
10.2
1.2
0.4
-4.9
-0.1
-
-
6.8
5.2
-
-
-
-3.1
-
-
2.1
10.5
0.1
0.6
-
-
-
-
11.2
171.8
28.8
7.7
-43.0
-10.7
-
-
154.6
Provisions for forward financial
instruments
Other provisions for general risks
and commitments (**)
TOTAL
(*) This item mainly comprises impairments of performing loans under watch and sector-based impairments for credit risk.
(**) This item mainly comprises PEL/CEL provisions (See Note 14).
162
3
NOTE 14 Home savings accounts and plans
A. Outstanding deposits in PEL/CEL accounts
31/12/2013
31/12/2012
364.1
299.0
168.1
194.6
364.0
367.4
SUB-TOTAL
896.2
861.0
CEL accounts
143.8
153.3
1,040.0
1,014.3
(in EUR millions)
PEL accounts
TOTAL
B. Outstanding housing loans granted with respect to PEL/CEL accounts
31/12/2013
31/12/2012
5.6
10.7
8.0
7.0
0.9
1.1
14.5
18.8
31/12/2013
31/12/2012
-
3.1
-
0.4
7.6
2.0
SUB-TOTAL
7.6
5.5
CEL accounts
0.7
2.1
Drawn down loans
0.4
0.5
8.7
8.1
(in EUR millions)
TOTAL
C. Provisions for commitments linked to PEL/CEL accounts (1)
(in EUR millions)
PEL accounts
TOTAL
(1) These provisions are booked as “Provisions for general risk and commitments” (see Note 13 under “Other provisions for general risk and commitments”).
D. Methods used to establish the parameters for valuing provisions
The parameters used for estimating the future behaviour
of customers are derived from historical observations of
customer behaviour patterns over periods of between
10 and 15 years. The value of these parameters can
be adjusted if any changes are subsequently made to
regulations with the potential to undermine the reliability
of past data as an indicator of future customer behaviour.
basis of observable data and constitute a best estimate, at
the date of valuation, of the future value of these elements
for the period concerned, in line with the retail banking
division’s policy of interest rate risk management.
The discount rates used are derived from zero coupon
swaps vs. the Euribor yield curve at the date of valuation,
averaged over a 12-month period
The values of the different market parameters used,
notably interest rates and margins, are calculated on the
163
3
NOTE 15 Subordinated debt
31/12/2013
(in EUR millions)
31/12/2012
Redeemable subordinated notes
316.0
316.0
Subordinated borrowings
350.0
350.0
Interest payable
TOTAL
5.3
5.3
671.3
671.3
Details of redeemable subordinated notes
June 2004 issue of a total of EUR 50 million
with the following characteristics:
Issuance in October 2006 of a total €100 million
Size:
Principal:
Number of notes:
Issue price:
Maturity:
Interest:
Redeemable at par on:
Size:
Principal:
Number of notes:
Issue price:
Maturity:
Interest:
€50 million
€300
166,667
99.87% of principal
12 years
4.70% of principal
June 14, 2016
July 2005 issue of a total of €100 million
November 2006 issue of a total of €66 million
Size:
Principal:
Number of notes:
Issue price:
Maturity:
Interest:
Size:
Principal:
Number of notes:
Issue price:
Maturity:
Interest:
€100 million
EUR 10,000
10,000
100% of principal
10 years and 25 days
Principal x ((1+CNO-TEC
10 - 0.48% )^1/4 - 1)
July 25, 2015
For all redeemable subordinated notes, Crédit du Nord
has placed a self-imposed ban on the early amortisation
of subordinated notes via redemption, but reserves the
right to carry out early amortisation via stock market
purchases and the public offer of exchange or purchase
of redeemable subordinated notes. Crédit du Nor will then
require the prior approval of the Secretariat General of the
ACPR to carry out purchases on the stock market once
the cumulative amount of purchased securities exceeds
10% of the initial amount of the borrowing, and to carry out
public purchase or exchange offers or OTC purchases.
In the event the issuer is wound up, the subordinated
securities of all these issues will be redeemed at par
164
€100 million
EUR 10,000
10,000
100% of principal
10 years
4.38% of principal
October 18, 2016
€66 million
€300
220,000
100.01% of principal
12 years
4.15% of principal
November 6, 2018
and their redemption will only take place after all other
preferred and non-preferred creditors have been paid, but
before the repayment of participating loans granted to the
issuer and the participating securities it has issued. These
subordinated notes will be redeemed in the same order as
all other subordinated loans already issued or contracted,
or which may be issued or contracted, subsequently
by the issuer in France or abroad, in proportion to their
amount, where applicable.
At December 31, 2013, the unamortised debit balance of
the issue premiums of these borrowings stood at €10,400.
3
Details of subordinated borrowings
Subordinated loan totalling €350 million, taken out
on March 22, 2011, with the following characteristics:
Loan amount:
Maturity:
Interest:
Due date:
€350 million
10 years
6M Euribor + 2%
March 22, 2021
This loan can only be repaid early at the borrower’s
initiative with the prior approval of the Secretary General
of the ACPR.
The loan will be repaid in the same order as all other
subordinated loans already contracted, or which may be
contracted subsequently by the borrower in France or
abroad, in proportion to their amount, where applicable.
In the event of the court-ordered or conventional
liquidation of the borrower, the loan can only be repaid
after all other preferred or non-preferred creditors have
been paid, but, where applicable, before the repayment
of participating loans granted to the borrower and the
participating securities it has issued.
There is no clause for the conversion of subordinated debt
into capital or any other form of liability.
Interest paid on all these subordinated debts amounted to
€19.5 million at December 31, 2013 versus €22.6 million
NOTE 16 Change in shareholders’ equity
(in EUR millions)
Capital increase
Common
Additional
stock (1) paid-in-capital
Reserves
legal statutory
others
Retained
earnings
Net
Regulated Shareholders’
provisions
equity
890.3
10.4
86.8
806.0
0.4
0.3
226.9
0.8
2,021.9
-
-
-
-
-
-
-
-
-
-
-
2.2
2.0
-
0.1
-226.9
-
-222.6
rd
3 Resolution of the Joint
Shareholders’ Meeting of
May 11, 2012
2012 net income
-
-
-
-
-
-
344.9
-
344.9
Other changes
-
-
-
-
-
-
-
-
-
890.3
10.4
89.0
808.0
0.4
0.4
344.9
0.8
2,144.2
Capital increase
-
-
-
-
-
-
-
-
-
3rd resolution of the Ordinary
Shareholders’ Meeting of
May 16, 2013 (2)
-
-
-
122.0
-0.1
0.4
-344.9
-
-222.6
2013 net income
-
-
-
-
-
-
619.8
-
619.8
Other changes
-
-
-
-
-
-
-
-
-
890.3
10.4
89.0
930.0
0.3
0.8
619.8
0.8
2,541.4
AMOUNT AT DECEMBER 31, 2013
(1) At December 31, 2013, Crédit du Nord SA’s fully paid-up share capital amounted to €890,263,248 and consisted of 111,282,906 shares each with a par value of €8.
(2) Distribution of a dividend of €222.6 million to shareholders.
Societe Generale owned 100% of Crédit du Nord’s capital at December 31, 2013. As a result, Crédit du Nord’s accounts
are fully consolidated in Crédit du Nord’s consolidated financial statements.
165
3
Proposed distribution of earnings
• allocation of €208,000,000.00 to the ordinary reserve;
Acting in accordance with the quorum and majority
requirements established for Ordinary General
Shareholders’ Meetings, the Shareholders’ Meeting
resolved to allocate net income for the period amounting
to €619,822,876.06.
• allocation of €860,217.70 to retained earnings.
The ordinary reserve was therefore decreased from
€930,000,000.00 to €138,000,000.00.
Profits plus earnings carried forward from the previous
period, i.e. €784,093.84, resulted in total income
available for distribution of €620,606,969.90 which the
Shareholders’ Meeting resolves to allocate as follows:
• allocation of a dividend of €411,746,752.20 to
shareholders, i.e. a dividend per share of €3.70;
NOTE 17 Commitments
31/12/2013
(in EUR millions)
31/12/2012
Commitments given
Loan commitments
To banks
To customers
SUB-TOTAL (1)
676.2
599.8
2,274.0
2,191.8
2,950.2
2,791.6
247.5
273.6
To banks
To customers
SUB-TOTAL (2)
TOTAL
2,645.8
2,788.8
2,893.3
3,062.4
5,843.5
5,854.0
2,555.5
3,316.7
Commitments received
Loan commitments from banks (3)
(4)
7,455.0
7,373.7
10,010.5
10,690.4
502.9
398.6
707.8
630.5
-
-
200.6
315.0
Guarantee commitments from banks
TOTAL
At December 31, 2013, assets pledged as collateral
for own commitments (3G pool, SFEF, CRH, BEI,
Crédit Logement) amounted to €4,970.7 million and broke
down as follows: €3,586.7 million in Crédit du Nord assets
and €384.0 million in assets pledged as collateral from
its subsidiaries.
On the liabilities side, related cash borrowings came
to €1,232.1 million and, on the off-balance sheet, the
undrawn portion totalled €2,555.5 million.
At December 31, 2013, assets pledged as collateral
from its subsidiaries stood at €1,384.0 million.
166
Securitisation transactions set up in 2011 (FCT Blue
Star Guaranteed Home Loans) and 2012 (FCT Blue Star
Crédit du Nord Entreprises and FCT Blue Star Crédit
du Nord Prêts Personnels Immobiliers) were wound up
in December 2013.
FCT Blue Star Crédit du Nord Entreprises and FCT
Blue Star Crédit du Nord Prêts Personnels Immobiliers were
liquidated in December 2013. FCT Blue Star Guaranteed
Home Loans will be liquidated in January 2014.
3
NOTE 18 Forward financial instruments commitments
Total
31/12/2013
Total
31/12/2012
-
-
-
-
-
-
-
-
-
-
2,625.1
34,361.2
5,649.7
42,636.0
36,050.3
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,567.7
2,567.7
1,630.4
-
1,316.8
2,249.0
33.3
3,599.1
4,838.7
-
3,941.9
36,610.2
8,250.7
48,802.8
42,519.4
Trading
Speculation
Macro-hedging
Micro-hedging
D
A
C
B
Interest rate futures
-
-
-
Foreign exchange futures
-
-
-
-
-
Interest rate swaps
-
Others
-
Interest rate options
(in EUR millions)
Contract category under CRB Regulation 90/15
Firm transactions
Transactions on organised markets
OTC agreements
Options
Other options
TOTAL
Fair-value of hedging transactions
(in EUR millions)
31/12/2013
Firm transactions
Transactions on organised markets
Interest rate futures
-
Foreign exchange futures
-
-
OTC agreements
Interest rate swaps
Others
201.0
-
Options
Interest rate options
Other options
TOTAL
-
-0.3
3.0
203.7
167
3
NOTE 19 Interest income and expense
(in EUR millions)
2013
2012
90.0
167.9
INTEREST AND SIMILAR INCOME
Transactions with central banks, post office accounts and banks
Securities due under repurchase agreements
SUB-TOTAL
1.5
1.9
91.5
169.8
4.8
6.0
62.2
67.0
0.4
0.6
Interest income from transactions with customers
Commercial loans
Short-term loans
Export loans
Capital expenditure loans
Housing loans
Other loans
Overdrafts
80.2
85.7
375.6
383.9
53.8
55.8
38.0
36.7
-
0.1
SUB-TOTAL
615.0
635.8
120.0
186.9
Other interest and similar income
12.4
6.0
838.9
998.5
-88.3
-191.3
-
-
-88.3
-191.3
Special savings accounts
-87.6
-96.4
Other amounts due to customers
-54.7
-75.2
-
-0.8
SUB-TOTAL
-142.3
-172.4
-129.2
-153.6
SUB-TOTAL
INTEREST AND SIMILAR EXPENSES
Transactions with central banks, post office accounts and banks
SUB-TOTAL
Other interest and similar expenses
168
-0.1
-0.1
SUB-TOTAL
-359.9
-517.4
TOTAL NET
479.0
481.1
3
NOTE 20 Income from equity securities
(in EUR millions)
Dividends from shares and other equity securities
Dividends from equity investments and other long-term investment securities
TOTAL
(1) O/w income from shares in subsidiaries and affiliates
(1)
2013
2012
0.1
0.1
432.2
187.3
432.3
187.4
429.8
183.9
2013
2012
2.9
-
140.5
133.1
3.2
3.0
NOTE 21 Net fee income
(in EUR millions)
Fee income from
1.1
1.1
26.0
22.8
Services and other
276.4
282.0
SUB-TOTAL
450.1
442.0
-0.5
-0.4
-
-
Fee expense from
-0.2
-
-0.4
-0.1
-1.8
-1.8
Services and other
-56.5
-57.7
SUB-TOTAL
-59.4
-60.0
TOTAL NET
390.7
382.0
2013
2012
0.1
-0.4
Net income from forward financial instruments
-5.4
-20.0
Net income from foreign exchange transactions
16.5
12.7
SUB-TOTAL
11.2
-7.7
NOTE 22 Net income from financial transactions
(in EUR millions)
Net income from the trading portfolio
Net income from transactions in trading securities
Net income from short-term investment securities
Gains on sale
4.0
0.8
-
-4.3
Impairments
-6.4
-0.1
Reversals
Losses on sale
12.1
43.2
SUB-TOTAL
9.7
39.6
TOTAL NET
20.9
31.9
169
3
NOTE 23 Personnel expenses
(in EUR millions)
Employee compensation
2013
2012
-211.1
-223.0
Social security charges and payroll taxes
-45.9
-49.5(*)
Net retirement expenses - defined contribution plans
-41.4
-42.7(*)
Net retirement expenses - defined benefit plans
Other social security charges and taxes
Employee profit-sharing and incentives
o/w incentives
o/w profit-sharing
Transfer of charges
TOTAL
-4.3
-4.2
-33.5
-34.0
-32.0
-34.3
-18.5
-19.3
-8.4
-9.1
1.2
0.9
-367.0
-386.8
(*) Amount adjusted relative to the financial statements published at December 31, 2012.
Compensation of the administrative and decision-making bodies totalled €2.4 million in 2013.
2013
2012
Staff count recorded at December 31
4,939
5,153
Average staff count in activity
4,620
5,199
Executives
2,684
2,989
Non-executives
1,936
2,210
NOTE 24 Employee benefits
1. Post-employment defined contribution plans
Defined contribution plans limit Crédit du Nord’s liability to
the contributions paid to the plan but do not commit the
Group to a specific level of future benefits.
The main defined contribution plans provided to Crédit
du Nord employees notably include State pension plans
170
and other national retirement plans such as ARRCO and
AGIRC, pension schemes for which the only commitment
is to pay annual contributions (PERCO) and multi-employer
plans.
2.
3
Post-employment defined benefit plans
2.1 Reconciliation of assets and liabilities recognised in the balance sheet
31/12/2013
31/12/2012
Breakdown of provisions recorded in the balance sheet
29.4
29.6
Breakdown of assets recorded in the balance sheet
-0.8
-0.7
Net balance on the balance sheet
28.6
28.9
(in EUR millions)
BREAKDOWN OF SURPLUS/DEFICIT
67.6
79.7
-50.6
-56.1
A - Actuarial deficit (net balance)
17.0
23.6
B - Present value of unfunded obligations
33.0
33.5
0.6
0.7
20.8
27.5
Separate assets
-
-
Plan assets impacted by change in asset ceiling
-
-
21.4
28.2
28.6
28.9
Present value of defined benefit obligations
Fair value of plan assets
Unrecognised items
Unrecognised past service cost
Unrecognised net actuarial gain/loss
C - Total unrecognised items
A + B - C = NET BALANCE
Notes:
1. For pension plans or other post-employment plans, actuarial gains and losses exceeding 10% of the maximum between the
obligation and the assets are amortised over the estimated remaining lifetime of the participants, in accordance with the corridor
option.
2. Pension plans include accidental death plans, plans offering pension benefits as annuities and end of career payments. Pension
benefit annuities are paid additionally to State pension plans.
3. The present value of defined benefit obligations have been valued by independent qualified actuaries.
2.2 Actuarial costs of plans
(in EUR millions)
Past service cost
Impact of settlements/reductions
Interest cost
Expected return on plan assets
Expected return on separate assets
Actuarial gains/losses
31/12/2013
31/12/2012
4.1
3.2
-
-
0.1
0.1
-
-
3.1
4.1
-3.7
-3.2
-
-
1.4
0.7
Impact of change in asset ceiling
-
-
Changes in scope and other adjustments for the period
-
-0.5
5.0
4.4
TOTAL PLAN EXPENSES
171
3
2.3
Changes in net liabilities of post-employment plans booked to the balance sheet
2.3.1 Changes in the present value of defined benefit obligations
2013
2012
113.2
106.9
4.1
3.2
-
-
Past service cost
-
-
3.1
4.1
-4.1
15.2
-
-
-15.7
-10.2
-
-
(in EUR millions)
VALUE AT JANUARY 1
Service cost for the year, including social security contributions
Interest cost
Actuarial gains and losses generated over the period
Benefit payments
Transfers and others
-
-6.0
100.6
113.2
2.3.2 Changes in fair value of plan assets and separate assets
(in EUR millions)
2013
2012
VALUE AT JANUARY 1
56.1
53.4
3.7
3.3
-
-
1.2
5.0
Expected return on plan assets
Expected return on separate assets
Actuarial gains and losses generated over the fiscal year
-
-
-
-
Employer contributions
Benefit payments
3.2
5.8
-13.6
-7.5
-
-
Transfers, settlements and others
-
-3.9
50.6
56.1
2.4
Information on funding of pension plans and plan funding conditions
2.4.1 General information on funding assets
(composition, all plans combined and future contributions)
The fair value of plan assets is comprised of 24.3% bonds, 57.9% equities and 17.8% other assets.
Surplus plan assets totalled €0.8 million.
The employer contributions for the defined benefit post-employment plans in 2014 will be determined after the year-end
evaluations.
172
3
2.4.2 Actual returns on funding assets
Actual returns on plan assets and separate assets were:
(in EUR millions)
Plan assets
Separate assets
2.5
2013
2012
4.9
8.3
-
-
Sensitivity analysis of post-employment defined benefit plan obligations to changes
in the main actuarial assumptions
(as % of the item measured)
2013
2012
-9.7%
-9.2%
11.5%
11.0%
8.3%
8.1%
Variation of +1% in discount rate
Variation of +1% in long-term inflation rate
Variation of +1% in future salary increases net of inflation
3.
Other long-term benefits
Other long-term benefits granted to Group employees
include deferred bonuses, such as long-term variable
compensation, flexible working provisions and longservice awards. Other benefits besides post-employment
benefits and end-of-career benefits are not due in full in
the 12 months following the end of the year in which the
members of staff provided the corresponding services.
The net balance of other long-term benefits came
to €22.7 million in 2013 (o/w €8.5 million related to flexible
working provisions).
The total amount of expenses related to other long-term
benefits amounted to €1,3 million in 2013 (o/w €-.5 million
related to flexible working provisions).
NOTE 25 Other operating expenses
(in EUR millions)
Taxes
2013
2012
-18.8
-20.2
Other expenses
Rent, rental charges and other charges on buildings
Sub-contracting expenses
Charges reinvoiced to third parties
Transfer of charges
SUB-TOTAL
TOTAL
-38.3
-44.5
-254.6
-238.0
151.6
152.7
23.9
28.1
-117.4
-101.7
-136.2
-121.9
173
3
Statutory Auditors’ fees
DELOITTE
(in EUR thousands)
Statutory Auditors, certification, Audit of the individual
and consolidated financial statements
Additional assignments
ERNST & YOUNG
OTHER FIRMS (1)
2013
2012
2013
2012
2013
2012
-194.8
-191.0
-194.8
-191.0
-5.2
-5.2
8.1
-71.1
-6.0
-41.1
-
-84.0
(1) Statutory Auditors for the Monaco branch and asset transfer auditors.
NOTE 26 Cost of risk
(in EUR millions)
2013
2012
-202.8
-150.7
Counterparty risk
Net allocation for impairment
-4.9
-5.6
Losses covered by provisions
-66.1
-24.6
Reversals (including uses of provisions)
181.9
92.9
4.1
4.0
-87.8
-84.0
Net allocation to provisions for disputes
-1.2
-2.5
Losses not covered by provisions for disputes
-0.6
-0.4
Losses covered by provisions for disputes
-2.3
-3.0
4.8
3.9
-
-
0.7
-2.0
-87.1
-86.0
SUB-TOTAL
Other risks
Reversals of provisions for disputes (including uses of provisions)
SUB-TOTAL
TOTAL
174
3
NOTE 27 Gains or losses on fixed assets
(in EUR millions)
2013
2012
-
-
Equity investments, investments in subsidiaries and affiliates, and other long-term
investments
Gains on sale (1)
49.5
0.9
Losses on sale
-0.1
-0.5
Impairments
-0.1
-
-
0.6
49.3
1.0
0.1
0.2
-
-
0.1
0.2
Gains on sale
0.5
1.4
Losses on sale
-0.2
-0.9
0.3
0.5
49.7
1.7
Reversals
SUB-TOTAL
Operating tangible fixed assets
Gains on sale
Losses on sale
SUB-TOTAL
Operating intangible fixed assets
SUB-TOTAL
TOTAL
(1) O/w gain on sale of Etoile Gestion Holding shares of €49.5 million in 2013. In December 2013, Crédit du Nord sold its stake in Amundi Group, held via Etoile Gestion Holding, to
Societe Generale.
NOTE 28 Income tax
2013
(in EUR millions)
Current taxes
(1)
Deferred taxes
TOTAL
2012
-115.5
-79.6
2.2
-11.8
-113.3
-91.4
2013
2012
733.1
436.3
38.00%
36.10%
(1) 2013 income tax includes a tax gain of €6.8 million versus a loss of €3.4 million in respect of fiscal year 2012.
Reconciliation of the normative tax rate and the effective tax rate:
Net income before tax (in EUR millions)
Normal tax rate applicable to French companies (including the social security
contribution of 3% and exceptional contribution of 10.7%)
Permanent differences
-20.02%
-14.24%
Differential on items taxed at reduced rate
-2.63%
-0.23%
Tax differential on profits taxed outside France
-0.05%
-0.68%
0.76%
-0.36%
Gain due to tax consolidation
Miscellaneous
-0.61%
0.35%
Effective tax rate
15.45%
20.94%
175
3
NOTE 29 Assets, liabilities and forward financial instruments - Breakdown
by residual maturity
Residual maturity at December 31, 2013
(in EUR millions)
< 3 months
3 months
to 1 year
1 to 5 years
> 5 years
Total
ASSETS (USES OF FUNDS)
Due from banks
4,817.9
519.9
2,418.9
1,603.7
9,360.4
1,893.5
1,631.2
6,009.4
6,952.7
16,486.8
Trading securities
Short-term investment securities
-
-
-
-
-
800.7
800.2
2,846.5
1,118.1
5,565.5
TOTAL
2.6
6.1
0.1
-
8.8
7,514.7
2,957.4
11,274.9
9,674.5
31,421.5
LIABILITIES (RESOURCES)
Due to banks
Debt securities
TOTAL
1,479.3
273.6
177.5
701.7
2,632.1
14,664.0
235.1
894.1
7.3
15,800.5
600.1
4,454.5
7,500.1
1,709,7
14,264.4
16,743.4
4,963.2
8,571.7
2,418.7
32,697.0
583.7
1,396.9
6,128.0
142.1
8,250.7
5,262.0
3,681.8
10,582.6
17,083.8
36,610.2
FORWARD FINANCIAL INSTRUMENTS
Micro-hedging transactions
Macro-hedging transactions
Position management transactions
TOTAL
176
334.7
458.7
2,737.6
410.9
3,941.9
6,180.4
5,537.4
19,448.2
17,636.8
48,802.8
3
NOTE 30 Information concerning subsidiaries and equity investments
(in EUR thousands)
Legal form
Reserves
and retained
Capital
earnings
Share of
capital
owned
(as a %)
Net asset value
of shares owned
Gross
Net
Unpaid loans
and advances
Guarantees and
commitments
given
Net
banking
income
2013
net
income
Dividends
received
in 2013
Obser
-vations
A. Information on subsidiaries and equity investments owned by Crédit du Nord, whose net asset value exceeds 1% of the bank’s capital
Subsidiaries (at least 50% of capital owned)
Banque Courtois
33, rue Rémusat
31000 Toulouse
SA (limited
company)
18,400
105,429
Banque Tarneaud
2-6, rue Turgot
87000 Limoges
SA (limited
company)
26,703
122,332
Banque Rhône-Alpes
20-22, boulevard
Edouard Rey
SA (limited
38000 Grenoble
company)
12,563
104,865
93.29
93,886
Banque Nuger
5, place Michel-deL’Hospital
63000 ClermontFerrand
SA (limited
company)
11,445
46,129
63.19
Banque Laydernier
10, avenue du Rhône SA (limited
74000 Annecy
company)
24,789
40,339
Etoile ID
59, boulevard
Haussmann
75008 Paris
SA (limited
company)
15,400
Banque Kolb
1-3, place du Généralde-Gaulle
SA (limited
88500 Mirecourt
company)
94.48
54,056
54,056
418,072
29,464
173,434
47,475
61,278
100.00 122,833 122,833
737,635
21,140
136,091
31,305
85,115
93,886
734,522
51,470
151,317
28,480
40,433
13,921
13,921
100,107
1,425
39,817
8,686
1,212
96.82
44,435
44,435
516,805
52,422
74,995
16,975
13,200
7,891
100.00
22,977
22,977
-
-
317
189
1,416
14,099
54,984
78.44
46,606
46,606
435,277
9,931
71,946
8,171
6,137
Kolb Investissement
59, boulevard
Haussmann
75008 Paris
Simplified
joint stock
company
77
17,426
100.00
38,964
38,964
-
-
1,721
1,665
-
Star Lease
59, boulevard
Haussmann
75008 Paris
SA (limited
company)
55,000
34,537
100.00
55,000
55,000
1,509,993
622,268
30,563
15,340
-
Société Marseillaise
de Crédit
75, rue Paradis
13006 Marseille
SA (limited
company)
24,472
216,406
94.03 975,386 975,386
863,940
210,411
370,019
77,188
212,266
Hedin
59, boulevard
Haussmann
75008 Paris
Partnership
27,716
-80,341
94.99
26,330
26,330
-
-
-4,891
-6,497
-
(3)
Nordenskiöld
59, boulevard
Haussmann
75008 Paris
Partnership
10,903
-31,484
94.99
10,358
10,358
-
-
-4,634
-29,186
-
(3)
Verthema
59, boulevard
Haussmann
75008 Paris
Partnership
18,397
-53,371
94.99
17,477
17,477
-
-
-4,111
-9,197
-
(3)
177
3
(in EUR thousands)
Legazpi
17, cours Valmy
92800 Puteaux
Legal form
Partnership
Reserves
and retained
Capital
earnings
18,305
Share of
capital
owned
(as a %)
Net asset value
of shares owned
Guarantees and
commitments
given
Net
banking
income
2013
net
income
Dividends
received
in 2013
Gross
Net
Unpaid loans
and advances
50.00
9,152
9,152
-
-
-7,801
-8,935
-
(3)
70,945
3.00
38,852
38,852
90,532
175,305
255,007
104,278
1,565
(1)
6.10
14,889
14,889
-
-
12,648
12,349
771
(2) (3)
50.00 157,407 157,407
-
- 1,577,565
41,807
-
(3)
-53,068
Obser
-vations
Equity investments (less than 50% of capital owned)
Crédit Logement
50, boulevard
Sébastopol 75003
Paris
SA (limited
company) 1,259,850
Sicovam Holding
18, rue La Fayette
75009 Paris
SA (limited
company)
10,265
519,844
Antarius
59, boulevard
Haussmann
75008 Paris
SA (limited
company)
314,060
47,512
B. General information concerning other subsidiaries and equity investments
Subsidiaries not covered in section A
a) French subsidiaries
(combined)
-
-
-
22,879
22,858
657,294
206,560
-
-
115
b) Foreign subsidiaries
(combined)
-
-
-
-
-
-
-
-
-
-
Equity investments (4) not covered in Section A
a) French equity investments
(combined, including property
development companies)
-
-
-
26,155
25,973
2,587
4,440
-
-
201
b) Foreign equity investments
(combined)
-
-
-
128
128
-
-
-
-
-
(1) Data in italics pertain to December 31, 2012 (2013 data unavailable).
(2) Data in italics taken at July 31, 2013.
(3) For non-banking companies, revenue is indicated rather than “Net banking income”.
(4) Including equity investments of less than 10% recorded in equity investment accounts, in accordance with the provisions of the internal charts of accounts.
Note: Net income and Net banking income for 2013 are indicated for some companies, subject to the approval of the financial statements by the Ordinary General Shareholders’ Meeting
scheduled to meet in 2014. Crédit du Nord does not hold any direct or indirect investments in non-cooperative countries or territories.
178
3
NOTE 31 Main changes in the securities portfolio in 2013
Crédit du Nord carried out the following transactions on
its securities portfolio during fiscal year 2013:
None.
In accordance with the provisions of Article L.233.6 of the
French Commercial Code, the table below summarises
the significant changes in Crédit du Nord’s investment
portfolio recorded in 2013 (note that legal thresholds exist
at 5%, 10%, 20%, 33% and 50%).
Acquisition:
Upward threshold breaches:
Creation:
Etoile Top 3 - Etoile Top 2006 - Etoile Top 2007 - Etoile
4 Stars - Etoile Existence - Etoile Garantie 2007/2013 Antarius Garantie Avril 2013 - Antarius 4 Etoiles - Antarius
4 Etoiles 2
Increased equity investment:
Percent of capital
Threshold Company
10%
FRG Nord-Pas-de-Calais
Complete disposal:
9.83%
Percent of capital
Threshold Company
FRG Nord-Pas-de-Calais
previous
10.01%
Downward threshold breaches:
Tarneaud
Participation in capital increases:
31/12/2013
50%
31/12/2013
previous
FCT Blue Star Crédit du Nord
Entreprises
0.00%
50.00%
FCT Blue Star Crédit du Nord
Prêts Personnels Immobiliers
0.00%
50.00%
Etoile Gestion Holding
0.00%
69.88%
Amérasia 3
0.00%
95.00%
Amérasia 4
0.00%
95.00%
Nord Assurances Courtage
0.00%
99.80%
Silk 1
0.00%
99.96%
Starquinze
0.00% 100.00%
Reduced equity investment (1):
Starseize
0.00% 100.00%
Société Financière de la Tour Boieldieu - Vliance
Fiduciaire - FCPI Gen-I - FCPI Innovation Technologies SNC Legazpi - SNC Hedin - SNC Verthema SNC Nordenskiöld - Caisse de Refinancement de
l’Habitat - Silk 1 - Amérasia 3 - Amérasia 4 - Starquinze Starseize - Stardix-sept - Stardix-huit - Starvingtsept - Starvingt-neuf - Startrente - Startrente-quatre
- Startrente-cinq - Startrente-six - Startrente-sept Startrente-huit - Startrente-neuf - Starquarante Nord Assurances Courtage
Stardix-sept
0.00% 100.00%
Stardix-huit
0.00% 100.00%
Starvingt-sept
0.00% 100.00%
Starvingt-neuf
0.00% 100.00%
Startrente
0.00% 100.00%
Startrente-quatre
0.00% 100.00%
Startrente-cinq
0.00% 100.00%
Startrente-six
0.00% 100.00%
Etoile Existence - Etoile Garantie 2007/2013 - Antarius
Garantie Avril 2013 - Antarius 4 Etoiles - Antarius 4
Etoiles 2 - Prado Carenage - Etoile Gestion Holding FCT Blue Star Crédit du Nord Entreprises - FCT Blue Star
Crédit du Nord Prêts Personnels Immobiliers
(1) Includes capital reductions, transfers of all assets and liquidations.
Startrente-sept
0.00% 100.00%
Startrente-huit
0.00% 100.00%
Startrente-neuf
0.00% 100.00%
Starquarante
0.00% 100.00%
179
3
Information on the Corporate Officers
Information on the Corporate Officers
In 2013, the composition of the Board of Directors changed:
• resignation of Philippe HEIM as Director in March;
• appointment of Anne MARION-BOUCHACOURT as Director at the Shareholders’ Meeting of May 16;
• Thierry DIGOUTTE replaced Pascal Coulon, who resigned in July, as employee representative Director.
Furthermore, the directorships of Jean-François SAMMARCELLI and Patrick DAHER, which had reached expiry, were
renewed for a term of four years.
Positions held and duties performed over the last five years
Jean-François SAMMARCELLI (19/11/1950)
Philippe AYMERICH (12/08/1965)
• Deputy Chief Executive Officer of Societe Generale
(since 01/2010);
• Chief Executive Officer: Crédit du Nord (since 01/2012);
• Chairman of the Board of Directors: Crédit du Nord
(since 01/2010); CGA (from 01/2005 to 10/2011);
• Director: Crédit du Nord (since 11/2009); SOGECAP*;
SOGEPROM (since 02/2009); Boursorama (since
05/2009); Amundi Group (since 12/2009); Sopra
Geneval (since 04/2010); CGA (from 01/2005 to
10/2011); SOGESSUR (until 06/2011); SG Equipement
Finances (until 04/2010); Banque Tarneaud (from
04/2010 to 05/2011);
• Vice-Chairman of the Supervisory Board: Banque Kolb
(from 03/2012 to 05/2013); Banque Rhône Alpes (from
04/2012 to 05/2013);
• Member of the Supervisory Board: Societe Generale
Marocaine de Banques (since 12/2007); Fonds de
garantie des dépôts (since 06/2009); Banque Tarneaud
(since 05/2011); SKB Banka (until 05/2009);
• Member of the Supervisory Board: Banque Courtois
(since 02/2012); Société Marseillaise de Crédit (since
02/2012); Banque Tarneaud (since 03/2012); Banque
Rhône Alpes (since 04/2012); Banque Kolb (from
03/2012 to 05/2013).
• Permanent Representative of SG FSH on the Board of
Directors of Franfinance (until 04/2011);
• Permanent Representative of Crédit du Nord on the
Boards of Directors of Banque Rhône-Alpes (from
03/2010 to 05/2010) and Société Marseillaise de
Crédit (from 09/2010 to 12/2010);
• Permanent Representative of Crédit du Nord on the
Supervisory Boards of Banque Rhône-Alpes (since
05/2010) and Société Marseillaise de Crédit (since
12/2010);
• Non-Voting Director of Ortec Expansion (since
04/2009).
* Positions held for at least the past five years.
180
• Chairman of the Supervisory Board: Société Marseillaise
de Crédit (since 02/2012); Banque Courtois (since
02/2012); Banque Rhône Alpes (since 05/2013);
• Director: Crédit du Nord (since 01/2012); Sogecap
(since 03/2012); Amundi Group (since 02/2012);
Généras SGBT (from 06/2010 to 06/2012); Societe
Generale Ré SA SGBT (from 08/2010 to 06/2012);
Didier ALIX (16/08/1946)
• Chairman of the Board of Directors: Sogébail*; Société
de Gestion St Jean de Passy*;
• Chairman of the Supervisory Board: Komercni Banka
(from 10/2001 to 07/2013);
• Vice-Chairman of the Board of Directors: Fondation
d’Entreprise SG pour la Solidarité*;
• Deputy Chief Executive Officer: Societe Generale (from
09/2006 to 12/2009);
• Director: Crédit du Nord (from 07/2007 to 11/2009 then
since 01/2010); Laboratoire bio végétale Yves Rocher*;
CIPM International (since 06/2012); Société de Gestion
St Jean de Passy*; BRD Groupe Societe Generale
BHFM*; FAYAT SAS (since 02/2011); SG Private
Banking suisse SA SGBT (since 12/2009); Societe
Generale au Liban (until 06/2007); Fondation Notre
Dame (since 10/2012); UMHS (since 06/2013); SGBT
Luxembourg (from 12/2009 to 03/2012); Franfinance
(from 01/1991 to 04/2010); National Societe Generale
Bank SAE (NSGB) (from 02/2001 to 04/2010); Rémy
COINTREAU (from 07/2010 to 07/2013);
• Member of the Supervisory Board: Groupe Steria SCA
(since 02/2007); Komercni Banka (from 10/2001 to
09/2010).
• Member of the Supervisory Board: Societe Generale
Marocaine de Banques*; Société FAIVELY Transport
(since 09/2010); Rocher Participations (since 07/2012);
Komercni Banka (from 10/2001 to 07/2013).
• Director: Crédit du Nord*; DAHER International
Développement* (company under Luxembourg law);
LISI (since 04/2008).
3
Patrick DAHER (05/08/1949)
• Chairman and Chief Executive Officer: Compagnie DAHER*;
• Chairman of the Supervisory Board: Grand Port
Maritime de Marseille (since 01/2009);
• Chairman: DAHER MTS SAS (since 06/2002);
• Director and Chief Executive Officer: Sogemarco DAHER*;
Bruno FLICHY (25/08/1938)
Christophe BONDUELLE (14/12/1959)
• Chairman and Chief Executive Officer: Bonduelle SA* ;
• Chairman: Pierre & Benoit Bonduelle (SAS)*; Bonduelle
(SAS)*; Bonduelle Canada*; Bonduelle Ontario*;
Terricole (Cie du Quebec)*; Bonduelle US Holding (Inc.;
since 2012); Bonduelle USA (since 2012); Bukh Limited
(since 2012);
• Director: Crédit du Nord*; Eiffage*; Aviva Participations*;
Aviva France (since 11/2008); Dexia Banque Belgique
(from 02/2004 to 05/2010);
• Member of the Supervisory Board: Aviva France (from
2004 to 11/2008).
Philippe HEIM (03/04/1968)
• Chief Executive Officer: Bonduelle Limited*; Bonduelle
Netherland BV (SRL)*;
• Chief Executive Officer: Inter Europe Conseil (IEC) since
03/2013;
• Chairman of the Supervisory Board: Bonduelle Polska*;
Bonduelle Central Europe*;
• Director: Inter Europe Conseil (IEC) since 03/2013;
Crédit du Nord (from 05/2010 to 03/2013); Groupama
Banque (from 10/2009 to 11/2012); Newedge Group
(from 05/2011 to 06/2013);
• Chairman of the Board of Directors: Bonduelle SA de
CV*; Bonduelle Portugal *; Bonduelle Northern Europe
(SA under Belgian law)*; Bonduelle Iberica (SAU)*;
Bonduelle Italia (SRL)*;
• Director: Crédit du Nord (since 05/2011); Bonduelle
Nordic*; Bonduelle Northern Europe (SA under Belgian
law)*; Gelagri Bretagne (since 2009); Bonduelle Kuban
(since 03/2013).
Séverin CABANNES (21/07/1958)
• Deputy Chief Executive Officer: Societe Generale
(since 05/2008);
• Director: Crédit du Nord (since 02/2007); Amundi
Group (since 31/12/2009); TCW Group (from 08/2009
to 02/2013); Fiditalia (from 01/2007 to 04/2008);
Genefimmo Cafi 1 (from 04/2007 to 04/2009); Rosbank
BHFM (from 05/2008 to 06/2009);
• Permanent Representative of Societe Generale,
Director at SG SCF GLFI 5 (since 03/2013).
Anne MARION-BOUCHACOURT (10/12/1958)
• Chairman: Societe Generale China Ltd CAOA (since
09/2008);
• Director: Societe Generale China Ltd (since 09/2008);
SGBT Luxembourg (since 11/2011); Crédit du Nord
(since 05/2013).
Thierry MULLIEZ (26/08/1954)
• Chairman: HTM (since 10/2008);
• Director: Crédit du Nord (since 05/2011); HTM (since
10/2008); Boulanger*; SECOM (since 04/2008);
Crématorium de France (since 06/2010); DECATHLON
(since 12/2009, representative of SAS Holympiades);
SECOM (since 04/2008); ADEO (since 05/2012).
181
3
Patrick SUET (13/01/1954)
Employee directors:
• Chairman of the Board of Directors: SGBT Luxembourg
(since 06/2009); Sofrantem (since 10/2011); Societe
Generale Ré SA SGBT (from 09/2010 to 06/2012)
Généras SA (until 06/2012);
Pascal COULON (25/02/1967)
• Director: Crédit du Nord*; Généras SA (from 09/2000
to 06/2012); SGBT Luxembourg (since 11/2006);
Sofrantem (since 10/2011); Societe Generale Ré
SA SGBT (from 08/2010 to 06/2012); Clickoptions
(from 10/2000 to 08/2010); Sogé participations (from
04/2001 to 05/2008);
• Member of the Supervisory Board: Lyxor Asset
Management Mark (from 05/2005 to 06/2012); Lyxor
International Asset Management Mark (from 05/2005
to 06/2012).
• Employee Director: Crédit du Nord (from 07/2009 to
07/2013).
Thierry DIGOUTTE (15/05/1957)
• Employee Director: Crédit du Nord (since 07/2013).
Marie-Chantal JACQUOT (01/07/1961)
Annie PRIGENT (15/07/1957)
Additional information on Directors
G
Absence of conflicts of interest
To the best of Crédit du Nord’s knowledge, there are
no conflicts of interest between Crédit du Nord and the
members of the Board of Directors, with respect to either
their personal or professional interests.
Furthermore, there is no family link between the different
Crédit du Nord Directors.
G
Absence of criminal conviction
To the best of the Board of Directors’ knowledge, none of
the Crédit du Nord Directors has been convicted of fraud
in the past five years.
In addition, none of the Directors has been associated
with a bankruptcy, receivership or liquidation in the past
five years, nor have they been incriminated or penalised
by a statutory or regulatory authority.
Finally, none of the Crédit du Nord Directors has been
prevented by a court from acting as a member of an
administrative, supervisory or management body, or
from participating in the management and conduct of a
company’s business in the past five years.
* Positions held for at least the past five years.
182
G
Independent Directors
Crédit du Nord has three independent Directors:
Christophe BONDUELLE, Patrick DAHER and Thierry
MULLIEZ.
They were chosen according to the criteria set forth in
the AFEP/MEDEF Code by the General Management
and the main shareholder, and they hold the personal
and professional qualities sought after for the exercise
of their office.
G
Shares held by directors
In accordance with Article 11 of the by-laws, the Directors
hold at least 10 shares.
G
Ethics
All Directors refrain from carrying out transactions in the
shares of the companies on which (and to the extent that)
they hold, by virtue of their offices, information which has
not yet been made public.
3
Senior management remuneration policy
The remuneration of senior corporate officers is
determined based on the guidelines recommended by
the Remuneration Committee and approved by the bank’s
Board of Directors. It complies with the European Capital
Requirements Directive (CRD3) of November 24, 2010
and applies the recommendations of the AFEP/MEDEF
Corporate Governance Code, revised in June 2013
(Point 23 “Remuneration of Chief Executive Officers”),
thus meeting its principles of completeness, balance,
consistency, clarity of rules, measures, etc.).
Remuneration of Chief Executive Officers includes:
• fixed annual compensation;
• performance-based compensation in the form of
a bonus paid at the end of each fiscal year after the
financial statements are approved. Since January 1,
2010, the amount of this bonus has been determined
via an assessment utilising multiple criteria, notably
including:
– maintaining and, as the case may be, raising customer
satisfaction,
– the level of Crédit du Nord Group’s commercial
performance (particularly development of customer
bases, outstanding loans and deposits) and financial
performance (in particular the change in GOI after cost
of risk, the C/I ratio and return on equity),
– the focus placed on HR management (strengthening
of employee expertise, quality of recruitment, work
environment, multi-annual oversight of Group
headcount, etc.),
– the contribution to Societe Generale Group’s analysis
of the developments affecting Retail Banking in France
and the search for synergies between Societe Generale
and Crédit du Nord, in accordance with Crédit du Nord’s
specific inter-relational and operational characteristics.
In accordance with regulations, one portion of the variable
compensation of corporate officers is paid in cash and
Societe Generale share equivalents, and the remaining
portion is deferred over one to three years and is based
on the achievement of economic targets.
Philippe AYMERICH
Appointed Chief Executive Officer of Crédit du Nord on
January 11, 2012 following the resignation of Vincent
TAUPIN, Philippe AYMERICH has an employment
contract with Societe Generale. He is posted to Crédit du
Nord for the term of his office as Chief Executive Officer.
The CEO’s fixed and performance-based compensation
are shown in the AFEP-MEDEF tables below.
Since 2012, directors’ fees and other compensation paid
to Boards of Directors or Supervisory Boards on which
Mr. AYMERICH sits as a representative of Crédit du Nord
or as a representative of Societe Generale Group remain
with the company where the office is held
Long-term profit-sharing
Each year, the Board of Directors can recommend to
Societe Generale that it grant Societe Generale shares
and/or Societe Generale options to Mr. AYMERICH in
accordance with the terms and conditions established
under the relevant plans, provided this is permitted by
national legislation and regulations in force.
The allocation between stock options and performance
shares will be determined on a case-by-case basis in
compliance with the rules governing Societe Generale
plans.
For the purposes of definitive allocation, stock options or
bonus shares will be subject to performance conditions
established by the rules of the relevant plans, subject to
national legislation and regulations in force.
Furthermore, as a salaried employee of Societe Generale,
Mr. AYMERICH is eligible for Société Generale’s profitsharing and incentive programmes and is therefore
ineligible for programmes offered by Crédit du Nord.
183
3
Obligation to hold and to keep Societe
Generale shares
As a member of Societe Generale Group Management
Committee, Mr. AYMERICH must hold 10,000 Societe
Generale shares within 5 years of the date of his
appointment as Chief Executive Officer of Crédit du Nord,
i.e. January 11, 2012. The shares may be held either
directly or indirectly through the company’s savings plan.
For as long as this minimum shareholding requirement is
not satisfied, Mr. AYMERICH is required keep any shares
resulting from the exercise of options acquired under
Societe Generale’s bonus share allocation programmes.
The shares may be held either directly or indirectly through
the company’s savings plan.
Provisions related to post-employment
benefits
• Termination benefit: Mr. AYMERICH will not receive a
termination benefit when his term of office expires.
• Retirement: Mr. AYMERICH is eligible for Societe
Generale’s supplementary pension allocation plan for
“Outside Classification” executive level employees.
This complementary scheme, set up in 1991, grants
beneficiaries, on the date of settlement of their Social
Security pension, a total pension equal to the product of
the following two terms:
– The average, over the last ten years of the beneficiary’s
career, of the proportion of basic salaries exceeding
“Tranche B” of the AGIRC pension increased by a
variable part limited to 5% of the basic fixed salary;
– The rate equal to the ratio between a number of
annuities corresponding to the years of professionnal
services within Societe Generale and 60.
AGIRC’s “Tranche C” pension vested in respect of his
professional services within Societe Generale is deducted
from this total pension. The complementary allocation to
be paid by Societe Generale is increased for beneficiaries
who have brought up at least three children, as well as for
those retiring after 60. It cannot be less than one-third of
the full-rate value of service of AGIRC “Tranche B” points
acquired by the beneficiary since his or her entry in Societe
Generale’s “Unclassified” category.
Compensation and annuities paid in consideration for
the period of employment with Societe Generale include
services rendered as a corporate officer at Crédit du Nord.
Eligibility for this plan is subject being in the employ of the
company at the time the entitlements are paid.
Attendance fees paid to directors
The amount of directors’ fees was set at €81,000 by the
General Shareholders’ Meeting of May 11, 2012.
The rules for distributing directors’ fees among Board
members resolved by the Board of Directors on
March 12, 1998, are as follows:
• half of the attendance fees are distributed in equal
amounts among the directors;
184
• the balance is divided up among directors in proportion
to the number of Board meetings attended by each
director during the fiscal year. The share belonging to
absentees is not redistributed to other directors but is
retained by Crédit du Nord.
3
AFEP/MEDEF and AMF recommendations
The Board of Directors of Crédit du Nord examined and decided to apply the AFEP/MEDEF recommendations on
compensation of Chief Executive Officers.
The standardised presentation of their compensation, prepared in accordance with AFEP/MEDEF recommendations,
is presented below.
Standardised tables compliant with AFEP/MEDEF and AMF recommendations
Table 1
SUMMARY OF REMUNERATION AND STOCK OPTIONS AND SHARES
VALLOCATED TO EACH CHIEF EXECUTIVE OFFICER (1)
Fiscal Year 2012
Fiscal Year 2013
1,243,532
1,361,000
Value of options awarded during the fiscal year (see Table 4)
0
0
Value of performance-based shares awarded during the fiscal year (2) (see Table 6)
0
642,500
571,876
0
1,815,408
2,003,500
706,205
743,787
Value of options awarded during the fiscal year (see Table 4)
0
0
Value of performance-based shares awarded under a long-term incentive programme during
the fiscal year (2) (see Table 6)
0
0
Valuation of share equivalents awarded of performance-based shares awarded under a long-term
incentive programme during the fiscal year (2)
0
0
706,205
743,787
Jean-François SAMMARCELLI, Chairman
Remuneration due for the fiscal year (detailed in Table 2)
Valuation of share equivalents awarded under a long-term incentive programme
during the fiscal year (2)
TOTAL
Philippe AYMERICH, Chief Executive Officer
Remuneration due for the fiscal year (detailed in Table 2)
TOTAL
Amounts in euros
(1) Remuneration due in respect of corporate offices held during the fiscal year.
(2) This programme is detailed in the section of Societe Generale’s Registration Document pertaining to remuneration of corporate officers.
185
3
Table 2
STATEMENT OF COMPENSATION PAID TO EACH SENIOR MANAGEMENT CORPORATE OFFICER (1)
Fiscal Year 2012
Amount paid
Fiscal Year 2013
Amount due
in respect of
the fiscal year
Amount paid
Amount due
in respect of
the fiscal year
Jean-François SAMMARCELLI, Chairman (this compensation is not billed to Crédit du Nord, with the exception of directors’ fees
paid in respect of the office held at CDN)
- fixed compensation
650,000
650,000
650,000
650,000
0
117,499
48,460 (4)
140,993
119,994 (5)
469,997
395,862 (6)
563,971
0
0
0
0
58,615
0
69,039
0
6,036
6,036
6,036
6,036
834,645
1,243,532
1,169,397
1,361,000
201,674 (7)
201,674 (7)
220,008
220,008
- non-deferred variable compensation (2)
0
260,000
286,374
264,000
- deferred variable compensation (2)
0
240,000
0
256,000
- multi-annual variable compensation
0
0
0
0
- directors’ fees
0
0
0
0
- benefits in kind (3)
4,531 (7)
4,531 (7)
3,779
3,779
TOTAL
206,205
706,205
510,161
743,787
- non-deferred variable compensation (2)
- deferred variable compensation (2)
- multi-annual variable compensation
- directors’ fees
- benefits in kind (3)
TOTAL
- fixed compensation
(1) Compensation figures are in euros, gross, before tax.
(2) The criteria used to determine these figures are detailed in the Chapter covering the remuneration of corporate officers.
(3) Provision of a company car.
(4) Payment of the annual variable compensation due in respect of fiscal year 2011, indexed to the Societe Generale share price.
(5) Payment of the annual variable compensation due in respect of fiscal year 2010, indexed to the Societe Generale share price.
(6) Payment of the first instalment of the deferred variable compensation due in respect of fiscal year 2011, indexed to the Societe Generale share price.
(7) Amounts are determined on a pro rata basis according to the individual’s time with the Company.
186
3
Table 3
STATEMENT OF DIRECTORS’ FEES
Members of the Board that receive directors’ fees
(€6,000 gross per year per Director +
€1,000 for members of the Audit Committee)
Attendance fees awarded
in respect of 2012
Attendance fees awarded in respect
of 2013 and paid in 2014 (1)
6,000 (2)
3,810
Didier ALIX (3)
6,500
3,969
Christophe BONDUELLE
4,000
2,381
Séverin CABANNES
5,500
3,334
Pascal COULON (4)
6,000
3,000 (5)
Patrick DAHER (3)
7,000
3,969
-
3,000 (5)
Bruno FLICHY
6,000
3,810
Angélina HOLVOET (6)
500 (5)
-
Thierry DIGOUTTE
Marie-Chantal
JACQUOT (7)
Alain JAFFRAIN (8)
Thierry MULLIEZ
Annie
PRIGENT (7)
TOTAL
-
6,000 (5)
4, 500 (5)
-
4,000
2,381
-
6,000 (9)
50,000
41,654
(1) Net amounts paid to individuals after deducting the mandatory withholding tax of 21% and social security contributions (application of the tax scheme under the 2013 Finance Act).
(2) Amount due in respect of 2012 but paid in 2013.
(3) Also a member of the Audit Committee meeting for the first time in 2012.
(4) Resigned in July 2013 and replaced by his alternate, Thierry DIGOUTTE.
(5) Gross amount paid to the Crédit du Nord union (CFDT).
(6) After taking his retirement on January 31, 2012, replaced by Alain JAFFRAIN, his alternate.
(7) Elected as an employee representative director in the December 2012 elections.
(8) Not re-elected in November 2012.
(9) Gross amount paid to the Crédit du Nord union (SNB).
The Board of Directors met four times in 2013, with the average meeting lasting three hours. The attendance rate was
once again high, topping 80%, demonstrating their dedication to their role as directors.
Table 4
STOCK OPTIONS AWARDED DURING THE FISCAL YEAR
CORPORATE OFFICER BY THE ISSUER AND BY ANY COMPANY BELONGING TO THE GROUP
Name of senior corporate officer
Date of plan
Type of option
(subscription
or purchase)
Value of options based
on the method used
for the consolidated
financial statements *
Number of options
awarded during
the fiscal year
No options awarded in 2013
Philippe AYMERICH
No options awarded in 2013
Strike price Exercise period
* This value corresponds to the value of the options at the time they were awarded, in accordance with IFRS 2, after primarily taking into account a potential discount linked to
performance criteria and the probability of the individuals continued employ with the company at the end of the vesting period, but before the averaging effect under IFRS 2 of the
expense over the vesting period.
187
3
Table 5
SOCIETE GENERALE STOCK OPTIONS
EXERCISED DURING THE FISCAL YEAR
Name of senior corporate officer
Date of plan
Number of options exercised
during the fiscal year
No options exercised in 2013
Philippe AYMERICH
No options exercised in 2013
TOTAL
Strike price
-
Table 6
PERFORMANCE-BASED SOCIETE GENERALE SHARES AWARDED TO EACH CORPORATE OFFICER
Number
Value of shares
of options
based on the
awarded
method used for
during the
the consolidated
Date of plan Reason for award fiscal year financial statements (1)
Performance-based shares
awarded to each corporate officer
by Societe Generale during
the fiscal year
Jean-François SAMMARCELLI 14/03/2013 (1)
06/05/2013 (2)
Philippe AYMERICH
Terms of
payment of
annual variable
compensation
due in respect
of 2012
Long-term
profit-sharing
Date of
observation of
performance
condition
Delivery date
Performancebased
3,934
113,352
N/A
01/04/2014
no
3,934
114,790
31/03/2014
01/10/2014
yes (3)
3,934
109,742
31/03/2015
01/10/2015
yes (3)
3,934
108,764
31/03/2016
01/10/2016
yes (3)
25,000
317,000
31/03/2016
01/04/2017
yes (3)
25,000
325,500
31/03/2014
01/04/2018
yes (3)
N/A
(1) These shares are awarded as payment of part of the deferred variable compensation, in accordance with European Directive CRD3.
(2) These shares, which represent the maximum award in the event the performance conditions are exceeded, are awarded as part of the long-term profit-sharing plan for Chief
Executive Officers of Societe Generale Group.
(3) Performance conditions are detailed in the section of Societe Generale’s Registration Document pertaining to remuneration of corporate officers on page 84.
Table 7
SOCIETE GENERALE PERFORMANCE SHARES (1)
PERMANENTLY VESTED BY EACH CORPORATE OFFICER
Date of plan
Philippe AYMERICH
TOTAL
Number of shares permanently vested
during the fiscal year
N/A
0
02/11/2010
16 (2)
09/03/2010
1,165 (2)
-
1,181
(1) Performance-based shares are free shares awarded to corporate officers, in accordance with Articles L.225-197-1 et seq. of the French Commercial Code, and which are subject
to additional requirements provided for by the AFEP/MEDEF recommendations of October 2008.
(2) Vested shares were awarded in respect of his salaried activity, before he became a corporate officer.
188
3
Table 8
HISTORY OF SOCIETE GENERALE STOCK OPTIONS AWARDED
DISCLOSURES OF SUBSCRIPTIONS OR PURCHASES
Date of the Board of Directors’ meeting
Total number of shares (1) available
for subscription or purchase
09/03/2010
09/03/2009 21/03/2008 18/09/2007 19/01/2007 25/04/2006 18/01/2006
1,000,000 1,344,552 (5)
2,328,128
135,729
1,418,916
154,613
1,738,543
o/w number of shares available for
subscription or purchase by corporate
officers
Corporate Officer 1:
Jean-François SAMMARCELLI (2)
Corporate Officer 2: Philippe AYMERICH (3)
0
28,456
26,830
0
16,747
0
18,074
14,215
11,382
10,434
0
0
0
0
Beginning of exercise period
09/03/2014
31/03/2012 21/03/2011 18/09/2010 19/01/2010 25/04/2009 18/01/2009
Expiry date
08/03/2017
08/03/2016 20/03/2015 17/09/2014 18/01/2014 24/04/2013 17/01/2013
Subscription or purchase price (4)
41.20
23.18
63.60
104.17
115.60
107.82
93.03
0
77,290
0
0
0
0
2,174
Total number of cancelled or expired options
649,762
910,675
1,325,589
32,011
331,178
154,613
1,736,369
Number of stock options remaining
at period end
350,238
356,587
1,002,539
103,718
1,087,738
0
0
Terms of exercise (where the plan includes
more than one tranche)
Number of shares subscribed
for at 31/12/2013
(1) Exercising an option entitles the holder to one Societe Generale share. This table reflects the adjustments made following capital increases. This line does not include options
exercised since the date of allocation.
(2) Appointed as a corporate officer on January 1, 2010.
(3) Appointed as a corporate officer on January 11, 2012.
(4) The subscription or purchase price is equal to the average of the 20 share prices prior to Societe Generale’s Board of Directors’ meeting.
(5) O/w 320,000 stock options initially awarded to the corporate officers of Societe Generale Group, who decided to waive them.
Table 9
STOCK OPTIONS AWARDED TO THE TOP TEN HIGHEST PAID EMPLOYEES NOT SERVING
AS SENIOR CORPORATE OFFICERS AND OPTIONS EXERCISED BY THESE EMPLOYEES
Total number of options
awarded/share subscriptions
or purchases
Average weighted price
(in euros)
Options awarded during the fiscal year by the issuer to the top ten highest
paid employees of Crédit du Nord Group (the number indicated is the highest
number of options awarded)*
0
0
Options held by the issuer and exercised during the fiscal year by the top ten
highest paid employees of Crédit du Nord Group (the number indicated is the
highest number of options exercised)
5,047
33.4
*
No stock option plan was established by Societe Generale during financial year 2013.
189
3
Table 10
HISTORY OF PERFORMANCE SHARES AWARDED INFORMATION ON PERFORMANCE SHARES
Date of Shareholders’ meeting
22/05/2012
25/05/2010
25/05/2010
25/05/2010
27/05/2008
Date of the Board
of Directors’ meeting
14/03/2013
02/03/2012
07/03/2011
02/11/2010
09/03/2010
1,846,313
2,975,763
2,351,605
5,283,520
4,200,000
-
-
19,460 (1)
-
-
Philippe AYMERICH
-
-
3,162 (1)
40
2,330
29/03/2013 (R)
31/03/2015 (NR)
(1st tranche)
Total number of shares awarded
o/w the number awarded
to corporate officers
Under plan No. 1:
31/03/2013 (R)
31/03/2015 (R)
31/03/2014 (R)
31/03/2013 (R)
31/03/2017
(NR)
31/03/2016
(NR)
31/03/2015
(NR)
31/03/2017
31/03/2016
31/03/2015
29/03/2015
31/03/2016
yes
yes
yes
yes
-
3,923
1,533,893
889,128
2,796,586
Cumulative number of cancelled
or expired shares
9,686
81,545
527,841
580,072
1,192,480
Performance shares outstanding
at year-end
1,836,627
2,890,295
289,871
3,814,320
210,934
Vesting date
End date of holding period (2)
Performance-based
Number of shares vested
at 31/12/2013
31/03/2014 (R) 31/03/2014 (NR)
31/03/2016 (NR)
(2nd tranche)
31/03/2015
31/03/2014
Under plan
No. 2:
31/03/2012
(1st tranche)
31/03/2013
(2nd tranche)
31/03/2014
31/03/2015
according to lists
of beneficiaries
(1) As the performance condition applicable to this award was not achieved, the rights were entirely lost.
(2)
Applicable to beneficiaries who are French tax residents only.
R = French tax residents.
NR = Non-French tax residents.
For a description of the “Bonus shares for all” of November 2010, see page 361, note 41 to the consolidated financial statements in Societe Generale’s Registration Document.
Table 11
SITUATION OF THE SENIOR CORPORATE OFFICERS
Dates of offices
Employment contract
with Crédit du Nord (1)
yes
no
Compensation or benefits
due as a result of
Supplementary termination or change of
pension plan (2)
position
yes
no
yes
no
Compensation related
to a non-compete
clause
start
end
yes
no
Chairman
2010
2013
X
X (3)
X
X
Philippe AYMERICH
Chief Executive Officer
2012
2015
X
X (3)
X
X
(1) As regards the combination of a corporate mandate with an employment contract, the only positions addressed by the AFEP/MEDEF recommendations are Chairman of the Board
of Directors, the Chairman and Chief Executive Officer, and the Chief Executive Officer of companies with a Board of Directors.
(2) Detailed information on the supplementary pension plans is provided in the section entitled “Information on Corporate Officers”.
(3) Paid to Société Générale.
190
Statutory auditors’ report on the financial statements
3
Statutory auditors’ report on the financial statements
Year ended December 31, 2013
This is a free translation into English of the statutory auditors’ report on the financial statements issued in French and
it is provided solely for the convenience of English-speaking users.The statutory auditors’ report includes information
specifically required by French law in such reports, whether modified or not. This information is presented below the
audit opinion on the financial statements and includes explanatory paragraphs discussing the auditors’ assessments of
certain significant accounting and auditing matters. These assessments were considered for the purpose of issuing an
audit opinion on the financial statements taken as a whole and not to provide separate assurance on individual account
balances, transactions or disclosures. This report should be read in conjunction with and construed in accordance with
French law and professional auditing standards applicable in France.
In accordance with the assignment entrusted to us by your
annual general meeting, we hereby report to you for the year
ended December 31, 2013 on:
• the audit of the accompanying financial statements of
Crédit du Nord;
In our opinion, the financial statements give a true and fair
view of the assets and liabilities and of the financial position
of the Company as at December 31, 2013 and of the results
of its operations for the year then ended in accordance with
French accounting principles.
• the justification of our assessments;
• the specific verifications and disclosures required by
law.
The financial statements have been approved by the board of
directors. Our role is to express an opinion on these financial
statements based on our audit.
I. Opinion on the financial statements
We conducted our audit in accordance with professional
standards applicable in France; those standards require
that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free
of material misstatements. An audit includes performing
procedures, using sampling techniques or other methods
of selection, to obtain audit evidence about the amounts and
disclosures in the financial statements. An audit also includes
assessing the appropriateness of accounting policies used
and the reasonableness of accounting estimates made, as
well as the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a reasonable basis for
our audit opinion.
II. Justification of our assessments
In accordance with the requirements of Article L.823-9
of the French Commercial Code (“Code de commerce”)
relating to the justification of our assessments, we bring to
your attention the following matters:
• For the purpose of preparing the financial statements,
your company records depreciation and provisions
to cover the credit risks inherent to its activities
and performs significant accounting estimates,
as described in note 1 to the financial statements,
related in particular to the valuation of investments in
subsidiaries and of its securities portfolio as well as the
assessment of provisions for employee benefits. We
have reviewed and tested the processes implemented
by management, the underlying assumptions and the
valuation parameters, and we have assessed whether
these accounting estimates are based on documented
procedures consistent with the accounting policies
disclosed in note 1 to the financial statements
• As detailed in note 1 to the financial statements,
your Company uses internal models to measure
financial instruments that are not listed on active
191
3
Statutory auditors’ report on the financial statements
markets. Our procedures consisted in reviewing the
control procedures for the models used, assessing
the underlying data and assumptions as well as their
observability, and verifying that the risks generally
expected from the markets were taken into account
in the valuations.
These assessments were made as part of our audit of
the financial statements taken as a whole, and therefore
contributed to the opinion we formed which is expressed in
the first part of this report.
III. Specific verifications and disclosures
We have also performed, in accordance with professional
standards applicable in France, the specific verifications
required by French law.
We have no matters to report as to the fair presentation
and the consistency with the financial statements of the
information given in the management report of the board
of directors and in the documents addressed to the
shareholders with respect to the financial position and the
Concerning the information given in accordance with
the requirements of article L. 225-102-1 of the French
Commercial Code (Code de commerce) relating to
remunerations and benefits received by the directors and
any other commitments made in their favour, we have
verified its consistency with the financial statements, or with
the underlying information used to prepare these financial
statements and, where applicable, with the information
obtained by your Company from companies controlling your
Company or controlled by it. Based on our procedures, we
have the following comment on the accuracy and fairness
of this information: this information does not include all the
compensation and benefits paid by the company controlling
your Company to the executive officers concerned regarding
the mandates, duties or assignments other than those
carried out within or on behalf of the Crédit du Nord, and this
information includes the compensation and indemnities paid
by your Company to executive officers solely with respect to
their mandates carried out within Crédit du Nord.
In accordance with French law, we have verified
that the required information concerning the controlling
interests has been properly disclosed in the management
report.
DELOITTE & ASSOCIES
Jean-Marc MICKELER
192
Bernard HELLER
Statutory auditors’ report on related party agreements and commitments
3
Statutory auditors’ report on related party agreements
and commitments
General Meeting of Shareholders to approve the financial statements for the year ended
December 31, 2013
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.
In our capacity as statutory auditors of your company,
we hereby report on certain related party agreements
and commitments.
We are required to inform you, on the basis of the
information provided to us, of the terms and conditions
of those agreements and commitments indicated to
us, or that we may have identified in the performance
of our engagement. We are not required to comment
as to whether they are beneficial or appropriate or to
ascertain the existence of any such agreements and
commitments. It is your responsibility, in accordance
with Article R. 225-31 of the French Commercial Code
(Code de commerce), to evaluate the benefits resulting
from these agreements and commitments prior to their
approval.
In addition, we are required, where applicable, to inform
you in accordance with Article R. 225-31 of the French
Commercial Code (Code de commerce) concerning the
implementation, during the year, of the agreements and
commitments already approved by the General Meeting
of Shareholders.
We performed those procedures which we considered
necessary to comply with professional guidance issued
by the national auditing body (Compagnie Nationale
des Commissaires aux Comptes) relating to this type of
engagement. These procedures consisted in verifying
that the information provided to us is consistent with the
documentation from which it has been extracted.
Agreements and commitments submitted
for approval by the General Meeting of
Shareholders
We hereby inform you that we have not been advised
of any agreements or commitments authorized in
the course of the year to be submitted to the General
Meeting of Shareholders for approval in accordance with
Article L. 225-38 of the French Commercial Code (Code
de commerce).
Agreements and commitments already
approved by the General Meeting of
Shareholders
In accordance with Article R. 225-30 of the French
Commercial Code (Code de commerce), we have
been advised that the implementation of the following
agreements and commitments which were approved
by the General Meeting of Shareholders in prior years
continued during the year.
With Société Générale, your shareholder
a) Nature and purpose
Pooling of IT infrastructures.
Conditions
In the interest of generating Group-wide synergies, a
subcontracting agreement with a Société Générale
department (GTS) was drawn up in the first half
of 2009 and implemented on August 1, 2009.
193
3
Statutory auditors’ report on related party agreements and commitments
This subcontracting agreement pertained to the
deployment, production and maintenance of IT technical
infrastructure services, and the expenses incurred by
GTS have been invoiced to your company at actual
cost since 2009. Your Board of Directors, which met on
July 23, 2009, authorized the signing of the necessary
agreements for the implementation of this agreement.
A total of EUR 43,201 thousand excluding tax was
invoiced for services rendered in 2013.
b) Nature and purpose
Creating a common Information System for Société
Générale Group’s Retail Banking France.
Conditions
Under the Convergence program, and to meet the goal
of improving the service related to the IT needs of the
various businesses of Société Générale Group’s retail
banks, the establishment of a common information
system is a major lever for operational efficiency, through
the synergies developed and the sharing of skills. The
Group decided to build this Information System with
assets from each of Société Générale Group’s retail
banking networks in France and created a common
organization, the Information Systems, Organization
and Processes Division (SIOP), housed within Société
Générale Group. SIOP aims at securing the operation
of the Information System and optimizing the expected
synergies in order to decrease the portion of NBI devoted
to IT.
Your Board of Directors met on May 6, 2011 and
authorized the signature of the documents necessary
for the implementation of this project, namely:
• The contract (letter of intent and operating agreement)
that specifies the legal, administrative and financial
terms and conditions in which SIOP provides
services to its customers and the implementation
of the contract, its scope and its governance. The
letter of intent was followed by the signing of a
framework agreement and an application agreement
on March 9, 2012;
• The transfer agreement that specifies, as part of
the implementation of the aforesaid agreement, the
terms of transfer and assignment of rights, duties
and obligations of your company to SIOP, including
the disposal of certain assets (intangible assets, in
particular) at fair value. An agreement for the transfer
of intellectual property rights was signed on November
10, 2011.
Based on the simulation carried out in June 2011 in
connection with the drafting of the transfer agreement,
and subject to the implementation of the Convergence
project deployment schedule, defined on the same date,
it is stated that:
• the net book value of the assets to be sold is EUR
33,767 thousand as of December 31, 2011;
• 8 lots were sold in 2013 for EUR 1,268 thousand. These
disposals resulted in a gain of EUR 230 thousand.
This approach takes into account the full cost of the
projects, less a discount for obsolescence, and a
discount related to IT asset adjustment costs.
The amount of EUR 73,802 thousand excluding tax was
invoiced for the services provided in 2013 under the
agreement between SIOP and your company.
Société Générale paid your company a cash balance of
EUR 3,300 thousand in 2013 in accordance with the
clause capping IT expenses and presented in article 14
of the financial terms and conditions of the framework
agreement.
DELOITTE & ASSOCIES
Jean-Marc MICKELER
194
Bernard HELLER
Assemblée Générale Ordinaire : projet de résolutions
3
Draft Resolutions: General Meeting of Shareholders
of May 28, 2014
First resolution
Approval of the
consolidated financial
statements
The General Meeting of Shareholders, under the conditions required by Ordinary
General Meetings as to quorum and majority, having been informed of the Statutory
Auditors’ report on the consolidated financial statements, approves the transactions
cited therein, the balance sheet closed December 31, 2013, and the income statement
for fiscal year 2013.
The General Meeting approves the net income after taxes (Group share) of
€368,879,000.00.
Second resolution
Approval of individual
financial statements
and discharge
of Directors
“The General Meeting of Shareholders, under the conditions required by Ordinary
General Meetings as to quorum and majority, having been informed of the Statutory
Auditors’ general report on the individual financial statements, approves the
transactions cited therein, the balance sheet closed December 31, 2013, and the
income statement for fiscal year 2013. The General Meeting approves the net income
after taxes of €619,822,876.06.
Consequently, the General Meeting fully and without reservation releases the Directors
from their mandates for said fiscal year.”
Third resolution
“Acting in accordance with the quorum and majority requirements established for
Ordinary General Shareholders’ Meetings, the Shareholders’ Meeting resolved to
allocate net income for the period amounting to €619,822,876.06.
Profits plus earnings carried forward from the previous period, i.e. €784,093.84,
resulted in total income available for distribution of €620,606,969.90 which the
Shareholders’ Meeting resolves to allocate as follows:
– allocation of a dividend of €411,746,752.20 to shareholders, i.e. a dividend per share
of €3.70;
– allocation of €208,000,000.00 to the ordinary reserve;
– allocation of €860,217.70 to retained earnings.
The ordinary reserve was therefore increased from €930,000,000.00 to €1,138,000,000.00.
For individuals residing in France, dividends are subject to income tax on a progressive
scale.
At the time of their payment, they are subject to social security contributions. They
are also subject to a compulsory deduction at the rate of 21% calculated on the gross
amount. This deduction is offset against the income tax payable for the subsequent
year, with any surplus being refunded by the tax authorities.
Subject to compliance with the conditions set out in Article 117 quater of the French
General Tax Code, taxpayers may be exempted from this levy, however
Dividends are eligible for the 40% tax deduction referred to in Article 158-3-2 of the
French General Tax Code.
195
3
Assemblée Générale Ordinaire : projet de résolutions
In accordance with the law, shareholders are hereby reminded that the following
dividends were distributed over the past three years:
Fourth resolution
Agreements addressed
by Article L. 225-38
et seq. of the French
Commercial Code
Fifth resolution
Consultative opinion
on the compensation
paid in 2013 to the
persons referred to in
Article L 511-71 of the
French Monetary and
Financial Code
Sixth resolution
Authorisation of a
maximum ratio of
200% between the
variable and fixed
components of
compensation paid to
the persons referred to
in Article L.511-71 of
the French Monetary
and Financial Code
Seventh resolution
Appointment
of a Director
Eighth resolution
Powers
196
– Fiscal Year 2012:
€2.00 per share
€2.00 per share
no dividend paid.”
“The General Meeting, under the conditions required by Ordinary General Meetings as
to quorum and majority, has been informed of the Statutory Auditors’ Special Report
on agreements addressed by Articles L 225-38 et seq. of the French Commercial
Code, approves this report and notes that there are not agreements to submit for
approval.”
to quorum and majority, having read the report of the Board, consulted in accordance
with Article L.511-73 of the French Monetary and Financial Code, issues a favourable
opinion of the overall budget of €1,070,000 for all types of remuneration paid during
fiscal year 2013 to the persons referred to in said article.”
to quorum and majority and by Article L.511-78 of the French Monetary and Financial
Code, having read the report of the Board, authorises the Company, for variable
remuneration granted in respect of fiscal year 2014 to the persons referred to in
Article L.511-71 of the French Monetary and Financial Code, to set a maximum ratio
of 200% between the variable and fixed components of the total remuneration of
each person in question. This rate may be updated under the conditions of Article
L.511-79 of the French Monetary and Financial Code, within the limit of 25% of total
variable remuneration, provided that the payment is made in the form of instruments
deferred over 5 years.
It gives all powers to the Board, with the option to delegate said powers, to implement
this authorisation.”
The General Meeting, under the conditions required by Ordinary General Meetings
as to quorum and majority, hereby appoints Ségolène BENHAMOU as a Director for
a term of four years. His/her mandate shall expire at the end of the General Meeting
held to approve the financial statements for the fiscal year ending 31 December 2017.”
All powers are granted to bearers of a copy or extract of the minutes of this General
Meeting of Shareholders to carry out all formalities and publications relating to the
preceding resolutions.”
Additional
information
4
General description of Crédit du Nord __________________________________________ 198
Group activity _______________________________________________________________ 201
Corporate Social Responsibility (CSR) Report ____________________________________ 203
Independent verifier’s report on consolidated social, environmental and societal
information presented in the management report _________________________________ 218
Responsibility for the Registration Document and audit ____________________________ 220
Cross Reference tables _______________________________________________________ 221
197
4
Additional information
General description of Crédit du Nord
Company name
Corporate purpose (article 3 of the bylaws)
Crédit du Nord
The purpose of the company, under the conditions set
forth by the laws and regulations applicable to credit
institutions, is to perform with individuals or corporate
entities, in France or abroad:
Address of the head office
and telephone number
Address: 28, place Rihour - 59000 Lille, France
Telephone: +33 (0)1 40 22 40 22
Legal form
A limited liability company (Société Anonyme) registered
in France and governed by Articles L. 210-1 et seq. of
the French Commercial Code.
The company has the status of a bank governed by
Articles L. 311-1 et seq. of the French Monetary and
Financial Code.
Registration number
SIREN 456 504 851 RCS Lille
APE activity code
– any and all banking transactions;
– any and all transactions related to banking
transactions, including, in particular, all investment or
related services as governed by Articles L. 321-1 and
321-2 of the French Monetary and Financial Code;
– any and all acquisitions of ownership interests in other
companies.
In accordance with the conditions set forth by the
French Banking and Financial Regulation Committee,
the company may also regularly engage in any and
all transactions other than those mentioned above,
including in particular insurance brokerage.
Generally, the company may, on its own behalf, on
behalf of third parties or jointly, engage in any and all
financial, commercial, industrial, agricultural or real
estate transactions that are directly or indirectly related
to the abovementioned activities or likely to facilitate the
execution thereof.
6419 Z
Share capital
Creation and expiration date
Crédit du Nord was founded in 1848 under the name
Comptoir national d’escompte de l’arrondissement de Lille.
198
Crédit du Nord’s share capital is set at EUR
890,263,248, divided into 111,282,906 fully paid-up
shares with a face value of €8.
It adopted the status of a limited liability company
(Société Anonyme) in 1870 and took the name “Crédit
du Nord” in 1871.
The shares comprising the company’s capital are not
subject to any pledge agreements.
The date of expiration of the company is set at
21 May 2068, barring dissolution before this date or an
extension thereof as provided by law.
Form of shares
All shares must be registered.
Share transfer approval
offer each shareholder the choice between payment
of the final or interim dividends in cash or in shares,
under the conditions set forth by the currently applicable
legislation. Shareholders must exercise this option for
the entire amount of final or interim dividends to be
received for the fiscal year.
The General Meeting of April 28,1997 ruled that the
assignment, sale or transfer of shares to a third party
who is not a shareholder, for any reason whatsoever,
except in the event of the transfer of an estate,
liquidation, communal property between spouses or
transfer to a spouse or next-of-kin, is subject to the
company’s prior approval.
Except in the case of a reduction in share capital, no
distribution to shareholders may take place where
shareholders’ equity is or would as a result of said
distribution be lower than the sum of the company’s
share capital plus any legal reserves which, in
accordance with the law or under the company’s bylaws,
are not available for distribution.
Parent company documents
Shareholders’ Meetings
Disclosure requirements
No restrictions have been made to legal provisions
concerning ownership thresholds.
The documents relating to Crédit du Nord, including its
bylaws, financial statements, and the reports presented
at its Shareholders’ Meetings by the Board of Directors
or Statutory Auditors, can be consulted at the Bank’s
Corporate Secretariat/Corporate Office at 59, boulevard
Haussmann, 75008 Paris, France.
Fiscal year
From January 1 to December 31
Allocation and distribution of income
(article 22 of the bylaws)
Net income for the year is determined in accordance
with all currently applicable laws and regulations. At
least 5% of net income for the year, less any previous
accumulated losses, must, by law, be set aside to form
a legal reserve until this reserve reaches one-tenth of
share capital.
Net income available after said allocation to legal
reserves, as well as any retained earnings, constitutes
«income available for distribution» from which dividends
may be paid out and/or funds allocated to ordinary,
extraordinary or special capital reserves as approved
by the Shareholders’ Meeting on the basis of the
recommendations made by the Board of Directors.
The General Meeting called to approve the financial
statements of the fiscal year may, in respect of all or part
of final or interim dividends proposed for distribution,
4
(article 19 of the bylaws)
The General Meeting, which meets on a regular basis,
represents all shareholders and exercises all powers
devolved to it by law.
It is convened to rule on those issues listed on the
agenda in accordance with the currently applicable legal
and regulatory provisions.
The right to take part in the Meeting is subject to
registration of shares in the name of the shareholder at
least five days before the date of the meeting.
Profit-sharing
A profit-sharing agreement was signed on 14 June 2013
which applies to fiscal years 2013 through 2015.
AII payments therein are calculated on the basis of
8.75% of Crédit du Nord’s gross operating income
adjusted for certain parameters. 50% of profit-sharing
is paid out in equal amounts (capped at EUR 5 million),
with the remainder paid in proportion to gross taxable
wages excluding performance bonuses. For 2013,
total profit-sharing is capped at 8.5% of gross fiscal
remuneration paid to all company employees in the year
in question.
Crédit du Nord makes an additional “employer’s
contribution” where employees pay any profit-sharing
into the Company Savings Plan or into the Company
Pension Savings Plan (PERCO), in accordance with predefined scales and limits.
199
4
Change in capital
2013
Shares outstanding
111,282,906*
Par value per share (in EUR)
Capital stock (in EUR)
2012
2011
2010
2009
111,282,906*
111,282,906*
111,282,906*
92,532,906
8
890,263,248*
Maximum number of shares to be created **
8
8
8
8
890,263,248*
890,263,248*
890,263,248*
740,263,248
-
-
-
-
Total number of potential shares
111,282,906*
-
111,282,906*
111,282,906*
111,282,906*
92,532,906
Potential share capital (in EUR)
890,263,248*
890,263,248*
890,263,248*
890,263,248*
740,263,248
*
Capital increase of €150,000,000 approved by the Extraordinary Shareholders’ Meeting of September 15, 2010, fully subscribed by Societe Generale with a view to financing the
acquisition of Société Marseillaise de Crédit.
**
Created by convertible debt and/or the exercise of stock options.
Ownership and voting rights at December 31, 2013
Societe Generale
100%
Members of Management bodies
-
Employees (via specialised fund managers)
-
Double voting rights
None.
Changes in ownership in the last three years
No changes have taken place since December 11, 2009, the date on which the shares held by Dexia Crédit Local
(10%) and Dexia Banque Belgique (10%) to Societe Generale.
Dividend payments
– A dividend per share of €3.50 was paid out in respect of fiscal year 2009.
– No dividend was paid in respect of fiscal year 2010.
– On May 28, 2014, a proposal will be put forward to the Shareholders’ Meeting to distribute a dividend of €3.70 for 2013.
Securities markets
Not applicable: Crédit du Nord shares are not listed on any markets.
200
Group activity
4
Group activity
Use of patents and licences
Not applicable.
Legal risks
Crédit du Nord is a credit institution approved in its
capacity as a bank. As such, it may engage in any and
all banking transactions.
It is also authorized to provide any and all investment or
related services as referred to in articles L. 321-1 and
L. 321-2 of the Monetary and Financial Code. As an
investment service provider, Crédit du Nord is subject
to the applicable regulatory framework, in particular
prudential rules and the controls of the ACPR and AMF.
All managers and employees are bound by professional
secrecy, the breach of which is subject to criminal
penalties.
Crédit du Nord is also an insurance broker.
Litigation and extraordinary
circumstances
To date there are no extraordinary circumstances and/or
ongoing litigation that may have, or may have had in the
recent past, a significant effect on the business, income,
financial position or assets and liabilities of Crédit du
Nord or its subsidiaries.
Other special risks
To the best of Crédit du Nord’s knowledge, no such risk
currently applies.
Insurance
General policy
Crédit du Nord’s insurance policy aims to obtain the best
coverage with respect to the risks to which it is exposed.
A certain number of major risks are covered by policies
taken out as part of Societe Generale’s Global Insurance
Policy, while others are covered by policies taken out by
Crédit du Nord.
Risks covered by the Societe Generale
Global Insurance Policy
1. Theft/fraud
These risks are included in a «global banking» policy that
insures the banking activities of Crédit du Nord and its
subsidiaries.
2. Professional liability insurance
The consequences of any lawsuits are insured under the
global policy. The level of coverage is the best available
on the market.
3. Operating losses
The consequences of an accidental interruption in
activity are insured under the global policy. This policy
complements the business continuity plans.
4. Third-party liability insurance of the
corporate officers
The purpose of this policy is to cover the company’s
managers and directors in the event of claims filed
against them and invoking their liability.
201
4
Group activity
Risks covered by Crédit du Nord policies
1. Buildings and their contents
Buildings and their contents are insured by a multi-risk
policy with a ceiling of €80,000,000. .
3. Liability insurance linked to operations
This insurance covers any pecuniary damages to third
parties incurred by all persons or equipment deemed
necessary for the company’s operations.
Other risks linked to activities
2. IT risks
This insurance covers any loss or damages to equipment
(hardware, media) used to process information.
202
Within the framework of all Group contracts, Crédit du
Nord offers customers death and invalidity insurance on
their loans (property, consumer loans, etc.).
Corporate Social Responsibility (CSR) Report
4
The legal obligation for all companies listed on a regulated market to report in their yearly management report on
the social and environmental consequences of their activities was reinforced by the passing of the “Grenelle 2”
Law of July 12, 2010 on France’s national commitment to the environment, including Article 225 therein (“Article
225”) and its implementing decree of April 24, 2012 on corporate transparency requirements for social and
environmental issues. These new provisions amend Article L.225-102-1 of the French Commercial Code based
on Article 116 of the Law on New Economic Regulations (NER) of 2001.
The information presented in this report is structured according to the 42 indicators given in the implementing
decree of April 24, 2012. It is prepared on the basis of contributions from the Group’s internal network of CSR
officers, in line with CSR reporting protocol and the “Planethic Reporting” (*) application used for the standardised
collection of CSR indicators The entire reporting protocol is coordinated by the Corporate Secretariat. The CSR
indicator and data collection process is reviewed and optimised each year.
(*)
Quantitative data from Planethic Reporting are calculated from over a sliding 12-month period or over the calendar year.
SOCIAL INFORMATION
Employment
Total headcount and breakdown of staff by gender, age bracket and region
Crédit du Nord Group headcount at December 31, 2013: 9,280 employees (bank staff on permanent contracts, active
fixed-term contracts or on long-term leave).
The average age for Group employees is 41.60 (43.20 for men and 40.39 for women), broken down as follows:
< 25 years old
Men
135
264
531
959
532
887
495
655
429
591
355
448
519
507
> 55 years old
990
983
1,000
800
600
400
200
0
Women
200
400
600
800
1,000
Total Men: 3,986 | Total Women: 5,294
203
4
Overall average seniority for Group employees is 15.41 years (16.37 years for men and 14.69 for women), broken
down as follows:
< 1 year
Men 124 194
1 year
179 260
Between 2 and 4 years
671 993
831 1,320
458 639
223 271
342 297
523 511
> 35 years
635 809
1,500
1,200
900
600
300
0
For the breakdown of staff by region, see the section
entitled “Jobs and regional development”.
New hires and dismissals
Recruitment
2013
Total number of new hires
1,289
Permanent contracts
512
Women
291
Men
221
Fixed-term contracts
777
Women
498
Men
279
Departures
2013
Total number of departures
1685
Retirement and early retirement of members
of permanent staff
491
Retirement and early retirement of staff
on fixed-term contracts
Resignations of members of permanent staff
0
(*)
299
Resignations of staff on fixed-term contracts
38
Dismissals of members of permanent staff
89
Dismissals of staff on fixed-term contracts
10
Deaths among members of permanent staff
4
Deaths among staff on fixed-term contracts
0
Departures of members of permanent staff
for other reasons
11
Departures of staff on fixed-term contracts
(end of contract)
743
(*) Tripartite agreements are included in resignations. (Departure agreement in
Societe Generale Group or Nord).
204
Women
300
600
900
1,200
1,500
Crédit du Nord parent company has signed a workforce
and competency planning (GPEC) agreement aimed at:
– providing a set of information to employees and their
representatives about careers and the company’s
businesses and prospects;
– supporting employees at every stage of their careers,
particularly when they first join the company;
– managing careers and skills, ensuring equal
opportunities for men and women;
– ensuring support for older workers within the
company.
Termination of employment, of any kind, is subject to
contractual procedures.
A number of steps involving consultation with
staff representatives must take place prior to any
redundancies.
When redundancies are being made, a number of
support measures are available including the possibility
of alternative employment in or outside the company as
well as financial assistance.
A similar agreement is in place at Banque Kolb, while the
Group’s other banks are planning to roll out the same
type of agreement.
Remuneration and changes in pay
The remuneration of all Crédit du Nord Group
employees, regardless of position, contains both a
fixed and a variable portion. Remuneration is assessed
each year by the remuneration panel with reference
to the results of the annual appraisal of professional
performance.
Since 2008, a specific budget has been allocated each
year to reducing pay gaps between men and women
at each of the Group’s banks. The Group is currently
experiencing a high turnover of staff and an increasing
proportion of women in its workforce.
The annual appraisal reflects Crédit du Nord Group’s
eagerness to support each member of staff in
developing his or her career and expertise.
The annual appraisal also affirms the Group’s
determination to pursue a policy of managing
competencies and developing talent within the Company
in order to meet the challenges of the future.
All Group employees attend an individual performance
and development assessment interview each year.
This interview provides an opportunity for the manager
to sit down with the member of staff and go over his
or her activities and performance over the past year,
discuss ways of improving his or her job performance
and establishing business targets for the following year.
Organisation of work
Working hours
Since 2000, Crédit du Nord has had its own agreement
on the reduction and organisation of working hours,
which provides for basic annualised working time of 39
hours per week.
4
Absenteeism (Crédit du Nord Group data)
Absenteeism (in numbers of working days)
Number of days of paid leave
Number of days of paid sick leave
2013
260,686
170,518
Number of days of paid maternity leave
78,217
Number of days of paid leave
for other reasons
11951
Total number of days paid
Paid absenteeism rate
3,478,450
7.49%
Employee relations
Social dialogue: information, consultation and
negotiation
Social dialogue is a collaborative process between
employer and employee (or their representatives)
on common-interest issues relating to a company’s
economic and social policy. Applied at a Group-wide
or individual entity level, it can take various forms, from
the simple exchange of information to consultation and
negotiations with a view to signing an agreement.
Of the Group’s eight banks, five have staff-elected
representatives on their Board of Directors.
The Employee Representative Bodies include:
– unions, delegates and representatives. The national
and central union delegates have exclusive control
when it comes to collective bargaining;
– the Regional Works Councils and the Central Works
Council of Crédit du Nord, or the Works Council of
the regional banks, which act as advisory bodies
for all matters concerning the general running of
establishments and the Group. They also manage
social and cultural activities for staff;
There are also a number of specific work cycles,
including a 37.5 hour work week (branches open from
Tuesday to midday Saturday).
205
4
– employee delegates, whose responsibility is to
represent individual or Group employee claims
pertaining to regulations and collective bargaining
agreements;
– the Health and Safety Committee (CHSCT), whose
main purpose is to protect the health and safety of
employees, improve working conditions, and ensure
compliance with legal and regulatory requirements.
Collective bargaining agreements
The Crédit du Nord banks have signed a large number of collective bargaining agreements, including:
Crédit du Nord
Banque
Courtois
Banque
Kolb
Banque
Laydernier
Banque
Nuger
Banque
Rhône Alpes
Banque
Tarneaud
Société
Marseillaise
de Crédit
Agreement on gender equality
Renewal
in 2012
Renewal
in 2012
Renewal
in 2014
Renewal
in 2012
Renewal
in 2012
Renewal
in 2012
Renewal
in 2012
Renewal
in 2012
Workforce and competency
planning agreement
Renewal
in 2010
-
Agreement
in 2010
-
-
-
-
-
Agreement to promote the
employment and integration
of persons with disabilities
-
-
Renewal
in 2013
Renewal
in 2013
-
-
-
-
-
-
-
-
-
Agreement
in 2001
Renewal
in 2013
-
Agreement on preventing and
treating stress in the workplace
and psychological risk
Agreement
in 2012
-
Agreement on handling abusive
and aggressive behaviour
Agreement
in 2010
Agreement
in 2013
-
Agreement
in 2010
Agreement on profit-sharing
Agreement
Agreement
Agreement
overhauled
in 1997 +
in 1970 +
in 2011 amendments amendments
Agreement
overhauled
in 2012
Agreement
in 2000
Agreement
in 1998
Agreement
overhauled
in 2009
Renewal
in 2012
Renewal
in 2012
Renewal
in 2013
Renewal
in 2012
Agreement
in 2008
Agreement
in 2012
Renewal
in 2013
Renewal
in 2014
Renewal
in 2012
Agreement on health insurance
Agreement
Agreement
in 2005 +
in 2005 +
amendments amendments
Agreement
in 2004
Agreement
in 2012
Agreement
Agreement
in 2007 +
in 2008 amendments
Agreement on employment
and union law
Agreement
in 2004 +
amendments
-
-
Agreement
in 1999
Agreement on employee benefits
Agreement
Agreement
in 2000 +
in 2001 +
amendments amendments
-
-
Agreement
Agreement
in 2008 +
in 2001 +
- amendments amendments
First
agreement
in 2013
First
agreement
in 2013
First
agreement
in 2013
Agreement on incentives
Generation agreement
Company savings plan
Collective pension plan
206
Renewal
in 2012
First
agreement
in 2013
Renewal
in 2013
Agreement
in 2008 +
amendment
-
First
agreement
in 2013
First
agreement
in 2013
Agreement
Agreement
Agreement
Agreement
Agreement
in 1969 +
in 1998 +
in 2002 +
in 1998 +
in 2000 +
amendments amendments amendments amendments amendments
Amendment
overhauled
in 2009
Action plan
Agreement
Agreement
in 2006 +
in 2007 +
amendment amendments
Agreement
in 2012
Agreement
in 2007
Agreement
in 2008
Agreement
Agreement
in 2001 +
in 2000 amendments
First
agreement
in 2013
Agreement
in 2012
First
agreement
in 2013
Amendment
Agreement
overhauled
in 2011 +
in 2011 amendments
Agreement
Agreement
Agreement
in 2012 +
in 2007 +
in 2012 +
amendment amendments amendments
Health and safety
Occupational health and safety conditions,
overview of agreements signed with trade
unions or staff representatives governing
occupational health and safety
Crédit du Nord has established a system of support and
assistance including a leaflet entitled “After an attack”,
which outlines the medical, psychological and legal
support available. While initially intended for victims of
armed robberies, this information is also provided to
victims of serious abusive or aggressive incidents.
Crédit du Nord Group has chosen Preventis – an
occupational health intervention agency – to assist it in
its activities.
As required by current legislation, in early 2013 Crédit du
Nord also designated a suitably qualified member of staff
to be in charge of security matters and one person to be
involved in occupational risk prevention (IPRP).
Accidents in the workplace, including frequency and
severity, and work-related illnesses, are recorded.
In 2013, 108 accidents were reported for Crédit du Nord
Group.
Crédit Nord has also signed agreements in favour of
health, safety and well-being in the workplace. The areas
covered by the agreements include:
It is reviewed annually, particularly in light of changes
in applications and processes, and adjusted in order
to better meet the needs of employees and the
requirements of all the Group’s banks.
A training plan is defined each year to meet market and
business line needs.
Training is the main driver of the Bank’s strategy.
The 2014 training plan will be structured around the
following key areas:
– induction and training of new employees in a business
line and support for employees who are taking on a
new role;
– upskilling;
– “Individual Training Entitlement (DIF)” provision.
This plan has an accompanying training map:
– induction and training of employees – overview;
– induction programmes;
– security programmes;
– validation of AMF knowledge (Autorité des Marchés
Financiers);
– business programmes;
– business cycles;
– internships;
– stress;
– “Individual Training Entitlement (DIF)” provision.
– abusive and aggressive behaviour in business
relationships;
Total number of training hours
– attacks/branch security.
The agreements are accompanied by leaflets from the
French Banking Association (AFB) such as “Acting
together against abusive and aggressive behaviour” and
“Preventing harassment and violence in the workplace”.
Training
4
Training (basis of calculation: 1 day = 8 hours)
Total number of training days
2013
28,798
Women
15,983
Men
12,815
Number of employees who took at least one
course during the year
7,648
Women
4,272
Men
3,376
Percentage of employees who took at least
one course during the year
84.58%
Training policies implemented
A distinctive and individually tailored training support
system has been in place for many years at Crédit
du Nord, both to facilitate the induction process and
support employees who are taking on new roles.
This system is adapted to each employee’s experience.
207
4
Diversity and equal opportunity
Measures taken to promote gender equality
A gender equality and diversity agreement has been in
place within the company since 2004. This agreement
focuses on three areas for action: recruitment, career
development and job classification, each of which
is linked to quantitative progress targets which are
monitored for the duration of the agreement. A
dedicated budget for reducing wage gaps has been in
use since 2008.
Measures taken to promote the employment
and integration of disabled workers
Crédit du Nord has signed a new company agreement
promoting the employment and integration of persons
with disabilities. This agreement provides for:
– a dedicated contact person – the disability officer
– who is in charge of activities that contribute to
the recruitment and integration of persons with
disabilities;
– a report on initiatives undertaken, monitoring of
dedicated resources and their achievements,
Four of the Group’s other banks have also signed an
agreement in favour of the employment of persons with
disabilities.
Fighting discrimination
In 2013, all the Group’s banks launched negotiations
on the generation contract, leading to the signing of an
agreement setting obligations in three specific areas:
– employment of employees over the age of 45;
208
– integration of young adults under the age of 26 in job
market;
– transmission of knowledge and skills.
Each Bank has notably established, over the period
of the action plan or agreement, the goal of recruiting
“senior” employees and young adult as well as the
continued employment of “older” workers.
Promotion and observation of the
fundamental conventions of the
International Labour Organisation
Non-discrimination
Occupation)
(Employment
and
Crédit du Nord Group does not practise any form of
discrimination whatsoever, whether towards its staff
and prospective employees or its customers, business
partners or suppliers.
Freedom of
bargaining
association
and
collective
Forced or compulsory labour
Child labour
Crédit du Nord operates exclusively in France and
complies with all applicable labour laws, which cover all
three of the above areas.
4
INFORMATION ON CSR COMMITMENTS
Regional, economic and social
impacts of the company’s activities
Jobs and regional development
Crédit du Nord Group was established through the
grouping of some 80 regional banks that have been
pooling their respective strengths and talents for over
160 years now. Today, the Group comprises, among
others, eight regional banks – Courtois, Kolb, Laydernier,
Nuger, Rhône-Alpes, Société Marseillaise de Crédit,
Tarneaud and Crédit du Nord.
Crédit du Nord Group’s entities enjoy a large degree of
autonomy in the management of their activities, ensuring
rapid decision-making and the capacity to respond
quickly to their customers’ needs. The strategy of the
Group’s banks is based around three core aims:
– to be a reference bank in terms of the quality of its
customer relationships;
– to develop a high degree of individual and collective
professionalism,
– to offer their customers state-of-the-art services and
technologies.
With its strong regional presence, Crédit du Nord
serves the needs of its customers through its banking
and financing activities and seeks to contribute to the
social and economic progress of the départements and
regions in which it operates.
Customer satisfaction and financing the economy
remain at the heart of the Group’s regional banking
model. The 2012 buyback of non-controlling shares in
Banque Tarneaud, which operates in the Centre-Ouest
Atlantique region, illustrates the Group’s desire to
strengthen its regional presence.
The Group’s strong regional ties enable it to play a
leading role in the development of the regions, either
through the presence of a regional office or through
a regional bank. It provides jobs to local economies,
supports the creation and development of businesses
and provides backing for their projects.
Spread across the majority of France, its points of sale
enable the Group to forge strong local relationships
between its specialist advisors and customers that
ensure the Group is able to meet their personal and
professional banking and finance needs.
The quality and stability of Crédit du Nord Group’s results
are widely recognised by the markets, as confirmed by
its long-term A rating from Standard & Poor’s and Fitch.
209
4
Crédit du Nord Group
Lille
Nord Métropole
Arras
Rouen
Les Provinces du Nord
Nancy
Paris
Banque Kolb
Banque Nuger
Nord Ouest
Banque Rhône-Alpes
Limoges
Ile-de-France
Lyon
Clermond-Ferrand
Annecy
Banque Laydernier
Banque Tarneaud
Marseille
Monaco
Toulouse
Banque Courtois
Geographic presence of branches and breakdown of workforce by region and regional bank
at December 31, 2013:
Crédit du Nord regions
and branch
Corporate division
Number of branches
Headcount*
Nord-Ouest
Ile de France
Loiret
Corporate
customer
division
Corporate
divisions
Monaco branch
Arras
Rouen
Paris
Paris
Paris and Lille
Monaco
83
107
120
12
0
1
782
910
1,100
315
1,201
35
Nord Métropole
Provinces
du Nord
Lille
65
638
* Headcount = Staff on permanent contracts, fixed-term contracts and in work-study programmes at Crédit du Nord, including seconded Societe Generale employees.
Crédit du Nord
regional banks
Corporate division
Number of branches
Headcount*
Banque
Kolb
Banque
Tarneaud
Banque
Nuger
Banque
Rhône-Alpes
Banque
Laydernier
Banque
Courtois
Société
Marseillaise
de Crédit
Nancy
Limoges
Clermont-Ferrand
Lyon
Annecy
Toulouse
Marseille
44
74
23
82
46
84
174
343
614
168
660
358
696
1,710
* Headcount = Staff on permanent contracts, fixed-term contracts and in work-study programmes at a regional bank, including seconded Societe Generale and Crédit du Nord
employees.
Surrounding and local communities
As part of a regional approach, Crédit du Nord and
its regional banks are developing a local relationship
banking strategy on all retail banking markets in
France: the employees of Crédit du Nord Group and
its network of 915 branches serve over 2.1 million
210
individual customers, 217,700 professional customers
and 46,800 business customers.
In general, Crédit du Nord and its specialist advisors
support local people in their day-to-day needs and their
plans for the future with products and services to suit
their individual needs.
For customers in financial difficulty, as part of the
commitment undertaken by the banking profession in
2005 to “make banking easier for everyone”, Crédit du
Nord Group offers customers a range of alternatives to
cheque payments (including a bank card that requires
systematic authorisation for payments and withdrawals
in France and Europe, account balance alerts, capped
charges in the event of a payment incident, etc.).
Customers:
For customers with a serious health risk, the Group
offers products and services under the terms of the
AERAS agreement (s’Assurer et Emprunter avec un
Risque Aggravé de Santé).
For over 20 years, the Crédit du Nord Group banks
have conducted a yearly customer satisfaction survey
of nearly 60,000 individual, professional and business
customers (1). In addition, the banks listed closely to
each new customer’s views by having them complete
a customer satisfaction questionnaire once they have
been with the bank for six months.
Relations
with
persons
or
organisations concerned by the
company’s activities
Conditions for dialogue with these persons or
organisations
At Crédit du Nord, corporate social responsibility
means understanding and integrating the needs and
expectations of the Group’s different stakeholders,
including customers, employees and suppliers.
Accessibility for persons with disabilities
In France, in accordance with the “Law of February 11,
2005 on equal rights and opportunities, participation and
citizenship of persons with disabilities,” several initiatives
have been undertaken across the network in order to
improve the accessibility of the Group’s services:
– for the blind or visually-impaired: 95% of Automated
Teller Machines (ATMs) are accessible to them;
– for the mobility-impaired: a project was initiated
in 2010 to bring the branches into compliance,
after observing that only 39 out of the 787
branches reviewed met the required standards. At
December 31, 2013, 63.25% of the Crédit du Nord
Group branches were deemed compliant. The target
for December 31, 2014 is for 90.38% of the Group’s
branches to be compliant.
4
“Customer satisfaction has been our biggest
commitment for more than a century.”
Building quality relationships with customers, adapting
to new requirements and making every effort to meet
their expectations have made up Crédit du Nord Group’s
DNA for more than a century.
The Crédit du Nord Group banks ask these customers
for an honest assessment of how well they are received
by the bank, either on the telephone or at the branch,
the availability and responsiveness of their advisor, the
quality of advice offered and level of commitment, and
the quality and performance or the productions and
services they are offered, etc.
Improving the customer satisfaction score is the top
annual performance goal of the Group’s branches.
Finally, in order to ensure a consistently high level of
quality meeting that meets the expected standards,
each year Crédit du Nord Group conducts two “mystery
call” campaigns during which 20,000 telephone calls are
made to its own branches, accompanied by “mystery
shopper” visits.
In 2013, the Group was acknowledged with awards for
the commitment of its employees to providing a high
level of customer satisfaction. The competition surveys
(2)
conducted over the past 9 years by the Conseil
Supérieur de l’Audiovisuel (CSA) on the customers of
major French banking groups have systematically ranked
the Crédit du Nord banks among the leaders on the
individual, professional and business customer markets.
The results of these surveys provide Crédit du Nord
Group with an overview of its customers’ assessment
and are used to identify areas for improvement in order
to better meet their expectations.
(1) Branch/business centre surveys conducted by CSA: from April 22, to July 13, 2013 on a sample of 44,011 individual customers, 7,956 professional
customers and 4,320 business customers (averaging 70 customers per branch or business centre).
(2) Competition surveys performed by CSA: from February 25 to March 30, 203 on sample of 4,531 individual customers of the market’s top 11 banks;
from February 25 to March 30, 2013 on a sample of 3,444 professional customers of the market’s top 10 banks; from February 22 to April 9, 2013 on a
sample of 2,701 business customers of the market’s top 10 banks.
211
4
For more than 15 years, at the Crédit du Nord Group
branches:
employees via the Group website: “www.roulonsensemble.com”.
– 100% of advisors can be reached on their direct line
and by e-mail;
In early 2013, the “Etoile Plurielle” association was
created with the objective of providing a forum for
dialogue, sharing, transmission of experience and
learning for women executives at Crédit du Nord Group
with the aim of furthering their professional development.
The association had 104 members at the end of 2013.
– 100% of individual and professional customers have
a dedicated CRM;
– 100% of wealth management customers have a
dedicated wealth management advisor and CRM
assigned to them;
– 100% of business customers have a dedicated
corporate customer advisor and sales assistant
assigned to them.
Furthermore, the decision was made not to forward
customer calls to centralise telephone platforms and
never to impose the Group’s online banking services on
customers (Internet, telephone).
Please refer to the “Subcontractors and suppliers”
section below.
Rating agencies
Crédit du Nord Group answers questionnaires from
extra-financial rating agencies on a consolidated basis
through its parent company.
Claims and mediator
Partnerships and corporate sponsorship
The Group is committed to finding a solution to
complaints or problems in a timely manner. In the event
of a continuing disagreement, customers may file a
complaint with their bank’s Customer Relations Centre
and, if the dispute is still not resolved, request the
intervention of the mediator.
At Crédit du Nord, solidarity, art and music and sports
sponsorships are a day-to-day commitment. Getting
involved in the cultural life and local associations of
their regions and reinforcing links with partners are key
priorities of the Crédit du Nord Group banks. In 2013,
Crédit du Nord donated more than €1.9 million to over
200 sports clubs, associations, exhibitions and cultural
events.
The free mediator services established by the Crédit
du Nord Group, which are intended to achieve an outof-court solution to disputes, are widely publicised by
the bank including through information provided on the
back of all account statements. Crédit du Nord has
undertaken to comply in full with all decisions taken by
the independent mediator (Christiane Scrivener).
Employees
Crédit du Nord Group places great importance on
promoting lasting relationships with its employees as
part of a commitment to mutual development in an
environment favouring both individual and collective
well-being.
In the interest of improving working conditions, and in
line with its commitment to preserving the environment,
Crédit du Nord organises a carpool service for its
212
Suppliers
The types of projects that Crédit du Nord supports
can be local initiatives, such as a charity sports day, or,
equally, national projects such as “Marseilles-Provence
2013 – European Capital of Culture” of which Société
Marseillaise de Crédit was an Official Partner.
In 2013, for the second year in a row, Crédit du Nord
partnered with the “Imagine for Margo” association,
which raises funds to support European research on
specific treatments for paediatric cancers. Crédit du
Nord also took part in the second annual “Children
without Cancer” race organised by this association.
The funds raised by this event were used to fund two
clinical trials, one of which enabled 120 European
children to receive a new treatment in 7 countries.
By participating in this race, Crédit du Nord Group’s
aim was to get truly involved in a community initiative
alongside individual members of staff, who also raised
€44,000.
Subcontractors and suppliers
Incorporation of CSR criteria in the company’s
purchasing policy
For its main purchases, Crédit du Nord Group uses
Societe Generale Group Purchasing Department, which
implements a series of multi-annual action plans that
seek the proactive involvement of all stakeholders in the
value chain (prescribers, purchasers and suppliers).
These action plans, known as the Ethical Sourcing
Program (ESP 2006-2010) and the Sustainable Sourcing
Program (SSP 2011-2015), demonstrate the Group’s
determination to make CSR a fundamental part of its
purchasing processes. This commitment is reflected in
different key initiatives:
– the signing of compliance rules governing purchasing
by 100% of purchasers;
– the inclusion of a sustainable development clause in
all contracts that commits all suppliers to upholding
any labour laws (and where no such laws apply, to
at least comply with the provisions of the ILO) and
environmental legislation in force in the countries
where they operate);
– environmental and social risk mapping on products
and services purchased;
– the evaluation of suppliers prior to each purchase
which has a minimum weighting of 3% in the selection
criteria;
– the incorporation of CSR objectives by all purchasers
in a CSR initiative specific to their purchasing
category (for example contracts with protected
sector companies, inclusion of environmental criteria
in specifications);
4
Societe Generale’s socially responsible purchasing policy
is based on three core pillars:
– Economic pillar: commitment to SMEs that makes
it less difficult for them to win Societe Generale
procurement contracts and to establishing a
framework of mutual trust with suppliers;
– Social pillar: promotion and use of subcontractors
within the protected sector;
– Environmental pillar: participation in the Carbon
Reduction Plan through the inclusion of environmental
criteria in the selection process for products and
services.
For purchases that are handled directly, Crédit du Nord
Group very much follows Societe Generale Group’s
policy while favouring local suppliers.
Importance of outsourcing and incorporation
of CSR criteria in relations with suppliers and
subcontractors
In 2006, Societe Generale Group Purchasing
Department formalised a CSR supplier selection process
aimed at covering the largest possible cost base. When
a call for tenders is sent out, all suppliers are assessed
and given a CSR rating. Once the evaluation is complete,
the CSR rating is factored into the selection criteria.
Since 2011, Societe Generale Group Purchasing
Department has worked with independent firm Ecovadis,
recognised for its expertise in sustainable development.
Suppliers invited to bid are surveyed by Ecovadis using
a questionnaire that is tailored to their business sector
and the size of their company as well as their geographic
coverage.
The methodology and criteria used in the Ecovadis
questionnaire are consistent with international CSR
standards (Global Reporting Initiative, United Nations
Global Compact, ISO 26000, ILO Conventions).
– a CSR-specific “Purchasing and Sustainable
Development” in-house training module.
213
4
Fair practices
Anti-corruption initiatives
Since 1993 (Law No. 93-122 of January 29), corruption
and transparency of the economic environment and
public procedures have fallen within the scope of the
anti-money laundering and terrorist financing system
in place at the Group’s various banking institutions.
This system consists in expanding our KYC and
the consistency between transactions carried out
and the economic purpose of the bank’s relations.
Any inconsistency that might appear inexplicable or
unexplained is subject to a declaration of suspicion to
the competent authorities.
As a preventive measure, the Purchasing Department
has updated its contract awarding procedures and
purchase agreements to include an anti-corruption
clause that covers suppliers.
A system of continuous monitoring of employee
practices is in place.
Measures in favour of consumer health and
safety
Crédit du Nord Group sets itself very high standards in
the way it operates it business, particularly in terms of
customer satisfaction, the pace of business, fair pricing,
214
synergies between markets and the expansion of the
range of products and services (including multi-channel
offerings).
It aims to provide a courteous and respectful service to
borrowers at all stages of the credit cycle, from approval
to final repayment. This applies to consumer credit and
home loans for individual customers.
The Group’s staff do not receive any fee-for-service
remuneration (commission), which ensures that the
advice they give customers is completely impartial.
Human rights
Human rights initiatives
Crédit du Nord Group pursues its development with the
utmost respect for fundamental human and workers’
rights and for the environment – all around the world.
4
ENVIRONMENTAL INFORMATION
General environmental policy
Company policy addressing environmental
issues and, where applicable, steps taken to
evaluate environmental performance or obtain
environmental certification.
In keeping with the three pillars of the Group’s banking
model (regional presence, relationship-building and
customer satisfaction) which are now more relevant
than ever and help to set us apart, Crédit du Nord aims
to reduce the environmental footprint of its internal
operations.
The Group’s environmental policy strives to meet three
major objectives:
Implementation of a carbon neutrality and then
reduction programme with a cross-business impact:
– Real estate: defining principles for building
refurbishments and renovations (better use of
space and of new technologies with a reduced
environmental impact).
– Consumables: stricter policy on the use of
consumables, particularly paper, by being more
demanding when it comes to suppliers and reducing
the use of paper.
– Transport: improved monitoring and control of
business travel with greater use of alternative tools
such as audio and videoconferencing systems.
– to reduce and minimise the direct and indirect impact
of its activities on the environment;
Employee training and
environmental protection
– to reduce natural resource and energy consumption
through careful and efficient utilisation;
The Group intends to add a section to its intranet site on
sustainable development and CSR with a link to Societe
Generale’s CSR website. This will enable staff to find out
about sustainable development issues and to be aware
of what actions are being taken.
– to ensure constant attention is paid to employee
comfort and customer service.
With the incorporation of Societe Generale Group’s
2008-2012 carbon neutrality programme, Crédit du
Nord has undertaken to foster a culture of environmental
awareness.
The 2013-2015 carbon reduction programme took over
from the previous programme and strengthened its
ambitions with the following two objectives:
– to reduce greenhouse gas (GHG) emissions;
– to reduce energy consumption.
Environmental information is managed by means of
a dedicated CSR reporting tool, which is used to
monitor environmental indicators as well their scope of
application. All entities (buildings exceeding 5000 m²,
regions and regional banks) actively collect and transmit
this data, which contributes to the quality of reporting.
awareness
on
It will inform consultations, best practices and decisions
related to sustainable development and CSR.
Pollution and environmental risk prevention
Not relevant given the nature of the company’s
operations
Amount of provisions and guarantees for
environmental risks, provided that such
information is not liable to harm the company’s
interests in any ongoing legal disputes
There are no plans for a specific provision for
environmental risks, given the nature of the company’s
operations.
215
4
Pollution and waste management
Consumption of raw materials and steps taken
to improve efficient use of consumables
Measures for preventing, reducing or offsetting
emissions into the air, water and soil with a
severe impact on the environment.
Because of nature of Crédit du Nord’s operations, the
main raw materials used by the Group are paper and
energy.
operations and geographical location.
Paper consumption:
Waste prevention, recycling and disposal
measures
Waste at the central buildings is divided into different
categories and treated appropriately. Service providers
are contracted to collect, sort and recycle the majority
of this waste. In 2013, a call for tenders was launched
to set up sorting and collection of paper waste across
the Group’s entire network of branches while maintaining
confidentiality.
The results of this call for tenders are being rolled out
gradually based on each bank’s needs and capabilities.
A number of awareness campaigns are regularly carried
out to encourage employees to take a more “ecoresponsible” approach through better recycling.
Sound pollution and any other form of businessspecific pollution
Sustainable use of resources
Water consumption and water supply based on
local constraints
While water consumption may not be relevant given the
nature of the company’s operations and geographical
location, water is nevertheless an important resources
for all that needs to be preserved. This is why the
Group’s water use is measured and special efforts are
made to reduce consumption.
216
Paper is constantly reviewed from both a qualitative (raw
materials, transport, etc.) and quantitative point of view.
Since 2012, the Group has selected paper meeting
strict environmental requirements and product life cycle
analysis criteria. The main objective was to select with
paper with the lowest possible environmental impact
associated with its manufacture.
Researching and implementing paperless systems
(electronic account statements, digital files, electronic
signatures, etc.) in order to reduce the amount of paper
used is an ongoing goal of the company. For example:
– the number of individual customers signing up for
online statements rose significantly in 2013 (+48%
compared to 2012). To continue in this vein, in 2013,
the Group decided to expand the option for individual
customers to minors in the household and to offer the
option to professional customers as well;
– an initiative was also undertaken to reduce the listings
addressed to the Group’s operating branches. In
addition to this environmental goal, this initiative also
helped refocus the staff’s work exclusively on listings
calling for action on their part. The result was a 75%
decline in the volume of listings sent to the Group’s
operating branches, i.e. a reduction of 40 tons of
listings per year.
The Group regularly runs awareness campaigns to
encourage staff to use paper more efficiently.
Energy consumption, steps taken to improve
energy efficiency and use of renewable energy
sources
Energy consumption:
As for all other resources, each year since 2011 Crédit
du Nord Group has measured its energy consumption
(electricity, heating oil, gas). All data are consolidated at
the parent company level (Societe Generale).
– in 2013, Crédit du Nord organised a carpooling
service for its employees.
Land use
operations
Climate change
Measures taken to improve energy efficiency
Greenhouse gas (GHG) emissions
Energy efficiency has become a key focus of
environmental policy.
In addition to measurements and comparative
monitoring, which help better identify areas for
improvement, all Group initiatives related to transport,
paper consumption and direct or indirect emissions
from energy consumption are aimed at reducing GHG
emissions.
Me a su re m e n t syste ms a n d i n di c a tors enab le
consumption to be managed more efficiently.
A number of energy efficiency initiatives can be identified
in this way: insulation work, installation of motion
detectors, LED lighting for signage and point-of-sale
advertising and the replacement of heating and air
conditioning systems with more energy-efficient ones.
More large-scale initiatives are also occasionally carried
out. For example:
– following a thermal audit that confirmed significant
losses of energy due to one of the central building’s
inefficient window panes and steel joinery, work
was implemented to replace 76 window frames and
windows in order to save 5% on primary energy
consumption (heating + cooling);
– to reduce its indirect impact, the Group decided to
streamline branch deliveries by cash transportation
companies while continuing to meet the branches’
needs. Actual savings came to 1,300 monthly
deliveries out of 6,800, i.e. a 19% reduction.
4
Five Crédit du Nord Group banks published GHG
reviews on 2011 emissions.
Adapting to the impact of climate change
Preserving biodiversity
Measures taken to preserve or develop
biodiversity
217
4
Independent verifier’s report on consolidated social, environmental and societal information presented in the management report
Independent verifier’s report on consolidated social,
environmental and societal information presented
in the management report
This is a free translation into English of the original report issued in the French language 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.
To the shareholders,
In our quality as an independent verifier of which the
admissibility of the application for accreditation has
been accepted by the COFRAC, under the number
n° 3-1050, and as a member of the network of one of
the statutory auditors of the company Crédit du Nord
Group, we present our report on the consolidated social,
environmental and societal information established for
the year ended on the 31 December 2013, presented in
chapter 4 of the management report, hereafter referred
to as the “CSR Information,” pursuant to the provisions
of the article L.225-102-1 of the French Commercial
Code (Code de commerce).
Responsibility of the independent verifier
It is our role, based on our work, to attest whether the
required CSR Information is present in the management
report or, in the case of its omission, that an appropriate
explanation has been provided, in accordance with the
third paragraph of R. 225-105 of the French Commercial
Code (Code de commerce). It is not for us to express
a limited assurance conclusion that the CSR Information,
overall, is fairly presented, in all material aspects, in
according with the Criteria.
Our verification work was undertaken by a team
of 3 people between December 2013 and March 2014
for an estimated duration of 2 weeks.
Responsibility of the company
It is the responsibility of the Board of Directors to
establish a management report including CSR
Information referred to in the article R. 225-105-1 of
the French Commercial Code (Code de commerce),
in accordance with the protocols used by the company,
made up of Société Générale Group’s procedures
(hereafter referred to as the “Criteria”), and of which a
summary is included in introduction of the CSR report.
Independence and quality control
Our independence is defined by regulatory requirements,
the Code of Ethics of our profession as well as the
provisions in the article L. 822-11 of the French
Commercial Code (Code de commerce). In addition,
we have implemented a quality control system,
including documented policies and procedures to
ensure compliance with ethical standards, professional
standards and applicable laws and regulations.
218
Nature and scope of the work
We undertook the following work, in accordance with
professional standards applicable in France and with the
decree of 13 May 2013 determining the modalities by
which the independent verifier leads its mission:
• we obtained an understanding of the company’s CSR
issues, based on interviews with the management
of relevant departments, a presentation of the
company’s strategy on sustainable development
based on the social and environmental consequences
linked to the activities of the company and its societal
commitments, as well as, where appropriate, resulting
actions or programmes;
• we have compared the information presented in the
management report with the list as provided for in the
Article R. 225-105-1 of the French Commercial Code
(Code de commerce);
Independent verifier’s report on consolidated social, environmental and societal information presented in the management report
• in the absence of certain consolidated information,
we have verified that the explanations were
provided in accordance with the provisions in
Article R. 225-105-1, paragraph 3, of the French
Commercial Code (Code de commerce);
• we verified that the information covers the
consolidated perimeter, namely the entity and its
4
subsidiaries, as aligned with the meaning of the
Article L.233-1 and the entities which it controls, as
aligned with the meaning of the Article L.233-3 of the
French Commercial Code (Code de commerce).
Based on this work, we confirm the presence in the
management report of the required CSR information.
Paris-La Défense, le 31 mars 2014
French original signed by:
Independent Verifier
ERNST & YOUNG et Associés
Eric DUVAUD
Partner, Sustainable Development
Hassan BAAJ
Partner
219
4
Responsibility for the Registration Document and audit
Responsibility for the Registration Document and audit
Person responsible for the Registration Document
Certification by the person responsible for the Registration Document
and the Annual Financial Report
I hereby certify, having taken all reasonable measures to this end, that to the best of my knowledge, the information
contained in this Registration Document is true and that there are no omissions that could impair its meaning.
I certify that, to the best of my knowledge, the financial statements were drawn up in accordance with applicable
accounting standards and present fairly, in all material respects, the financial position and results of the parent company
and of the entire Group as constituted by the consolidated companies, and that the Management Report (including the
cross-reference table for the annual report, in Chapter 4, page 224, which indicates the content) accurately reflects
the development of business, results and the financial situation of the parent company and of the entire Group as
constituted by the consolidated companies, as well as a description of the main risks and uncertainties to which they
are exposed.
I received a letter of completion from the Statutory Auditors in which they state that they verified the information in respect
of the financial position and accounts presented in the Registration Document, which they have read in its entirety.
The historic financial information presented in the Registration Document was addressed in Statutory Auditors’ reports,
appearing on pages 132 and 133, 191 and 192 of this document, in addition to financial information for fiscal years
2011 and 2012, respectively on pages 134 and 135, 196 and 197 of the 2011 Registration Document and pages 132
and 133, 188 and 189 of the 2012 Registration Document.
The Statutory Auditors’ reports referring to the 2011 and 2012 annual parent company financial statements contain
observations. The Statutory Auditors’ report referring to the 2013 consolidated financial statements contain an
observation.
Paris, April 28, 2014
Chief Executive Officer, Philippe Aymerich
Statutory auditors
220
DELOITTE & ASSOCIES
Represented by Bernard HELLER
Represented by Jean-Marc MICKELER
Adress: 1/2, place des Saisons
92 400 Courbevoie - Paris-La Défense 1
Adress : 185, avenue Charles de Gaulle
92 200 Neuilly-sur-Seine
Date appointed: May 4, 2000
Date of last reappointment: May 11, 2012 for six
fiscal years
Date appointed: May 4, 2000
Date of last reappointment: May 11, 2012 for six
fiscal years
Expiry of this mandate:
At the end of the Ordinary General Shareholders’ Meeting
convened to approve the financial statements for the
fiscal year ending December 31, 2017.
Expiry of this mandate:
At the end of the Ordinary General Shareholders’ Meeting
convened to approve the financial statements for the
fiscal year ending December 31, 2017.
Alternate Statutory Auditors: Société PICARLE et
Associés, represented by Marc CHARLES
Alternate Statutory Auditors: Société BEAS,
represented by Mireille BERTHELOT
Cross Reference tables
4
1. Cross Reference table for the Registration Document
In accordance with Article 28 of EC Regulation No. 809/2004 of April 29, 2004, the following information is included
for reference purposes in the Registration Document:
• individual and consolidated financial statements for the fiscal year ended December 31, 2012, the related Statutory
Auditors’ reports and the Group Management Report appearing on pages 42-176, pages 132 and 133, pages
188 and 189, and pages 13-25 of the Registration Document filed with the AMF on April 26, 2013 under No.
D.13-0451;
• individual and consolidated financial statements for the fiscal year ended December 31, 2011, the related Statutory
Auditors’ reports and the Group Management Report appearing on pages 44-183, pages 134 and 135, pages
196 and 197, and pages 13-28 of the Registration Document filed with the AMF on April 27, 2012 under No.
D.12-0462;
The chapters of Registration Document Nos. D.13-0451 and D.12-0462 not listed above are either not applicable for
investors or are covered in another section of this Registration Document.
To assist with the reading of the Registration Document, the following cross-reference table refers to the main chapters
required by Annex 1 of European Regulation No. 809/2004.
Page no.
of the Registration
Document
Chapters
1. Responsibility for the registration document
220
2. Statutory auditors
220
3. Select financial information
3.1. Select historic financial information for the issuer, for each financial year
3.2. Select financial information for interim periods
6-7
-
4. Risk factors
35; 76-87; 201-202
5. Information concerning the issuer
5.1. History and development of the company
198
5.2. Investments
26; 100-101
6. Overview of activities
6.1. Main activities
16-20
6.2. Main markets
95
6.3. Exceptional events
-
6.4. Issuer’s degree of dependence on patents, licences, industrial, commercial,
and financial contracts, and on new manufacturing processes
6.5. Basis of issuer statements concerning its competitive position
201
-
7. Organisation chart
7.1. Overall description of the Group
7.2. List of major subsidiaries
11
11; 74-75; 177-178
221
4
Page no.
of the Registration
Document
Chapters
8. Buildings, plant and equipment
8.1. Major existing or planned tangible fixed assets
100-101
8.2. Environmental issues with the potential to influence the use of tangible
assets
203-217
9. Overview of financial situation and results
9.1. Financial situation
21-25
9.2. Operating income
21-25
10. Cash flow and capital
10.1. Information on the issuer’s capital
42 to 47
10.2. Source and amount of the issuer’s cash flow
48
10.3. Information on the issuer’s borrowing conditions and financing structure
93; 104; 106; 112
10.4. Information concerning any restrictions on the use of capital having
influenced or capable of influencing the issuer’s transactions
-
10.5. Information concerning the expected sources of financing needed to
honour the commitments listed in chapters 5.2 and 8.1
-
11. Research and development, patents and licences
-
12. Information on trends
26
13. Profit forecasts or estimates
-
14. Administrative, Management and Supervisory bodies and General
Management
14.1. Board of Directors and General Management
4
14.2. Conflicts of interest involving the administrative, management
and supervisory bodies and General Management
180 to 182
15. Compensation and benefits
15.1. Amount of compensation paid and benefits in kind
183-190
15.2. Total amount provisioned or recorded by the issuer for the payment
of pensions and other benefits
130
16. Corporate Governance
16.1. Expiry of current mandates
4; 180-182
16.2. Service agreements binding members of the administrative bodies
-
16.3. Information on the issuer’s Audit Committee and Compensation Committee
4; 27-28; 183-184
16.4. Declaration indicating whether or not the issuer complies with corporate
governance policy
-
17. Employees
17.1. Number of employees
22; 124; 170; 203
17.2. Ownership interests and stock options of Directors
17.3. Agreement allowing for employees to invest in the issuer’s capital
222
185; 187-189
200
4
Page no.
of the Registration
Document
Chapters
18. Key shareholders
18.1. Shareholders owning more than 5% of the share capital or voting rights
200
18.2. Other voting rights
200
18.3. Ownership of the issuer
200
18.4. Agreement of which the issuer is aware, the implementation of which
could lead to a change in ownership at a future date
19. Transactions with affiliates
130-131; 157; 193-194
20. Information concerning the issuer’s financial situation and results
20.1. Historical financial information
42-132; 138-179
20.2. Pro forma financial information
-
20.3. Financial statements
42-132; 138-179
20.4. Verification of annual historic financial information
20.5. Date of latest financial information
133-134; 191-192
42; 140
20.6. Interim financial information
-
20.7. Dividend policy
200
20.8. Legal and arbitration procedures
201
20.9. Significant change in the financial or commercial situation
-
21. Additional information
21.1. Share capital
198; 200
21.2. Articles of incorporation and bylaws
198-199
22. Major contracts
-
23. Information from third parties, expert certifications and interest
declaration
-
24. Documents available to the public
25. Information on ownership interests
199
11; 74-75; 177-178
223
4
2. Cross Reference table for the Annual Financial Report
In accordance with Article 222-3 of the General Regulations of the Autorité des Marchés Financiers (French Securities
Regulator), the annual financial report mentioned in Section I of Article L.451-1-2 of the French Monetary and Financial
Code includes the items described in the following pages of the Registration Document:
Annual financial report
Chapters
Certification of the person responsible for the registration document
Page no.
of the Registration
Document
220
Management Report
- Analysis of the results, financial situation, and risks of the parent company and
the consolidated group and list of powers delegated for the purposes of capital
increases (Article L.225-100 and L.225-100-2 of the French Commercial Code)
-
- Information required by Article L.225-100-3 of the French Commercial Code
relating to items liable to have an impact on the public offer
-
- Information relating to share buybacks (Article L.225-211 paragraph 2
of the French Commercial Code)
-
Financial statements
- Annual financial statements
141-179
- Statutory Auditors’ report on the annual financial statements
191-192
- Consolidated financial statements
- Statutory Auditors’ report on the consolidated financial statements
224
42-132
133-134
The original document was filed with the AMF (French Securities Regulator) on April 28, 2014, in accordance
with Article 212-13 of its General Regulation. As such, it may be used to support a financial transaction
if accompanied by a prospectus duly approved by the AMF.
This document was produced by the issuer and is binding upon its signatory.
This Registration Document is available online at www.groupe-credit-du-nord.com. Person responsible for
the information contained in this report: Frédéric Figer – Tel.: 33 (0)1 40 22 45 45 – E-mail: [email protected]

Registration document and annual financial report

Transcription

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